Agreement To Effect Orderly Liquidation

AGREEMENT TO EFFECT ORDERLY LIQUIDATION


OF MESSAGEMEDIA EUROPE, B.V.


BY AND BETWEEN MESSAGEMEDIA EUROPE, B.V.,


MESSAGEMEDIA, INC.,


MESSAGEMEDIA US/EUROPE, INC. AND


@viso LIMITED


DATED MAY 9, 2001


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AGREEMENT TO EFFECT ORDERLY LIQUIDATION OF MESSAGEMEDIA EUROPE, B.V., a Netherlands corporation (together with its subsidiaries, the "JOINT VENTURE"), dated May 9, 2001, by and between the JOINT VENTURE, MESSAGEMEDIA, INC., a Delaware corporation ("MESSAGEMEDIA US"), MESSAGEMEDIA US/EUROPE, INC., a Delaware corporation wholly-owned by MessageMedia US ("MESSAGEMEDIA SUB," and, collectively with MessageMedia US, "MESSAGEMEDIA"), and @VISO LIMITED, a company incorporated under the laws of England and Wales ("@viso") (this "AGREEMENT").


WHEREAS, MessageMedia, MessageMedia Sub and @viso are parties to that certain Shareholders Agreement, dated March 7, 2000, pursuant to which they are associated as shareholders of the Joint Venture (the "SHAREHOLDERS AGREEMENT");


WHEREAS, MessageMedia US and the Joint Venture are parties to that certain Master License and Services Agreement, dated March 10, 2000, referred to in Section 1(c) of the Shareholders Agreement (the "LICENSE AGREEMENT");


WHEREAS, @viso and the Joint Venture are parties to that certain Credit Agreement, referred to in Section 1(d) of the Shareholders Agreement (the "CREDIT AGREEMENT");


WHEREAS, MessageMedia US and @viso are parties to that certain Loan Agreement, dated March 7, 2000, referred to in Section 1(e) of the Shareholders Agreement (the "LOAN AGREEMENT");


WHEREAS, the Joint Venture, MessageMedia and @viso desire to effect the orderly liquidation of the Joint Venture, and to terminate the Shareholders Agreement, License Agreement, Credit Agreement and Loan Agreement, to the extent and upon the terms and conditions hereinafter set forth.


NOW, THEREFORE, in consideration of the premises and the mutual covenants herein set forth, the parties hereby agree as follows:


1. INITIAL PAYMENTS.


(a) No later than May 11, 2001 (the "FUNDING DATE"), @viso will contribute to the Joint Venture $2,000,000 (US dollars) (the "@viso CONTRIBUTED AMOUNT") by wire transfer of immediately available funds to an account designated by the Joint Venture, which funds shall be used to satisfy (i) all creditors' and employees' claims of the Joint Venture and any accounting, audit or legal fees and expenses incurred by the Joint Venture in connection with its shut down and liquidation, (ii) that certain e1,239,393 (euros) obligation due @viso by the Joint Venture as a result of services provided to the Joint Venture by @viso pursuant to Section 2(d) of the Shareholders Agreement, and (iii) all reimbursable expenses and monthly license and support fees earned by MessageMedia US through the date hereof pursuant to the License Agreement, but excluding: (x) any and all severance payments due David Ehrenthal, the Chief Executive Officer of the Joint Venture, (y) obligations due pursuant to that certain $5,300,000 promissory note, issued in March 2000 and used by the Joint Venture to purchase technology pursuant to Section 1.29 of the License Agreement (the "$5,300,000 NOTE"), and (z) any and all expenses, costs, fees or other obligations not specifically identified above due either to @viso or MessageMedia US (hereafter these claims, obligations, expenses and fees, including those


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referred to in (i), (ii) and (iii) above, but excluding those referred to in (x), (y) and (z) above, shall be referred to as the "SHUTDOWN COSTS").


(b) On the Funding Date, @viso will loan MessageMedia US $2,000,000 (the "MESSAGEMEDIA CONTRIBUTED AMOUNT" and, collectively with the @viso Contributed Amount, the "CONTRIBUTED AMOUNTS"), pursuant to the terms of the MessageMedia Contributed Amount Note attached hereto as Exhibit A (the "CONTRIBUTED AMOUNT NOTE"), which funds concurrently shall be contributed by MessageMedia US to the Joint Venture by a direct wire transfer of immediately available funds from @viso to an account designated by the Joint Venture and be used exclusively to fund the Shutdown Costs. In the event that the Contributed Amounts exceed the Shutdown Costs (the "EXCESS CONTRIBUTED AMOUNTS"), concurrently with the liquidation of the Joint Venture, the Joint Venture shall distribute the Excess Contributed Amounts to @viso by wire transfer of immediately available funds to an account designated by @viso; provided, however, that 50% of such Excess Contributed Amounts shall be applied to the principal amount at the time outstanding under the Contributed Amount Note, which principal amount correspondingly shall be reduced (as set forth in such note).


(c) On the Funding Date, in consideration of the termination, release and cancellation of the Loan Agreement, as set forth in Section 3(c) below, MessageMedia US will issue @viso a promissory note with a principal amount of $2,500,000 (the "TERMINATION NOTE"), the form of which is attached hereto as Exhibit B.


2. REPRESENTATIONS AND WARRANTIES.


Each of MessageMedia US and @viso hereby represents and warrants to the other as follows:


(a) It is a company duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, with full power and authority to enter into and perform this Agreement.


(b) No consent, approval or authorization of, or declaration or filing with, any governmental authority or person or entity is required on its part in connection with the execution and performance of this Agreement.


(c) The execution and delivery of this Agreement and the performance of its obligations hereunder will not (i) violate or be in conflict with any provision of law, any order, rule or regulation of any court or other agency of government, or any provision of its charter or bylaws, or (ii) violate, be in conflict with, result in a breach of, or constitute a default under any material indenture, license, lease, agreement or other instrument to which it is a party or by which it or any of its properties is bound.


3. TERMINATION OF AGREEMENTS.


(a) TERMINATION OF CREDIT AGREEMENT. Effective as of the receipt by the Joint Venture of the Contributed Amounts, the Credit Agreement shall terminate and be of no further force or effect and all liabilities and claims thereunder forever shall be discharged and released.


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(b) TERMINATION OF SHAREHOLDERS AGREEMENT. Effective as of the receipt by the Joint Venture of the Contributed Amounts, the Shareholders Agreement shall terminate and be of no further force or effect and all liabilities and claims thereunder forever shall be discharged and released.


(c) TERMINATION OF LOAN AGREEMENT. Effective upon the issuance of the Termination Note by MessageMedia US to @viso, the Loan Agreement shall terminate and be of no further force or effect and all liabilities and claims thereunder forever shall be discharged and released.


(d) TERMINATION OF LICENSE AGREEMENT AND RELEASE OF $5,300,000 PROMISSORY NOTE. Effective as of the receipt by the Joint Venture of the Contributed Amounts, the License Agreement shall terminate and be of no further force or effect and all liabilities and claims thereunder forever shall be discharged and released, including, without limitation, the $5,300,000 Note; provided, however, that, MessageMedia US shall be entitled to recover in the liquidation of the Joint Venture the amounts referred to in Section 1(a)(iii) above.


4. MUTUAL RELEASE.


Except otherwise as set forth immediately below and otherwise in this Agreement, and excluding the obligations created pursuant to the Termination Note and the Contributed Amount Note, effective as of the receipt by the Joint Venture of the Contributed Amounts, each of the parties hereto hereby releases, acquits and forever discharges the other party, including such other party's current and former officers, directors, agents, servants, employees, stockholders, attorneys, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages, indemnities and obligations of every kind and nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, events, acts or conduct occurring at any time prior to and including the date of this Agreement, including, without limitation, any and all claims and demands directly or indirectly arising out of or in any way connected with the execution and negotiation of this Agreement (or any related agreement) or the Shareholders Agreement, or with regard to forming and operating the Joint Venture. If any party has filed any claim, complaint, or charge against any party indemnified hereunder before any local, state, federal or foreign administrative body or court, such party agrees to dismiss with prejudice such claim, complaint, or charge, and to send confirmation of dismissal to such other party within 14 days after the date of this Agreement. Each party agrees that in the event it brings a claim or charge covered by this release or does not dismiss and withdraw any claim covered by this release in which such party seeks damages or any other relief against any other party indemnified hereunder, this Agreement shall serve as a complete defense to such claim or charge.


5. ASSUMPTION OF CERTAIN JOINT VENTURE ASSETS/SEVERANCE COSTS.


(a) MessageMedia US shall have the right to assume any and all of the Joint Venture's customer contracts, including, without limitation, any contract by and between the Joint Venture and Vivendi Universal S.A. ("VIVENDI") or any affiliate or non-wholly owned subsidiary of Vivendi. If MessageMedia US, in its sole discretion, elects to assume any contract


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by and between the Joint Venture and Vivendi or any affiliate or non-wholly owned subsidiary of Vivendi, it also shall assume any and all obligations imposed by the terms and conditions of such contract.


(b) MessageMedia US shall have the right to hire any personnel of the Joint Venture required to service such assumed customers, and shall provide @viso with a list of the key Joint Venture personnel it intends to hire, and shall use commercially reasonable effort to provide such list on or before May 31, 2001, and, in any event, shall do so prior to the final liquidation of the Joint Venture.


(c) Notwithstanding anything in this Section 5 to the contrary, without the written consent of @viso, the Joint Venture shall not in any way be restricted from proceeding with its shut down and liquidation to accommodate the assumption of such customer contracts or the hiring of such personnel.


(d) MessageMedia US agrees to pay all costs which directly result from the assignment of such Joint Venture customer contracts in accordance with local laws, including, without limitation, any transfer tax associated with such assignment, but excluding any operational costs of the Joint Venture (which include any labor or employment costs of the Joint Venture).


(e) MessageMedia shall use commercially reasonable efforts to reassign to an appropriate position rather than terminate any employee of the Joint Venture who as of the time immediately prior to such termination MessageMedia intends to retain as a future employee of the Joint Venture or MessageMedia. In addition, Message Media US agrees to reimburse @ viso for any severance expenses incurred by @viso in connection with terminating any Joint Venture employee who MessageMedia or the Joint Venture shall rehire after such severance expense has been incurred.


(f) MessageMedia US agrees to hold harmless and indemnify @viso, including @viso's current and former officers, directors, agents, servants, employees, stockholders, attorneys, successors, assigns and affiliates (the "@viso INDEMNITEES"), against any and all expenses that the @viso Indemnitees become legally obligated to pay because of any claims, liabilities, demands or causes of action, in law, equity or otherwise, arising out of acts or conduct of MessageMedia relating to the performance or alleged non-performance of one or more of such assumed contracts and occurring after the date on which MessageMedia US assumes the Joint Venture customer contract that is the subject of such claim, liability, demand or cause of action.


6. SELECTION OF PERSONNEL.


@viso and MessageMedia US agree that they mutually shall select the personnel responsible for the shut down and liquidation of the Joint Venture.


7. CONFIDENTIALITY/NON-DISCLOSURE.


Each of the parties acknowledges that confidentiality and nondisclosure are material considerations for the parties entering into this Agreement. As such, each of the parties agree not to publicize nor to disclose the existence or the terms of this Agreement with any individual in


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any manner whatsoever, written or oral, including, but not limited to, the print or broadcast media, any public network such as the Internet, any other outbound data program such as computer generated mail, reports or faxes, or any source likely to result in publication or computerized access. Notwithstanding the prohibitions in this paragraph, the parties may disclose this Agreement: (a) in confidence to their respective attorneys, spouses, accountants, auditors, tax preparers, insurance carrier, and financial advisors; (b) as necessary to fulfill standard or legally required corporate reporting, disclosure requirements or financing requirements; (c) upon request from any government entity; (d) to investors or potential investors, purchasers or potential purchasers, successors and potential successors, and any current or prospective parent corporation; and (e) insofar as such disclosure may be necessary to enforce its terms or otherwise as required by law.


8. MESSAGEMEDIA US CHANGE OF CONTROL PREMIUM PAYABLE TO @VISO.


As additional consideration for the obligations of the parties hereto, MessageMedia US agrees that if there shall occur a "change of control" (as defined in the Contributed Amount Note) of MessageMedia US that is consummated on or before December 31, 2003, concurrently with the consummation of such change of control, MessageMedia US shall make a cash payment to @viso in an amount based upon the following formula:


Y = A x B x ((C - D) / D)


where:


Y = the cash payment to @viso;


A = 0.5;


B = the sum of the principal amounts outstanding under the Contributed
Amount Note and the Termination Note as of immediately prior to the
time such change of control is consummated;


C = the fair value of the consideration per share (as defined below) paid
to MessageMedia US stockholders in connection with such change of
control; and


D = the closing market price of MessageMedia US common stock as quoted on
the Nasdaq Market as of the date hereof (as adjusted for any stock
splits, combinations or dividends effected after the date hereof);


provided, further, that the quotient of ((C - D) / D) shall in no event exceed 0.25.


The fair value of the consideration paid per share, if the consideration received by MessageMedia US stockholders is other than cash, will be deemed its fair market value as determined in good faith by the Board of Directors of MessageMedia US; provided, however, any securities shall be valued as follows:


(a) Securities not subject to investment letter or other similar restrictions on free marketability covered by (b) below:


(i) if traded on a securities exchange or through the Nasdaq National Market, the value shall be deemed to be the average of the closing prices of the securities on such


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quotation system over the 30 day period ending three days prior to the consummation of the change of control;


(ii) if actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the 30 day period ending three days prior to the consummation of the change of control; and


(iii) if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors of MessageMedia US.


(b) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder's status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (a)(i), (ii) or (iii) to reflect the approximate fair market value thereof, as determined in good faith by the Board of Directors of MessageMedia US.


9. MISCELLANEOUS.


(a) All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto except as otherwise expressly limited herein.


(b) Each party shall bear its own costs incurred in the negotiations and preparation of this Agreement and of matters incidental thereto.


(c) All notices, requests, demands and other communications hereunder shall be in writing and sha ...