Non-Employee Stockholder Escrow Agreement - CMG Information Services Inc. and Mitch Mumma
NON-EMPLOYEE STOCKHOLDER ESCROW AGREEMENT
THIS ESCROW AGREEMENT dated April 8, 1998 (this "Agreement") is among CMG
Information Services, Inc. (the "Buyer"), a Delaware corporation, and Mitch
Mumma, as the representative of the non-employee stockholders (the "Stockholder
Representative") of Accipiter, Inc. (the "Seller"), a Delaware corporation, and
State Street Bank and Trust Company, as escrow agent (the "Escrow Agent").
RECITALS
A. Pursuant to an Agreement and Plan of Merger dated the date hereof (the
"Merger Agreement") between the Buyer, the Seller, CMGI Acquisition Corporation
("Acquisition") and certain stockholders of the Seller, the Buyer is acquiring
the Seller through the merger of the Seller into Acquisition (the "Merger").
Capitalized terms used herein and not otherwise defined have the meanings
assigned to them in the Merger Agreement.
B. The individuals listed on Annex I (the "Non-Employee Stockholders")
have entered into indemnification agreements dated the date hereof pursuant to
which they have agreed to indemnify the Buyer as provided in Section 10 of the
Merger Agreement and have placed in escrow hereunder a portion of the Merger
Consideration (the "Escrow Shares") as security for such indemnification
obligation. For purposes of this Agreement, the phrase "pro rata" shall mean in
proportion to each Non-Employee Stockholder's share allocation as set forth in
Annex I.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. C/NET, Inc. Warrant.
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(a) If C/NET, Inc. exercises any portion of the 1998 Tranche, the
corresponding portion of the 5,054 shares listed on Annex I as "Reserved for
C/NET, Inc. Warrant" (calculated on a net exercise basis) shall be forfeited to
the Buyer.
(b) If this Agreement terminates with C/NET, Inc. not having
exercised any portion of the 1998 Tranche, any shares listed on Annex I as
"Reserved for C/NET, Inc. Warrant" which have not previously forfeited to the
Buyer, shall at such time be forfeited to the Buyer.
(c) If C/NET, Inc. exercises any portion of the 1999 Tranche, each
Non-Employee Stockholder shall forfeit Escrow Shares equal to his, her or its
pro rata share of 61.5% of the shares the Buyer must deliver to C/NET, Inc. in
connection with such exercise (calculated on a net exercise basis).
(d) If this Agreement terminates with C/NET, Inc. not having
exercised any portion of the 1999 Tranche, each Non-Employee Stockholder shall
forfeit Escrow Shares equal to his, her or its pro rata share of 61.5% of the
shares that would have been deliverable to C/NET, Inc. by the Buyer if the
remaining portion had been exercised (calculated on a net exercise basis) on the
date of termination of this Agreement.
If C/NET, Inc. shall exercise the portion of the C/NET Warrant which will vest
on February 8, 1999, or if this Agreement shall terminate without such portion
of the C/NET Warrant having
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been exercised in full, an individual Non-Employee Stockholder shall forfeit
his, her or its pro rata share of 3,109 Escrow Shares.
2. Establishment of Escrow. The Buyer has delivered to the Escrow Agent
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and the Escrow Agent acknowledges receipt of the Escrow Shares in the form of a
single stock certificate. The Escrow Shares shall be held in escrow in the name
of the Escrow Agent or its nominee, subject to the terms and conditions set
forth herein. Unless and until the Escrow Shares are returned to the Buyer or
delivered to Non-Employee Stockholders pursuant to the terms of this Agreement,
the Escrow Agent shall vote the Escrow Shares in accordance with the written
instructions of the Stockholder Representative.
3. Amounts Earned on Escrow Shares; Tax Matters. All cash amounts earned
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on the Escrow Shares (cash dividends or other distributions) shall be
distributed pro rata to the Non-Employee Stockholders from time to time upon the
request of the Stockholder Representative. The parties agree that to the extent
permitted by applicable law, the Non-Employee Stockholders will include all
amounts earned on the Escrow Shares in their gross income (based upon each Non-
Employee Stockholder's pro rata share of the Escrow Shares) for federal, state
and local income tax (collectively, "income tax") purposes and pay any income
tax resulting therefrom. Any shares of Seller Common Stock, distributed with
respect to the Escrow Shares pursuant to a stock split, stock dividend or other
action shall be treated as Escrow Shares for all purposes. The parties hereto
agree to provide the Escrow Agent with a certified tax identification number by
signing and returning a Form W-9 (or Form W-8, in the case of non-U.S. persons)
to the Escrow Agent within 30 days from the date hereof. The parties hereto
understand that, in the event their tax identification numbers are not certified
to the Escrow Agent, the Internal Revenue Code may require withholding of a
portion of any distribution or other income earned on the Escrow Shares in
accordance with the Internal Revenue Code, as amended from time to time.
4. Claims Against Escrow Shares.
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(a) At any time or times prior to the Expiration Date (as defined
below), the Buyer may make claims (each a "Claim") against the Escrow Shares (i)
for amounts due for indemnification under the Merger Agreement as agreed to by
each Non-Employee Stockholder in an indemnification agreement delivered to the
Buyer on the date hereof or (ii) as specified in Section 1 hereof. The Buyer
shall notify the Stockholder Representative and the Escrow Agent in writing of
each such Claim, including a brief description of the amount and nature of such
Claim and the value per share of the Escrow Shares as set forth in this Section.
Each such notice delivered to the Escrow Agent by the Buyer shall contain a
representation of the Buyer to the effect that the Buyer has delivered a copy of
such notice to the Stockholder Representative prior to or simultaneously with
its delivery to the Escrow Agent. In the event that the amount subject to the
Claim is unliquidated, the Buyer shall make a good faith estimate as to the
amount of the Claim for purposes of determining the number of Escrow Shares, if
any, to be withheld by the Escrow Agent if such Claim is not resolved or
otherwise adjudicated by the Expiration Date. If the Stockholder Representative
disputes such Claim, the Stockholder Representative shall give written notice
thereof to the Buyer and to the Escrow Agent within thirty (30) days after the
date the Buyer's notice of Claim was delivered to the Stockholder
Representative, in which case the Escrow Agent shall continue to hold the Escrow
Shares in accordance with the terms of this Agreement; otherwise, such Claim
shall be deemed to have been acknowledged to be payable in shares out of the
Escrow Shares in the full amount thereof as set forth in the Claim, and the
Escrow Agent shall use its best efforts to pay such Claim from the Escrow Shares
to the Buyer within three (3) business days after expiration of that thirty-day
period. The Escrow Agent shall effect such payment of Escrow Shares to the Buyer
by surrendering such Escrow Shares to the Buyer's transfer agent (Bank of
Boston, c/o Boston EquiServe, L.P., Mail Stop 45-02-09, P. O.
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Box 644, Boston, MA 02102) for cancellation upon receipt by the Escrow Agent of
a copy of a letter from the Buyer to the Buyer's transfer agent, instructing
such transfer agent to issue a new certificate to the Escrow Agent for the
remaining Escrow Shares after giving effect to such payment. If the amount of
the Claim exceeds the aggregate value of the Escrow Shares, the Escrow Agent
shall have no liability or responsibility for any deficiency. The value per
share of the Escrow Shares for purposes of this Agreement shall be the closing
price for the Escrow Shares for the ten (10) trading days preceding the date of
the notice by the Buyer of any Claim and such value shall be set forth in any
such notice. The Escrow Agent may rely conclusively on the per share value set
forth therein for the purpose of determining the amount of shares required to
pay a Claim. All Claims paid out of the Escrow Shares shall be rounded to the
nearest whole share. Under no circumstances shall the Non-Employee Stockholders
or the Stockholder Representative have any right to substitute other property
for the Escrow Shares or to change the per share value stated herein.
(b) If the Stockholder Representative gives notice to the Buyer and
the Escrow Agent pursuant to Section 4(a) disputing a Claim, no distribution of
the Escrow Shares shall be made by the Escrow Agent to the Buyer or to the Non-
Employee Stockholders of the Set Aside Amount (as defined in Section 5(a)) with
respect to such Claim until either (i) such disputed Claim has been resolved as
evidenced by a written notice executed by the Buyer and the Stockholder
Representative instructing the Escrow Agent as to the distribution of such Set
Aside Amount or portion thereof or (ii) such dispute shall have been adjudicated
in accordance with the arbitration procedures described in Section 5(b).
5. Disputed Claims.
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(a) If the Stockholder Representative disputes a Claim of the Buyer
as above provided and subject to Section 4, the Escrow Agent shall set aside a
portion of the Escrow Shares equal to the amount of the Claim as set forth in
the notice of the Claim (the "Set Aside Amount"). In the event the Buyer
notifies the Escrow Agent in writing that it has made out-of-pocket expenditures
or anticipates that it will incur legal expenses in connection with any such
disputed Claim with respect to which it is entitled to be indemnified under the
Merger Agreement, a portion of the Escrow Shares equal to such incurred or
anticipated expenditures shall also be set aside and added to and become a part
of the Set Aside Amount, provided that in the event that it shall be agreed (as
evidenced by a written notice executed by the Buyer and the Stockholder
Representative as described in Section 4(b)) or determined through an
arbitration proceeding described in Section 5(b) that the Buyer is not entitled
to indemnification with respect to such Claim, the Buyer shall not be entitled
to such shares.
(b) If the Escrow Agent does not receive written notice executed by
the Buyer and the Stockholder Representative within sixty (60) days after the
Stockholder Representative sends notice of such dispute to the effect that the
disputed Claim has been resolved, the Claim shall be referred to an arbitrator
chosen by agreement of the Stockholder Representative and the Buyer. If no
agreement is reached regarding selection of the arbitrator within thirty (30)
days after written request from either party to the other, the Buyer or the
Stockholder Representative may submit the matter in dispute to the American
Arbitration Association (the "Association"), to be settled by arbitration in
Boston, Massachusetts in accordance with the commercial arbitration rules of the
Association. The Buyer and the Stockholder Representative agree to act in good
faith to mutually select an arbitrator. The fees and expenses of any arbitration
shall be borne by the Non-Employee Stockholders and the Buyer in such
proportions as shall be determined by the arbitrator, or if there is no such
determination, then such fees and expenses shall be borne equally by the Non-
Employee Stockholders, on the one hand, and the Buyer, on the other hand. In no
event shall the Escrow Agent or Stockholder Representative (in such capacity) be
responsible for any fees or expenses of any party to any arbitration proceeding.
The
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determination of the arbitrator as to the amount, if any, of the Claim that is
properly allowable shall be conclusive and binding upon the parties hereto and
judgment may be entered thereon in any court having jurisdiction. The Escrow
Agent shall make payment of such Claim, as and to the extent allowed, to the
Buyer out of the Set Aside Amount within three (3) business days following its
receipt of a copy of the arbitration award determination.
6. Termination. This Agreement shall terminate twelve (12) months after
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April 8, 1998 (the "Expiration Date"), provided that there are no outstanding
Claims as to which the Escrow Agent has received notice pursuant to Section 4 on
or prior to the Expiration Date; otherwise this Agreement shall continue in
effect until the resolution of all such Claims for which notice has been
received on or prior to the Expiration Date. The Buyer shall give the Escrow
Agent prompt written notice of the occurrence of the Expiration Date. Upon
receipt of such notice or as soon thereafter as is practicable, the Escrow Agent
shall distribute any remaining Escrow Shares less (i) the amount of any then
existing Set Aside Amounts and (ii) the amount specified in any notice of a
Claim delivered to the Escrow Agent on or within thirty (30) days prior to the
Expiration Date with respect to which no Set Aside Amount has yet been
established. At such time thereafter as any remaining Claim hereunder has been
resolved and the Escrow Agent has received a written notice executed by the
Buyer and the Stockholder Representative to that effect (or a copy of an
arbitration award pursuant to Section 5(b) to that effect) and any amounts to be
distributed to the Buyer in connection therewith have been so distributed, the
Escrow Agent shall distribute any portion of the remaining Escrow Shares pro
rata to the Non-Employee Stockholders (except to the extent that a Claim
resulted from a Non-Employee Stockholder's breach of a representation or
warranty individually, as opposed to a breach by the Seller, in which case the
distribution to such Non-Employee Stockholder shall be appropriately reduced).
Upon the resolution of all outstanding Claims hereunder, the Escrow Agent shall
distribute the remaining amount, if any, of the Escrow Shares pro rata to the
Non-Employee Stockholders (except to the extent that a Claim resulted from a
Non-Employee Stockholder's breach of a representation or warranty individually,
as opposed to a breach by the Seller, in which case the distribution to such
Non-Employee Stockholder shall be appropriately reduced) and this Agreement
shall terminate. The Escrow Agent shall effect such distributions of Escrow
Shares as it is required to make to the Non-Employee Stockholders under this
Agreement by surrendering such Escrow Shares to the Buyer's stock transfer agent
for cancellation upon receipt by the Escrow Agent of a copy of a letter from the
Buyer to the Buyer's stock transfer agent, instructing such transfer agent to
issue such shares to the Non-Employee Stockholders.
7. The Escrow Agent.
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(a) Notwithstanding anything herein to the contrary, the Escrow Agent
shall promptly dispose of all or any part of the Escrow Shares as directed by a
writing jointly signed by the Stockholder Representative and the Buyer. The
reasonable fees and expenses of the Escrow Agent in connection with its
execution and performance of this Agreement as set forth on Annex II hereto
shall be borne by the Buyer. The Escrow Agent shall not be liable for any act or
omission to act under this Agreement, including any and all claims made against
the Escrow Agent as a result of its holding the Escrow Shares in its own name,
except for its own gross negligence or willful misconduct. The Escrow Agent
shall not be liable for, and the Buyer and the Non-Employee Stockholders shall
jointly and severally indemnify the Escrow Agent against any losses or claims
(including reasonable court costs, attorneys' fees and costs and other out-of-
pocket expenses) arising out of any action taken or omitted in good faith
hereunder. The Escrow Agent may consult counsel satisfactory to it, including
house counsel, and the advice or opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with the advice or
opinion of such counsel. The Escrow Agent may decline to act and shall not be
liable for failure to act if in doubt as to its duties under this Agreement. In
no event shall the Escrow Agent be
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liable for indirect, punitive, special or consequential damages. The Escrow
Agent may act upon any instrument or signature believed by it to be genuine and
may assume that any person purporting to give any notice or instruction
hereunder, reasonably believed by it to be authorized, has been duly authorized
to do so. The Escrow Agent's duties shall be determined only with reference to
this Agreement and applicable law and the Escrow Agent is not charged with
knowledge of or any duties or responsibilities in connection with any other
document or agreement, including without limitation, the Merger Agreement.
(b) The Escrow Agent shall have the right at any time to resign
hereunder by giving written notice of its resignation to the parties hereto, at
the addresses set forth herein or at such other address as the parties shall
provide, at least thirty (30) days prior to the date specified for such
resignation to take effect. In such event the Buyer, with the approval of the
Stockholder Representative which will not be unreasonably withheld, shall
appoint a successor escrow agent within that thirty-day period; if the Buyer
does not designate a successor escrow agent within such period, the Escrow Agent
may appoint a successor escrow agent or may apply to a court of competent
jurisdiction for the appointment of such successor. Upon the effective date of
such resignation, the Escrow Shares together with all cash and other property
then held by the Escrow Agent hereunder shall be delivered by it to such
successor escrow agent or as otherwise shall be designated in writing by the
Buyer and the Stockholder Representative.
(c) In the event that the Escrow Agent should at any time be
confronted with inconsistent or conflicting claims or demands by the other
parties hereto, the Escrow Agent shall have the right to interplead the parties
in any court of competent jurisdiction and request that such court determine the
respective rights of the parties with respect to this Agreement and, upon doing
so, the Escrow Agent shall be released from any obligations or liability to the
other parties as a consequence of any such claims or demands.
(d) The Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder, either directly or
by or through its agents or attorneys. Nothing in this Agreement shall be deemed
to impose upon the Escrow Agent any duty to qualify to do business or to act as
fiduciary or otherwise in any jurisdiction other than the Commonwealth of
Massachusetts. The Escrow Agent shall not be responsible for and shall not be
under a duty to examine, inquire into or pass upon the validity, binding effect,
execution or sufficiency of this Agreement or of any amendment or supplement
hereto.
(e) The Buyer and the Stockholder Representative, jointly and
severally, agree to assume any and all obligations imposed now or hereafter by
any applicable tax law with respect to the payment of Escrow Funds under this
Agreement and to indemnify and hold the Escrow Agent harmless from and against
any taxes, additions for late payment, interest, penalties and other expenses,
that may be assessed against the Escrow Agent on any such payment or other
activities under this Agreement. The Buyer and the Stockholder Representative
undertake to instruct the Escrow Agent in writing with respect to the Escrow
Agent's responsibility for withholding and other taxes, assessments or other
government charges, certifications and governmental reporting in connection with
its acting as Escrow Agent under this Escrow Agreement. The Buyer and the
Stockholder Representative, jointly and severally, agree to indemnify and hold
the Escrow Agent harmless from any liability on account of taxes, assessments or
other government charges, including, without limitation, the withholding or
deduction or the failure to withhold or deduct same, and any liability for
failure to obtain proper certifications or to properly report to governmental
authorities, to which the Escrow Agent may be or become subject in connection
with or which arises out of this Agreement, including costs and expenses
(including reasonable legal fees and expenses), interest and penalties.
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(f) The Escrow Agent shall be entitled to reimbursement on demand for
all expenses incurred in connection with the administration of the escrow
created hereby which are in excess of its compensation for normal services
hereunder, including, without limitation, payment of all legal fees and expenses
incurred by the Escrow Agent in connection with the resolution of any Claim by
any party hereunder.
8. Stockholder Representative.
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(a) In the event the Stockholder Representative shall die or resign
or otherwise terminate his status as such, his successor shall be Frank Dalton
or such other person as the Stockholder Representative may appoint. If the
successor Stockholder Representative shall die or resign or otherwise terminate
his status as such, his successor shall be any person appointed by such
successor Stockholder Representative or, in the case of the death of the
successor Stockholder Representative or his failure to appoint a successor after
a vacancy has been created, elected by the vote or written consent of a majority
in interest of the Non-Employee Stockholders. All decisions of the Stockholder
Representative shall be binding upon the Non-Employee Stockholders. The
Stockholder Representative shall keep the Non-Employee Stockholders reasonably
informed of his material decisions.
(b) The Stockholder Representative is authorized to take any action
deemed by him appropriate or necessary to carry out the provisions of, and to
determine the rights of the Non-Employee Stockholders under this Agreement. The
Stockholder Representative shall serve as the agent of the Non-Employee
Stockholders for all purposes related to this Agreement, including without
limitation service of process upon the Non-Employee Stockholders. By execution
of this Agreement, the Stockholder Representative accepts and agrees to
diligently discharge the duties and responsibilities of the Stockholder
Representative set forth in this Agreement. The authorization and designation of
the Stockholder Representative under this Section 8(b) shall be binding upon the
successors and assigns of each Non-Employee Stockholder. The Buyer and the
Escrow Agent shall be entitled to rely upon such authorization and designation
and shall be fully protected in dealing with the Stockholder Representative, and
shall have no duty to inquire into the authority of any person reasonably
believed by any of them to be the Stockholder Representative.
(c) The Stockholder Representative (i) shall not be liable to any of
the Non-Employee Stockholders for any error of judgment, or action taken or
omitted in good faith, or mistake of fact or law unless caused by his own gross
negligence or willful misconduct, (ii) shall be entitled to treat as genuine any
letter or other document furnished to him by the Buyer, the Non-Employee
Stockholders or the Escrow Agent and believed by him to be genuine and to have
been signed and presented by the proper party or parties and (iii) shall be
reimbursed from the proceeds of Escrow Shares otherwise immediately deliverable
to the Non-Employee Stockholders under the Escrow Agreement for counsel fees and
other out-of-pocket expenses incurred by the Stockholder Representative in
connection with this Agreement. Such reimbursement shall be made out of the net
proceeds of Escrow Shares by the Escrow Agent as provided in Section 8(d). The
Non-Employee Stockholders shall jointly and severally indemnify the Stockholder
Representative against any losses or claims (including reasonable out-of-pocket
expenses) arising out of any action taken or omitted in good faith hereunder.
(d) The Stockholder Representative shall not be entitled to any
compensation for services hereunder. To the extent the Stockholder
Representative shall incur reasonable out-of-pocket costs in the performance of
his duties hereunder, the Stockholder Representative shall be authorized to
direct the Escrow Agent with prior notice to the Buyer to either (i) sell in the
open market that number of Escrow Shares (up to one percent of the Escrow
Shares) sufficient to generate net proceeds to reimburse the Stockholder
Representative for such out-of-pocket costs or
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(ii) deliver or cause to be delivered to the Stockholder Representative such
number of Escrow Shares (up to one percent of the Escrow Shares) as are equal to
such out-of-pocket costs divided by the closing price of the Escrow Shares on
the business day prior to such determination. The Escrow Agent shall have sole
discretion as to which of such methods it will use to effect such reimbursement.
9. Jurisdiction.
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Each of the parties hereto irrevocably submits to the jurisdiction of
the federal and state courts located in the Commonwealth of Massachusetts and
the State of North Carolina for the purposes of any suit or other proceeding
arising out of the transactions contemplated by this Agreement. Each of the
parties further agrees to commence any such suit or proceeding only in one of
the federal or state courts located in the Commonwealth of Massachusetts or the
State of North Carolina and to not attempt to transfer such suit or proceeding
to a court outside of the Commonwealth of Massachusetts or the State of North
Carolina after such suit has been commenced.
10. Governing Law. This Agreement is governed by the laws of the
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Commonwealth of Massachusetts, and shall inure to the benefit of and be binding
upon the successors, assigns, heirs and personal representatives of the parties
hereto.
11. Counterparts. This Agreement may be executed in two or more
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counterparts, all of which documents shall be considered one and the same
document.
12. Notices. Any notice or other communication required or permitted
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hereunder shall be in writing and shall be deemed given when delivered in
person, by overnight courier, by facsimile transmission (with receipt confirmed
by telephone or by automatic transmission report) or two business days after
being sent by registered or certified mail (postage prepaid, return receipt
requested), as follows:
To the Buyer:
CMG Information Services, Inc.
100 Brickstone Square, 1st Floor
Andover, MA 01810
Attention: Chief Financial Officer
Telephone: 781/684-3660
Facsimile: 781/684-3172
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Attention: William Williams
Telephone: 617/573-0100
Facsimile: 617/227-4420
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To the Stockholder Representative:
Mitch Mumma
Intersouth Partners
1000 Park Forty Plaza, Suite 290
Durham, NC 27713
Telephone: 919/544-6473
Facsimile: 919/544-6645
with a copy to:
Hutchison & Mason PLLC
4011 Westchase Boulevard, Suite 400
Raleigh, NC 27607
Attention: Fred Hutchison
Telephone: 919/829-9600
Facsimile: 919/829-9696
To the Escrow Agent:
State Street Bank and Trust Company
Corporate Trust
Two International Place
Boston, MA 02110
Attention: Virginia Jones
Telephone: 617/664-5215
Facsimile: 617/664-5365
Any party may by notice given in accordance with this section to the other
parties designate another address or person for receipt of notices hereunder.
13. Binding Effect. This Agreement shall be binding upon the respective
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parties hereto and their heirs, executors, successors and assigns.
14. Modifications. This Agreement may not be altered or modified without
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the consent of the parties hereto, which consent shall not constitute a waiver
of any of the terms or conditions of this Agreement, unless such waiver is
specified in writing, and then only to the extent so specified. A waiver of any
of the terms and conditions of this Agreement on one occasion shall not
constitute a waiver of the other terms and conditions of this Agreement or of
such terms and conditions on any other occasion.
15. Reproduction of Documents. This Agreement and all documents relating
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thereto, including, without limitation (a) consents, waivers and modifications
which may hereafter be executed, and (b) certificates and other information
previously or hereafter furnished, may be reproduced by any photographic,
photostatic, microfilm, optical disk, micro-card, miniature photographic or
other similar process. The parties hereto agree that any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding, whether or not the original is in existence and
whether or not such reproduction was made by a party in the regular course of
business, and that any enlargement, facsimile or further reproduction shall
likewise be admissible in evidence.
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[SIGNATURE PAGE TO NON-EMPLOYEE STOCKHOLDER ESCROW AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first stated above.
CMG INFORMATION SERVICES, INC.
By /s/ Andrew J. Hajducky III
--------------------------------------
Name: Andrew J. Hajducky III
Title: President
STOCKHOLDER REPRESENTATIVE
By /s/ Mitch Mumma
--------------------------------------
Mitch Mumma
ESCROW AGENT
By /s/ Patrick E. Thebado
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Name: Patrick E. Thebado
Title: Assistant VIce President
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ANNEX I
Pro Rata Interests
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<TABLE>
<CAPTION>
Stockholder Number of Shares
- ----------- ----------------
<S> <C>
Intersouth III 19,987
Aurora Ventures 1,755
Aurora Ventures II 1,755
Edward Fadel 351
Paul Mayer 351
Alex Thorpe 175
Paul Rasmussen 873
Gray Ventures 702
Tri-State Investment 3,449
Southeast Interactive 1,755
Cordova Capital 7,023
Don Rainey 101
Claire Roise 205
Reserved for C/NET, Inc. Warrant 5,054
Totals 43,536
</TABLE>
<PAGE>
ANNEX II
Escrow Agent Fees
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Acceptance Fee: Waived
Administrative Fee: $2,500.00 per year or part
thereof, plus $35.00 per
stockholder
Out-of-Pocket Expenses: At cost
Legal Fees (Peabody & Arnold) At cost