EXHIBIT 10.25
[Effective Date]
NBC Internet, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Re: NBC ADVERTISING PURCHASE
Dear Xxxxx:
This letter ("Letter Agreement") sets forth the agreement between the
National Broadcasting Company, Inc. ("NBC"), and NBC Internet, Inc.
("Advertiser") with respect to the Advertiser's purchase of certain
advertising inventory on NBC Network Television, NBC owned and operated
television stations and, to the extent applicable, any other standard (ie,
over-the-air broadcast) television network programmed or controlled by NBC (all
of the foregoing are hereafter collectively referred to as "NBC TV") and on
non-standard television channels owned and operated by NBC, which are currently
MSNBC and CNBC (all such non-standard television channels are hereafter
collectively referred to as "NBC Cable"). The terms and conditions shall be
as follows:
1. GENERAL TERMS. (a) NBC shall provide Advertiser with the use of fifteen
(15), thirty (30), and sixty (60) second advertising spots (each, a "Spot")
to be telecast on NBC TV and NBC Cable as requested by Advertiser reasonably
spread over 48 months commencing on September 27, 1999 (the "Commencement
Date").
(b) Any co-branding or reselling of the Spots shall be subject to the
approval of NBC, which approval shall not be unreasonably withheld or delayed.
For purposes of this paragraph 1(b), any determination or consent of NBC may
only be given by NBC's account manager for this Letter Agreement, who shall
initially be [___________] and requests for any such determination or consent
may only be requested by Advertiser's account manager for this Letter
Agreement, who shall initially be Xxxxxxx Xxxxxxxxxx and shall thereafter be a
designee of the Class A Directors of Advertiser (as such term is defined in the
Certificate of Incorporation of Advertiser) (the "Class A Directors").
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(c) All such Spots run by Advertiser shall be, at all times, subject to
NBC TV or NBC Cable's standard terms and conditions for such advertising
which, for NBC TV, are described in the "Participating Sponsorship Agreement"
attached as Exhibit A hereto (the "Standard Terms") and for MSNBC and CNBC
are described in the "Standard Terms and Conditions for the Telecast of
Commercial Advertising" and the "Commercial Continuity Guidelines" attached
as Exhibit B hereto (the "MSNBC/CNBC Standard Terms"), respectively;
PROVIDED, HOWEVER, that in the case of a conflict between the terms of this
Letter Agreement and the terms of the Standard Terms and/or the MSNBC/CNBC
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. Advertiser acknowledges that if it
fails to deliver any of the material required by NBC to air Advertiser's Spots
during any particular Program pursuant to the procedures in the Standard Terms,
then NBC TV or such NBC Cable channel shall be deemed to have telecast such
Spot during the relevant Program for purposes hereof even if such Spot is not
actually shown when the Program is telecast; PROVIDED, HOWEVER, that if
Advertiser supplies any new commercial material to NBC, Advertiser instructs
NBC to use such new material in lieu of the commercial material previously
delivered to NBC, and such new material complies with the standards described
in the Standard Terms, including NBC Advertising Standards, then NBC will make
reasonable commercial efforts to telecast such new material on all Spots and
will telecast such new material commencing no more than 72 hours after receipt
of such new material by NBC.
2. VALUE OF SPOTS. (a) NBC and Advertiser agree that Advertiser's Spots
telecast during the term of this Letter Agreement shall have an aggregate value
of $405,000,000, of which (i) not less than $45 million shall be purchased
during the fourth calendar quarter of 1999; (ii) not less than $20 million
shall be purchased in each of the next eleven calendar quarters; (iii) not less
than $105 million shall be purchased in the first year following the
Commencement Date; and (iv) not less than $89 million shall be purchased in
each of the next two years. The value of each Spot for purposes of this Letter
Agreement shall be 85% of the gross market rate charged by NBC TV or an NBC
Cable channel, where market rate is defined as the actual current rate, whether
on or off any rate cards, and as adjusted for any applicable frequency
discounts, early payment discounts, rebates, and other discounts, charged by
NBC TV or such NBC Cable channel to an advertiser purchasing Spots valued at
the same amount as Advertiser actually purchases in any given broadcast year on
NBC TV or such NBC Cable channel. The value of each Spot shall be calculated
at the actual current rate in effect at the time such Spot is ordered - ie, (1)
where the Spot will be telecast by the NBC Television Network and is ordered
before or during the upfront market, in accordance with Section 3(b) below, the
actual current rate will be based on the upfront rate for such Spot, (2) where
the Spot will be telecast by the NBC Television Network and is ordered after
the upfront market, the actual current rate will be based on the scatter market
rate for such Spot, and (3) where the Spot will be telecast by a television
station owned and operated by NBC or on an NBC Cable channel, the actual
current rate will be based on the rate for such Spot charged by such television
station or such NBC Cable channel.
(b) Ninety (90) days prior to the fourth anniversary of the Commencement
Date, Advertiser and NBC agree to negotiate concerning the purchase by
Advertiser over a six year
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period beginning at the end of the term of this Letter Agreement of up to an
additional $500,000,000 of Spots on NBC TV, at a price and subject to terms and
conditions to be mutually agreed upon by Advertiser and NBC. Any decision by
the parties for Advertiser to purchase such additional Spots shall be subject
to the approval of a majority of the Class A Directors of Advertiser.
(c) NBC and each NBC Cable channel shall provide Advertiser with a
written report within 5 business days after the end of each calendar month
following the date hereof setting forth the aggregate value of the Spots
telecast by NBC or such NBC Cable channel in the preceding month (each, a
"Monthly Report"). Neither NBC nor any NBC Cable channel shall include in the
amount for the aggregate value of the Spots in the Monthly Report, and
therefore shall not charge Advertiser, for Spots not actually telecast or
deemed telecast. Within ten (10) business days after receiving each Monthly
Report, absent manifest error, Advertiser shall pay NBC or such NBC Cable
channel in cash for the amount set forth in such Monthly Report; PROVIDED,
HOWEVER, that no payment shall be required until January 15, 2000. NBC's
obligations under this Letter Agreement are conditioned upon full payment by
Advertiser of all obligations to NBC and each NBC Cable channel that arise
solely under this Letter Agreement.
3. SPOT PLACEMENT AND TERMS. (a) NBC and Advertiser shall use their good
faith efforts to prepare and mutually agree as provided in Section 3(b) upon a
written schedule (the "Schedule") for the telecast of the Spots during such
broadcast year representing approximately $70 million in value as determined
herein on the Dates, Days and Times, adjacent to specific programming
(including special events and major sports events), adjacent to other
advertisers' spots, with the audience delivery or demographics, and otherwise
as based upon Advertiser's written proposal provided to NBC in accordance with
Section 3(b) below. In no event shall Advertiser have less control and
direction over the frequency and other timing of Spots; less control and
direction over placement adjacent to or in conjunction with programming and
other advertisers' spots; and less choice of spots (including spots for
special events) than any other advertiser purchasing a similar aggregate market
value of Spots (as calculated on an annual basis) from NBC.
(b) Immediately after NBC's announcement of its prime-time schedule for
the upcoming broadcast year (i.e., the opening of the upfront marketplace),
Advertiser shall provide NBC with a written proposal for the Schedule for the
upcoming broadcast year. Promptly thereafter, the parties shall use their good
faith efforts to expeditiously agree on the Schedule. The Schedule for each
broadcast year after the initial year shall be subject to the review and
approval of a single person, who shall either be a member of senior management
of Advertiser or a Class A Director, which person may be appointed by, and may
be removed by, a majority of the Class A Directors, but de minimus amendments
to the Schedule may be agreed by Advertiser's account manager for this Letter
Agreement without any further approval by a majority of the Class A Directors.
NBC's obligation to provide Spots on the Schedule for NBC Cable in each
broadcast year shall be limited to providing Spots valued hereunder in an
amount ranging from ten percent (10%) to twenty percent (20%) of the aggregate
value of the Schedule.
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(c) In addition to the Spots to be telecast pursuant to the Schedule,
Advertiser may negotiate directly with NBC Cable and NBC's owned and operated
television stations to place some or all of Spots valued at $20 million per
year to be telecast by NBC Cable and/or such television stations. To the extent
that, following such good faith discussions, Advertiser, NBC, NBC Cable and
such television stations cannot agree on the placement of such Spots, then NBC
may place and telecast any of such Spots that Advertiser is unable to place
with NBC Cable or such television stations or in the Schedule on a "run of
schedule" basis (ie, as and to the extent that time is available on NBC TV) in
any daypart (other than overnight) on NBC TV and in accordance with the
audience delivery or demographics reasonably requested by Advertiser. NBC may
charge Advertiser for the value of such Spots in accordance with the last
sentence of Section 2(a) above.
(d) In no event shall Advertiser have less access to ratings, audience
delivery, demographic and other information in the control of NBC than any
other advertiser purchasing a similar aggregate market value of Spots (as
calculated on an annual basis) from NBC TV or any NBC Cable channel, as the
case may be. In the event that Advertiser determines, in its reasonable
discretion, that the mechanism for determining the Schedule has resulted in
Advertiser's receiving less control and direction over the frequency and other
timing of Spots; less control and direction over placement adjacent to or in
conjunction with programming and other advertisers' spots; and less choice of
spots (including spots for special events) than any other advertiser purchasing
a similar aggregate market value of Spots (as calculated on an annual basis)
from NBC TV for the 2000/2001 broadcast year, then Advertiser may request that
the procedure for determining the Schedule be revised to provide Advertiser
with such rights. Following such request, Advertiser and NBC shall use their
good faith efforts to revise such procedure accordingly.
(e) The parties agree that no agency fees or other expenses may be
deducted by Advertiser in any way in connection with determining the amount of
cash to be paid to NBC or any NBC Cable channel pursuant hereto at any time.
4. PREEMPTION. NBC shall be able to preempt any of the Spots only in the
event of programs of public importance, news reports, political programs,
sports events, special programs, or special events and not solely for another
advertiser. In the event NBC fails to present over its network facilities any
telecast hereunder because of preemption as provided herein; unavailability of
technical facilities; defect or breakdown of equipment or transmission
facilities; labor dispute; government action; the unforeseen absence of a
principal performance; force majeure; act of God; or any other cause beyond the
control of NBC, whether of a similar or dissimilar nature, NBC's liability
therefor shall be limited solely to, at the option of NBC, (a) cancellation or
a pro rata rebate, as applicable, of all charges for the Spots not telecast to
Advertiser or (b) the provision of a mutually acceptable make good for such
affected telecast and such failure to telecast shall not constitute a breach of
this Letter Agreement.
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5. REPRESENTATIONS AND WARRANTIES. NBC 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 principles of equity.
6. TERMINATION. (a) Notwithstanding any other remedy available to NBC, in
the event that:
(i) NBC 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) of
Advertiser; 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, NBC shall have the right, but not the obligation, to
terminate this Letter Agreement, without prejudice to the rights of the parties
hereunder and thereunder, and require Advertiser to immediately pay NBC a cash
amount equal to the value of the advertising already telecast by NBC as of such
termination.
(b) Notwithstanding any other remedy available to Advertiser, in the
event that:
(i) Advertiser notifies NBC in writing (with specificity) that NBC has
materially breached this Letter Agreement and NBC has not cured such alleged
breach within thirty (30) days of its receipt of such notice; or
(ii) NBC 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 NBC 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 NBC, such
proceeding remains undismissed after thirty (30) days,
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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 thereunder.
(c) 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 in Control shall be exercisable no later than the
later to occur of (x) twenty (20) days prior to the consummation of the
transaction resulting in such Change of Control and (y) ten (10) business days
after receipt by NBC of notice (which notice shall identify the acquiror of
Advertiser, be in writing, explicitly state that it is being delivered in
accordance with this Section 6 and provide NBC with such additional information
as has been provided to the other stockholders of Advertiser of such Change of
Control. For purposes of this Section 6, "Change of Control" shall have the
meaning set forth in that Brand Integration and License Agreement between
Advertiser and NBC Multimedia, Inc. dated as of May 8, 1999.
7. MISCELLANEOUS. This Letter Agreement constitutes the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersedes all prior and contemporaneous agreements, negotiations, and
understandings between the parties, both oral and written relating to the
subject matter hereof. No waiver or modification of any provision of this
Letter Agreement shall be effective unless in writing and signed by NBC and
Advertiser and, to the extent that such waiver or modification constitutes a
material change in this Letter Agreement, a majority of Class A Directors of
Advertiser (as such term is defined in the Certificate of Incorporation of
Advertiser). 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 as or be construed as a waiver
of such provision respecting any future event or circumstance. The terms of
this Letter Agreement shall apply to parties hereto and any of their successors
or assigns; PROVIDED that this Letter Agreement may not be transferred or
assigned by either party, without the prior written consent of the other party.
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.
8. 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 Letter Agreement.
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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.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: _____________________________
Name:
Title:
ACCEPTED AND AGREED:
NBC INTERNET, INC.
By: _______________________________
Name:
Title:
