HealthExtras
2275 Research Boulevard
Sixth Floor
Rockville, MD 20850
March 2, 2000
Mr. Joel Faden
Cambria Productions, Inc.
f/s/o Christopher Reeve
1775 Broadway, Suite 708
New York, NY 10019
Mr. Brian Dubin
William Morris Agency, Inc.
1325 Avenue of the Americas
New York, NY 10019
Dear Joel and Brian:
The terms of the July 8, 1997 agreement (the agreement) by and between
Cambria Productions, Inc. (Cambria) (Lender) f/s/o Christopher Reeve (Artist)
and HealthExtras, Inc. (Extras) contains an option for an additional two year
term. Extras exercised that option in an agreement dated May 27, 1999. Because
of the success to date of the Extras programs, Extras seeks to amend the
original agreement and the two year option agreement as indicated below. This
letter shall serve as written notification of Extras' intent to amend the
renewal option to an aggregate period of five years and to exercise its option
thereunder, and, when signed below by Cambria will indicate Cambria's approval
of such amendment and agreement to the extended option term.
Concurrent with the extension and exercise of the option period the
agreement shall be amended as follows:
1. The services paragraph of the agreement shall now reflect that the
number of radio recording spots, each not to exceed 60 seconds in
duration, shall be two per year through the term of the extended
option, and that the number of sixty (60) second television commercials
per year shall be increased from one (1) to two (2) and the number of
service days from three (3) to four (4) days per year.
2. The territory paragraph of the agreement shall now be deemed to include
Europe in addition to the Untied States, its possessions and
territories.
3. The compensation paragraph of the agreement shall now reflect that the
compensation to Lender will be changed from "$1.00 per card" to read
"$1.00 per enrollee" per year for all customers subscribing to the
insurance benefits issued through Extras. This payment formula shall be
retroactive to July 8, 1997 and prospective through the extended option
period and the ten year "annuity period" thereafter pursuant to the
agreement.
4. The "annuity period" as called for in the compensation paragraph of the
agreement shall commence upon the expiration of the extended option
period and continue for 10 additional years.
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5. The fees and the payment thereof during the option period shall be
amended as follows and the following additional provisions added
thereto:
Option Period Payments Due Date
------------- -------- --------
July 1, 2000 to June 30, 2001 $ 1,000,000 July 1, 2000
July 1, 2001 to June 30, 2002 $ 500,000 January 1, 2001
$ 500,000 July 1, 2001
July 1, 2002 to June 30, 2003 $ 500,000 January 1, 2002
$ 500,000 July 1, 2002
July 1, 2003 to June 30, 2004 $ 500,000 January 1, 2003
$ 500,000 July 1, 2003
July 1, 2004 to June 30, 2005 $ 500,000 January 1, 2004
$ 500,000 July 1, 2004
If any payment is not received within thirty (30) days of its due date,
Lender, on behalf of Artist, reserves the right to terminate the agreement
immediately in addition to being entitled to exercise any other rights pursuant
to the agreement, in its discretion, including charging Extras the highest then
current legal percentage rate of interest on accrued uncollected payments.
Lender may also cancel its approval of the remaining extension of the option
period. In the event of any such termination Extras shall continue to be
responsible for the "annuity payments" of $1.00 per enrollee per year as
stipulated in the agreement.
6. An option of an additional five year term, i.e., July 1, 2005 -
June 30, 2010 maybe exercised in writing by Extras no later than
July 1, 2004. The guarantee for such additional option period and the
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schedule of payments thereof shall be as follows:
Option Period Payments Due Date
------------- -------- ---------
July 1, 2005 to June 30, 2006 $ 1,150,000 July 1, 2005
July 1, 2006 to June 30, 2007 $ 650,000 January 1, 2006
$ 650,000 July 1, 2006
July 1, 2007 to June 30, 2008 $ 750,000 January 1, 2007
$ 750,000 July 1, 2007
July 1, 2008 to June 30, 2009 $ 875,000 January 1, 2008
$ 875,000 July 1, 2008
July 1, 2009 to June 30, 2010 $ 1,000,000 January 1, 2009
$ 1,000,000 July 1, 2010
With respect to such additional five year term and the ten year "annuity
period" thereafter, the compensation to Lender shall be increased from $1.00 to
$1.50 per enrollee per year for all customers subscribing to the insurance
benefits issued through Extras.
7. The approval paragraph of the agreement shall be amended to include the
following sentence: "Artist shall also have complete and absolute
approval of the product(s) and services provided by Extras which Extras
is advertising and which Artist is promoting hereunder."
8. Neither party may assign their rights or responsibilities under this
agreement.
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All other terms and conditions of the agreement shall be deemed to remain
unaltered and in full force effect.
If you are in agreement with the foregoing, please sign where indicated
below. Upon the full signature hereof, this letter amendment shall be deemed to
be a binding, legally enforceable agreement.
Sincerely,
HEALTHEXTRAS, INC.
By:/s/ David T. Blair
----------------------------
Title: Chief Executive Officer
-------------------------
AGREED TO AND ACCEPTED:
CAMBRIA PRODUCTIONS, INC.
f/s/o CHRISTOPHER REEVE
By: /s/ Joel Faden
----------------------------
Title: Assistant