INTERACTIVE MARKETING AGREEMENT
-------------------------------
This Interactive Marketing Agreement (the "Agreement"), is made and entered into
as of December 1, 1997 (the "Effective Date"), by and between America Online,
Inc. ("AOL"), a Delaware corporation, with offices at 22000 AOL Way, Dulles,
Virginia 20166, and Cyberian Outpost, Inc. (the "Marketing Partner" or "MP"), a
Connecticut corporation, with offices at 27 North Main Street, P.O. Box 636,
Kent, Connecticut 06757 (each a "Party" and collectively the "Parties.")
INTRODUCTION
------------
AOL and MP each desires to enter into an interactive marketing relationship
whereby AOL will promote the MP Products and the interactive site referred to
(and further defined) herein as the Affiliated MP Site. This relationship is
further described below and is subject to the terms and conditions set forth in
this Agreement. Defined terms used herein but not defined in the body of the
Agreement shall be as defined in Exhibit B attached hereto.
TERMS
-----
1 PROMOTION, DISTRIBUTION AND MARKETING.
-------------------------------------
1.1. AOL Promotion of MP Products and Affiliated MP Site. AOL will provide MP
---------------------------------------------------
with the promotions for the MP Products and Affiliated MP Site described
in Exhibit A attached hereto (the "Promotions"). Subject to MP's
reasonable approval, AOL will have the right to fulfill its promotional
commitments with respect to any of the foregoing by providing MP with
comparable promotional placements in appropriate alternative areas of the
AOL Network. In addition, if AOL is unable to deliver any particular
Promotion, AOL will work with MP to provide MP, as its sole remedy, with
a comparable promotional placement (a "Comparable Placement"). In the
event the Parties are unable to agree on a Comparable Placement, the
Parties shall mutually agree to submit the matter to the Management
Committee as provided in Section 7 hereof. AOL reserves the right to
redesign or modify the organization, structure, "look and feel,"
navigation and other elements of the AOL services at any time. In the
event such modifications materially and adversely affect any specific
Promotion, AOL will work with MP to provide MP, as its sole remedy, with
a comparable promotional placement.
1.2 Impressions. During the Initial Term, AOL will deliver a total of [XXX
XXXXXXX XXXXX XXXXX XXXXX XXXXX XXXXXXX XXXXXX XXXXXXXXX] Impressions
(the "Impressions Commitment") through the Promotions. With respect to
the Impressions Commitment, AOL will not be obligated to provide more
than such target amounts during the Term. In the event that as of the end
of the seventh month of the Term AOL shall not have provided a minimum of
[XXXXX XXXXXX XXXXXXXXXXXX] Impressions through the Promotions (the
"Impressions Minimum"), AOL shall have a reasonable time, not to exceed
sixty (60) days, within which to deliver the Impressions Minimum. If AOL
shall not have delivered the Impressions Minimum within sixty (60) days,
as its sole remedy, [XXXXX XXXXXX XXXXXXXXXXXX]. If there is a shortfall
in Impressions as of the end of the Initial Term (a "Final Shortfall"),
AOL shall elect to either (i) provide MP with advertising placements out
of excess inventory on the AOL Network which have a total value, based on
AOL's then-current advertising rate card, equal to the value of the Final
Shortfall (determined by multiplying the percentage of Impressions that
were not delivered by the total, guaranteed payment provided for below)
or (ii) continue to provide MP with certain Promotions designated by AOL
in its sole and absolute discretion until the Impressions Commitment is
fulfilled. If at any time during the Term MP shall not be in compliance
with the provisions of this Agreement, and as a result of such non-
compliance AOL is unable to provide the Impressions required hereunder
during such period of non-compliance, then AOL shall have the right to
reduce the Impressions Commitment, on
1
Confidential
a pro-rata basis, for such period of non-compliance (e.g., if MP has
not complied with the provisions of this Agreement for a period of two
months, then AOL shall reduce the Impressions Commitment by an amount
equal to the product of two (2) times [xxxxxxxxxxx] divided by fourteen
(14)).
1.3 Content of Promotions. The specific Content to be contained within the
---------------------
Promotions (including, without limitation, advertising banners and
contextual promotions) (the "Promo Content") will be determined by MP,
subject to (a) AOL's technical limitations, (b) the terms of this
Agreement and (c) AOL's then-applicable policies relating to
advertising and promotions. MP will consistently update the Promo
Content no less than two times per week The Parties will jointly
consult with each other regarding the Promo Content to ensure that it
is designed to maximize performance. Except to the extent expressly
described herein, the specific form, placement, duration and nature of
the Promotions will be as determined by AOL in AOL's reasonable
editorial discretion and in consultation with MP (consistent with the
editorial composition of the applicable screens).
1.4 MP Promotion of AOL. As more fully set forth in Exhibit C attached
-------------------
hereto, MP will promote AOL as its preferred Interactive Service and
will promote the availability of the Affiliated MP Site through the AOL
Network. MP will not implement or authorize any promotion on behalf of
any third party which is inconsistent with promotion of AOL as its
preferred Interactive Service.
2 AFFILIATED MP SITE.
------------------
2.1 Customized Site. The Affiliated MP Site shall be an optimized and
---------------
"mirrored" version of MP's main web site containing the specific
Content described in Section 2.2 below for-distribution hereunder
according to AOL specifications and guidelines to ensure that (i)
the functionality and features within the Affiliated MP Site are
optimized for the client software then in use by a majority of AOL
Members and (ii) the forms used in the Affiliated MP Site are
designed and populated in a manner intended to minimize delays
when AOL Users attempt to access such forms.
2.1.1 Specific Requirements.
---------------------
(i) MP shall design the Affiliated MP Site to conform,
in all respects, with the provisions of Exhibit E
attached hereto, and
(ii) AOL reserves the right to review the Affiliated MP
Site to ensure that such site is compatible with
AOL's then-available client and host software and the
AOL Network. MP will take all necessary steps to
conform its promotion and sale of the MP Products
through the Affiliated MP Site to the then-existing
technologies identified by AOL which are optimized
for the AOL Network. AOL will be entitled to require
changes to the Content (including, without
limitation, the features or functionality) within any
linked pages of the Affiliated MP Site to the extent
such Content will, in AOL's good faith judgment,
adversely affect any operational aspect of the AOL
Network.
2.1.2 Customization. MP shall customize the Affiliated MP Site
-------------
for AOL Members as follows:
(i) ensure that the Affiliated MP Site is only available
to, and accessible by, AOL Users:
(ii) ensure that AOL Users linking to the Affiliated MP
Site do not receive advertisements, promotions or
links for any other Interactive Service or any entity
reasonably construed to be in competition with AOL or
any other entity otherwise in conflict with AOL
advertising policies and exclusivities; and
2
Confidential
(iii) with the exception of advertising links sold and
implemented pursuant to this Agreement, provide
continuous navigational ability for AOL Users to return
to an agreed-upon point on the AOL Network (for which AOL
shall supply the proper address) from the Affiliated MP
Site (e.g., the point on the AOL Network from which the
Affiliated MP Site is linked), which, at AOL's option,
may be satisfied through the use of a hybrid browser
format.
2.2 Content. MP will provide a comprehensive offering of the MP Products
-------
and other Content described in Exhibit D-1 attached hereto, through the
Affiliated MP Site. MP will review, delete, edit, create, update and
otherwise manage all Content available on or through the Affiliated MP
Site in accordance with the terms of this Agreement or any amendments
thereto. MP will ensure that the Affiliated MP Site does not in any
respect promote, advertise, market or distribute the products, services
or content of any Interactive Service other than AOL. Except as
otherwise mutually agreed upon by the Parties hereto, the Affiliated MP
Site shall not contain Content (including without limitation, third
party content) relating to anything other than the MP Products listed
on Exhibit D-1 attached hereto.
2.3 Production Work. Except as agreed to in writing by the Parties pursuant
---------------
to the "Production Work" section of the Standard Legal Terms & Conditions attached hereto as Exhibit F, MP will be responsible for all
production work associated with the Affiliated MP Site, including all
related costs and expenses.
2.4 Hosting; Communications. MP will be responsible for all communications,
-----------------------
hosting and connectivity costs and expenses associated with the
Affiliated MP Site. In addition, MP will provide all computer,
telephone and other equipment or resources necessary for MP to access
the AOL Network. MP and AOL shall mutually agree upon the most
appropriate means by which MP will connect the MP data center to AOL's
designated data center; provided, however, that in the event the
Parties determine that MP shall utilize a dedicated high speed
connection from the MP data center to AOL's designated data center,
then MP shall be responsible for all costs associated with such high
speed connection.
2.5 Product Offering. MP will ensure that the Affiliated MP Site includes
----------------
all of the MP Products or Content (including, without limitation, any
features, offers, contests, functionality or technology) that are then
made available by or on behalf of MP through any Additional MP Channel;
provided, however, that (a) such inclusion will not be required where
it is commercially or technically impractical to either Party (i.e.,
inclusion would cause either Party to incur substantial incremental
cost), and (b) the specific changes in scope, nature and/or offerings
required by such inclusion will be subject to AOL's review and approval
and the terms of this Agreement.
2.6 Pricing and Terms. MP will ensure that: (a) the prices (and any other
-----------------
required consideration) for the MP Products in the Affiliated MP Site
will not exceed the prices for the MP Products or any substantially
similar products offered by or on behalf of MP through any Additional
MP Channel; (b) the terms and conditions on which the MP Products or
any other products are offered in or through the Affiliated MP Site
are no less favorable, in any respect, than the terms and conditions
on which the MP Products or any substantially similar products are
offered by or on behalf of MP in or through any Additional MP Channel:
and (c) both the prices and the terms and conditions related to the MP
Products or any other products offered in the Affiliated MP Site are
reasonably competitive in all material respects with the prices and
terms and conditions for the MP Products or substantially similar
products offered by any MP Competitor through any Interactive Site.
2.7 Special Offers. Subject to the provisions of Section 2.5 and 3.3
--------------
hereof, on a regular and
3
Confidential
consistent basis, MP shall promote the following through the
Affiliated MP Site;(a) preferred offerings of computer
hardware and peripherals and packaged software to AOL Members
and (b) other special offers exclusively available to AOL
Members and/or AOL Users ((a) and (b) collectively, the
"Special Offers"). MP will provide AOL with reasonable prior
notice of Special Offers so that AOL can market the
availability of such Special Offers in the manner AOL deems
appropriate in its editorial discretion, subject to the terms
and conditions hereof. The Affiliated MP Site and any
promotions made by MP pursuant to the terms of this Agreement
shall be designed to promote revenue.
2.8 Operating Standards. MP will ensure that the Affiliated MP
-------------------
Site and the delivery of the MP Products complies at all times
with the standards set forth in Exhibit E. To the extent site
standards are not established in Exhibit E with respect to any
aspect or portion of the Affiliated MP Site (or the MP
Products or other Content contained therein), MP will provide
such aspect or portion at a level of accuracy, quality,
completeness, and timeliness which meets or exceeds prevailing
standards in the retail computer hardware and peripherals
industry.
2.9 Advertising Sales. Subject to the terms hereof, MP shall have
-----------------
the right to sell promotions, advertisements, links, pointers
or similar services or rights through the Affiliated MP Site
("Advertisements"). The specific advertising inventory within
the Affiliated MP Site shall be determined by MP. MP will
provide AOL with quarterly reports providing detailed
information regarding any advertising sales by MP and any
other information relevant to the computation and sharing of
Advertising Revenues derived from the Affiliated MP Site. MP
and AOL shall share the revenues derived from the sale of
Advertisements in the Affiliated MP Site pursuant to Section
4.3 hereof. All Advertisements in the Affiliated MP Site shall
be subject to AOL's then-applicable advertising policies and
existing exclusivities.
3 AOL EXCLUSIVITY OBLIGATIONS.
---------------------------
3.1 Exclusive Product. With respect to the MP Competitors listed
-----------------
below, from and after February 1, 1998, and for the remainder
of the Initial Term, so long as MP is in compliance with all
material terms of this Agreement, MP shall be the exclusive
third party reseller of computer [xxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxx] as may be mutually agreed upon
by the Parties, but specifically excluding, without
limitation, such products as [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxx] promoted on the Exclusive Screens (the "Exclusive
Products"). The MP Competitors shall consist of the third
parties listed on Exhibit H attached hereto. To the extent
that any MP Competitor is not solely a provider of the
Exclusive Products (i.e. it is also engaged in activities
other than providing the Exclusive Product) such exclusivity
shall only apply to the marketing of the Exclusive Product by
such MP Competitor.
3.2 Exceptions. Notwithstanding anything to the contrary contained
----------
in this Section 3, no provision of this Agreement shall limit
AOL's ability (on or off the AOL Network) to:
(i) advertise Hardware Products sold through the AOL Store
via pop-ups on the AOL Network;
(ii) promote, market or distribute the products of original
equipment manufacturers of computer hardware and peripheral
equipment;
(iii) promote, market or distribute the products of any third
party that markets and/or distributes its products through an
Auction Format or a Retail Club. For the purposes hereof, an
"Auction Format" shall mean a format whereby products are sold
through the
4
Confidential
bidding by one or more individuals or entities on a product or
group of products, and the price of such product or group of
products is determined by the price paid by the highest
bidder, and a "Retail Club" shall mean either (a) a business
which sells a collection of goods or services and derives a
substantial portion of its revenues from subscription fees
paid by its members in order to gain access to such goods,
services or products (e.g.: CUC International), or (b) a
business which initially offers goods or services to its
members at a steep discount in return for a contractual
commitment from such members to purchase a certain number of
goods or services at some future date (e.g.: Columbia Record
Club or BMG Music Club); or
(iv) enter into an arrangement with any third party (which
third party is not principally in the business of providing
the Exclusive Products) for the primary purpose of acquiring
AOL Users whereby such party is allowed to promote or market
products or services to AOL Users that are acquired as a
result of such agreement.
3.3 Packaged Software. During the Term, MP shall have the right to
-----------------
promote, market and sell pre-packaged software on the AOL.
Service and AOL.com, provided that such prepackaged software
shall not be subject to the exclusivity provisions of Section
3.1.
4 PAYMENTS.
--------
4.1 Guaranteed Payments.
4.1.1 During the Initial Term, MP shall pay to AOL a
guaranteed payment of Five Million Dollars
(US $5,000,000) as follows:
(i) Two Hundred Thousand Dollars (US $200,000)
upon execution of this Agreement;
(ii) Two Hundred Thousand Dollars (US $200,000)
on January 15, 1998;
(iii) Four Million Dollars (US $4,000,000) upon
the occurrence of the earlier of (i) the
receipt of funds by MP in a debt or equity
financing (or series of related financings)
consummated by MP after the Effective Date
yielding aggregate proceeds to MP of at
least Six Million Dollars (US $6,000,000)
and (ii) March 1, 1998;
(iv) Two Hundred Thousand Dollars (US $200,000)
on April 1, 1998;
(v) Two Hundred Thousand Dollars (US $200,000)
on July 1, 1998 and
(vi) Two Hundred Thousand Dollars (US $200,000)
on October 1, 1998.
4.1.2 During the AOL Renewal Term or the MP Renewal Term,
as the case may be. MP will pay to AOL the guaranteed
payments set forth in Section 6.2.
4.2 Sharing of Transaction Revenues. MP shall pay to AOL an amount
-------------------------------
equal to [xxxxxxxxxxxxxx] of Transaction Revenues until such
time as aggregate Transaction Revenues plus [xxxxxxxxxxxxxxx]
of aggregate Advertising Revenue ("MP Revenues") shall equal
a sum total of [XXXXXXX] (the "Threshold"). During the Initial
Term, from and after the Threshold has been met, MP shall pay
to AOL an amount equal to [xxxxxxxxxxxx] of aggregate
Transaction Revenues. MP will pay all of the foregoing amounts
on a quarterly basis within thirty (30) days of the end of the
quarter in which the applicable Transaction Revenues were
generated.
5
Confidential
4.2.1 Sharing of Transaction Revenues During a Renewal Term pursuant to
-----------------------------------------------------------------
Section 6.2.
------------
a. During the AOL Renewal Term, MP shall pay to AOL an amount equal
to [XXXXXXXXX XXXXXXXX] of Transaction Revenues until such time as
MP Revenues shall equal a sum total of [XXXXX XXXX XXXXXXX XXXXX
XXXXXXXXXX] (the "AOL Renewal Threshold"). During the AOL Renewal
Term, from and after the AOL Renewal Threshold has been met, MP
shall pay to AOL an amount equal to [XXXX XXXXXXXX] of aggregate
Transaction Revenues. MP will pay all of the foregoing amounts on a
quarterly basis within thirty (30) days of the end of the quarter in
which the applicable Transaction Revenues were generated.
b. During the MP Renewal Term, MP shall pay to AOL an amount equal
to [XXX XXXXXXXXX] of Transaction Revenues until such time as MP
Revenues shall equal a sum total of [XXX XXXXXX XXXXX XXXX XXXXXXX
XXXXXX XX XXXXXXX] (the "MP Renewal Threshold"). During the MP
Renewal Term, from and after the MP Renewal Threshold has been met,
MP shall pay to AOL an amount equal to [XXXX XXXXXXX] of aggregate
Transaction Revenues. MP will pay all of the foregoing amounts on a
quarterly basis within thirty (30) days of the end of the quarter in
which the applicable Transaction Revenues were generated.
4.3 Sharing of Advertising Revenues. MP shall pay to AOL an amount equal to
-------------------------------
[XXXXX XXXXX XXXX] of all Advertising Revenues generated pursuant ot this
Agreement. MP shall pay to AOL all Advertisng Revenues received and owned
to AOL on a quarterly basis within thirty (30) days of the end of the
quarter in which such amounts were generated by MP.
4.4 Alternative Revenue Streams. In the event MP or any of its affiliates (a)
---------------------------
receives or desires to receive, directly or indirectly, any compensation in
connection with the Affiliated MP Site other than Transaction Revenues or
Advertising Revenues (an "Alternative Revenue Stream"), or (b) desires to
materially alter its current business model (e.g.: a change to an Auction
Format or Retail Club) (an "Alternative Business Model") MP will promptly
inform AOL in writing, and the Parties will negotiate in good faith
regarding whether MP will be allowed to (i) market products producing such
Alternative Revenue Stream through the Affiliated MP Site or (ii) create an
Alternative Business Model, and if so, the equitable portion of revenues
from such Alternative Revenue Stream or Alternative Business Model (if
applicable) that will be shared with AOL (in no event less than the
percentage of Transaction Revenues to be paid to AOL pursuant to this
Section 4). In the event the Parties cannot in good faith reach agreement
regarding such Alternative Revenue Stream or Alternative Business Model
within ten (10) days of AOL's request to negotiate, the Parties shall
mutually agree to submit such dispute to the Management Committee for
resolution in the manner set forth in Section 7 hereof.
4.5 Wired Payments; Late Payments. All payments required under this Section 4
-----------------------------
will be paid in immediately available, non-refundable funds wired to AOL's
account. If (i) the amounts owed pursuant to Section 4.1 are not paid
within five (5) business days of the date when such amounts are due and
payable or (ii) the amounts owed pursuant to Sections 4.2, 4.3 and 4.4 are
not paid within fifteen (15) days of the date when such amounts are due and
payable, then in addition to its other remedies hereunder, AOL shall have
the right to immediately terminate this Agreement. Notwithstanding the
foregoing, after such time as AOL shall have received the payments required
pursuant to Section 4.1.1 (iii) hereof, if the remaining amounts owed
pursuant to Section 4.1 are not paid within [XXXXXXX] business days of the
date when such amounts are due and payable, then MP shall have an
additional [XXXXXXX] days within which to make such payment (the
"Additional Payment Period"). If after such time payment shall not have
been received by AOL, then in addition to its other remedies hereunder, AOL
shall have the right to
6
Confidential
immediately terminate this Agreement. MP shall only be
entitled to one Additional Payment Period hereunder; In the
event that MP requires more than one Additional Payment
Period, AOL shall have the right to immediately terminate this
Agreement in addition to any other remedies it may possess
hereunder. All amounts owed hereunder not paid when due and
payable will bear interest from the date such amounts are due
and payable at the prime rate listed in the Wall Street
Journal at such time.
4.6 Auditing Rights. MP will maintain complete, clear and accurate
---------------
records of all expenses, revenues and fees in connection with
the performance of this Agreement. For the sole purpose of
ensuring compliance with this Agreement, AOL will have the
right, at its expense, to direct an independent certified
public accounting firm to conduct a reasonable and necessary
inspection of portions of the books and records of MP which
are relevant to MP's performance pursuant to this Agreement;
provided, however, that AOL shall not have the right to
-------- -------
perform more than two (2) such audits in any given calendar
year. Any such audit may be conducted after twenty (20)
business days prior written notice.
4.7 Taxes. MP will collect and pay and indemnify and hold AOL
-----
harmless from, any sales, use, excise, import or export value
added or similar tax or duty not based on AOL's net income,
including any penalties and interest, as well as any costs
associated with the collection or withholding thereof,
including attorneys' fees.
4.8 Reports; Customer Data.
----------------------
4.8.1 Sales Reports. MP will provide AOL with a monthly
-------------
report in a reasonable AOL designated format,
detailing the following activity in such month (and
any other information mutually agreed upon by the
Parties or reasonably required for measuring revenue
activity by MP through the Affiliated MP Site),
subject to MP's technical limitations: (i) summary
sales information by day (date, number of MP
Products, number of orders, total Transaction
Revenues); and (ii) detailed sales information (order
date/time stamp (if technically feasible), purchaser
name and screenname) (the information in clauses (i)
and (ii) are collectively referred to herein as
"Sales Reports"). AOL will be entitled to use the
Sales Reports in its business operations, subject to
the terms of this Agreement and provided that such
Sales Reports are not shared with the AOL Store for
the purpose of marketing products competitive with
the Exclusive Products. More generally, each payment
to be made by MP pursuant to this Section 4 will be
accompanied by a report containing information which
supports the payment, including information
identifying (i) gross Transaction Revenues and an
aggregate accounting of all items deducted or
excluded from gross Transaction Revenues to produce
Transaction Revenues, including, without limitation,
chargebacks and credits for returned or cancelled
goods or services (and, where possible, an
explanation of the type of reason therefor, e.g., bad
credit card information, poor customer service, etc.)
and (ii) any applicable Advertising Revenues.
4.8.2 Fraudulent Transactions. To the extent permitted by
-----------------------
applicable laws, MP will provide AOL with a report of
any fraudulent order, including the date, screenname
or email address and amount associated with such
order, promptly following MP obtaining knowledge that
the order is, in fact, fraudulent. AOL shall
cooperate with MP in tracking any fraudulent orders.
5 WARRANTS
--------
5.1 Grant of Warrants. Subject to the receipt by MP of shareholder
-----------------
approval, MP hereby grants to AOL warrants (the "Warrants")
representing the right for a ten-year period to purchase [xxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
shares of MP common stock, with no par value (the "Common
Stock"), at a price
7
Confidential
per share equal to the lessor of [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
xxxxxxxx] (the "Exercise Price"). Provided, however, that in connection
with clause (i) above, if no Financing Event occurs by March 1, 1998, AOL
shall receive the lowest price paid by any investor or group of investors
in the next subsequent financing event occurring on or prior to December
31, 1998.
5.2 Vesting of Warrants. The Warrants granted hereunder shall vest as follows:
-------------------
(i) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] shares on
the Effective Date;
(ii) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] shares
immediately [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXX] and
(iii) [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX] shares at
the earliest of such time as MP shall have generated either [XXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
5.3 Terms and Conditions. AOL shall receive shares of Common Stock upon
--------------------
exercise of the Warrants granted hereunder. Additionally, six months after
the effective date of the the initial public offering of securities of MP
pursuant to an effective registration statement under the Securities Act of
1993, as amended, AOL shall be entitled to receive [XXXXXXXXX] demand
registration rights, one of which may, at AOL's option, be on Form S-1 and
piggyback registration rights in connection with any shares of stock
received upon exercise of the Warrants. All such registration rights shall
be subject to customary market stand-off and underwriter cutback
provisions. Notwithstanding anything to the contrary contained herein, in
the event MP shall grant registration rights to any investor in the
Financing Event immediately subsequent to the Effective Date that are more
favorable, in any respect, than those granted to AOL hereunder, then MP
shall provide AOL with those right(s) that are more favorable than the
rights of AOL.
5.4 Anti-Dilution Rights. On the date hereof AOL shall have weighted average
--------------------
anti-dilution protection rights in the event that MP issues any shares of
Common Stock or any security convertible into or exchangeable for Common
Stock to any person or entity and the consideration per share is less than
the Exercise Price. Notwithstanding the foregoing, in the event, that MP
provides anti-dilution protection rights to any investor in the Financing
Event immediately subsequent to the Effective Date hereof that are more
favorable to such investor, in any respect, than the rights granted to AOL
pursuant to the first sentence of this Section 5.4, MP hereby agrees to
provide AOL with any and all such more favorable anti-dilution protection
rights. All rights granted in this Section 5.4 are supplementary and
additional to any other rights provided herein, including, without
limitation, the rights granted in Section 5.1 hereof.
5.5 Approval; Final Agreement
-------------------------
(a) The provisions of this Section 5 contain all of the principal and
essential terms and conditions of the Warrants granted to AOL hereunder,
and without limiting the foregoing, within thirty (30) days of the
execution hereof (the "Cutoff Date"), MP shall convene a meeting of its
shareholders and shall use its best efforts to authorize the grant of
Warrants made to AOL hereunder and upon receipt of the requisite approvals,
MP shall
8
Confidential
issue the Warrants granted hereunder and will enter into a
Common Stock Warrant Purchase Agreement which will document
the grant of Warrants hereby made by MP to AOL.
(b) MP hereby acknowledges and agrees that, in the event of a
breach of the provisions of this Section 5.4, AOL would be
irreparably harmed and it would be impossible for AOL to
determine the amount of damages that would result from such
breach, and that accordingly, any remedy at law for any such
breach or threatened breach thereof, would be inadequate,
Accordingly, MP agrees that if the Cutoff Date shall have
occurred and (i) MP shall not have convened a meeting of its
shareholders or (ii) MP shall have received shareholder
approval but the Warrants shall not have been issued to AOL,
the provisions of this Section 5.4 may be specifically
enforced through equitable and injunctive relief in addition
to any other applicable rights or remedies AOL may have, from
any court of competent jurisdiction. MP hereby waives the
claim or defense that a remedy at law would be adequate in
respect to this provision, and agrees to have this Section 5.4
specifically enforced against MP without the necessity of
posting bond or other security, and consents to the entry of
injunctive relief enjoining or restraining any breach or
threatened breach of this Section 5.4.
(c) In the event that MP shall not have obtained shareholder
approval for the grant of Warrants made to AOL hereunder by
the Cutoff Date, then in addition to its other remedies
hereunder, AOL shall have the right to immediately terminate
this Agreement.
6 TERM: RENEWAL: TERMINATION.
--------------------------
6.1 Term. Unless earlier terminated as set forth herein, the
----
initial term of this Agreement will be fourteen (14) months
from the Effective Date (the "Initial Term"). The Initial Term
and either the AOL Renewal Term or the MP Renewal Term, as the
case may be, shall be referred to herein as the "Term".
6.2 Renewal.
-------
6.2.1 One-Year Extension by AOL. In the event MP shall have
-------------------------
generated [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx] in Target
Revenues during the Initial Term (the "Target
Amount"), AOL may at its option extend the Agreement
for an additional year (an "AOL Renewal Term") by
providing MP with written notice thereof no later
than the later of (i) November 15, 1998 or (ii)
fifteen (15) days after MP shall have generated the
Target Amount (the "Put Notice"). During any such AOL
Renewal Term, MP shall pay to AOL a guaranteed
payment of [xxxxxxxxxxxxxxxxx payable as follows: [x
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxx] In the event that an equity
financing is consummated by MP prior to the
expiration of the Initial Term yielding aggregate
proceeds to MP of at least [xxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxx] the foregoing payments schedule
shall no longer be in effect, and MP shall make the
following payment on an accelerated schedule :[xxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxx]
9
Confidential
6.2.2 One-Year Extension by MP. In the event that (i) MP shall not have
------------------------
generated the Target Amount or (ii) AOL shall have elected not to
renew this Agreement pursuant to the terms of Section 6.2.1, MP may,
no later than September 15, 1998, notify AOL in writing that MP
desires to renew this Agreement for one (1) additional year (the "MP
Renewal Term"). During the MP Renewal Term, MP shall pay to AOL a
guaranteed payment of [XXXXXXXXXXXXXXXXXXXXXXXX] payable as follows:
[XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
6.3 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); provided that, AOL will not be required to provide notice to MP
in connection with MP's failure to make any payment to AOL required
hereunder. Notwithstanding the foregoing, in the event of a material
breach of a provision that expressly requires action to be completed within
an express period shorter than 30 days, either Party may terminate this
Agreement if the breach remains uncured after written notice thereof to the
other Party. In the event that MP terminates this Agreement in accordance
with the terms and conditions of this Section 6.3 due to a material breach
of AOL of the terms of this Agreement, provided that MP shall have paid all
amounts then due and owing pursuant to Section 4.1, 4.2 and 4.3 hereof, MP
shall no longer owe any amounts due under Sections 4.1, 4.2 or 4.3.
6.4 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) calender days or (iv) makes an
assignment for the breach of creditors.
6.5 Termination on Change of Control. In the event of a Change of Control of MP
--------------------------------
resulting in control of MP by an Interactive Service other than AOL, AOL
may terminate this Agreement by providing to MP thirty (30) days prior
written notice of such intent to terminate.
6.6 Expiration of Term. Upon the termination of this Agreement by AOL, pursuant
------------------
to Section 6.3, or the expiration of the Initial Term, the AOL Renewal Term
or the MP Renewal Term. AOL shall have the right for successive one year
periods (each a "Renewal Term") to promote one or more "pointers" or links
from the AOL Network to any MP Interactive Site selling products
substantially similar to the MP products (the "Link"); provided that (i)
AOL shall have the right to use MP's tradenames, trademarks and service
marks in connection with the Link and (ii) MP shall not be required to
perform the
10
Confidential
cross promotional obligations required hereunder.
6.6.1 Payments. In connection with the foregoing, MP shall
--------
make the following payments to AOL:
(a) an amount equal to [xxxxxxxxxxxx] of all revenues
derived from the sale of products in the MP
Interactive Site which are attributable to the Link
(the "MP Interactive Transaction Revenues") during
the first Renewal Term:
(b) an amount equal to the greater of (i)[xxxxxxxxx]
of all MP Interactive Transaction Revenues and (ii)
the standard percentage of revenues paid to other
vendors of MP during the second Renewal Term: and
(c) a percentage of MP Interactive Transaction
Revenues that is no less than the standard percentage
of revenues paid to other vendors of MP at all times
after the second Renewal Term.
6.6.2 Exclusivity. AOL shall have the right to maintain the
-----------
exclusivity provisions of Section 3.1 hereof during
any Renewal Term (the "Exclusivity Right"); provided,
however, that the Exclusivity Right shall be
exercisable by AOL for an aggregate period not to
exceed two Renewal Terms. In the event that AOL
exercises the Exclusivity Right during any Renewal
Term, notwithstanding the provisions of Section
6.6(ii), MP shall continue to perform the cross
promotional obligations required hereunder.
7 MANAGEMENT COMMITTEE/ARBITRATION. If the Parties are unable to resolve
--------------------------------
any dispute, controversy or claim arising under this Agreement
(excluding any disputes relaxing to intellectual property rights or
confidentiality) (each a "Dispute"), such Dispute shall be submitted
to the Management Committee for resolution. If the Management
Committee is unable to resolve the Dispute within ten (10) business
days after submission to them, the Dispute shall be solely and finally
settled by arbitration in Washington, D.C. under the auspices of the
American Arbitration Association; provided that the Federal Rules of
Evidence shall apply to any such Dispute and, subject to the
arbitrators' discretion to limit the time for and scope of discovery,
the Federal Rules of Civil Procedure shall apply with respect to
discovery; and provided further that, consistent with the parties'
desire to avoid delays and unnecessary expense, any Dispute arising
from any provision of the Agreement which expressly or implicitly
provides for the parties to reach mutual agreement as to certain terms
therein shall not be submitted to arbitration but shall be resolved in
good faith by the Management Committee. The arbitrator may enter a
default decision against any Party who fails to participate in the
arbitration proceedings. For purposes herein, the "Management
Committee" shall mean a committee made up of two (2) senior executives
from each of the Parties for the purpose of resolving Disputes under
this Section and generally overseeing the relationship between the
Parties contemplated by this Agreement. Notwithstanding the foregoing,
during the resolution of any Dispute, the Parties hereto shall
continue to make all payments required hereunder.
8 STANDARD TERMS. The Standard Online Commerce Terms & Conditions set
--------------
forth in Exhibit F attached hereto and Standard Legal Terms & Conditions set forth on Exhibit G attached hereto are each hereby made
a part of this Agreement.
11
Confidential
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.
AMERICA ONLINE, INC. CYBERIAN OUTPOST, INC.
By: /s/ David M Colburn By: /s/ Darryl Peck
-------------------------------- --------------------------------
Print Name: David M. Colburn Print Name: Darryl Peck
----------------------- -----------------------
Title: Sr. Vice President Title: President/CEO
---------------------------- ----------------------------
12
Confidential
EXHIBIT A
Placement/Promotion Plan
------------------------
AOL Networks Placement and Integration
Interactive Marketing Agreement - America Online Inc. and Cyberian Outpost Inc.
Was this helpful?