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EXHIBIT 10.30
December 13, 1999
Xxxxx Xxxx
President & Chief Executive Officer
Telocity, Inc.
00000 Xxxxx Xx Xxxx Xxxxxxxxx
Xxx Xxxx, XX 00000
Advertising Agreement
Dear Xx. Xxxx:
This letter sets forth the agreement between NBC Internet, Inc. ("NBCi")
and Telocity, Inc. ("Advertiser") with respect to NBCi's agreement to provide
Advertiser with the right to use certain of NBCi's advertising inventory on NBC
Television Network and its owned and operated television stations (collectively,
"NBC TV") to promote Advertiser only, subject to the following terms and
conditions:
1. Spots. (a) NBCi shall develop and produce fifteen (15) and thirty (30)
second advertising spots to promote the next generation Internet services
available on the Co-Branded site accessible through Advertiser's high-speed
Internet services (the "Spots"). Advertiser shall [*]. Use of each Spot will be
subject to Advertiser's approval, not to be withheld or delayed unreasonably.
NBCi will instruct NBC TV to telecast the Spots on NBC TV on the Dates, Days and
Times mutually agreed by NBCi and Advertiser (subject to NBCi's available
inventory and prior sales commitments); provided, however, that in the event
that no such agreement is reached with regard to the number or value of Spots to
be broadcast in any calendar quarter or year, NBCi may propose and implement a
reasonable schedule for the broadcast of Spots in accordance with the terms of
Section 2 below and based upon Advertiser's reasonable request for such
schedule. An initial schedule for the first quarter of 2000 shall be determined
as soon as practicable following the date hereof. All spots run by Advertiser
pursuant to this Letter Agreement shall be subject to NBC TV's standard terms
and conditions for such advertising which are described in the "Participating
Sponsorship Agreement" attached hereto as Exhibit A (the "Standard Terms") and
which are made a part of this Letter Agreement in their entirety; provided,
however, that in the case of a conflict
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.
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between the terms of this Letter Agreement and the terms of the Standard Terms,
the terms of this Letter Agreement shall govern. For purposes of the Standard
Terms, Advertiser shall be both the "Advertiser" and the "Agency" as such terms
are used therein.
(b) With respect to the placement or telecast of Advertiser's Spots in
any particular Program, Advertiser acknowledges that NBC TV may reject such
placement or telecast if such placement or telecast would compete with or
violate the rights of any other advertiser, sponsor or supplier of such Program
or program category, as determined by NBC TV in its sole discretion and in good
faith; it being understood that NBCi's aggregate commitments set forth in
Section 2 below shall not be affected by any such rejection.
(c) Advertiser may elect to substitute up to [*] of the value of Spots
to be provided by NBCi in any given financial quarter with an equivalent value
of on-line advertising at [*] of the applicable NBCi standard rate card, subject
to the restrictions set forth in Section 7.5 ("Online Promotions") of the
Operating Agreement among NBCi, NBC TV, and Advertiser dated December 13th, 1999
(the "Operating Agreement"), provided that Advertiser gives NBCi three-months
prior written notice.
2. Value of Spots. NBCi shall telecast Spots with a total spot value of
$13,000,000 (the "Total Spot Value") during the thirty-six (36) months
commencing on January 1, 2000 (the "Effective Date"). The value of each Spot for
purpose of this Letter Agreement shall [*]. The parties agree that no agency
fees or other expenses may be deducted by Advertiser in any way in connection
with determining the number of Shares (as defined below) to be paid to NBCi
pursuant to Section 3 hereof at any time.
3. Payment for the Spots. (a) Advertiser shall deliver to NBCi 2,480,916
shares of Series C Preferred Stock of Advertiser pursuant to the terms and
conditions of that certain Series C Preferred Stock Purchase Agreement dated as
of the date hereof between Advertiser and certain investors (the "Purchase
Agreement").
(b) NBCi shall provide Advertiser with a written report within 10
business days after the end of each calendar month after the Effective Date
during which Advertiser's Spots have been telecast and setting forth the
aggregate value of Advertiser's Spots telecast by NBCi in the preceding month.
4. Representations and Warranties. NBCi and Advertiser each represent 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 obligations of such party, enforceable against it in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
by general
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.
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principles of equity.
5. Termination. (a) Notwithstanding any other remedy available to NBCi, in
the event that:
(i) NBCi notifies Advertiser in writing (with specificity) that
Advertiser has materially breached this Letter Agreement and Advertiser
has not cured such alleged breach within thirty (30) days of its receipt
of such notice; or
(ii) upon the occurrence of a Change of Control (as hereinafter
defined); or
(iii) Advertiser admits in writing its inability to pay its debts
generally; makes a general assignment for the benefit of creditors; has
any proceeding instituted by or against it seeking to adjudicate it as
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of Advertiser
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or similar official for
it or any substantial part of its property; provided, in the case where
such proceeding is involuntarily instituted against Advertiser, such
proceeding remains undismissed after thirty (30) days,
then, in any such case, NBCi shall have the right, but not the obligation, to
terminate this Letter Agreement, without prejudice to the rights of the parties
hereunder and, in the event of a termination after NBCi's receipt of the Shares
pursuant to Section 3(a) hereof, NBCi shall pay Advertiser a cash amount equal
to the difference, if positive, between the Total Spot Value and the value of
the Spots already telecast (or deemed telecast), as determined and calculated
pursuant to Sections 1 and 2 above. Notwithstanding the foregoing, the terms
contained in Sections 5, 6, 7 and 8 shall survive the termination hereof. Any
such termination right in connection with a Change of Control shall be
exercisable no later than the later to occur of (x) ten (10) business days prior
to the consummation of such Change of Control and (y) ten (10) business days
after receipt by NBCi of notice (which notice shall identify the third party
having or acquiring Control over Advertiser, be in writing, explicitly state
that it is being delivered in accordance with this Section 5 and provide NBCi
with such additional information as has been provided to the other stockholders
of Advertiser) from Advertiser of such Change of Control (which termination
shall become effective, at NBCi's discretion, upon the consummation of such
Change of Control or following receipt of such notice from Advertiser). For
purposes of this Section 5, the following terms shall have the following
meanings:
"Change of Control" shall mean (A) any consolidation, reorganization
or merger of Advertiser with any third party, other than a transaction
resulting in the holders of the capital stock of Advertiser (prior to such
consolidation, reorganization or merger) having Control over the surviving
or resulting entity, (B) any third party having Control over Advertiser or
(C) any sale, transfer or other disposition by Advertiser of all or
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substantially all of its assets to any third party; and
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of
Advertiser, whether through ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
(b) Notwithstanding any other remedy available to Advertiser, in the
event that:
(i) Advertiser notifies NBCi in writing (with specificity) that
NBCi has materially breached this Letter Agreement and NBCi has not cured
such alleged breach within thirty (30) days of its receipt of such notice;
or
(ii) NBCi admits in writing its inability to pay its debts
generally; makes a general assignment for the benefit of creditors; has
any proceeding instituted by or against it seeking to adjudicate it as
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of NBCi or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or similar official for it or any
substantial part of its property; provided, in the case where such
proceeding is involuntarily instituted against NBCi, such proceeding
remains undismissed after thirty (30) days,
then, in any such case, Advertiser shall have the right, but not the obligation,
to terminate this Letter Agreement, without prejudice to the rights of the
parties hereunder and, in the event of a termination after NBCi's receipt of the
Shares pursuant to Section 3(a) hereof, require NBCi to pay Advertiser a cash
amount equal to the difference, if positive, between the Total Spot Value and
the value of the Spots already telecast (or deemed telecast), as determined and
calculated pursuant to Sections 1 and 2 above. Notwithstanding the foregoing,
the terms contained in Sections 5, 6, 7 and 8 shall survive the termination
hereof.
(c) In the event that the Operating Agreement is terminated pursuant to Section
12 ("Term; Termination") thereof, NBCi in its sole discretion may (i) terminate
its obligations under this Letter Agreement and provide Advertiser with cash in
lieu of the unused portion of the advertising; or (ii) telecast spots which
promote solely Advertiser and its high-speed Internet services only
("Advertiser-Branded Spot") in lieu of the unused portion of the advertising,
provided that such Advertiser-Branded Spots shall be valued at [*] of the
scatter market rate of a similar spot charged by NBC TV at the time that each
Advertiser-Branded Spot is scheduled by NBCi. In the event that NBCi terminates
the promotional exclusivity set forth in Section 4.12 ("Promotional
Exclusivity") of the Operating Agreement, NBCi will telecast Advertiser-Branded
Spots in lieu of the unused portion of the advertising, provided that such
Advertiser-Branded
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.
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Spots shall be valued at [*] of the scatter market rate of a similar spot
charged by NBC TV at the time that each Advertiser-Branded Spot is scheduled by
NBCi. Advertiser shall bear the total cost of the production of all
Advertiser-Branded Spots. Advertiser agrees that it will comply with NBCi's
then-current policies regarding the timely delivery of commercial materials
related to the Advertiser-Branded Spots.
6. Miscellaneous. This Letter Agreement, the Purchase Agreement, the
Operating Agreement, and the exhibits and schedules hereto and thereto
constitute the entire agreement and understanding of the parties relating to the
subject matter hereof and supersede all prior and contemporaneous agreements,
negotiations, and understandings between the parties, both oral and written
relating thereto. No waiver or modification of any provision of this Letter
Agreement shall be effective unless in writing and signed by both parties. The
terms of this Letter Agreement shall apply to parties hereto and any of their
successors or assigns; provided, however, that this Letter Agreement may not be
transferred or assigned by Advertiser, including, without limitation, the right
to receive Spots to be telecast by NBC TV, without the prior written consent of
NBCi which shall not be unreasonably withheld. This Letter Agreement may be
executed in counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
7. Governing Law and Jurisdiction. This Letter Agreement shall be governed by
and construed under the laws of the State of New York applicable to contracts
fully performed in New York, without regard to New York conflicts law. The
parties hereto irrevocably consent to and submit to the exclusive jurisdiction
of the federal and state courts located in the County of New York. The parties
hereto irrevocably waive any and all rights to trial by jury in any proceeding
arising out of or relating to this Agreement.
8. Liability. In the event that NBC TV does not telecast Spots equal to the
Total Spot Value during the thirty-six (36) months after the Effective Date,
then as liquidated damages and not a penalty, NBCi shall pay Advertiser in cash
an amount equal to the difference, if positive, between the Total Spot Value and
the value of the Spots actually telecast, as calculated pursuant to Section 2
above. Except for damages arising out of the gross negligence of willful
misconduct of either party hereto, no party shall be liable to the other party
or its affiliates, officers, directors, successors or assigns for any
incidental, consequential, special or punitive damages or lost profits arising
out of this Letter Agreement, whether liability is asserted in contract or tort
and irrespective of whether it has advised or been advised of the possibility of
any such loss or damage.
If you are in agreement with the above terms and conditions, please
indicate your acceptance by signing in the space provided below, and return one
original to me. This Letter Agreement shall be null and void if not signed
within two (2) days of the date set forth above.
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the
Commission.
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Very truly yours,
NBC INTERNET, INC.
By: /s/ AUTHORIZED SIGNATORY
-------------------------
Name:
Title:
ACCEPTED AND AGREED:
TELOCITY, INC.
By: /s/ AUTHORIZED SIGNATORY
-------------------------
Name:
Title:
[SIGNATURE PAGE TO TELOCITY ADVERTISING LETTER AGREEMENT]
