EXHIBIT 10.57
CONFIDENTIAL
CONFIDENTIAL
FIRST AMENDMENT TO INTERACTIVE SERVICES AGREEMENT
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This First Amendment to Interactive Services Agreement (this "First
Amendment"), effective as of April 12, 2000 (the "First Amendment Date"), is
made and entered into by and between America Online, Inc. ("AOL"), a Delaware
corporation, with its principal offices at 00000 XXX Xxx, Xxxxxx, Xxxxxxxx
00000, and xxxxxx.xxx, Inc. ("Interactive Content Provider" or "ICP"), a
Delaware corporation, with its principal offices at 0000 X. Xxxxx Xxxx., Xxxxx
000, Xxxxxx, Xxxxx 00000 (each a "Party" and collectively the "Parties").
RECITALS
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WHEREAS, AOL and ICP entered into an Interactive Services Agreement,
effective as of July 1, 1999 (the "Agreement");
WHEREAS, AOL and ICP each desires to amend the terms of the Agreement as
described in this First Amendment; and
WHEREAS, defined terms used but not otherwise defined in this First
Amendment, including the Exhibits hereto, shall be as defined in the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements herein contained, the Parties hereto agree as follows:
TERMS
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1. REFERENCES. All references in the Agreement to "this Agreement" or "the
Agreement" (including indirect references such as "hereunder") are
hereby deemed to be amended to refer to the Agreement as amended by this
First Amendment.
2. AMENDMENT TO SECTION 1.5. Section 1.5 of the Agreement is hereby deleted
in its entirety. AOL shall have no impressions obligations to ICP
whatsoever and any reference to an Impressions Target in the Agreement
is hereby deleted.
3. AMENDMENT TO SECTION 3.4 (CARRIAGE AND PROMOTIONAL FEE). Section 3.4 of
the Agreement is hereby deleted in its entirety and replaced with the
following Section 3.4:
"3.4 CARRIAGE AND PROMOTIONAL FEE/OTHER.
(a) Fee. ICP shall pay AOL $24,250,000 on the Effective Date
("Guaranteed Payment"). AOL acknowledges that ICP has paid in full
the Guaranteed Payment.
(b) Reduced Commitments. Beginning on April 1, 2000:
(i) AOL's sole carriage and programming obligations to ICP
pursuant to the Agreement shall be as set forth in Exhibit
H, AOL shall not be obligated to provide the Promotions set
forth in Section 1.1 or Exhibit A-1, and AOL shall have no
further obligations under Exhibit A. By way of clarification
and not limitation, AOL shall have all rights specified in
Section 1.1 and Exhibit A,
(ii) in addition to all other obligations set forth in the
Agreement, and in accordance with the terms of the
Agreement, as amended by this First Amendment, ICP shall
continue to provide the ICP Internet Site, the ICP
Programming and all existing Licensed Content for the
Netscape Netcenter, Digital City and XXX.xxx ("Selected
Properties") until at least the earlier of July 31, 2000 or
the date AOL notifies ICP that such Content should be
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Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as ***. A complete version of this exhibit has
been filed separately with the Securities and Exchange Commission.
removed from any Selected Property. If AOL does not request
that ICP remove such Content from a Selected Property by
July 31, 2000, ICP shall continue to provide such Content
unless and until AOL requests that ICP remove such Content;
provided that, ICP shall have the right after July 31, 2000,
upon thirty (30) days written notice to AOL, to discontinue
providing such programming for any Selected Property if AOL
does not provide promotions for such programming on such
Selected Property within any thirty (30) day period. By way
of clarification and not limitation, ICP shall continue to
provide the programming set forth in the Programming Plan
for the AOL Service and CompuServe unless AOL chooses to
remove, or directs ICP to remove, some or all of such
programming,
(iii) ICP shall not be entitled to Premier Status hereunder
and Section 1.6 of this Agreement (other than Section 1.6.2
(b)) shall be of no further force or effect, and
(iv) Section 8 of the Agreement shall be of no further force
or effect.
(c) Other Agreements. ICP represents, warrants and covenants that
ICP shall amend all of ICP's agreements with other Interactive
Services to reduce all payments by ICP thereunder by at least ***
on or before July 1, 2000. In the event ICP is unable to reduce its
payments to other Interactive Services by *** on or before July 1,
2000, AOL shall have an immediate right to terminate this Agreement
without ICP having any right to cure. Notwithstanding anything to
the contrary in this Agreement, (a) AOL shall be entitled, if it so
elects, ***.
4. AMENDMENT TO SECTION 3.9 (WARRANTS). Section 3.9 is hereby deleted in
its entirety (including Exhibits H, I and J referenced therein) and
replaced with the text set forth below, and the Time Warrant, Page View
Warrant and PMRA previously issued thereunder to AOL are hereby
cancelled by AOL and delivered herewith to ICP, each of which has been
marked "CANCELLED" on the face thereof:
"3.9 ISSUANCE OF COMMON STOCK. On April 12, 2000, ICP shall issue to
AOL Three Million Five Hundred Thousand (3,500,000) shares of
common stock of ICP, pursuant to a stock purchase agreement
substantially in the form attached hereto as Exhibit I (the "Stock
Purchase Agreement"), which shares shall be subject to the
Registration Rights Agreement, dated as of July 1, 1999, by and
between ICP and AOL. Such Stock shall be deemed fully earned by
AOL upon receipt. ***. In addition, on or after April 12, 2000, to
the extent the Company provides to any such Existing Interactive
Services Provider any investors rights (including but not limited
to registration rights, put rights or rights of first offer) on
terms more favorable than the rights provided to AOL pursuant to
this Agreement, the investors rights provided to AOL in connection
with this Agreement shall be deemed to be amended to the extent
necessary to provide investor rights to AOL on terms as favorable
as the rights provided to such Existing Interactive Service
Provider."
5. AMENDMENT TO SECTION 4.2 (ADVERTISING SALES ON THE ICP INTERNET SITE AND
THE XX. XXXX SITE). Section 4.2 is hereby amended to add the following
text at the end of such Section:
"Notwithstanding the foregoing, beginning on April 1, 2000, ICP shall
have the exclusive right to license or sell ICP Advertisements and to
retain *** of all Advertising Revenues generated therefrom, but ICP
shall not authorize or permit any third party to license or sell the
ICP Advertisements, except that, nothing herein shall prohibit ICP
from using any third
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*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
party to sell advertising on the Xx. Xxxx Site. ICP shall fully
perform all of AOL's obligations pursuant to agreements for the
license or sale of ICP Advertisements which were entered into by AOL
pursuant to the Agreement prior to April 1, 2000. In addition, ICP
fully releases and forever discharges AOL from and against any and all
ICP charges, complaints, claims, demands, actions or causes of action,
whether known or unknown, anticipated or unanticipated, of any kind,
sort or nature whatsoever arising prior to the First Amendment Date,
including without limitation those arising from, related to or
concerning in any way AOL's license or sale of ICP Advertisements
pursuant to the Agreement."
6. AMENDMENT TO SECTION 7.1 (TERM). The first sentence of Section 7.1 of
the Agreement is hereby deleted and replaced with the following text:
"Unless earlier terminated as set forth herein, the initial term of
this Agreement shall commence on the Effective Date and expire on
April 15, 2001 (the "Initial Term")."
In addition, the term "Section 5.4" on the fifth line of Section 7.1 of
the Agreement shall be replaced with "Section 3.4".
7. AMENDMENT TO SECTION 7.2 (TERMINATION FOR BREACH). The heading of
Section 7.2 is hereby amended to read "Termination for Breach/Other."
Section 7.2 is hereby deleted and replaced with the following text:
"ICP may terminate this Agreement at any time in the event of a
material breach by AOL which remains uncured after thirty (30) days
written notice thereof. AOL may terminate this Agreement at any time
in the event of a material breach by ICP upon written notice thereof,
with no right to cure. This Agreement shall automatically terminate in
the event that (a) a trustee, receiver, custodian, or similar official
for ICP or any substantial portion of ICP's business is appointed, or
(b) ICP stock fails to meet the listing requirements for any automated
stock quotation system or national securities exchange on which such
stock is listed. Notwithstanding any other provision herein, any right
of AOL hereunder to terminate this Agreement which requires the
provision of notice of such intent to terminate shall be exercisable
by AOL without the requirement that AOL provide such notice if such
notice is legally prohibited or stayed."
8. AMENDMENT TO SECTION 7.4. Section 7.4 of the Agreement shall be deleted
and replaced in its entirety with the following text:
"7.4 ADDITIONAL TERMINATION RIGHTS. AOL shall have the right to
terminate this Agreement in the event of one of the triggering events
as set forth below:
7.4.1 ICP has unpaid obligations to AOL or any third party which
ICP is not disputing in good faith in excess of *** (in the
aggregate); or
7.4.2 The sum of ICP's "cash," "marketable securities" and
available credit, credit lines and capital commitments falls below
*** in any quarter as such are reported in ICP's Form 10-Q or in
any report provided pursuant to Section 17 of the First Amendment.
7.4.3 The occurrence of any event or combination of events which,
in AOL's sole judgment, materially reduces the likelihood that ICP
will be able fully and timely to comply with its obligations under
the Agreement.
7.4.4 Upon the occurrence of any of the foregoing, and
notwithstanding anything to the contrary in the Agreement or any
other agreement between the parties, AOL shall be permitted (but
not required) to deliver to ICP a notice of termination of the
Agreement, and the Agreement shall be terminated immediately upon
ICP's receipt of such notice.
AOL's right of termination under this Section 7.4 shall be immediate and
ICP shall have no right to cure."
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*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
9. AMENDMENT TO SECTION 7.7 (TERMINATION ON CHANGE OF CONTROL). Section 7.7
is hereby amended only as follows: the term "Named Entity" shall be
replaced with the term "Interactive Service."
10. AMENDMENT TO ARTICLE IV OF EXHIBIT C (CONFIDENTIALITY). Article IV of
Exhibit C of the Agreement is amended to add the following text at the end
of such Article:
"ICP acknowledges and agrees that (x) any information about AOL's
relationship with ICP, including without limitation, the substance or
terms of the Agreement or the First Amendment, shall constitute
Confidential Information under this Agreement, (y) that ICP's
employees must comply with the provisions of this Article IV, and (z)
that any disclosure by ICP's employees of any information set forth in
clause (x) or any other Confidential Information, shall be deemed a
material breach of this Agreement by ICP with no right to cure.
Notwithstanding anything in the contrary in this Agreement or this
Article IV, ICP shall use best efforts to ensure that ICP's employees
to not disclose to any third party such Confidential Information."
11. ADDITION OF NEW EXHIBIT H. Attachment 1 to this First Amendment is hereby
added as a new Exhibit H to the Agreement.
12. CONTINUANCE OF AGREEMENT. Except as modified by this First Amendment, the
Agreement shall remain in full force and effect.
13. STAY WAIVER
In consideration for AOL's willingness to enter into this Amendment and its
agreement to the restructuring contemplated thereby, ICP agrees that in the
event that, after the Amendment Effective Date, ICP becomes subject to any
bankruptcy or reorganization proceedings, and there is before or after the
commencement of such bankruptcy proceedings any default under the Agreement
or any event which under the terms of the Agreement would give AOL the
right to terminate the Agreement (or event which, with the passage of time
and/or the giving of notice would become a default or give rise to any
right to terminate the Agreement) by ICP under the Agreement (or under any
other agreement to which ICP and AOL are parties), ICP shall and hereby
does stipulate and agree to the modification of the automatic stay of 11
USC Section 362, and any other stay or injunction that may be in effect, so
as to enable AOL to exercise each and every one of its rights and remedies
under the Agreement, as amended hereby, including without limitation the
right to terminate the Agreement, and ICP hereby waives any right to or
benefit from any such stay or injunction. ICP agrees that it will not take
any position or seek any relief in any bankruptcy case that is in any
respect inconsistent with the foregoing agreements. ICP acknowledges that
the foregoing agreement is appropriate because, among other things, (a) ICP
is obtaining by virtue of the First Amendment the benefits of a
restructuring of its relationship with AOL and substantial relief from
financial obligations, and (c) it would be unfair and inequitable for ICP,
having received the material benefit of the restructuring reflected by this
Amendment, to then frustrate AOL's ability to exercise its rights and
remedies under the Agreement by means of a bankruptcy filing. This Section
13 is a material inducement to AOL to enter into this Amendment.
14. ASSUMPTION/REJECTION
ICP agrees that if it becomes subject to any proceedings under Title 11 of
the United States Code, it will (a) *** and (b) will not seek to assume the
Agreement without the express written consent of AOL. ICP acknowledges that
the Related Agreements are part of a single contractual arrangement, such
that it would be improper for ICP to seek to assume any of such Related
Agreements without assuming all of them at the same time. For purposes of
this section, the "Related Agreements" are the Agreement, as amended by
this First Amendment, the Stock Purchase Agreement and the Development and
Services Agreement by and between the Parties, effective as of July 1,
1999.
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*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
15. CHAPTER 11 PLAN
ICP agrees that if it becomes subject to any proceedings under Chapter 11
of the Bankruptcy Code, or any similar or successor provision of state or
federal law, it will not propose a plan of reorganization or liquidation
that would alter in any way any of AOL's legal, contractual, or equitable
rights against ICP, whether under the Agreement or otherwise, without the
express consent of AOL.
16. [INTENTIONALLY OMITTED].
17. REPORTING REQUIREMENTS. ICP shall provide reports *** as requested by AOL.
In addition, on the first business day of each month following the First
Amendment Date, ICP shall complete and deliver to AOL a report, in a form
designated by AOL, ***. Each such report shall be certified as complete and
accurate by an officer of ICP.
18. PERSONAL SERVICES. The parties agree and acknowledge that AOL is entering
into the Agreement with ICP because of ICP's unique qualifications and
reputation and because of ***.
19. ADDITIONAL COVENANTS. ICP shall not incur any debt after the date of the
First Amendment Date without the consent of AOL, other than (a) ordinary
course of business trade credit, (b) debt incurred solely to purchase
assets to be used in connection with ICP's current business and which is
secured by such assets, (c) debt which is used to refinance existing debt
in an amount no greater than the existing debt and on terms no less
favorable to Koop than the existing debt, and (d) total unsecured debt not
covered by (a), (b) or (c) hereof of not greater than $100,000 outstanding
at any time.
20. COUNTERPARTS. This First Amendment may be executed in counterparts, each of
which shall be deemed an original and all of which together shall
constitute one and the same document.
IN WITNESS WHEREOF, the Parties hereto have executed this First Amendment
as of the First Amendment Date.
AMERICA ONLINE, INC. xxxxxx.xxx, Inc.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
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Print Name: Xxxxx X. Xxxxxxx Print Name: Xxxxxx Xxxxxxx
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Title: President, Business Affairs Title: CEO
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Date: April 14, 2000 Date: April 14, 2000
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*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
ATTACHMENT 1
EXHIBIT H TO THE AGREEMENT
CARRIAGE PLAN:
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BRAND - SCREEN IMPRESSIONS
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Xxxxx 0 Promotions
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CompuServe - Health and Fitness Main
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CompuServe - Contextual Placement Other
- Content Articles
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AOL Service - Today In Health
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AOL Service - Contextual Placement Other
- Text
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CompuServe - Contextual Placement Other
- Text
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Total Level 1: *** IMPRESSIONS
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Xxxxx 0 Promotions
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CompuServe - News ROS
--------------------------------------------------------------------------------
Total Level 3: *** Impressions
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Xxxxx 0 Promotions
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CompuServe - Communications Channel
ROS
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Total Level 4: *** IMPRESSIONS
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Level 5 Promotions
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AOL Service - Email
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CompuServe - Email
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Total Level 5: *** IMPRESSIONS
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Xxxxx 0 Promotion
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CompuServe - Chat
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Total Level 6: *** IMPRESSIONS
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*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
