EXHIBIT 10.6
May 24, 1999
Scripps Xxxxxx Broadcasting Company
d/b/a Home & Garden Television
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen: Re: Relationship with Xxxxxx.xxx, Inc.
This letter sets forth the agreement between Scripps Xxxxxx Broadcasting
Company d/b/a Home & Garden Television ("HGTV") and Xxxxxx.xxx, Inc.
("Xxxxxx.xxx") with respect to the issuance of equity in Xxxxxx.xxx to HGTV in
exchange for certain HGTV cable television advertising inventory. This letter
also addresses the parties' expectations regarding the initiation and continuing
development of a strategic alliance between them. The general terms and
conditions of this relationship shall be as follows:
1. Purchase of Advertising. Subject to the terms of that certain
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Amendment to Stock Purchase Agreement (the "Amended Stock Purchase Agreement")
dated as of May 21, 1999 and executed between Xxxxxx.xxx and HGTV and certain
stockholders of Xxxxxx.xxx, Xxxxxx.xxx will issue 262,237 shares of its $.01 par
value Series E Convertible Preferred Stock (the "In-kind Stock") to HGTV in
exchange for HGTV issuing an advertising credit to Xxxxxx.xxx in the amount of
$1,499,995.64 (the "Advertising Credit"). HGTV's issuance of the Advertising
Credit represents full payment for the In-kind Stock. HGTV's purchase of the
In-kind Stock shall in no way be affected by the parties' pursuit of the
strategic relationship referenced below.
2. General Terms of Advertising. HGTV shall provide Xxxxxx.xxx with the
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use of advertising spots (each, a "Spot") to be telecast on HGTV reasonably
spread over a period commencing on the date hereof and continuing thereafter for
twenty-four (24) months (the "Term"). The parties agree that Xxxxxx.xxx shall
seek to order and HGTV shall telecast Spots having an
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aggregate value equal to approximately $750,000 during the first twelve (12)
months of the Term and Spots having an aggregate value of the balance of the
Advertising Credit during the second twelve (12) months of the Term, with the
value of each Spot calculated at the rates negotiated by HGTV and Xxxxxx.xxx at
that time; provided, however, that in no event shall such rates be greater than
the rates payable by a third-party advertiser of a similar quantity and quality
of Spots. The Spots shall be telecast on the dates and at times mutually agreed
to by the parties. The parties agree to meet during the six (6) month period
following the date hereof to agree upon a budget and schedule for the use of the
Advertising Credit during the first twelve (12) months of the Term and to meet
on a timely basis to agree upon a budget and schedule for the use of the
Advertising Credit during the second twelve (12) months of the Term. If a
portion of the Advertising Credit remains after expiration of the Term, then
Xxxxxx.xxx may continue to use the balance of such Advertising Credit to
purchase Spots from HGTV.
3. Use of Advertising Credit. The Advertising Credit shall be treated as
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a credit balance owned by Xxxxxx.xxx and to be used by Xxxxxx.xxx in its sole
discretion to purchase advertising on the HGTV network. The parties agree that
the delivery of the In-kind Stock pursuant to the Amended Stock Purchase
Agreement and the agreement related thereto as set forth herein constitute full
and complete payment to HGTV for the Spots. Without the prior written consent
of HGTV, Xxxxxx.xxx shall not assign or otherwise transfer the Advertising
Credit; provided, however, that nothing herein shall prevent the continued use
of the Advertising Credit by Xxxxxx.xxx's successor in interest in the event of
a merger, consolidation or sale of substantially all of the assets of Xxxxxx.xxx
or the sale of a majority of the outstanding shares of capital stock of
Xxxxxx.xxx (each, a "Transferring Transaction"), but only in connection with and
in furtherance of the Xxxxxx.xxx website or, with HGTV's prior written approval,
which shall not be unreasonably withheld, a website that replaces the Xxxxxx.xxx
website if the latter is discontinued following such a Transferring Transaction.
4. Strategic Relationship. Xxxxxx.xxx and HGTV agree that their mutual
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goal is to work together in the utilization/commercialization of each other's
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content, expertise and consumer base. In furtherance of that goal, the parties
shall use their commercially reasonable efforts to explore and pursue strategic
ventures and relationships with each other, such as, for example, the
integration of their respective media offerings. Without limiting the
generality of the foregoing, the parties shall use their best effort during the
six (6) month period following the date hereof to form and document a plan to
capitalize on their possible synergies. Such activities are presently intended
to include, without limitation, the following:
By Xxxxxx.xxx:
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. serving as an on
line and electronic commerce partner of HGTV with respect to gardening and
gardening-related products;
. providing content for use by HGTV; and
. selling HGTV-related items through Xxxxxx.xxx's website.
By HGTV:
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. serving as a media partner of Xxxxxx.xxx;
. providing content for use by Xxxxxx.xxx; and
. facilitating the relationship between Xxxxxx.xxx and third parties
interested in selling products through the Internet.
Further, the parties shall use their commercially reasonable efforts to (a) work
together on tying Xxxxxx.xxx's electronic commerce capabilities to HGTV's
programming, (b) provide developmental guidance to each other, (c) discuss and,
as appropriate, initiate co-branding opportunities, (d) cooperate on the joint
development of electronic commerce offerings, (e) share research information,
(f) discuss and, as appropriate, implement exclusive parameters of the
arrangement between the parties, (g) co-develop new operations (e.g., software,
functions, and processes) that enhance the relationship between the parties
and/or their respective businesses, and (h) generally work to pursue mutually
beneficial projects. The terms, pricing, cost and revenue sharing for such
projects shall be as mutually agreed upon by the parties at a later date. Until
the parties agree to the contrary in
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writing during the Term, the parties are free to continue to pursue ventures
with third parties of the kind and to the extent that they have pursued such
ventures prior to the date hereof.
5. Xxxxxx.xxx Marks. Xxxxxx.xxx hereby grants to HGTV a nonexclusive,
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royalty-free license effective throughout the Term to use, display and publish,
with Xxxxxx.xxx's prior review for approval, the Xxxxxx.xxx marks as set forth
on the attached Exhibit A, but only in furtherance of the activities
contemplated herein. Any use of the Xxxxxx.xxx marks by HGTV must comply with
any reasonable usage guidelines communicated by Xxxxxx.xxx to HGTV from time to
time. Nothing contained in this letter agreement shall give HGTV any right,
title or interest in or to the Xxxxxx.xxx marks or the goodwill associated
therewith, except for the limited usage rights expressly provided above. HGTV
acknowledges and agrees that, as between Xxxxxx.xxx and HGTV, Xxxxxx.xxx is the
sole owner of all rights to the Xxxxxx.xxx marks.
6. HGTV Marks. HGTV hereby grants to Xxxxxx.xxx a nonexclusive, royalty-
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free license effective throughout the Term to use, display and publish, with
HGTV's prior review for approval, the HGTV marks as set forth on the attached
Exhibit B, but only in furtherance of the activities contemplated herein. Any
use of the HGTV marks by Xxxxxx.xxx must comply with any reasonable usage
guidelines communicated by HGTV to Xxxxxx.xxx from time to time. Nothing
contained in this letter agreement shall give Xxxxxx.xxx any right, title or
interest in or to the HGTV marks or the goodwill associated therewith, except
for the limited usage rights expressly provided above. Xxxxxx.xxx acknowledges
and agrees that, as between HGTV and Xxxxxx.xxx, HGTV is the sole owner of all
rights to the HGTV marks.
7. Representations and Warranties. HGTV and Xxxxxx.xxx each represent
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and warrant that this letter agreement has been duly authorized, executed and
delivered by such party and that this letter agreement constitutes the legal,
valid and binding obligation of such party, enforceable in accordance with these
terms.
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8. Publicity. Neither party shall issue a press release or make any
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statement to the general public concerning this letter agreement, Spots, or the
existence thereof, without the expressed prior written consent of the other;
provided, however, that HGTV agrees that Xxxxxx.xxx may file this letter
agreement with the Securities and Exchange Commission (the "SEC") and or
describe this letter agreement in any registration statement filed with the SEC,
as long as Xxxxxx.xxx consults with HGTV during the process.
9. Miscellaneous. This letter agreement, along with other documents
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executed by the parties related to HGTV's purchase of the In-Kind Stock,
constitutes the entire agreement and understanding of the parties related to the
subject matter hereto and supersedes all prior and contemporaneous agreements,
negotiations, and understandings between the parties both oral or written
relating to the subject matter hereof. No waiver of modification of any
provision of this letter agreement shall be effective unless in writing and
signed by both parties. Any waiver by either party of any provision of this
letter agreement shall not be construed as a waiver of any other provision of
this letter agreement, nor shall such waiver operate at or be construed as a
waiver of such provision respecting a future circumstance. The terms of this
letter agreement shall apply to the parties hereto and any other successors or
assigns. This letter agreement may be executed in counterparts, each of which
when executed shall be deemed to be an original, but all which taken together
shall constitute one and the same agreement. Facsimile signatures of this
letter agreement shall be deemed of equal validity and as fully enforceable as
original signatures thereof.
10. Governing Law. This letter agreement shall be governed and construed
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under the laws of the State of Texas applicable to contracts fully performed in
Texas, without regard to Texas conflicts of law principles.
If you are in agreement with the above terms and conditions, please
indicate your acceptance by signing in the space provided below and returning
one original
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May 24, 1999
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to me. This letter agreement shall be null and void if not signed within three
days of the date set forth above.
Xxxxxx.xxx looks forward to a mutually beneficial and enduring
relationship.
Yours very truly,
Xxxxxx.xxx, Inc.
BY
Xxxxx X. X'Xxxxx,
Chief Operating Officer
MW2\76320JNO:PN
Encs.
Accepted and agreed to this
24th day of May, 1999.
SCRIPPS XXXXXX BROADCASTING
COMPANY d/b/a HOME & GARDEN
TELEVISION
BY /s/ Xxxxxxx X. Xxxx
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Its President/CEO
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