Exhibit 10.16
ADDENDUM TO THE SNAP AGREEMENTS
THIS ADDENDUM TO SNAP AGREEMENTS (the "Addendum") is dated as of May 9, 1999
between CNET, Inc., a Delaware corporation ("CNET"), National Broadcasting
Company, Inc., a Delaware corporation ("NBC"), NBC Multimedia, Inc., a Delaware
corporation ("NBC Multimedia"), and Snap! LLC, a Delaware limited liability
company ("Snap").
WHEREAS, the parties entered into a Preferred Carriage Agreement dated effective
June 30, 1998 (the "PCA Agreement"), wherein CNET agreed to provide certain
services and grant certain exclusive placements to Snap.
WHEREAS, the parties also entered into the Contribution Agreement dated
effective June 4, 1998 (the "Contribution Agreement") and are parties to the
Amended and Restated Limited Liability Company Agreement dated June 30, 1998
(the "LLC Agreement," together with the PCA Agreement and the Contribution
Agreement, the "Agreements").
WHEREAS, the parties have determined that it is in the best interest of each
party to transfer the operations of Snap to a newly-formed corporation pursuant
to Agreements of Contribution and Merger dated May 9, 1999 (the "Snap
Transfer"), and to modify the Agreements on the terms set forth in this
Addendum.
NOW THEREFORE, in consideration of the mutual promises described herein, the
parties, intending to be legally bound, hereby agree as follows:
1. CARRIAGE OF CNET SERVICES ON SNAP SITES. Notwithstanding anything in the
PCA Agreement to the contrary, Section 1 (Carriage of CNET Services on
Snap Sites) of the PCA Agreement will remain in full force and effect for
one year following the closing date of the Snap Transfer; provided,
however, that CNET and Snap will, in good faith, continue their existing
negotiations related to modifying or restating Section 1of the PCA
Agreement.
2. NBC EXCLUSIVITY. Sections 3.1 and 3.3 through 3.9 inclusive of the PCA
Agreement are hereby deleted in their entirety.
3. CNET EXCLUSIVITY. Section 4 (CNET Exclusivity) of the PCA Agreement is
hereby deleted in its entirety and restated as follows:
4. CNET EXCLUSIVITY
During the period beginning on the date of the Addendum and
continuing for one (1) year thereafter (the "CNET Exclusivity
Period"):
4.1 PREFERRED CONTENT AGGREGATION SERVICE. Snap will be the
Preferred general content aggregation service (i.e. General
Internet Directory Service) on any CNET Site (as defined
below), with the exception of links to Snap
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Competitors that are provided as part of editorial
content (e.g. a news story, which shall not be subject
to this clause). At the option of CNET, such services
shall be delivered via either (i) a direct link to Snap
or (ii) a RTQ to Snap which is served on pages of the
relevant CNET Site. If CNET chooses RTQ delivery, it
will pay Snap's actual direct costs plus 10% for
providing such service. Notwithstanding the foregoing,
if (a) Snap cannot provide the required functionality
within a reasonable period of time, or (b) if the
quality of services available from Snap is materially
inferior to those available from a third party, or (c)
with respect to customized or specialized aggregation
services (as opposed to general aggregation services
covering an unlimited range of Content areas), if the
price of services available from Snap is not competitive
with that offered by a third party, then the CNET Site
may utilize another general content aggregation service,
as applicable, as the Preferred service for such
function, provided that CNET first offers Snap the right
to provide such services on specified terms and does not
thereafter offer more favorable terms to a third party.
For purposes hereof, a "CNET Site" shall include any
Internet site directly operated and controlled by CNET
or any of its majority-owned subsidiaries.
4.2 BRANDING ON CONTENT AGGREGATION SERVICE. Whenever Snap
provides content aggregation services to a CNET Site
pursuant to this Section 4, such services will include
branding for Snap similar to branding provided for
similarly situated content providers, subject to the CNET
Sites' reasonable guidelines and subject to compliance with
Snap's reasonable trademark usage guidelines. To the
extent that a CNET Site is required to provide branding for
a third party information provider in connection with such
Snap services, branding for Snap will be more prominent
than branding for such third party (subject to Snap's
contractual obligations to such third party).
4.3 CO-BRANDING.
4.3.1 CNET will not enter into a relationship with a
Snap Competitor that allows the Snap Competitor
to co-brand its General Internet Portal Service
with CNET's brand. Notwithstanding the
foregoing, CNET may co-brand Content provided to
a Snap Competitor.
4.3.2 The parties acknowledge that CNET produces
co-branded editions of CNET Sites for various
resellers, distributors and other licensees
(collectively the "Distributors"). In some
cases, such Distributors are entitled to replace
CNET's default content with other content within
their own co-branded editions of the CNET Sites.
Notwithstanding the other provisions of the
Agreement, if any such
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Distributor has specifically required that Snap's
content be replaced, then CNET will not be
required to display the Snap's content within
such Distributor's co-branded edition of the CNET
Site. If a Distributor elects to keep the Snap
content on the co-branded CNET Site, the display
of such Snap content shall be subject to the
branding requirements of Section 4.2, above.
4.4 CONTROL OF A SNAP COMPETITOR. Neither CNET, any subsidiary
of CNET in which CNET, directly or indirectly, owns more
than 50% of the voting securities of such subsidiary or any
other entity for which CNET directly or indirectly has the
right to designate a majority of the board of directors or
similar governing body or otherwise solely controls (i.e.,
no other Person has control rights) (collectively, a
"majority-owned subsidiary of CNET") will not invest in,
purchase, loan money to, build, develop or operate a Snap
Competitor, provided that this will not prevent (i) the
acquisition of up to a 5% equity interest in a Snap
Competitor or (ii) acquisitions of a majority of the voting
securities or partnership interests, or the right to
designate a majority of the directors or other governing
body, of any Person or business that has as part of its
operations a Snap Competitor provided that such Snap
Competitor accounts for less than 20% of such acquired
Person's or business's gross revenues at the time of
acquisition and the acquiring party divests (or takes such
actions as may be necessary so that the operations no
longer constitute a Snap Competitor) no later than 18
months after such acquisition. CNET and its majority-
owned subsidiaries will not provide promotional assistance
to, or license any material intellectual property or
technology to or provide material technical or operational
assistance to, a Snap Competitor, other than (i)
promotional assistance provided as part of or in connection
with the provision by CNET, or its majority-owned
subsidiaries, of Content, provided that the value of such
promotion does not exceed $5 million per year for any Snap
Competitor as measured by CNET's or its Subsidiary's
standard rate card; (ii) promotional assistance that is
acquired by a Snap Competitor on market terms in the
ordinary course of conduct of CNET's and its subsidiaries'
business; and (iii) the licensing of any intellectual
property or technology or the provision of technical or
operational assistance to a Snap Competitor relating to the
transmission of CNET Content to such Snap Competitor and/or
the formatting and technical display of CNET Content by
such Snap Competitor. The foregoing will not prevent CNET
or its subsidiaries from selling, providing purchasing or
acquiring advertising or advertising time or space to or
from a Snap Competitor in the ordinary course of business.
4.5 XXXXXX.XXX
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4.5.1 CNET operates a web site that is an organized
collection of search engines, and includes both
broad-based search engines as well as those
dedicated to specific subject areas ("Xxxxxx.xxx").
4.5.2 During the Exclusivity Period, CNET will not operate
Xxxxxx.xxx as a Snap Competitor.
4.5.3 If CNET uses Snap as the provider of general search
results during the Exclusivity Period, Snap will
provide such results to Xxxxxx.xxx on the following
terms:
4.5.3.1 Xxxxxx.xxx will request, and Snap will
provide, search results through the
Real-Time Query Interface or successor
thereof. Xxxxxx.xxx will display the
results in the Xxxxxx.xxx user interface
with branding for Snap similar to the
branding Snap currently provides to
Inktomi. To the extent that branding for
Inktomi is also required on Xxxxxx.xxx
in connection with displaying the Snap
results, branding for Snap will be more
prominent than branding for Inktomi
(subject to Snap's contractual
obligations to Inktomi).
4.5.3.2 CNET will sell all advertising and
e-commerce opportunities and retain
all revenue associated with the
display of search results on
Xxxxxx.xxx. CNET will reimburse the
Snap for the Snap's actual direct
costs to supply the search results
(e.g., Inktomi and any bandwidth
costs), plus 10%.
4.6 SEARCH SERVICE. The parties agree that CNET may obtain Web
and information search services for the CNET Sites
(including Xxxxxx.xxx) from Snap and/or any search engine
OEM provider (e.g., Inktomi, FAST). If CNET elects to
obtain such search services from Snap, then at the option
of CNET, such services shall be delivered via either (i) a
direct link to Snap or (ii) a RTQ to Snap which is served
on pages of the relevant CNET Site. If CNET chooses RTQ
delivery, it will pay Snap's actual direct costs plus 10%
for providing such service.
4. REMNANT INVENTORY. Section 5 (Remnant Inventory) of the PCA Agreement is
hereby deleted in its entirety.
5. SERVICES BY CNET. On or before the closing date of the Snap Transfer,
Snap will pay CNET in full for the services requested by Snap or provided
by CNET to Snap in accordance with past practices. Any obligations of
CNET to provide any product or service to Snap will terminate on the
closing date of the Snap Transfer; provided that
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CNET will continue to perform certain limited administrative functions
(e.g., payroll services) normally provided for a transitional period
in connection with comparable transactions.
6. SNAP DEBT. The parties agree that NBC shall continue to provide
capital (either through an extended line of credit or otherwise) for
all Snap-related expenses arising between the date of this Addendum
and the closing date of the Snap Transfer. All amounts owed by Snap to
NBC shall be relieved by Snap effective on the closing date of the
Snap Transfer. Notwithstanding the foregoing, the parties each
acknowledge and agree that CNET shall not be liable for any amounts or
debts owed by Snap to NBC, and each party hereby releases CNET from
all obligations or liabilities related to the same.
7. LIABILITY/INDEMNIFICATION.
7.1 The parties hereby agree that any monetary damages, costs,
expenses or liabilities ("Damages") arising from or related to the
pending Snap trademark litigation shall be paid for as follows:
(a) NBC shall pay up to the first $500,000 of any such Damages and
(b) NBC and CNET will split the amount of the Damages in excess of
$500,000 equally, and shall each be severally liable for 50% of
the total Damages in excess of $500,000.
7.2 Subject to the provisions of Section 7.1, NBC shall indemnify and
hold CNET harmless from and against any costs, losses, liabilities
and expenses, including all court costs, reasonable expenses and
reasonable attorney's fees that CNET may suffer, incur or be
subjected to by reason of any legal action, proceeding,
arbitration or other claim by a third party, whether commenced or
threatened, arising out of any matter or issue related to Snap,
the Contribution Agreement, the LLC Agreement, the Snap Transfer
or the PCA Agreement.
8. RESTRICTIONS ON CNET SHARES.
8.1 Until January 1, 2000, NBC agrees, and agrees to cause its
controlled affiliates, not to sell, transfer or otherwise dispose
of any shares of common stock of CNET held by NBC or its
controlled affiliates (the "Shares") without the prior written
consent of CNET, in each case except pursuant to a tender offer
where the purchaser acquires a majority of the outstanding common
stock of CNET (provided that such tender offer is either approved
by CNET's board of directors or NBC tenders its shares during the
last two business days of the offer and at a time when the offer
is not impeded by a rights plan) or pursuant to a merger,
consolidation or other business combination involving CNET.
8.2 NBC acknowledges that unless the Shares are subsequently
registered for resale under the Securities Act of 1933, as amended
(the "Securities Act"), any sale of Shares by NBC or its
controlled affiliates will be subject to the provisions of Rule
144 promulgated under the Securities Act, which permits limited
resale of shares
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subject to the satisfaction of certain conditions, including,
among other things: the availability of certain current public
information about the issuer, the resale occurring not less
than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited
"broker's transaction" or in transactions directly with a
market maker (as said term is defined under the Securities
Exchange Act of 1934, as amended) and the number of shares
being sold during any three-month period not exceeding
specified limitations.
8.3 NBC further acknowledges that the Shares may not be sold, pledged
or otherwise transferred in the absence of an effective
registration statement pertaining thereto under the Securities
Act, and all applicable regulations promulgated thereunder, and
under any applicable state securities laws and all applicable
regulations promulgated thereunder (the "State Acts"), or an
exemption from the registration requirements of the Securities Act
and all applicable State Acts.
8.4 NBC agrees that CNET may place a stop transfer order in accordance
with this Section 8 with its transfer agent, if any, with respect
to the certificates representing any Shares. Each certificate
representing the Shares will bear substantially the following
legends until such restriction is no longer required by law or
this Addendum:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE APPLICABLE SECURITIES
LAWS OF ANY STATE, AND MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
IN COMPLIANCE WITH THE REQUIREMENTS OF ALL SUCH
LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET
FORTH IN AN AGREEMENT DATED MAY 9, 1999 BETWEEN
CNET, INC., THE NATIONAL BROADCASTING COMPANY, NBC
MULTIMEDIA, INC. AND SNAP! LLC.
9. STOCK OPTION AGREEMENT. (a) If NBC exercises its right to purchase
shares of Xxxx.xxx, Inc. ("Xoom") pursuant to the Stock Option Agreement
between NBC and Xoom dated May 9, 1999 (the "Stock Option Agreement"),
then at or prior to such exercise NBC shall assign to CNET 20% of the
option under the Stock Option Agreement (but not any shares purchased by
NBC) together with the associated rights and CNET will assume the related
obligations. In the event of any such assignment, the maximum Total
Profit (as defined in the Stock Option Agreement) permitted under the
Stock Option Agreement will be allocated 80% to NBC and 20% to CNET and
neither NBC nor CNET will exercise the option or take any other action
that would result in its Total Profit exceeding its allocable share of
the maximum Total Profit.
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(b) If NBC exercises its right to cause Xoom to repurchase the option
prior to having made any assignment pursuant to clause (a) above, NBC
will pay to CNET 20% of the net cash proceeds received by NBC pursuant to
such repurchase.
10. RELEASE OF NBC. NBC is hereby released from its oral promise to provide
free television advertising to CNET.
11. RELEASE OF CNET. Except as specifically set forth in this Addendum, CNET
is hereby released by NBC, NBC Multimedia and Snap from all
representations, warranties, obligations, exclusivity and non-compete
agreements and provisions made by CNET to, or for the benefit of, NBC,
NBC Multimedia and Snap, whether contained in the Agreements or
elsewhere.
12. ADDITIONAL AGREEMENT. CNET and NBC agree that as of the closing of the
Snap Transfer, they will enter into a Voting and Right of First Offer
Agreement in the form attached hereto as EXHIBIT A.
13. SINGLE INSTRUMENT. Upon the execution of this Addendum, each reference
in the Agreements to "this Agreement," "hereunder," "hereof," "herein,"
or words of like import, and each reference in any document related
thereto, or executed in connection herewith, shall mean and be a
reference to the Agreements as amended hereby, and the Agreements and
this Addendum shall be read together and construed as one single
instrument. All capitalized terms used herein but not defined herein have
the meaning for such term provided in the Agreements. This Addendum
shall be governed by and subject in all respects to the terms of the
Agreements; however, in the event of any conflict between the Agreements
and this Addendum, the terms of this Addendum shall control.
14. RATIFICATION. Except as specifically amended above, the Agreements and
any document related thereto or executed in connection therewith shall
remain in full force and effect and are hereby ratified and confirmed in
all respects.
15. NO WAIVER. The execution, delivery and effectiveness of this Addendum
shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of either party under any document related
thereto, or constitute a waiver of any provision of any document related
thereto.
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IN WITNESS WHEREOF, the parties have executed this Addendum effective the day
and year first written above.
CNET, INC. NATIONAL BROADCASTING
COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxx
----------------------------- ----------------------------
Title: Executive Vice President Title: President, NBC Cable and
and Chief Financial Officer Business Development
---------------------------- ---------------------------
NBC MULTIMEDIA, INC. SNAP! LLC
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxxxx
------------------------------ ------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx Xxxxxxx
---------------------------- ----------------------------
Title: President, NBC Cable and Title: COO
Business Development ---------------------------
---------------------------
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EXHIBIT A
VOTING AND RIGHT OF FIRST OFFER AGREEMENT
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