Marketing Agreement - America Online Inc. and eMachines Inc.


                                 Confidential
                             MARKETING AGREEMENT*
                             --------------------

     This Marketing Agreement (the "Agreement"), dated as of June 17, 1999 (the
"Effective Date"), is between America Online, Inc. ("AOL"), a Delaware
corporation, with offices at 22000 AOL Way, Dulles, Virginia 20166, and
eMachines, Inc. ("eMachines"), a Delaware corporation, with offices at 14350
Myford Drive, Suite 100, Irvine, California 92606.  AOL and eMachines may be
referred to individually as a "Party" and collectively as "Parties."

                                 INTRODUCTION
                                 ------------

     AOL and eMachines each desires to enter into an marketing relationship
whereby eMachines will distribute and promote certain products and or services
that are owned, operated, distributed or authorized to be distributed by or
through AOL or any of its Affiliates pursuant to the terms and conditions
contained herein.  Defined terms used but not defined in the body of the
Agreement will be as defined on Exhibit A attached hereto.
                                ---------                 

                                     TERMS
                                     -----

1.  eMachines Distribution of the AOL Software.  eMachines shall distribute the
    ------------------------------------------                                 
    AOL Software through all Products, and any other products subsequently
    agreed upon by the Parties. eMachines shall load the AOL Software onto each
    Product (including, without limitation, any new builds of the Products
    during the Term) by burning the AOL Software into the hard drive or other
    applicable storage mechanism of such Products. The AOL Software to be loaded
    shall include, in each case, the then-current version of the AOL Classic
    Service, the CompuServe Service, Netscape Navigator Browser Software, AIM
    Software, and ICQ Software (replacing, if necessary, any older versions of
    such software contained in the online services folder or similar area on the
    Products). The AOL Software for each respective AOL Service shall each be
    fully installed in each Product (i.e., not in setup.exe file form),
    provided, however, that eMachines' bundling obligations under this Section 1
    shall not commence until eMachines' June 1999 product build cycle that is
    scheduled for retail distribution in early August, 1999. eMachines shall use
    best efforts, including but not limited to, making the necessary revisions
    to software preloads in order to meet such schedule and in no event shall
    the bundling obligations hereunder commence later than September, 1999. The
    AOL Software combined with the Products is sometimes referred to herein as
    the "Bundled Products".

---------------------
    *  CERTAIN CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
       SEPARATELY FILED WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
       REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 
2.  eMachines Promotion of the AOL Software.
    --------------------------------------- 

    2.1  Desktop Icons.  For each Bundled Product, eMachines shall include one
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         desktopicon (outside of, and in addition to the placements within, the
         online services folder and ICW) for each AOL Service and prominent
         shortcuts for the AOL Classic Service, the CompuServe Service, Netscape
         Navigator Browser, AIM Service and ICQ Service from the "Start" menu
         and, with respect to the AOL Classic Service and the CompuServe
         Service, the "Task Bar" of the Bundled Products (including, with
         respect to the desktop icon, any future items with similar
         functionality).

    2.2  Online Services Folder.  The AOL Classic Service shall have the first
         ----------------------                                               
         position within the "online services folder" (or successor or
         replacement product) on each Product. The CompuServe Service shall have
         the second position within the "online services folder" (or successor
         or replacement product) on each Product, provided that upon the launch
         date of eMachines.Net, eMachines.Net shall have the first position
         within the "online services folder", AOL Services shall have the second
         position within the "online services folder", and the Compuserve
         Service shall have the third position within the "online services
         folder".

    2.3  Packaging.  eMachines shall prominently promote the AOL Services on and
         ---------
         in the packaging of the Bundled Products through (a) insertion of the
         documentation, brochures, and similar materials related to use of the
         AOL Classic Service, the CompuServe Service, Netscape Navigator
         Browser, AIM Service and ICQ Service which AOL will provide to
         eMachines for distribution to end users of the Bundled Products (the
         "Documentation"), (b) insertion of CD-ROM pack-ins containing the AOL
         Classic Software and CompuServe Software which AOL will provide to
         eMachines, and (c) display of AOL-supplied stickers on the Products
         (e.g., on-box, on-package, on-monitor). AOL will provide said
         materials, at its expense, delivered to the point of manufacture of the
         Products.

    2.4  Internet Connection Wizard. eMachines will include the AOL Classic
         --------------------------
         Service and the CompuServe Service within the Internet Connection
         Wizard (or successor or replacement product) (the "ICW") on each
         Bundled Product with the "most prominent and favorable promotion" (as
         described below). For purposes of the preceding sentence, the term
         "most prominent and favorable promotion" shall mean that (a) the AOL
         Classic Service and the CompuServe Service shall have the first and
         second positions, respectively, in any list of Interactive Services
         which appears within the ICW on the Bundled Products, provided, that
         after the launch date of eMachines.Net, eMachines.Net shall have the
         first position in any list of Interactive Services and AOL Classic
         Service and Compuserve Service will move to the second and third
         positions, respectively, (b) until the launch date of eMachines.Net,
         the AOL Classic Service shall be the default Interactive Service which
         is automatically selected 

                                      -2-

 
         when a user opens a page which contains a list of Interactive Services
         (i.e., AOL shall be highlighted within the list of Interactive Services
         and information regarding the AOL Classic Service, and no other
         Interactive Service, shall appear in the adjacent window) and (c) no
         information regarding any Interactive Service (other than the AOL
         Classic Service, CompuServe Service, or eMachines.Net) shall appear
         when one of such AOL Services is highlighted on a page within the ICW
         which contains a list of Interactive Services.

    2.5  Exclusivity; Preferred Placement. During the Exclusive Period,
         --------------------------------
         eMachines agrees that, other than eMachines.Net, the AOL Services shall
         be the only Interactive Services to be bundled or otherwise distributed
         with the Products; provided that notwithstanding the foregoing,
         eMachines shall be permitted to distribute through the Products
         Microsoft's Internet Explorer and any Interactive Services sponsored by
         Microsoft only to the extent eMachines is so obligated under agreements
         in connection with its use of Microsoft Windows and the license of the
         Microsoft operating system (the "Microsoft Agreements"). In addition,
         eMachines shall give AOL thirty (30) days written notice prior to a
         review of the eMachines.Net connectivity provider (currently to be
         provided by UUNet) (the "Connectivity Provider Review") and shall give
         AOL the opportunity to bid on becoming the eMachines.Net connectivity
         provider and shall otherwise allow AOL to participate in the
         negotiations during the Connectivity Provider Review. With respect to
         eMachines' obligations under the Microsoft Agreement to promote certain
         other Interactive Services on the Products and with respect to
         eMachines.Net, eMachines agrees that the AOL Services shall be promoted
         no less favorably than such Interactive Services on the Products.
         During the term of this Agreement or until otherwise addressed in
         Section 19 of this Agreement, eMachines shall not change the default
         portal of eMachines.Net (i.e. Netscape Netcenter) without the prior
         written consent of AOL, such consent shall be in AOL's sole discretion.
         Notwithstanding the provisions of this Section 2, eMachines obligations
         under this Agreement are subject to the Microsoft Agreements, its
         existing Agreement with UUNet, and its existing agreement with Trigem
         and with regard to any future agreements between eMachines and
         Microsoft Corporation, eMachines shall not subscribe to or make
         available a Microsoft sponsored Interactive Service unless obligated to
         do so under eMachines' license of the Microsoft operating system.

3.  Trademark License.  eMachines shall be entitled to use the Marks in
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    connection with the fulfillment of its obligations hereunder.

4.  Payments.  AOL shall pay eMachines a fee of [*] for each Qualified New
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    Member to the AOL Classic Service acquired through the distribution of the
    Bundled Products. AOL shall pay eMachines a fee of [*] for each Qualified
    New Member to the Compuserve Service acquired through the distribution of
    the Bundled Products. AOL shall pay such amounts to eMachines on a quarterly
    basis, within thirty (30) days of 

[*] Confidential Information has been omitted and separately filed with the 
Commission. Confidential treatment has been requested with respect to the 
omitted portions.

                                      -3-

 
    the end of each calendar quarter. For the purposes hereof, a "Qualified New
    Member" shall mean any person or entity who registers for the AOL Classic
    Service or the CompuServe Service during the Term using eMachines' special
    promotion identifier and who pays the then-standard fees required for
    membership to the AOL Classic Service or the CompuServe Service through at
    least three (3) consecutive billing cycles (not including any standard free
    trial period). Notwithstanding this Section 4, eMachines hereby agrees and
    acknowledges that AOL shall have no bounty payment obligations with respect
    to customers who subscribe to the Compuserve Service in connection with the
    Consumer Rebate Offer described in Section 13.

5.  Expenses.  Except as otherwise expressly provided for herein, eMachines
    --------                                                               
    shall be responsible for the costs and expenses associated with its
    marketing, promotion and distribution of the AOL Software through the
    Bundled Products.

6.  AOL Materials.  AOL shall, at its expense, provide to eMachines the AOL
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    Software, documentation and related promotional materials to be included by
    eMachines within the Bundled Products (the "AOL Deliverables") delivered at
    AOL's expense, to the point of manufacture of the Products. The AOL Software
    and the CompuServe Software will be delivered in the form of a master
    diskette or CD-ROM to be pre-loaded by eMachines on each Product. eMachines
    acknowledges and agrees that AOL requires at least thirty (30) days to
    complete the preparation and delivery of the AOL Deliverables. eMachines
    shall use commercially reasonable efforts to order sufficient quantities of
    the AOL Deliverables and allow AOL at least thirty (30) days lead-time to
    develop and deliver such orders. AOL shall use commercially reasonable
    efforts to provide eMachines with the requested AOL Deliverables within
    thirty (30) days of receiving an order for such AOL Deliverables from
    eMachines.

7.  Testing.  eMachines shall test the AOL Software and shall notify AOL of its
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    acceptance or rejection of such software within twenty (20) business days of
    its receipt of such software, and shall cooperate with AOL on a timely,
    priority basis in order to report and resolve issues associated with the
    testing process. eMachines shall not distribute any Bundled Products
    hereunder without AOL's prior written approval.

8.  Reporting.  From time to time upon AOL's request (but no more than once
    ---------                                                              
    every quarter), eMachines shall provide AOL with a report, in a detailed
    format reasonably satisfactory to AOL, setting forth (i) the total number of
    Bundled Products distributed and sold, and (ii) future forecasts regarding
    distribution and sales of Bundled Products. AOL shall provide eMachines with
    quarterly reports setting forth the number of Qualified New Members acquired
    by AOL through the distribution of the Bundled Products in the preceding
    quarter, and eMachines shall have right to an independent third party audit
    of such quarterly reports.

9.  International Distribution.  The Parties agree that the provisions of this
    --------------------------                                                
    Agreement shall also be applicable to Canadian distribution of the Bundled
    Products (including any variations of Products distributed in Canada, e.g.,
    with respect to name or model 

                                      -4-

 
    number). For any other country (outside of the United States and Canada) in
    which AOL or an Affiliate offers an Interactive Service, the Parties will
    use best efforts (subject to the written agreement of any applicable
    Affiliate) to enter into an addendum to extend this Agreement to such other
    country on appropriate terms, and in the event that the parties cannot reach
    an agreement with respect to a particular country within sixty days of
    beginning negotiations in such county, but in no event less that six (6)
    months from the Effective Date, the exclusivity provisions contained in this
    Agreement with respect to such country shall be removed, provided, that with
    respect to entering an agreement in Japan, the parties acknowledge that
    eMachines has an existing partner in Japan ("Hikari") and the parties shall
    make good faith efforts to reach an agreement within sixty days of the
    Effective Date under which Hikari's retail outlets shall be an integral part
    of the distribution channels under such agreement, and if the parties,
    despite such good faith efforts, cannot reach a three party agreement, the
    exclusivity provisions of this agreement with respect to Hikari in Japan
    shall be removed. A standard form of such addendum shall be made available
    to eMachines upon request. In addition, AOL and eMachines shall discuss and
    use best efforts to enter into an agreement to launch a consumer rebate
    program in England whereby eMachines computers shall be exclusively bundled
    with a Consumer Rebate Offer for a commitment to a UK/AOL Service for
    distribution as promptly as possible following the Effective Date.

10.  Direct Mail.  eMachines shall provide AOL with access to eMachines' direct
     -----------                                                               
     mail or other customer lists, to the extent such lists exist, excluding
     subscribers to eMachines.Net service, for AOL's mailing and acquisition
     efforts. Notwithstanding Section 10 of the Standard Terms, defined in
     Section 21, eMachines shall remain free to use and dispose in its sole
     discretion its customer lists and information.

11.  Additional Activities.  eMachines and AOL shall use good faith efforts to
     ---------------------                                                    
     work together on additional promotional activities on a case-by-case basis
     with the goal of maximizing registration of Qualified New Members and
     selling Bundled Products (i.e., cooperative contribution to the Parties
     promotional efforts, promotion in traditional media, other products and
     peripherals, etc.). eMachines agrees to promote the AOL Services in all of
     its media advertising to the extent it has the ability to influence the
     creative content of such advertisements, except for (i) promotions
     surrounding eMachines.Net, (ii) promotions that interfere with any non-
     competitive third party cooperative advertising programs, and (iii)
     promotions that have an unreasonable material effect on the cost of the
     underlying advertisement campaign. Further, in eMachines' development of
     Products other than laptop and desktop computers, eMachines shall use
     commercially reasonable best efforts (with AOL's reasonable cooperation) to
     make all such Products compatible with one or more AOL Services.

                                      -5-

 
12.  Warrants and Investment.
     ----------------------- 

     12.1  Grant of Warrants.  Subject to the closing of the AOL Investment (as
           -----------------                                                   
           defined below), eMachines hereby grants to AOL warrants (the
           "Warrants") representing the right for a five-year period to purchase
           such shares of eMachines common stock equal to the value of Twelve
           Million Five Hundred Thousand dollars (US$12,500,000) divided by the
           eMachines' Stock Price, defined below. eMachines Stock Price shall
           equal (X) a number equal to the price per share of eMachines' common
           stock during an initial public offering of its common stock (an
           "IPO"), multiplied by a factor of 1.25, provided that the eMachines
           Stock Price shall be no less than a number equal to the initial
           issuance price per share of the Series A Preferred Stock of eMachines
           multiplied by a factor of 1.25, or (Y) in any other scenario besides
           an IPO, a number equal to the price per share of eMachines' common
           stock based on a One Billion Two Hundred Fifty Million dollar
           (US$1,250,000,000) valuation of eMachines on a post-money number of
           shares basis. If eMachines does not satisfy the requirements of the
           AOL Investment Review by July 15, 1999, pursuant to Section 12.5 of
           this Agreement, then AOL will receive twenty five percent (25%)
           warrant coverage in the Series A Financing as long as AOL elects to
           invest no less than Thirty Million dollars (US$30,000,000). If
           eMachines requests AOL in writing to invest less than Fifty Million
           Dollars (US$50,000,000) in the Series A Financing or does not permit
           AOL to invest prior to December 31, 1999, eMachines shall issue the
           full Warrant regardless of the size of AOL's investment so long as
           AOL invests the amount requested by eMachines in a timely manner,
           provided that, in the event that eMachines does not satisfy the
           requirements of the AOL Investment Review and the requested
           investment by AOL is on terms less favorable than those proposed in
           the PPM, then AOL shall receive the full warrants whether or not it
           invests.

     12.2  Vesting of Warrants. All Warrants granted to AOL hereunder shall vest
           -------------------
           upon the issuance of the Warrants, discussed in Section 12.4 of this
           Agreement, and shall contain a cashless exercise provision.

     12.3  Terms and Conditions. Any shares of stock acquired by AOL upon
           --------------------
           exercise of the Warrants shall possess rights, preferences, and
           privileges that are no less favorable than the rights, preferences,
           and privileges accorded to holders of Common Stock of the Company.
           Additionally, AOL shall be entitled to the same registration rights
           as the current common stockholders of eMachines (including Form S-1
           and Form S-3 demand registration rights and piggyback registration
           rights), in connection with any shares of stock received upon
           exercise of the Warrants.

     12.4  Final Agreement. The provisions of this Section 12 contain all of the
           ---------------
           principal and essential terms and conditions of the Warrants to be
           issued to AOL hereunder, and without limiting the foregoing, as soon
           as practicable, but in no event later than five (5) days after the
           closing of the AOL 

                                      -6-

 
           Investment eMachines shall issue a warrant in a form reasonably
           acceptable to AOL; notwithstanding, in the event that the Warrant is
           not issued by the date five (5) days after the AOL Investment and on
           such date AOL is performing its obligations hereunder without
           material breach then after such date the Warrants shall be deemed to
           have been issued in accordance herewith and AOL shall have the right
           to cease performance of its obligations hereunder until such time as
           eMachines shall have issued the Warrants.

     12.5  AOL Investment. AOL, subject to AOL's Investment Review, defined
           --------------
           below, will purchase ("AOL Investment") Fifty Million dollars
           (US$50,000,000) of preferred stock of eMachines in its Series A
           financing (the "Series A Financing") in accordance with the terms and
           conditions set forth in the Summary of Terms included in the
           Confidential Offering Memorandum of eMachines dated May 14, 1999 (the
           "PPM"), provided, however, that AOL shall have board observer rights
           as set forth in such documentation and the terms of the AOL
           Investment shall be no less favorable than the terms contained in the
           PPM. AOL's Investment Review shall mean the following:

     (X) AOL's approval, not to be unreasonably withheld, of the following
matters related to the Series A Financing: (i) the lead investor of the Series A
Financing, (ii) the additional co-investors of the Series A Financing, provided
that the list of co-investors or their affiliates (with the exception of any
affiliates of Comcast Interactive Capital Group) delivered to AOL prior to the
Effective Date and attached as Exhibit C have been previously approved by AOL;
(iii) the size of the Series A Financing, provided that One Hundred and Fifty
Million (US$150,000,000) is hereby approved by AOL, and (iv) approval of the
terms and conditions of the definitive documents related to the Series A
Financing, provided that to the extent the terms and conditions of such
documents are generally applicable to all investors of the Series A Financing,
the terms and conditions of such documents are presumed to be reasonable; and
(Y) AOL's approval, not to be unreasonably withheld, of the following due
diligence matters (i) review of the audited December 31, 1998, and March 31,
1999 financial quarters of eMachines, (ii) the review of the interim financial
statements from the end of the March 31, 1999 quarter up to May 31, 1999, (iii)
confirmation from Trigem that it has the ability and commitments in place to
satisfy the production requirements of eMachines as represented in the Business
Plan of the PPM for years 1999 and 2000, and (iv) no material adverse change in
the operations and financial condition of eMachines from the Effective Date
until the closing of the AOL Investment.

     13.  eMachines Consumer Rebate Offer.  eMachines and AOL hereby agree to
          -------------------------------                                    
          participate in a program offering consumers a rebate in accordance
          with the terms and conditions set forth on Exhibit B attached hereto.

     14.  Term, Renewal, Termination.
          -------------------------- 

          14.1  Term. Unless earlier terminated, as set forth herein, the
                ----
                initial term of this Agreement will be [*] from the Effective
                Date (the "Initial Term").

                                      -7-

 
[*] Confidential Information has been omitted and separately filed with the 
Commission. Confidential treatment has been requested with respect to the 
omitted portions.


 
    14.2  Renewal. This Agreement may be renewed for an additional [*] term (the
          -------
          "Renewal Period") upon mutual written agreement of the parties as set
          forth in Section 14.3 below. If this Agreement has not otherwise been
          terminated under this Agreement prior to the end of the Initial Term,
          AOL shall (A) extend the payment to eMachines of the revenue share
          under the eCommerce Package, defined in Section 16, for keyboards and
          Desktop channels only and AOL shall not be responsible to pay
          eMachines [*] per each member per month under the eCommerce Package;
          and (B) continue to pay eMachines a fee of [*] per month for each
          consumer who participated in the Rebate Offer Contract described in
          Section 13 (or other amounts as relate to any agreed upon modification
          to the Consumer Rebate Offer) for the remainder of such consumer's
          continuous membership to the appropriate AOL Service whether or not
          the Parties elect to enter into a Renewal Period. Further, eMachines
          will be paid bounties for those customers that activated their
          membership during the term of the Agreement but become Qualified New
          Members after termination of the Agreement.

    14.3  Declaration of Intent. Each Party is required to deliver to the other
          ---------------------
          Party no later than thirty (30) days prior to the [*] anniversary of
          the Effective Date of this Agreement a written notice stating
          whether or not such Party intends to negotiate in good faith for a
          Renewal Period. In the event that AOL declares in its notice that it
          is not interested in negotiating in good faith for a Renewal Period
          and eMachines declares in its notice that it is interested in
          negotiating in good faith for a Renewal Period, then on the [*]
          anniversary of the Effective Date, the Exclusive Period shall
          terminate.

    14.4  Termination for Breach. Except as expressly provided elsewhere in this
          ----------------------
          Agreement, either Party may terminate this Agreement at any time in
          the event of a material breach of the Agreement by the other Party
          which remains uncured after thirty (30) days written notice thereof to
          the other Party (or such shorter period as may be specified elsewhere
          in this Agreement). In the event this Agreement is terminated upon the
          material breach of the Agreement by AOL, AOL will (A) extend the
          payment to eMachines of the revenue share under the eCommerce Package,
          defined in Section 16, for keyboards and Desktop channels only and AOL
          shall not be responsible to pay eMachines [*] per each member per
          month under the eCommerce Package; (B) continue to pay eMachines a fee
          of [*] per month for each consumer who participated in the Rebate
          Offer Contract described in Section 13 (or other amounts as relate to
          any agreed upon modification to the Consumer Rebate Offer) for the
          remainder of such consumer's continuous membership to the appropriate
          AOL Service; and (C) pay bounties for those customers that activated
          their membership during the term of the Agreement but become Qualified
          New Members after termination of the Agreement.

                                      -8-

[*] Confidential Information has been omitted and separately filed with the 
Commission. Confidential treatment has been requested with respect to the 
omitted portions.


 
    14.5  Termination for Bankruptcy/Insolvency. Either Party may terminate this
          -------------------------------------
          Agreement immediately following written notice to the other Party if
          the other Party (i) ceases to do business in the normal course, (ii)
          becomes or is declared insolvent or bankrupt, (iii) is the subject of
          any proceeding related to its liquidation or insolvency (whether
          voluntary or involuntary) which is not dismissed within ninety (90)
          calendar days or (iv) makes an assignment for the benefit of
          creditors.

15.  Promotional Materials/Press Releases.  Each Party will submit to the other
     ------------------------------------                                      
Party, for its prior written approval, which will not be unreasonable withheld
or delayed, any marketing, advertising, press releases, and all other
promotional materials related to the transactions contemplated hereunder and/or
referencing the AOL Services and the AOL Software or the other Party and/or its
trade names, trademarks, and the AOL Services marks (the "Materials").  Each
Party will solicit and reasonably consider the views of the other Party in
designing and implementing such Materials.

16.  E-Commerce Package.  During the Term of this Agreement, eMachines and AOL
     ------------------                                                       
agree to work together to create a package (the "eCommerce Package") to sell to
third parties that shall include:

        (a)  Keyboard keys:  eMachines will manufacture a keyboard which
             -------------
provides one touch access to the internet through keyboard keys, or the
functional equivalent, if a user is an AOL or Compuserve subscriber, which (1)
shall initially be dedicated and point directly to a related destinations
designated by AOL and (2) that the technical design of the keyboard buttons
allows the Parties to modify the initial URL or other programming with which it
is was originally shipped.

        (b)  Desktop "channels": The parties agree to work together with a 3rd
             -----------------
party software developer to create a desktop tool containing designated
promotional space and links which (1) shall initially be dedicated and point
directly to a related destinations designated by AOL and (2) that the technical
design of the promotional space and links allows the Parties to modify the
initial URL or other programming with which it is was originally shipped.

        (c)  AOL Services buttons/links (i.e. pop-ups) that will contain
promotional space and links the technical design of the promotional space and
allows the Parties to modify the initial URL or other programming with which it
is was originally shipped.

        (d)  Pricing:  The Parties agree to [*] of the eCommerce Package, 
             -------
[*] AOL shall pay eMachines [*] against eMachines share of the revenue to be
derived from sales of the eCommerce Package.

17.  Customer Service.  During the Term of this Agreement, eMachines and AOL
     ----------------                                                       
agree to work together to develop a program (the "Call Center Acquisition
Program") to enable additional new member registrations to the AOL Services.

                                      -9-

[*] Confidential Information has been omitted and separately filed with the 
Commission. Confidential treatment has been requested with respect to the 
omitted portions.


 
18.  Technical Support.  AOL will be responsible for providing all technical
     -----------------                                                      
support and customer service relating to the consumers' use of the appropriate
AOL products and services as bundled under this Agreement and the Consumer
Rebate Offer and eMachines will be responsible for the providing all technical
support and customer service relating to the consumers' use of the Products and
eMachines' services under this Agreement.

19.  Netscape Portal.  The parties hereto shall agree, to be added as an
     ---------------                                                    
addendum of this Agreement, within 30 days of the Effective Date, to develop a
customized Netcenter portal which shall include a custom Netcenter homepage (the
"Custom Netcenter Home Page"), registration process for eMachines.Net, and a
process for transitioning the allocation of revenues and users between the
Parties at the end of term of such agreement.  Such addendum shall include the
following terms:

        (a) AOL and eMachines shall work together to create a portal to (i)
maximize member experience/retention, (ii) maximize revenue, and (iii) meet the
objective of launching the eMachines.Net Interactive Service within 90 days of
the Effective Date.

        (b) AOL shal l create a discrete area (the "eMachines Area") on the
Custom Netcenter Home Page whereby eMachines shall possess complete flexibility
to create eMachines' specific channels as desired and to arrange third party
relationships if so desired, including the ability to sell custom channel space
to these partners in return for e-commerce revenues for those referrals and
click-throughs. In order to maintain consistency with the successful Netcenter
programming model, the promotion of these sold partnerships is envisioned as a
feature frame on the Custom Netcenter Home Page containing a prominent link to
an eMachines "Commerce Partner" aggregation site and a rotating photo/text
promotion featuring partner special offers. For these eMachines derived sales,
eMachines will have control of the deal terms and shall retain [*] of the
revenue. Should AOL sell space within the eMachines Area, AOL and eMachines will
split the revenue (percentages to be determined) from those sales. The parties
agree that sales in this area will not be to competitors of either AOL or
eMachines, nor will it be to sites that are improper (i.e. pornography sites,
etc.).

        (c) AOL shall pay eMachines [*] of incremental advertising and
eCommerce revenue, net of commissions, derived from the traffic driven to the
Netcenter portal content areas through the eMachines.Net. Such payments will be
a product of CPM (typically between [*] depending on AOL's ability to sell the
advertising and commerce space at a premium), click through rate, sell through
rate and characteristics of portal use by the eMachines.Net users. Provided,
however, eMachines shall have the right to sell desktop channels, keyboard keys
and desktop icons, in a form similar to those keyboard keys and desktop channels
contemplated in Section 16 of this document, to third parties on systems sold
under eMachines.Net offers without payment to AOL. Such sales are subject to the
same terms and conditions outlined above with respect to links to competitive
and inappropriate sites.

                                     -10-

 
[*] Confidential Information has been omitted and separately filed with the 
Commission. Confidential treatment has been requested with respect to the 
omitted portions.


 
      (d)  eMachines.Net will at not any time co-brand or market eMachines.net
service with a connectivity provider that is a retail branded Interactive
Service, including but not limited to any marketing, advertising, press releases
and all other promotional materials, other than AOL without the prior written
consent of AOL, such consent shall be in AOL's sole discretion.

20.  Hardware Development and Sales.  eMachines and AOL agree to work together
     ------------------------------                                           
     to develop a special bundle or SKU that is offered exclusively through
     AOL's sales efforts for AOL members, such products to be available at
     wholesale prices to AOL for AOL's use in reselling to AOL members AOL shall
     consider auctioning eMachines closeout products on the AOL Classic Service.
     AOL and eMachines may explore co-development of new Internet devices and
     products that work with AOL's existing DSL and Broadband technologies and
     services on a case by case basis.

21.  Standard Terms and Conditions.  This Agreement incorporates by reference
     -----------------------------                                           
     AOL's standard legal terms & conditions (the "Standard Terms"), including
     terms related to licenses, representations and warranties, confidentiality,
     limitation of liability, disclaimers, indemnifications, use of AOL member
     information and miscellaneous legal terms. The Standard Terms appear at
     keyword "Standard Marketing Terms 2" on the America Online(R) brand
     commercial online service and at http://mediaspace.aol.com/markterm2.html
     on AOL.com. A hard copy of the Standard Terms will be provided to eMachines
     upon written request. eMachines acknowledges that it has been provided an
     opportunity to review the Standard Terms and agrees to be bound by them.
     For purposes of the Standard Terms, (a) the defined term "Service" shall
     include both the AOL Services, and (b) the defined term "Software" shall
     include the AOL Software. Notwithstanding the foregoing, to the extent that
     Section 10 of Standard Terms contradicts the terms of the other provisions
     of this Agreement, the other provisions of this Agreement shall control.

22.  Counterparts.  This Agreement may be executed in counterparts, each of
     ------------                                                          
     which will be deemed an original and all of which together will constitute
     one and the same document.

                   (the following page is a signature page)

                                     -11-

 
     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the Effective Date.

AMERICA ONLINE, INC.                            eMACHINES

By: /s/David M. Colburn                         By: /s/Stephen Dukker
    ------------------------                        --------------------------

Print Name: David M. Colburn                    Print Name: Stephen Dukker
            ----------------                                ------------------

Title: Senior Vice President                    Title: President & CEO
       ---------------------                           -----------------------


                                     -12-

 
                                   EXHIBIT A

                                  DEFINITIONS
                                  -----------

     "Affiliate" shall mean an entity in which AOL holds at least a nineteen
percent (19%) equity interest.

     "AIM Service" shall mean the AOL-branded service, currently available
through the Internet, that enables end-users of such service to exchange, in
real-time, private, personalized messages with, and to monitor the online status
of, other end-users of such service and AOL Members.

     "AIM Software" shall mean the client software (U.S. version) developed and
distributed by AOL that enables end-users to access and use the AIM Service, and
any updates, patches, new version and bug fixes thereto.

     "AOL Services" shall include the following services (each an "AOL Service")
the AOL Classic Service, the CompuServe Service, Netscape Navigator Browser, AIM
Service and ICQ, and such other services as AOL may designate to eMachines in
writing during the Term.

     "AOL Classic Service" shall mean the U.S. version of the America Online(R)
brand commercial online service.

     "AOL Classic Software" shall mean the proprietary software used to connect
to and use the U.S. version of the America Online(R) brand service.

     "AOL Software" shall mean the AOL Classic Software, the CompuServe
Software, the Netscape Navigator Software, the AIM Software, the ICQ Software,
and such other software for an AOL Service as AOL may designate to eMachines in
writing during the Term.

     "CompuServe Service" shall mean the U.S. version of the CompuServe(R) brand
commercial online service.

     "CompuServe Software" shall mean the proprietary software used to connect
to and use the U.S. version of the CompuServe(R) brand service.

     Eligible Computer Product shall mean the following Products of eMachines:
all desktop and laptop computers purchased from a Qualified Retailer.

     "Exclusive Period" shall mean the Term of this Agreement, unless such
Exclusive Period is sooner terminated pursuant to Section 14.3.

     eMachines.Net shall mean the eMachines' branded Interactive Service, with
connectivity services currently to be provided by UUNet and with Netscape
Netcenter as the default portal.

     "ICQ" shall mean the standard narrow-band English language version of the
ICQ brand communications and messaging service available in the U.S.

 
     "ICQ Software" shall mean the client software developed and distributed by
AOL that enables end-users to access and use ICQ, and any updates, patches, new
version and bug fixes thereto.

     "Interactive Service" shall mean any entity offering one or more of the
following: (i) online or Internet connectivity services (e.g., an Internet
service provider); (ii) an interactive site or service featuring a broad
selection of aggregated third party interactive content or navigation thereto
(e.g., an online service or search and directory service) and/or marketing a
broad selection of products and/or services across numerous interactive commerce
categories (e.g., an online mall or other leading online commerce site); and
(iii) communications software capable of serving as the principal means through
which a user creates, sends and receives electronic mail or real time online
messages.

     "Marks" shall mean the following tradenames, trademarks and service marks:
"America Online(R)" service, "AOL Canada(TM)" service, "AOL(R)"
service/software, AOL's triangle logo, the "CompuServe(R)" service/software and
logo, Netscape Navigator(R), ICQ(TM), and AOL Instant Messenger(TM).

     "Netscape Navigator Browser" shall mean the commercially release executable
code of Netscape Navigator.

     "Netscape Navigator Software" shall mean shall mean the client software
that enables end-users to access and use Netscape Navigator, and any updates,
patches, new version and bug fixes thereto.

     "Products" shall mean any personal desktop and laptop computers
manufactured, marketed and/or sold by eMachines (or its affiliates) during the
Term and any devices manufactured, marketed and/or sold by eMachines (or its
affiliates) during the Term to the extent such devices are compatible with any
Interactive Service.

     "Qualified Purchaser" shall mean any individual or entity who during the
Rebate Offer Period (as defined below) (a) during the Rebate Offer Period,
purchases an Eligible Computer Product, (b) is qualified by the Bank for the
Consumer Rebate Offer through a credit approval process administered by the
respective Qualified Retailer and the Bank at the time of the purchase, (c)
registers for a new account for the Compuserve Service in the United States
utilizing the Compuserve Software preloaded on the Eligible Computer Product,
(d) agrees to the Rebate Offer Contract (which shall include, without
limitation, a commitment to remain a Compuserve Service member and pay the
associated membership fee to the Bank for three (3) years) mails the Rebate
Offer Contract to the designated fulfillment house, (e) is eighteen years or
older and a resident of one of the fifty (50) United States or Washington D.C.
and (f) such other conditions as the Parties and the Bank may reasonably
determine.

     "Rebate Offer Contract" shall mean that certain contract between the
consumer and the Bank containing the terms and conditions of the Consumers
obligation to remain a Compuserve Service member and pay the associated
membership fee to the Bank for three (3) years) and the Bank's obligations to
such consumer.

                                      -2-

 
                                   EXHIBIT B

                             CONSUMER REBATE OFFER

     A.  Consumer Rebate Offer.  AOL shall use commercially reasonable efforts
         ---------------------                                                
to enter, promptly as possible following the Effective Date, an agreement with a
financial institution ___________ (the "Bank") (the "Joint Marketing Agreement")
whereby the Bank will offer (the "Consumer Rebate Offer") to Qualified
Purchasers.  Notwithstanding the above sentence, AOL shall use commercially
reasonable efforts to launch a consumer rebate offer (the "Consumer Rebate
Offer") on a test basis (including no less than two (2) national Computer Retail
Chains) by July 1, 1999; deploy a launch at Staples, Inc. by July 8, 1999; and
deploy a full channel launch by July 18, 1999.  The Consumer Rebate Offer will
consist of three separate programs whereby under one program Qualified
Purchasers will receive two hundred dollars (US$200.00) for a three year
commitment at $19.95 (the "$200 Program"), under a separate program Qualified
Purchasers will receive three hundred dollars (US$300.00) for a three year
commitment at $19.95 (the "$300 Program"), and under a third program, Qualified
Purchasers will receive four hundred dollars (US$400.00) for a three year
commitment at $21.95 (US$400.00) (the "$400 Program"); provided that, after
October 31, 1999, AOL shall have the right to increase the standard monthly
dollar amount commitment to the Compuserve Service of Qualified Purchasers under
the $200 Program and the $300 Program to $21.95.  If AOL increases its standard
pricing for the Compuserve Service to or above such amount and either [*].

     B.  [*]  The Parties hereby agree to enter into any additional agreements
that may be necessary to implement the Consumer Rebate Offer discussed herein.
Upon execution of this Agreement, eMachines shall provide AOL with a list of
retailers that will be participating in the Consumer Rebate Offer ("Qualified
Retailers"), provided, that eMachines shall have the opportunity to update such
list by delivering fifteen (15) days written notice to AOL of such revisions,
subject to AOL's reasonable approval.  eMachines may be a Qualified Retailer to
the extent eMachines sells an Eligible Computer Product directly to a Qualified
Purchaser and advertises the Consumer Rebate Offer during the Rebate Offer
Period.

     B.  [*]

     C.  Promotion of Consumer Rebate Offer.  eMachines will submit to AOL, for
         ----------------------------------                                    
its prior written approval, any marketing, advertising, press releases, and all
other promotional materials related to the transactions contemplated hereunder
and/or referencing the other Party and/or its trade names, trademarks, and
service marks (the "Materials").  Each Party will solicit and reasonably
consider the views of the other Party in designing and implementing such
Materials.  eMachines, subject to the prior written approval of AOL, shall
provide the Qualified Retailers with the following ("Promotional Deliverables"):
(i) provision of point of sale merchandising (tear pads, shelf talkers, flyers,
danglers) and (ii) pre-approved ad slick for use in POP, to be used in
circulars.  eMachines shall use its best efforts to ensure that each Qualified
Retailer provides sufficient space within its store where the Consumer Rebate
Offers will be prominently and regularly displayed.  AOL shall have final
approval on all descriptions of the Consumer Rebate Offer and use of the Marks.


[*] Confidential Information has been omitted and separately filed with the 
Commission. Confidential treatment has been requested with respect to the 
omitted portions.


 
     D.  Service Provider.  eMachines agrees, other than eMachines.Net, that the
         ----------------                                                       
AOL Services shall be the only Interactive Services to be bundled with any
eMachines Consumer Rebate Offer.

     E.  Rebate Offer Period.  [*]  Over the course of the [*] term, the Parties
         -------------------                                                    
agree to work together to develop new and/or additional consumer offers with the
intention of (a) meeting market and consumer conditions and expectations; (b)
maintaining competitiveness for both parties in their respective marketplace;
and (c) maintaining financially viable business models.  Such consumer offers
could include an extension of the existing Consumer Rebate Offer, the
introduction of additional consumer rebate offers and/or the replacement of the
existing Consumer Rebate Offer with a new consumer rebate offer(s).  Such
consumer offers to be similar in structure to the original Consumer Rebate Offer
and could include AOL Classic Service, CompuServe Service and/or eMachines.Net.
The Parties acknowledge that this agreement to work together in the development
of future consumer rebate offers does not mean that the Parties must match the
economic terms of other consumer rebate offers in the marketplace.

                                      -2-


 
[*] Confidential Information has been omitted and separately filed with the 
Commission. Confidential treatment has been requested with respect to the 
omitted portions.


 
                                   EXHIBIT C

                LIST OF CO-INVESTORS TO THE SERIES A FINANCING

Amerindo Investment Advisors
Banque Paribas
Bowman Capital Management
Chelsey Capital
Comcast Interactive Capital Group
Credit Suisse First Boston
Franklin Templeton
Hikari Tsushin
Omega Venture Partners
Rho Management
RRE Investors
Van Wagoner Capital Management

 
     AOL Standard Marketing Terms & Conditions (v.2)

     Standard Legal Terms & Conditions

     1. Agreement. MP acknowledges that these Standard Terms and Conditions are
        ---------                                                              
expressly referenced in and made a part of the Marketing Agreement which has
been executed by AOL and MP (the "Marketing Agreement", and collectively with
these Standard Terms and Conditions, the "Agreement"). Any defined term used in
these Standard Terms and Conditions without definition, shall have the meaning
ascribed to such term in the Marketing Agreement.

     2. License. AOL hereby grants MP a non-exclusive license to distribute and
        -------                                                                
promote the Software and Documentation through the Bundled Products during the
Term, solely to the limited extent and for the express purposes contemplated
hereunder.

     3. Trademark License. Solely in connection with the marketing, promotion
        -----------------                                                    
and distribution obligations specified in this Agreement, and subject to the
other provisions of this Agreement, MP shall be entitled to use the Marks,
provided that MP (a) does not create a unitary composite mark involving a Mark
without the prior written approval of AOL; and (b) displays symbols and notices
clearly and sufficiently indicating the trademark status and ownership of the
Marks in accordance with applicable trademark law and practice. In using the
Marks, MP acknowledges and agrees that: (i) the Marks are and shall remain the
sole property of AOL; (ii) MP shall not now or in the future contest the
validity of the Marks; (iii) nothing in this Agreement shall confer in MP any
right of ownership in the Marks; and (iv) MP acknowledges that its utilization
of the Marks will not create in it, nor will it represent it has, any right,
title or interest in or to such Marks other than the licenses expressly granted
herein.

     4. Quality Standards. MP agrees that the nature and quality of its products
        -----------------                                                       
and services supplied in connection with the Marks shall conform to quality
standards communicated in writing by AOL for use of its trademarks. MP agrees to
supply to AOL, upon request, with a reasonable number of samples of any
materials publicly disseminated by MP which utilize the Marks. MP shall comply
with all applicable laws, regulations and customs and obtain any required
government approvals pertaining to use of the Marks.

     5. Infringement Proceedings. MP agrees to promptly notify AOL of any
        ------------------------                                         
unauthorized use of the Marks of which it has actual knowledge. AOL shall have
the sole right and discretion to bring proceedings alleging infringement of the
Marks or unfair competition related thereto; provided, however, that MP agrees
to provide AOL with its reasonable cooperation and assistance with respect to
any such infringement proceedings.

     6. Ownership. MP acknowledges that the Software, Documentation and any
        ---------                                                          
other AOL Deliverables and any enhancements and improvements thereto are and
shall remain the exclusive property of AOL and MP shall not in any way alter,
interfere with or modify the Software, the Service functionality, user interface
or experience. Except as explicitly described in this Agreement, MP shall have
no rights to copy, use, reverse engineer, reproduce, display, modify or transfer
the Software, Documentation or any other AOL Deliverables, or any derivative
works thereof.

     7. Representations and Warranties. Each Party represents and warrants to
        ------------------------------                                       
the other Party that: (i) such Party has the full corporate right, power and
authority to enter into this Agreement and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it is
otherwise bound; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; and (iv) such Party
acknowledges that the other Party makes no representations, warranties or
agreements related to the subject matter hereof that are not expressly provided
for in this Agreement. MP further represents that the content of the Products
will neither infringe on any copyright, U.S. patent or any other third party
right nor violate any applicable law or regulation.

 
     8. Confidentiality. During the term of this Agreement, and for a period of
        ---------------                                                        
three (3) years following expiration or termination of this Agreement, each
Party acknowledges that Confidential Information may be disclosed to the other
Party during the course of this Agreement. Each Party agrees that it will take
reasonable steps, at least substantially equivalent to the steps it takes to
protect its own proprietary information, to prevent the duplication or
disclosure of Confidential Information of the other Party, other than by or to
its employees or agents who must have access to such Confidential Information to
perform such Party's obligations hereunder, who will each agree to comply with
this section. Notwithstanding the foregoing, either Party may issue a press
release or other disclosure containing Confidential Information without the
consent of the other Party, to the extent such disclosure is required by law,
rule, regulation or government or court order. In such event, the disclosing
Party will provide at least five (5) business days prior written notice of such
proposed disclosure to the other Party. For the purposes hereof, "Confidential
Information" shall mean any information relating to or disclosed in the course
of the Agreement, which is or should be reasonably understood by the receiving
Party to be confidential or proprietary to the disclosing Party, including, but
not limited to, the terms of the Agreement, information about AOL Members,
technical processes and formulas, source codes, product designs, sales, cost and
other unpublished information, product and business plans, projections, and
marketing data. "Confidential Information" will not include information (a)
already lawfully known to or independently developed by the receiving Party, (b)
disclosed in published materials, (c) generally known to the public, or (d)
lawfully obtained from any third party.

     9. Limitation of Liability; Disclaimer; Indemnification.
        ---------------------------------------------------- 

     9.1 Liability. UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE
         ---------                                                           
OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY
DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES), ARISING FROM BREACH OF THE AGREEMENT, THE USE OR INABILITY TO USE THE
SERVICE, OR ARISING FROM ANY OTHER PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT
LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS
("COLLECTIVELY, "DISCLAIMED DAMAGES"); PROVIDED THAT EACH PARTY WILL REMAIN
LIABLE TO THE OTHER PARTY TO THE EXTENT ANY DISCLAIMED DAMAGES ARE CLAIMED BY A
THIRD PARTY AND ARE SUBJECT TO INDEMNIFICATION PURSUANT TO SECTION 9.3.

     9.2 No Additional Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS
         ------------------------                                       
AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE PRODUCTS,
THE SERVICE, THE SOFTWARE OR DOCUMENTATION, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES
ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.

     9.3 Indemnity. AOL agrees to defend, indemnify and hold MP and the
         ---------                                                     
officers, directors, agents, affiliates, distributors, franchisees and employees
(the "Affiliated Parties") of MP harmless against any loss, damage, expense, or
cost, including reasonable attorneys fees (including allocated costs for in-
house legal services) ("Liabilities") arising out of any claim, demand,
proceeding, or lawsuit by a third party based on any assertion that the Software
breaches the patent, copyright, trademark, trade secret or other proprietary
right of such third party. MP agrees to defend, indemnify and hold AOL and the
Affiliated Parties of AOL harmless against any Liabilities arising out of any
claim, demand, proceeding, or lawsuit by a third party based on any assertion
that a Product breaches the patent, copyright, trademark, trade secret or other
proprietary right of such third party. Either Party will defend, indemnify, save
and hold harmless the other Party and its Affiliated Parties from any and all
Liabilities arising out of any claim, demand, proceeding or lawsuit by a third
party resulting from the indemnifying Party's material breach of any duty,
representation, or warranty of this Agreement, except where Liabilities result
from the gross negligence or knowing and willful misconduct of the other Party.

                                     -2-

 
     9.4 Claims. Each Party agrees to (i) promptly notify the other Party in
         ------                                                             
writing of any indemnifiable claim and give the other Party the opportunity to
defend or negotiate a settlement of any such claim at such other Party's
expense, and (ii) cooperate fully with the other Party, at that other Party's
expense, in defending or settling such claim. AOL reserves the right, at its own
expense, to assume the exclusive defense and control of any matter otherwise
subject to indemnification by MP hereunder.

     9.5 Acknowledgment. AOL and MP each acknowledges that the provisions of
         --------------                                                     
this Agreement were negotiated to reflect an informed, voluntary allocation
between them of all risks (both known and unknown) associated with the
transactions contemplated hereunder. The provisions of this Section 9 will be
enforceable independent of and severable from any other enforceable or
unenforceable provision of this Agreement.

     10. Solicitation of AOL Members. (a) During the term of the Agreement and
         ---------------------------                                          
for a two year period thereafter, MP will not use the Service or any other
product or service owned, operated, distributed or authorized to be distributed
by or through AOL or its Affiliates worldwide (the "AOL Network") (including,
without limitation, the e-mail network contained therein) to solicit any
authorized user of the AOL Network, including any sub-accounts using the AOL
Network under an authorized master account ("an AOL Member") on behalf of
another Interactive Service. More generally, MP will not send unsolicited,
commercial e-mail (i.e., "spam") through or into AOL's products or services,
absent a Prior Business Relationship. For purposes of this Agreement, a "Prior
Business Relationship" will mean that the AOL Member to whom commercial e-mail
is being sent has voluntarily either (i) engaged in a transaction with MP or
(ii) provided information to MP through a contest, registration, or other
communication, which included clear notice to the AOL Member that the
information provided could result in commercial e-mail being sent to that AOL
Member by MP or its agents. Any commercial e-mail to be sent through or into
AOL's products or services shall also be subject to AOL's then-standard
restrictions on distribution of bulk e-mail (e.g., related to the time and
manner in which such e-mail can be distributed through or into the AOL product
or service in question).

     (b) MP shall ensure that its collection, use and disclosure of information
obtained from AOL Members under this Agreement ("Member Information") complies
with (i) all applicable laws and regulations and (ii) AOL's standard privacy
policies, available on the America Online(R) brand commercial online service at
the keyword term "Privacy" (or any successor keyword) (or, in the case of an MP
interactive site or area (e.g., MP's site on the Internet) that is linked to a
specific area of the AOL Network that MP developed, manages or markets, MP's
standard privacy policies so long as such policies are prominently published on
the site and provide adequate notice, disclosure and choice to users regarding
MP's collection, use and disclosure of user information). MP will not disclose
Member Information collected hereunder to any third party in a manner that
identifies AOL Members as end users of an AOL product or service or use Member
Information collected under this Agreement to market another Interactive
Service.

     11. Excuse. Neither Party will be liable for, or be considered in breach of
         ------                                                                 
or default under this Agreement on account of, any delay or failure to perform
as required by this Agreement as a result of any causes or conditions which are
beyond such Party's reasonable control and which such Party is unable to
overcome by the exercise of reasonable diligence.

     12. Independent Contractors. AOL and MP are independent contractors.
         -----------------------                                         
Neither AOL nor MP is an agent, representative or partner of the other. Neither
AOL nor MP will have any right, power or authority to enter into any agreement
for or on behalf of, or incur any obligation or liability of, or to otherwise
bind, the other. This Agreement will not be interpreted or construed to create
an association, agency, joint venture or partnership between AOL and MP or to
impose any liability attributable to such a relationship upon either AOL or MP.

     13. Notice. Any notice, approval, request, authorization, direction or
         ------                                                            
other communication under this Agreement will be given in writing and will be
deemed to have been delivered and given for all purposes: (i) on the delivery
date if delivered by electronic mail on the AOL Network (to screenname
"AOLNotice@aol.com" in the case of AOL), through a confirmed facsimile or if
delivered personally to the Party to whom the same is directed; (ii) one (1)
business day after deposit with a commercial overnight carrier, with written
verification of receipt, or (iii) five (5) 

                                     -3-

 
business days after the mailing date, whether or not actually received, if
sent by U.S. mail, return receipt requested, postage and charges prepaid, or
any other means of rapid mail delivery for which a receipt is available, to
the person(s) specified below at the address of the Party set forth in the
first paragraph of the Agreement. In the case of AOL, such notice will be
provided to both the Senior Vice President for Business Affairs (fax no. 703-
265-1206) and the Deputy General Counsel (fax no. 703-265-1105), each at the
address of AOL set forth in the first paragraph of the Marketing Agreement. In
the case of MP, except as otherwise specified herein, the notice address shall
be the address for MP set forth in the first paragraph of the Marketing
Agreement, with the other relevant notice information, including the recipient
for notice and, as applicable, such recipient's fax number or e-mail address,
to be as reasonable identified by AOL.

     14. No Waiver. The failure of either Party to insist upon or enforce strict
         ---------                                                              
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement will not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same will be
and remain in full force and effect.

     15. Return of Information. Upon the expiration or termination of this
         ---------------------                                            
Agreement, each Party will, upon the written request of the other Party, return
or destroy (at the option of the Party receiving the request) all confidential
information, documents, manuals and other materials specified by the other
Party.

     16. Survival. Sections 8 through 23 of these Standard Terms and Conditions
         --------                                                              
will survive the completion, expiration, termination or cancellation of this
Agreement.

     17. Entire Agreement. This Agreement sets forth the entire agreement and
         ----------------                                                    
supersedes any and all prior agreements of the Parties with respect to the
transactions set forth herein. Neither Party will be bound by, and each Party
specifically objects to, any term, condition or other provision which is
different from or in addition to the provisions of this Agreement (whether or
not it would materially alter this Agreement) and which is proffered by the
other Party in any correspondence or other document, unless the Party to be
bound thereby specifically agrees to such provision in writing.

     18. Amendment. No change, amendment or modification of any provision of
         ---------                                                          
this Agreement will be valid unless set forth in a written instrument signed by
the Party subject to enforcement of such amendment, and in the case of AOL, by
an executive of at least the same standing as the executive who signed the
Agreement.

     19. Further Assurances. Each Party will take such action (including, but
         ------------------                                                  
not limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.

     20. Assignment. MP will not assign this Agreement or any right, interest or
         ----------                                                             
benefit under this Agreement without the prior written consent of AOL. Subject
to the foregoing, this Agreement will be fully binding upon, inure to the
benefit of and be enforceable by the Parties hereto and their respective
successors and assigns.

     21. Construction; Severability. In the event that any provision of this
         --------------------------                                         
Agreement conflicts with the law under which this Agreement is to be construed
or if any such provision is held invalid by a court with jurisdiction over the
Parties to this Agreement, (i) such provision will be deemed to be restated to
reflect as nearly as possible the original intentions of the Parties in
accordance with applicable law, and (ii) the remaining terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect.

     22. Injunctive Relief; Remedies. MP acknowledges a violation of this
         ---------------------------                                     
Agreement could cause irreparable harm to AOL for which monetary damages may be
difficult to ascertain or an inadequate remedy. MP therefore agrees that AOL
will have the right, in addition to its other rights and remedies, to seek and
obtain injunctive relief for any violation of this Agreement. Except where
otherwise specified, the rights and remedies granted to a Party under this
Agreement 

                                     -4-

 
are cumulative and in addition to, and not in lieu of, any other rights or
remedies which the Party may possess at law or in equity.

     23. Applicable Law; Jurisdiction. This Agreement will be interpreted,
         ----------------------------                                     
construed and enforced in all respects in accordance with the laws of the
Commonwealth of Virginia except for its conflicts of laws principles. Each Party
irrevocably consents to the exclusive jurisdiction of the courts of the
Commonwealth of Virginia and the federal courts situated in the Commonwealth of
Virginia, in connection with any action to enforce the provisions of this
Agreement, to recover damages or other relief for breach or default under this
Agreement, or otherwise arising under or by reason of this Agreement.

     24. Statements to Third Parties. MP shall not make, publish, or otherwise
         ---------------------------                                          
communicate, or cause to be made, published, or otherwise communicated, any
deleterious remarks to any third parties concerning AOL or its Affiliates,
directors, officers, employees or agents.

     25. Export Controls. Both Parties will adhere to all applicable laws,
         ---------------                                                  
regulations and rules relating to the export of technical data and will not
export or re-export any technical data, any products received from the other
Party or the direct product of such technical data to any proscribed country
listed in such applicable laws, regulations and rules unless properly
authorized.

     26. Headings. The captions and headings used in this Agreement are inserted
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for convenience only and will not affect the meaning or interpretation of this
Agreement.

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