PurchasePro, AOL Rethink Technology, Marketing Deal

Business-to-business marketplace provider PurchasePro will cease payments to AOL Time Warner’s America Online unit, through a restructured agreement between the two firms announced Monday.

The two companies have had a promotional and technology deal since last March, when AOL agreed to use PurchasePro’s B2B exchange platform in its Netscape Netbusiness Marketplace. In return, PurchasePro would fork over $25 million in technology payments, and also foot the bill for joint marketing and advertising. (AOL also has a small stake in the Las Vegas-based firm.)

In January, PurchasePro and the newly formed AOL Time Warner even increased their marketing efforts, launching what they described as a multi-million dollar ad campaign in the media conglomerate’s business magazines, including Fortune and FSB: Fortune Small Business, and on its CNN cable network.

But now, under the newly revamped agreement, PurchasePro is absolved of the remaining $20.7 million that it owed AOL through the original, three-year deal, and additional, undisclosed marketing-related costs. America Online will also pay $1.5 million to PurchasePro, which the companies said satisfied certain “existing obligations,” but did not disclose details of those debts.

Meanwhile, AOL retains the right to continue using PurchasePro’s software for the Netscape Netbusiness Marketplace — a B2B e-commerce area on its Netscape.com Web site.

In the original plan, America Online also agreed to resell PurchasePro’s software to businesses, and found buyers including Monster.com, Homestore.com and Hewlett-Packard. While AOL and PurchasePro did not disclose specifics, it’s likely that America Online would continue as a reseller.

Similarly, the companies also said they would continue working together to identify joint opportunities, but did not disclose further details.

“We are pleased to have reached this agreement with AOL and we believe it will be of mutual benefit to both companies moving forward as AOL looks for opportunities to make Netbusiness even more successful,” said PurchasePro chief executive Richard Clemmer.

The restructuring comes just months after PurchasePro began facing serious difficulties that began with co-founder, chairman and CEO Charles Johnson’s unexpected resignation in May. A day later, the company has reported lower-than-expected revenues and ballooning losses.

Appointed to the top post the next month and promising to shore up the firm, Clemmer promptly instituted sweeping changes that saw a management reorganization and layoffs affecting about half of the company’s 600-person staff. He also promised that the company would explore ways to reduce its costs.

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