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EXHIBIT 10.10
CONTENT PROVIDER AND DISTRIBUTION AGREEMENT
THIS AGREEMENT (hereinafter "Agreement") is entered into as of December
4, 1997 (the "Effective Date"), by and between THE VIRTUAL MALL, INC., a
California corporation doing business as "Xxxxx Xxxxxx" ("Xxxxx Xxxxxx"), and
XXXXXX GREETINGS, INC., a Delaware corporation ("Xxxxxx"), (together the
"Parties"), with reference to the following:
A. Greet Street is engaged in the business of developing and
distributing multimedia communication and messaging products that are sent by
electronic means such as E-mail. These products, which may be thought of as an
electronic version of a greeting card, typically combine media elements, such as
professionally produced layouts, characters, animation, sound and storylines
together with the sender's personal greeting or message (which itself may be
comprised of text, a sound or an image, or a combination thereof), and are
generally referred to in this Agreement as "Digital Greeting Products." Greet
Street distributes Digital Greeting Products through a variety of online
distribution channels operated by or secured by Greet Street including its own
worldwide web site (xxx.xxxxxxx.xxx) (collectively, the "Store").
X. Xxxxxx is engaged in the business of developing and distributing
printed greeting cards and desires to utilize its greeting card development
capabilities and its licensed rights to provide content for Digital Greeting
Products.
C. Greet Street and Xxxxxx have entered into that certain Series D
Preferred Stock Purchase Agreement, dated December 4, 1997, pursuant to which
Xxxxxx will make an equity investment in Greet Street (the "Purchase
Agreement").
NOW THEREFORE, in consideration of the foregoing, and the mutual
promises and covenants contained herein, the Parties agree as follows:
1. GENERAL RELATIONSHIP.
1.1 MANAGEMENT. Xxxxxx and Greet Street will appoint a senior level
manager from each company who will have the overall authority and responsibility
-to manage the strategic relationship between the Parties. Initially, these
roles will be filled by Xxxxxx Xxxxx from Xxxxxx and Xxxx Xxxxxxx from Greet
Street. In addition, each company will designate the individual(s) to be
responsible for managing and coordinating the following key areas of the
relationship: (a) overall Business Plan, including market research, (b)
Licensing, (c) Production, and (d) Merchandising & Marketing. Xxxxxx and Greet
Street agree to designate such individual(s) within one week after the Effective
Date. The goals and responsibilities of the various key areas of the
relationship are defined in the following paragraphs. These goals and
responsibilities refer to Digital Greeting Products only. Within the reasonable
parameters established by
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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this Agreement, Xxxxxx will control the areas of the Xxxxxx business plan,
Xxxxxx licensing, Xxxxxx content, and marketing and merchandising of
Xxxxxx-branded, separate areas within the Store, analogous to a particular
brands aisle in a supermarket (the "Xxxxxx Areas").
1.2 BUSINESS PLAN.
1.2.1 The Parties will cooperate as provided below for the overall
goal of gathering the information necessary to develop a business plan (the
"Business Plan"), with specific strategy and implementation plans for Licensing,
Production and Merchandising & Marketing. This initial business planning process
will specify the initial activities of the Parties and lay out a general idea of
their resource requirements moving forward. The members of the Business Planning
team will obtain market research and conduct other activities reasonably
necessary to develop the Business Plan, including, without limitation, primary
and secondary research in the following areas: (a) market segments, e.g.,
consumer and business, with respect to size, growth, characteristics,
demographics, where/access points; (b) product segments, including technology
adoption; (c) competitive environment; and (d) consumer habits and needs. Based
upon the findings of this research, as well as feedback from the appropriate
areas of both companies, the team will draft and circulate a Business Plan
outlining the specific goals to provide a roadmap for calendar year 1998 for
each of the key areas. The Business Plan will also provide specific deliverables
for each of the key areas of the relationship as described below.
1.2.2 The Parties will use commercially reasonable efforts to
complete the initial market research in connection with the development of the
Business Plan within 45 days after the Effective Date and to complete the
initial Business Plan within 60 days after the Effective Date.
1.2.3 Subsequent to completion of the initial business planning
process outlined above, the Business Planning team will continue market research
activities on an on-going basis, and based on such research, together with
feedback from the various teams described in Sections 1.3-1.5 below as well as
other relevant information from Xxxxxx and Greet Street, will update the
Business Plan outlining the specific goals in order to provide a roadmap for
each of the key areas on a quarterly basis thereafter. In addition to such
quarterly updates, the Business Planning team will develop an annual Business
Plan for each calendar year during the term of this Agreement.
1.3 LICENSING. The Licensing team will identify and prioritize desirable
licensors for the non-musical content of Digital Greeting Products. The members
of this team will help develop licensing agreement terms and formats which
Xxxxxx will attempt to incorporate into licensing agreements with the potential
licensors. After an initial annual plan for this area of the strategic
relationship has been developed, the Licensing team will meet on a quarterly
basis to evaluate and provide updates for the following quarters. In addition,
this team will provide
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budget proposals and general feedback for the Business Planning team.
1.4 PRODUCTION. The Production team will be responsible for selecting
design criteria and product form/type, setting production goals and
deliverables, setting up a production schedule, and coordinating production
resources on a quarterly basis. They will receive input from the Merchandising &
Marketing team on what type of content is needed. In addition, this team will
provide budget proposals and general feedback for the Business Planning team.
1.5 MERCHANDISING & MARKETING. The Merchandising & Marketing team will
advise Xxxxxx regarding merchandising in the Xxxxxx Areas, including the mix and
amount of Xxxxxx content type reflective of overall market demand, e.g.,
birthday, holidays, business, etc., the scope and range of licensed properties
reflected in the SKUs offered, as well as displaying content in the Xxxxxx
Areas, subject to Xxxxxx'x reasonable approval. The team will also be
responsible for devising and implementing an ongoing marketing strategy and
promotional events and products for the Xxxxxx Areas. The members of the team
will meet on a quarterly basis to provide a roadmap for the merchandising and
marketing activities for the Xxxxxx Areas for the following quarter. In
addition, this team will provide budget proposals and general feedback for the
Business Planning team.
2. CONTENT ACQUISITION. Xxxxxx will use reasonable efforts to obtain licenses
to use name brand and other creative assets desirable in the development of
Digital Greeting Products and to secure the electronic rights necessary for the
development and distribution of Digital Greeting Products under all current and
future licenses entered into by Xxxxxx. Greet Street will assist Xxxxxx in
determining which content would be desirable to license from the third party
owners of such content (collectively, "Content Licensors"). Xxxxxx will use
reasonable efforts to facilitate a direct relationship between Greet Street and
each Content Licensor whenever such a relationship would ensure improved
implementation of a particular license or would facilitate incorporation of
particular content into Digital Greeting Products. In addition, Xxxxxx will
provide Greet Street with copies of the relevant sections of all of its licenses
and similar agreements that are relevant to the development or distribution of
Digital Greeting Products, to the extent allowed by the terms of such agreements
and subject to Greet Street's execution of a non-disclosure agreement in
substantially the form of the NDA referenced in Section 14.3 below.
3. WEB SITE LINKS. Xxxxxx will use reasonable efforts to ensure that each
Content Licensor with a site on the Worldwide Web provides a link from such site
to the relevant area of the Store and makes reference to the Store in its
conventional marketing activities.
4. PRODUCTION VOLUME. Xxxxxx agrees to produce Digital Greeting Products
based on either original Xxxxxx content or content acquired by Xxxxxx from
Content Licensors through licensing or similar transactions ("Xxxxxx Greeting
Products") in the quantities set forth below:
- A minimum of [*********] by December 31, 1998, with a minimum of **********
per quarter thereafter; and
- A minimum of [*************************************] combined, such designs
to be made available to Greet Street [**********] before the applicable
holiday.
[*] - Indicates confidential information that has been
omitted and filed separately with the Securities
and Exchange Commission.
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5. APPROVAL RIGHTS. Greet Street may reject any Xxxxxx Digital Greeting
Product SKU for the Store which it in good faith believes contains inappropriate
content (e.g., content which is generally accepted as being of bad taste or
offensive to ordinary sensibilities), fails to meet Greet Street's technical
specifications or fails to be merchantable within the meaning of the Uniform
Commercial Code, and such rejected SKU will not be counted toward the production
volume set forth in Section 4 above.
6. TRAINING. Greet Street will provide at its own expense up to [***] hours
of initial training for Xxxxxx employees or representatives in the areas of
digital production, licensing, and merchandising, and will provide
[****************] hours of production training for each new Digital Greeting
Product technology, such as its proposed Flix(TM) product. In addition, at
Xxxxxx'x option, Xxxxxx may temporarily position at Greet Street's facilities
one or more individual(s) in the areas of creative and digital production for
initial training.
7. COMPENSATION AND PAYMENT.
7.1 ROYALTY. Greet Street will pay Xxxxxx a quarterly royalty payment
based on the higher of the following two aggregate royalty calculations:
(a) (i) with respect to sales of Digital Greeting Products
incorporating content for which royalties are owed by Xxxxxx to one or more
Content Licensor(s), [********************] (as defined below), and (ii) with
respect to sales of Digital Greeting Products incorporating content for which
royalties or similar amounts are owed by Xxxxxx to one or more Content
Licensor(s), a percentage of Net Revenues (as defined below) equal to
[******************************************************************************]
provided that in no case will the total amount owing to Xxxxxx exceed
[******************]; or
(b) [***********************] (as defined below) from sales of Xxxxxx
Digital Greeting Products, regardless of whether the content incorporated
therein is licensed from a Content Licensor.
[*] - Indicates confidential information that has been
omitted and filed separately with the Securities
and Exchange Commission.
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7.2 FREE GOODS. Xxxxxx acknowledges that Greet Street may offer certain
Digital Greeting Products, including Xxxxxx Digital Greeting Products, as
non-revenue generating premiums (for example to promote the sale of Xxxxxx
Digital Greeting Products or to promote the use or sale of Digital Greeting
Products in general), and that such distributions shall not require any royalty
payment to Xxxxxx. Notwithstanding the foregoing, Greet Street will not utilize
Xxxxxx Digital Greeting Products in any such non-revenue-generating manner
without the prior written consent of Xxxxxx, which consent will not be
unreasonably withheld or delayed.
7.3 REPORTS AND PAYMENT TO XXXXXX. Within 45 days of the end of each
calendar quarter during the term of this Agreement, beginning with the calendar
quarter in which Greet Street first actually receives-any revenues from the sale
of Xxxxxx Digital Greeting Products, Greet Street shall submit a report to
Xxxxxx setting forth all of the information reasonably necessary to calculate
the payments due to Xxxxxx for such month, including the amount of any allowable
adjustments in connection therewith. Such report shall include the calculation
of royalties due under Section 7.1 above, and shall include the appropriate
payment based on the higher of the two calculations.
8. CONTENT EXCLUSIVITY. All Xxxxxx Digital Greeting Products will be
provided to Greet Street for distribution (whether paid, sponsored or free) on
an exclusive basis for as long as Greet Street maintains the "Impressions" (as
defined below) levels set forth below. Notwithstanding the foregoing, **********
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Xxxxxx may revoke the foregoing exclusivity rights of Greet Street with respect
to Xxxxxx Digital Greeting Products, and such rights will become non-exclusive,
in the event that Greet Street fails to achieve [*****] Impressions (as defined
below) during calendar year 1998, and [*****] Impressions during each calendar
quarter thereafter, provided that Greet Street will have a period of [*****]
after any such measurement period to provide reasonable assurances (e.g.,
through executed distribution contracts or otherwise) to Xxxxxx that Greet
Street will achieve cumulative Impressions over a period consisting of the
measurement period during which it failed to achieve the required Impressions
plus a [*****] period thereafter, that equal or exceed the product of (a)
[*****] Impressions and (b) the total number of calendar quarters covered
thereby. For purposes hereof, an "Impression" means any graphic and/or textual
message delivered by or on behalf of Greet Street or the Store to an on-line
user over (i) the internet, whether through the Store or any other internet site
resulting from existing or future distribution arrangements, or (ii) any other
similar electronic distribution channel, including America Online or other
proprietary network, based on distribution arrangements entered into after the
Effective Date.
[*] - Indicates confidential information that has been
omitted and filed separately with the Securities
and Exchange Commission.
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9. ANCHOR TENANCY.
9.1 ANCHOR TENANT STATUS. Subject to Section 9.2 below, during the
term of this Agreement, Xxxxxx shall be an Anchor Tenant of the Store, and
Greet Street will provide positioning, promotion and level of exposure for the
Xxxxxx brand and Xxxxxx properties [******************************************
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[*] - Indicates confidential information that has been
omitted and filed separately with the Securities
and Exchange Commission.
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9.3 ************* Xxxxxx acknowledges that Greet Street's standard package
for Anchor Tenants may be modified by Greet Street from time-to-time.
Notwithstanding the foregoing, for so long as Xxxxxx remains an Anchor Tenant,
Greet Street will [*************************************************************
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9.4 ************* Regardless of Xxxxxx'x participation as an Anchor
Tenant, during the term of this Agreement, Xxxxxx Digital Greeting Products
will be [**************************************************]
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11. TERM OF AGREEMENT.
11.1 INITIAL TERM; RENEWALS. The term of this Agreement will commence on
the Effective Date and expire five (5) years thereafter, subject to early
termination as specifically provided in this Agreement. At Xxxxxx'x election,
after the expiration of the initial five-year term, this Agreement may be
extended for additional serial one-year renewal periods, provided that (a)
Xxxxxx is not then in breach of this Agreement, and (b) Xxxxxx makes a firm
offer on terms that are acceptable to Great Street, including a commitment to
maintain Xxxxxx'x status as an Anchor Tenant throughout the renewal period,
which commitment shall include continuing to satisfy the requirements of Section
9.2(b) above (but measured as of the commencement of each such renewal period),
and during such renewal period either matching or exceeding (i) the payment and
other terms (including providing similar non-cash benefits' if any) or any third
party that is both an Anchor Tenant and one of the three largest providers of
Digital Greeting Products to Greet Street, or (ii) the minimum payment and other
terms then in effect for a party to become an Anchor Tenant, if at the
commencement of the renewal period there are only two such Anchor Tenants.
[*] - Indicates confidential information that has been
omitted and filed separately with the Securities
and Exchange Commission.
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11.2 TERMINATION FOR BREACH. Either Party may terminate this Agreement
upon 30 days' prior written notice for breach by the other Party of a material
obligation if the breach is not remedied during such notice period.
11.3 TERMINATION PURSUANT TO PURCHASE AGREEMENT. Greet Street may
terminate this Agreement upon the occurrence of an event that would entitle
Greet Street (or its assignee) to repurchase Xxxxxx'x shares of capital stock in
Greet Street pursuant to the Purchase Agreement.
11.4 RESIDUAL RIGHTS. Greet Street will retain the right to continue to
distribute all Xxxxxx Digital Greeting Products then in the Store's product
database for a period of six (6) months after any termination or expiration of
this Agreement. Xxxxxx acknowledges that Greet Street's service allows customers
to re-send Digital Greeting Products that they previously have sent through
Greet Street. For example, by way of illustration only, if a recipient were to
accidentally delete their greeting, the sender would be able to use this service
to re-send the original personalized greeting to that recipient. Accordingly,
following the expiration or termination of this Agreement, Greet Street will be
allowed to continue to enable customers to re-send through Greet Street's
infrastructure, Xxxxxx Digital Greeting Products previously purchased by such
customers.
12. INDEMNIFICATION.
12.1 BY GREET STREET. Greet Street will defend, hold harmless and
indemnify Greet Street and its affiliates and their shareholders, officers,
directors and agents (each, a "Xxxxxx Party"), and each of their respective
successors and assigns, from and against any and all losses, damages, claims,
costs, expenses or liabilities (including reasonable attorneys' fees) incurred
by Xxxxxx or any Xxxxxx Party arising out of or related to any claims that any
portion of a Xxxxxx Digital Greeting Product provided by Greet Street infringes
any copyright, trademark, patent, trade secret or other right of a third party.
12.2 BY XXXXXX. Xxxxxx will defend, hold harmless and indemnify Greet
Street and its affiliates and their shareholders, officers, directors and agents
(each, a "Greet Street Party"), and each of their respective successors and
assigns, from and against any and all losses, damages, claims, costs, expenses
or liabilities (including reasonable attorneys' fees) incurred by Greet Street
or any Greet Street Party arising out of or related to any claims that any
content provided by Xxxxxx or a licensor of Xxxxxx and incorporated into a
Digital Greeting Product infringes any copyright, trademark, patent, trade
secret or other right of a third party.
12.3 GENERAL. A Party seeking indemnification hereunder shall: (i)
promptly notify the indemnifying Party of the claim or action and furnish the
indemnified Party a copy of each communication, notice or other action relating
to such claim or action; (ii) permit the indemnifying Party to assume sole
authority to conduct the trial or settlement of such claim or action and any
negotiations related
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thereto; and (iii) provide such information and assistance as may be reasonably
requested by the indemnifying Party in connection with such claim or action.
13. PRESS RELEASES.
Neither Party shall make any public announcement or issue any press
release concerning this Agreement except with the consent of the other Party or
insofar as the disclosing Party in good faith believes such announcement is
required by law.
14. GENERAL.
14.1 FORCE MAJEURE. Neither Party shall be liable or deemed to be in
default for any delay or failure in performance under this Agreement resulting
directly or indirectly by reason of fire, flood, earthquake, explosion or other
casualty, strikes or labor disputes, inability to obtain supplies or power, war
or other violence, any law, order, proclamation, regulation, ordinance, demand
or requirement of any government agency, or any other act or condition
whatsoever beyond the reasonable control of the affected Party, provided that
the Party so affected shall take all reasonable steps to avoid or remove such
cause of nonperformance and shall resume performance hereunder with dispatch
whenever such causes are removed. Notwithstanding the above, a Party materially
adversely affected by said delay, failure or interruption may terminate this
Agreement if said delay, failure or interruption should exceed 90 days, but the
terminating Party shall not be entitled to any damages or other relief except
termination.
14.2 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, United States of America,
as applied to agreements signed and performed entirely in California.
14.3 ARBITRATION. Any controversy or claim, whether based on contract,
tort, statute or other legal theory (including but not limited to any claim of
fraud or misrepresentation), arising out of or related to this Agreement or the
Mutual Nondisclosure Agreement dated October 20, 1997 (the "ISIDA"), or the
breach thereof, except for a dispute concerning the ownership by a Party of any
patent, copyright, trade secret or other proprietary right, shall be resolved by
arbitration administered by the American Arbitration Association under its
Commercial Arbitration Rules, modified as follows:
(a) the arbitration shall be held in a mutually agreeable location
other than San Francisco, California or Cincinnati, Ohio, before three
arbitrators;
(b) the arbitrators shall not have the power to award any damages
excluded by, or in excess of any damage limitations expressed in, this
Agreement;
(c) in order to prevent irreparable harm, the arbitrators may grant
temporary or permanent injunctive or other equitable relief;
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(d) subject to Section 14.10 below, costs and expenses of the
arbitration shall be borne as provided by the rules of the American Arbitration
Association;
(e) the arbitrators may order discovery to the extent the
arbitrators deem it appropriate;
(f) the decisions and awards of the arbitrators, including temporary
or permanent injunctive or other relief, shall be final and binding on the
Parties and may be enforced in any court having jurisdiction; and
(g) notwithstanding anything to the contrary in this Section 14.3,
in the event of alleged violation of a Party's intellectual property rights
(including but not limited to unauthorized disclosure of confidential
information), that Party may seek temporary injunctive relief from any court of
competent jurisdiction pending appointment of the arbitrators. The Party
requesting such relief shall simultaneously file a demand for arbitration of the
dispute, and shall request the American Arbitration Association to proceed under
its rules for expedited hearing. In no event shall any such temporary injunctive
relief continue for more than 60 days.
14.4 INDEPENDENT CONTRACTORS. It is expressly agreed that Greet
Street and Xxxxxx are acting hereunder as independent contractors, and under no
circumstances shall any of the employees of one Party be deemed the employees of
the other for any purpose. This Agreement shall not be construed -as authority
for either Party to act for the other Party in any agency or other capacity, or
to make commitments of any kind for the account of or on the behalf of the
other. This Agreement shall not be construed as establishing any joint venture
between the Parties and any actions, proposed actions, plans, budgets, or
projections made or proposed to be made by any team created pursuant to this
Agreement (including specifically, but not limited to, Sections 1.2, 1.3, 1.4
and 1.5 hereof) shall be subject to approval by both Greet Street and Xxxxxx.
14.5 NOTICE. Any notice required to be given by either Party to the
other shall be deemed given five (5) business days after being deposited in the
postal system in registered or certified form with return receipt requested,
postage paid, addressed to the notified Party at the address for notices set
forth in the Purchase Agreement, but only if the Party giving notice receives a
return receipt within 10 business days after the notice is mailed; (ii) on the
next business day if dispatched to the notified Party at the address set forth
in the Purchase Agreement via a courier service that guarantees next business
day delivery, but only if the records of such courier service confirm that such
delivery was in fact made the next business day; or (iii) immediately upon
dispatch if dispatched by facsimile transmission to the notified Party at the
facsimile telephone number set forth in the Purchase Agreement, the dispatching
Party receives an electronic confirmation of receipt, and the dispatching Party
also promptly gives notice as provided in clause W or (ii) of this Section 14.5.
Either Party may change the
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postal address or facsimile telephone number to which notice is sent by written
notice to the other Party.
14.6 ASSIGNMENT. This Agreement is not assignable by either Party
hereto without the prior written consent of the other, except that this
Agreement shall be assignable by Greet Street in connection with the sale of
substantially all of its assets, or by Greet Street to a successor corporation
in the event of a merger or a consolidation, provided that Greet Street first
provides Xxxxxx with written notice of such assignment. This Agreement shall be
binding upon and inure to the benefits of the Parties and their respective
successors and permitted assigns.
14.7 SEVERABILITY. If any provision of this Agreement is determined
by a court of competent jurisdiction to be invalid or unenforceable, such
determination shall not affect the validity or enforceability of any other part
or provision of this Agreement unless as a result the rights of either Party are
materially diminished or the obligations and burdens of either Party are
materially increased so as to be unjust or inequitable.
14.8 WAIVER. No waiver by any Party of any breach of any provision
hereof shall constitute a waiver of any other breach of that or any other
provision hereof.
14.9 ENTIRE AGREEMENT; HEADINGS. This Agreement and the NDA, as well
as the Purchase Agreement (including all of the agreements referred to therein
to which Greet Street and Xxxxxx are both parties), together constitute the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes all previous proposals, both oral and written, negotiations,
representations, commitments, writings and other communications between the
Parties. This Agreement may not be modified except by an instrument in writing
signed by a duly authorized representative of each of the Parties. The section
headings and captions in this Agreement are for convenience of reference only
and shall not be considered in interpreting this Agreement.
14.10 ATTORNEYS' FEES. If any legal action at law or in equity,
arbitration or other action or proceeding is necessary to enforce the terms of
this Agreement, the prevailing Party shall be entitled to reasonable attorneys'
fees in addition to costs of suit and to any other relief which that Party may
be entitled. This provision shall be construed as applicable to the entire
Agreement.
14.11 CUMULATIVE REMEDIES. Except as may be provided herein, the
rights and remedies provided herein shall be cumulative and in addition to any
other remedies available at law or equity.
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14.12 COUNTERPARTS. This Agreement may be executed in one or more
Counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement by
their duly authorized representatives as of the date first set forth above.
THE VIRTUAL MALL, INC. XXXXXX GREETINGS, INC.
(DBA GREET STREET)
By: /s/ XXXXXXXX X. XXXXXXXX By: /s/ X.X. XXXXXX
-------------------------------- ---------------------------------
Print Name: XXXXXXXX X. XXXXXXXX Print Name: X.X. XXXXXX
------------------------ -------------------------
Title: CEO Title: CHIEF FINANCIAL OFFICER
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FIRST AMENDMENT TO
CONTENT PROVIDER AND DISTRIBUTION AGREEMENT
BETWEEN EGREETINGS NETWORK AND XXXXXX GREETINGS, INC.
THIS FIRST AMENDMENT TO CONTENT PROVIDER AND DISTRIBUTION AGREEMENT
(this "Amendment") is made and entered into as of September 30, 1999, by and
between Egreetings Network ("EGN"), formerly known as The Virtual Mall d/b/a
"Greet Street", a California corporation with principal offices at 000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 and Xxxxxx Greetings, Inc.
("Xxxxxx"), a Delaware corporation with principal offices at 0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000.
WHEREAS, the parties have entered into that certain Content Provider and
Distribution Agreement dated as of December 4, 1997 (the "Agreement"), under
which Xxxxxx granted to EGN certain rights to use content owned or licensed by
Xxxxxx in Digital Greeting Products; and
WHEREAS, the parties wish to amend the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein and in the Agreement, the parties hereby agree
to amend the Agreement as follows:
1. All capitalized terms used herein and not otherwise defined in this
Amendment shall have the meanings ascribed to them in the Agreement. All
references to "Greet Street" in the Agreement shall be deemed to be references
to EGN. The defined term the "Store" in the last sentence of Paragraph "A" of
the Recitals to the Agreement is hereby deleted and replaced with the new
defined term the "EGN Web Site".
2. Paragraph "A" of the Recitals to the Agreement is hereby amended by
adding the following two sentences after the second sentence thereof: "For the
avoidance of doubt, products that cannot be sent electronically and personalized
by the addition of a message from the sender (e.g., so-called "Webisodes" that
are intended solely for viewing on a Web site) shall not be deemed Digital
Greeting Products under the Agreement. Products that are not Digital Greeting
Products are sometimes referred to herein as "Non-Digital Greeting Products".
3. Paragraph 1.3 of the Agreement and the third and fourth sentences of
Paragraph 2 of the Agreement are hereby deleted in their entirety.
4. Paragraph 4 of the Agreement is hereby deleted and replaced with the
following:
"4. Production Volume. During each calendar quarter of the term
of this Agreement, Xxxxxx agrees to produce and deliver to EGN an
aggregate of no less than [*************************] Digital
Greeting Products ("Xxxxxx Digital Greeting Products") based on
either original Xxxxxx content ("Original Content") or content
acquired by Xxxxxx from Content Licensors through licensing or
similar transactions ("Licensed Content"). For purposes of
determining whether Xxxxxx has satisfied the foregoing minimum
delivery obligation in any calendar quarter, [**** ********
******* ******** ******* ********* ** *** **** ** *******]
[*] - Indicates confidential information that has been
omitted and filed separately with the Securities
and Exchange Commission.
1.
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parties mutually agree, any Digital Greetings Products provided
by Xxxxxx to EGN in any calendar quarter in excess of [**********
**************] shall be applied to the delivery requirement for
the next quarter."
5. Paragraph 7.1 of the Agreement is hereby deleted and replaced with
the following new paragraph 7.1:
"7.1. Royalty.
(a) In consideration of the rights granted herein, EGN
will pay Xxxxxx within forty-five (45) days following the end of
each calendar quarter of the term a royalty in the amount of: (i)
[**************] in respect of each Xxxxxx Digital Greeting
Product derived from Original Content that is sent from the EGN
Web Site during such quarter; and (ii) [****************] in
respect of each Xxxxxx Digital Greeting Product that is derived
from Licensed Content or contains at least five frames of
animation and that is sent from the EGN Web Site during such
quarter.
(b) [****************************************************
***********************************************************
***********************************************************
*********************************************************
*************************************************************
*****************************************************************
**************************************************************
********************************************] The royalty rates
payable by EGN to major content archives, publishers, or media
companies, or to any third party that provides consideration to
EGN in addition to content licenses (e.g., marketing or
promotional exposure, or placement fees or other monetary
consideration) shall not be considered in determining the
Standard Royalty Rate."
6. The first sentence of Paragraph 8 of the Agreement is hereby deleted
and replaced with the following text:
"Xxxxxx hereby grants to EGN, during the term, the exclusive
right and license, throughout the world, to reproduce,
distribute, publicly perform and display, market and
commercialize the Xxxxxx Digital Greeting Product delivered to
EGN hereunder on and in connection with Digital Greeting
Products, and to utilize the Xxxxxx Digital Greeting Product in
connection with the marketing and promotion of Digital Greeting
Product. Prior to public distribution, EGN will provide Xxxxxx
with a pre-release copy of each Xxxxxx Digital Greeting Product.
EGN will not publicly release the applicable Xxxxxx Digital
Greeting Product until such time as Xxxxxx has approved (or has
been deemed to have approved) such Xxxxxx
[*] - Indicates confidential information that has been
omitted and filed separately with the Securities
and Exchange Commission.
2.
15
Digital Greeting Product as set forth in the next sentence.
Xxxxxx will have five (5) business days, from date of receipt, to
approve the applicable Digital Greeting Product (which approval
shall not be unreasonably withheld), at which time, in the
absence of notice of disapproval, approval shall be deemed
received. EGN shall have no right to edit, adapt, alter or
otherwise change the appearance or content of any Xxxxxx Digital
Greetings Product with the prior written consent of Xxxxxx, which
shall not be unreasonably delayed or withheld, provided, however,
that, EGN shall have the right to alter, modify, or adapt such
content in order to meet EGN's technical and production
specifications. Without limitation of the foregoing, during the
term, Xxxxxx will not authorize or license any third party to
display, perform, publish, reproduce, transmit or distribute
Digital Greeting Product embodying any work owned, created, or
licensed by Xxxxxx."
7. The third and fourth sentences of Paragraph 8 of the Agreement are
hereby deleted and replaced with the following sentence:
"Xxxxxx may revoke the foregoing exclusivity rights granted to
EGN pursuant to this Paragraph 8 in the event that (i) the total
number of Digital Greeting Products sent from the EGN Web Site
during any month of the term is less than the total number of
Digital Greeting Products sent from the EGN Web Site during the
month of August, 1999 (the "Target Amount"); and (ii) the number
of Digital Greeting Products sent from the EGN Web Site in any of
the three (3) months following the month in which the initial
shortfall occurred does not exceed the Target Amount."
8. The following paragraph shall be deemed added as a new Paragraph 8A
to the Agreement:
"8A. Non-Digital Greeting Product.
(a) During the period commencing on the earlier of
[***********] or the date [*************************************]
and continuing until the end of the terms of this Agreement,
[********************************************************
************************************************************
*******************************************************
************************************************************
*****************************************************************
************************************************************
****************************************************************
****************************************************************
*************************************************************
**************************************************************
************************************************************
***************************************************************
*****************************************************************
********************************************************
*******************************************************
*************************************************************
***********************************]
[*] - Indicates confidential information that has been
omitted and filed separately with the Securities
and Exchange Commission.
3.
16
**************************************************************
****************************************************************
****************************************************************
**************************************************************
***************************************************************
*******************************************]
(c) Xxxxxx shall use best efforts to cause any licensee of
Non-Digital Greeting Products other than EGN to [**********
***************************************************************
***************************************************************
*******************************************]
9. Paragraph 9 of the Agreement is hereby deleted and replaced with the
following new Paragraph 9:
"9. Placement of Xxxxxx Digital Greeting Product. Provided that
Xxxxxx has fulfilled the delivery requirements set forth in Paragraph 4 above:
(a) EGN will provide [****************************************
**********************************************************************
*********************************************************************
********]
(b) EGN will provide Xxxxxx with up to five (5) sub-channel
placements on the EGN Web Site featuring certain branded Xxxxxx
properties mutually agreed to by the parties, which list of properties
may by revised by Xxxxxx once per quarter; and
(c) [********************************************************
***********************************************************************
********************************************************************
***********************************************************************
**********************************************************************
***********************************************************************
**********************************************************************]"
10. The second sentence of Paragraph 11.1 of the Agreement is hereby
deleted.
11. The parties agree that except as and to the extent specifically
modified by this Amendment, all terms and conditions of the Agreement shall be
unaffected and shall remain in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be duly executed as of the date first set forth above.
EGREETINGS NETWORK XXXXXX GREETINGS, INC.
By: /s/ XXXXXX X. XXXXXX By: /s/ XXXXX X. XXXXXXX
-------------------------- --------------------------
(signature) (signature)
Name: XXXXXX X. XXXXXX Name: XXXXX X. XXXXXXX
------------------------ ------------------------
(print) (print)
[*] - Indicates confidential information that has been
omitted and filed separately with the Securities
and Exchange Commission.
4.
