CONFIDENTIAL
INTERACTIVE MARKETING AGREEMENT
This Interactive Marketing Agreement (the "Agreement"), dated as of
August 1, 1998 (the "Effective Date"), is between America Online, Inc.
("AOL"), a Delaware corporation, with offices at 00000 XXX Xxx, Xxxxxx,
Xxxxxxxx 00000, and DVD Express, Inc. ("MP"), a California corporation, with
offices at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000. AOL
and MP may be referred to individually as a "Party" and collectively as the
"Parties."
INTRODUCTION
AOL and MP each desires to enter into an interactive marketing
relationship whereby AOL will promote and distribute an interactive site
referred to (and further defined) herein as the Affiliated MP Site. This
relationship is further described below and is subject to the terms and
conditions set forth in this Agreement. Defined terms used but not defined in
the body of the Agreement will be as defined on Exhibit B attached hereto.
TERMS
1. PROMOTION, DISTRIBUTION AND MARKETING.
1.1 AOL PROMOTION OF AFFILIATED MP SITE. Provided that MP is in
compliance with all material terms of this Agreement, AOL shall be
obligated to provide MP with the promotions for the Affiliated MP
Site described on Exhibit A attached hereto. Subject to MP's
reasonable approval, AOL will have the right to fulfill its
promotional commitments with respect to any of the foregoing by
providing MP comparable promotional placements in appropriate
alternative areas of the AOL Network. In addition, if AOL is unable
to deliver any particular Promotion, AOL will work with MP to
provide MP, as its sole remedy, a comparable promotional placement.
AOL reserves the right to redesign or modify the organization,
structure, "look and feel," navigation and other elements of the AOL
Network at any time. In the event such modifications materially and
adversely affect any specific Promotion, AOL will work with MP to
provide MP, as its sole remedy, a comparable promotional placement.
The promotions described on Exhibit A and any comparable promotions
provided herein shall be referred to as the "Promotions."
1.2 IMPRESSIONS COMMITMENT. During the Term, AOL shall deliver up to [***]
Impressions to MP through the Promotions (the "Impressions
Commitment"). With respect to the Impressions Commitment, AOL will
not be obligated to provide in excess of any Impressions target
amounts (as specified on Exhibit A) in any year. In the event AOL
provides an excess of Impressions in any year, the annual Impressions
target for the subsequent year will be reduced by the amount of such
windfall. Any shortfall in Impressions at the end of a year will not
be deemed a breach of the Agreement by AOL; instead such shortfall
will be added to the Impressions target for the subsequent year. In
the event there is (or will be in AOL's reasonable judgment) a
shortfall in Impressions as of the end of the Initial Term (a "Final
Shortfall"), as MP's sole remedy, AOL will either (i) continue to
provide MP with Integrated Promotions until such time as the
Impressions which comprise the Final Shortfall are delivered or (ii)
provide MP with targeted advertising placements on the AOL Network
which have a total value, based on AOL's then-current advertising
rate card, equal to the value of the Final Shortfall (determined by
multiplying the percentage of Impressions that were not delivered by
the total guaranteed payment provided for below). In the event that
at any point during the Term, Site Revenues generated by MP
hereunder shall exceed the Aggregate Revenue Threshold, the entire
Impressions Commitment will be deemed satisfied; provided, however,
that AOL shall continue to provide MP with all integrated Promotions
as provided on Exhibit A until the expiration of the Initial Term.
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1.3 CONTENT OF PROMOTIONS. Promotions for MP will link only to the
Affiliated MP Site and will promote only the Premier Product. The
specific MP Content to be contained within the Promotions
(including, without limitation, advertising banners and contextual
promotions) (the "Promo Content") will be determined by MP, subject
to AOL's technical limitations, the terms of this Agreement and
AOL's then-applicable policies relating to advertising and
promotions. MP will submit in advance to AOL for its review a
quarterly online marketing plan with respect to the Affiliated MP
Site. The Parties will meet in person or by telephone at least
monthly to review operations and performance hereunder, including a
review of the Promo Content to ensure that it is designed to
maximize performance. MP will consistently update the Promo Content
no less than twice per week. Except to the extent expressly
described herein, the specific form, placement, duration and nature
of the Promotions will be as determined by AOL in its reasonable
editorial discretion (consistent with the editorial composition of
the applicable screens).
1.4. MP PROMOTION OF AFFILIATED MP SITE AND AOL. As set forth in xxxxxx
detail in Exhibit C, MP will promote AOL as its preferred
Interactive Service and will promote the availability of the
Affiliated MP Site through the AOL Network. MP will not implement or
authorize any promotion similar in any respect (including, without
limitation, in scope, purpose, amount, prominence or regularity) to
the promotion required or provided pursuant to Exhibit C for any
other Interactive Service.
2. AFFILIATED MP SITE.
2.1 CONTENT. MP will make available through the Affiliated MP Site the
comprehensive offering of Products and other related Content
described on Exhibit D. Except as mutually agreed in writing by the
Parties, the Affiliated MP Site will contain only Content that is
directly related to the Products listed on Exhibit D and will not
contain any third-party products, services, programming or other
Content. All sales of Products through the Affiliated MP Site will
be conducted through a direct sales format; MP will not promote,
sell, offer or otherwise distribute any products through any format
other than a direct sales format (e.g., through an auction or club
format) without the prior written consent of AOL. Notwithstanding
the foregoing, MP shall have the right to offer or distribute
products through an auction format so long as the availability of
an auction format for the purchase of products on the Affiliated MP
Site is promoted by MP at least two (2) clicks away from the AOL
Service and the products made available through an auction format
shall be subject to the prior written approval of AOL. MP will
review, delete, edit, create, update and otherwise manage all
Content available on or through the Affiliated MP Site in
accordance with the terms of this Agreement. MP will ensure that
the Affiliated MP Site does not in any respect promote, advertise,
market or distribute the products, services or content of any other
Interactive Service or any entity reasonably construed to be in
competition with AOL or any third party with which AOL has an
exclusivity or premier arrangement.
2.2 PRODUCTION WORK. Except as agreed to in writing by the Parties
pursuant to the "Production Work" section of the Standard Online
Commerce Terms & Conditions attached hereto as Exhibit F, MP will
be responsible for all production work associated with the
Affiliated MP Site, including all related costs and expenses.
2.3 TECHNOLOGY. MP will take all reasonable steps necessary to conform
its promotion and sale of Products through the Affiliated MP Site
to the then-existing technologies identified by AOL which are
optimized for the AOL Service. Additionally, MP shall have the
right to make available to AOL users (i) "streaming audio or video"
or any comparable audio or video delivery technology and (ii) "wav"
files, "mpeg" files or other downloadable, nonstreamed audio or
video files through any linked pages of the Affiliated MP Site;
provided that, MP shall not make available any full length Video
Products or any substantial portion thereof on the AOL Network,
through the products described in either clause (i) or (ii)
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above, and (b) if MP's provision of the foregoing products result
in an increase in AOL's network costs, AOL shall have the right to
restrict MP's offering of the foregoing and the Parties shall
renegotiate the economic terms of this Agreement. AOL will be
entitled to require reasonable changes to the Content (including,
without limitation, the features or functionality) within any linked
pages of the Affiliated MP Site to the extent such Content will, in
AOL's good faith judgment, adversely affect any operational aspect of
the AOL Network. AOL reserves the right to review and test the
Affiliated MP Site from time to time to determine whether the site is
compatible with AOL's then-available client and host software and the
AOL Network.
2.4 PRODUCT OFFERING. MP will ensure that the Affiliated MP Site
includes all of the Products and other Content (including, without
limitation, any features, offers, contests, functionality or
technology) that are then made available by or on behalf of MP through
any Additional MP Channel; provided, however, that (i) such inclusion
will not be required where it is commercially or technically
impractical to either Party (i.e., inclusion would cause either Party
to incur substantial incremental costs); and (ii) the specific changes
in scope, nature and/or offerings required by such inclusion will be
subject to AOL's review and approval and the terms of this Agreement.
2.5 PRICING AND TERMS. MP will ensure that: (i) the prices (and any other
required consideration) for Products in the Affiliated MP Site do
not exceed the prices for the Products or substantially similar
Products offered by or on behalf of MP through any Additional MP
Channel; (ii) the terms and conditions related to Products in the
Affiliated MP Site are no less favorable in any respect to the
terms and conditions for the Products or substantially similar
Products offered by or on behalf of MP through any Additional MP
Channel; and (iii) both the prices and the terms and conditions
related to Products in the Affiliated MP Site are reasonably
competitive in all material respects with the prices and terms and
conditions for the Products or substantially similar Products
offered by any MP Competitor through any Interactive Site.
2.6 SPECIAL OFFERS. MP will (i) use best efforts to promote through the
Affiliated MP Site any special or promotional offers made available
by or on behalf of MP through any Additional MP Channel and (ii)
promote through the Affiliated MP Site on a regular and consistent
basis special offers exclusively available to AOL Members and/or
AOL Users ((i) and (ii) collectively, the "Special Offers"). MP
will provide AOL with reasonable prior notice of Special Offers so
that AOL can market the availability of such Special Offers in the
manner AOL deems appropriate in its editorial discretion, subject
to the terms and conditions hereof.
2.7 OPERATING STANDARDS. MP will ensure that the Affiliated MP Site
complies at all times with the standards set forth in Exhibit E. To
the extent site standards are not established in Exhibit E with
respect to any aspect or portion of the Affiliated MP Site (or the
Products or other Content contained therein), MP will provide such
aspect of portion at a level of accuracy, quality, completeness,
and timeliness which meets or exceeds prevailing standards in the
video sale and rental industry. In the event MP fails to comply
with any material terms of this Agreement or any Exhibit attached
hereto, AOL will have the right (in addition to any other remedies
available to AOL hereunder) to decrease the promotion it provides
to MP hereunder (and to decrease or cease any other contractual
obligation hereunder) until such time as MP corrects its
non-compliance (and in such event, AOL will be relieved of the
proportionate amount of any promotional commitment made to MP by
AOL hereunder corresponding to such decrease in promotion) and (b)
any revenue threshold(s) set forth in Section 4 will each be
adjusted proportionately to correspond to such decrease in
promotion and other obligations during the period of
non-compliance. In the event that AOL decreases the promotions it
provides to MP hereunder, AOL shall promptly provide MP with notice
thereof.
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2.8 ADVERTISING SALES. MP shall have the right to sell promotions,
advertisements, links, pointers or similar services or rights
through the Affiliated MP Site ("Advertisements"). The specific
advertising inventory within the Affiliated MP Site will be as
reasonably determined by MP. Notwithstanding the foregoing, in the
event that MP desires to retain a third party to sell advertising
in the Affiliated MP Site on behalf of MP, MP shall first offer to
AOL the right to sell such Advertisements on behalf of MP on terms
and conditions that are no less favorable than those offered to any
third party. MP and AOL shall share the revenues derived from the
sale of Advertisements in the Affiliated MP Site pursuant to Section
4.3 hereof. All Advertisements in the Affiliated MP Site shall be
subject to AOL's then-applicable advertising policies,
exclusivities and prior approval.
2.9 TRAFFIC FLOW. MP will take reasonable efforts to ensure that AOL
traffic is either kept within the Affiliated MP Site or channeled
back into the AOL Network (with the exception of advertising links
sold and implemented pursuant to the Agreement). The Parties will
work together on implementing mutually acceptable links from the
Affiliated MP Site back to the AOL Service.
3. PREMIER STATUS.
3.1 PREMIER PRODUCT. Provided MP is in compliance with all material terms
of this Agreement, during the Initial Term, MP will be one of only
two third-party resellers of Premier Products (each a "Premier
Video Partner") expressly promoted by AOL in the specific manner
and on the specific screens of the AOL Service designated as
"Premier Screens" as provided on Exhibit A attached hereto.
3.2 EXCEPTIONS. Notwithstanding anything to the contrary contained in
this Section 3 (and without limiting any actions which may be taken
by AOL without violation of MP's rights hereunder), no provision of
this Agreement will limit AOL's ability (on or off the AOL Network)
to: (i) undertake activities or perform duties pursuant to existing
arrangements with third parties (or pursuant to any agreements to
which AOL becomes a party subsequent to the Effective Date as a
result of a Change of Control, assignment, merger, acquisition or
other similar transaction); (ii) sell advertisement placements
(e.g. banners, buttons, links, sponsorships), including standard
placements in any shopping area or channel; (iii) sell
advertisement placements to any video club, motion picture,
television or film studio or any entity which creates films,
television programs, or motion picture theatrical productions; (iv)
sell advertisement placements to any reseller of Video Products,
provided that, except for the other Premier Video Partner, such
promotions or advertisements cannot promote any online transactions
in connection with Video Products or link to a web site which
offers online transactions in connection with Video Products; (v)
enter into an arrangement with any third party for the primary
purpose of acquiring AOL Members whereby such party is allowed to
promote or market products or services to AOL Members that are
acquired as a result of such agreement; (vi) create contextual
links or editorial commentary relating to any third party marketer
of the Premier Product; or (vii) promote, advertise or distribute
the products of any third party which is an aggregator of products
(i.e., it is primarily engaged in activities other than marketing
Video Products) (each an "Aggregator"); provided that such
promotions do not expressly promote an Aggregator's Premier Product
within the Premier Screens.
3.3 PRODUCT OFFER RIGHT. In the event that MP does not offer certain Video
Products through the Affiliated MP Site, and if AOL, in its
reasonable judgment, determines that the offering of such Video
Products is important to a good AOL User experience, MP shall have
thirty (30) days after notice from AOL to provide such Video
Products in the MP Affiliated Site, and if within such thirty (30)
day period MP is unable to provide such Video Products, AOL shall
have the right to engage other third parties to provide such Video
Products.
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4. PAYMENTS.
4.1. GUARANTEED AOL SERVICE PAYMENTS. Subject to the
provisions of Section 4.2 hereof, MP will pay AOL a
non-refundable guaranteed payment of Fifteen Million
Dollars (US $15,000,000) as follows:
(i) [***]
(ii) [***] on or prior to each of [***]
(iii) [***] on or prior to each of [***] and
(iv) [***] on or prior to each of [***]
4.2. ACCELERATION OF PAYMENTS. (i) If a Financing Event shall
occur at any time prior to the [***] any payments due to
AOL pursuant to Section 4.1(i) or (ii) which have not yet
been paid shall immediately accelerate and shall be due
and payable within five (5) days of the occurrence of the
Financing Event, provided, however, that if the Financing
Event results in proceeds to MP of less than [***] (a
"Minor Financing Event"), then the portion of the
payments due pursuant to Section 4.1(i) or (ii) which
shall be accelerated, shall be equal to [***] of the
proceeds received in the Minor Financing Event, and the
remainder of the payments due pursuant to Section 4.1(i)
or (ii) (to the extent any shall remain) shall be paid on
the date(s) specified in Section 4.1(i) and (ii), or (ii)
if a Major Financing Event shall occur, and such Major
Financing Event occurs (a) prior to the [***] then
(x) any payments due to AOL pursuant to Section 4.1(i) or
(ii) which have not yet been paid shall immediately
accelerate and shall be due and payable within five (5)
days of the occurrence of the Major Financing Event and
(y), the payments provided for in Section 4.1(iii)(b)
shall immediately accelerate and MP shall pay AOL a total
of [***] on the [***] or (b) after the [***] but prior to
the [***] then the payments required pursuant to Section
4.1(iii)(b) shall immediately accelerate and MP shall
make such payments to AOL within five (5) days of the
occurrence of the Major Financing Event.
4.3. SHARING OF TRANSACTION REVENUES. If at any time during
the Term, (i) quarterly Site Revenues shall exceed [***]
(the "First Quarterly Hurdle") but is less than [***]
(the "Second Quarterly Hurdle"), MP shall pay to AOL an
amount equal to [***] of the Transaction Revenues derived
by MP between the First Quarterly Hurdle and the Second
Quarterly Hurdle or (ii) quarterly Site Revenues shall
exceed the Second Quarterly Hurdle, MP shall pay to AOL
an amount equal to [***] of Transaction Revenues derived
by MP after the Second Quarterly Hurdle has been met.
Notwithstanding the foregoing, if aggregate annual Site
Revenues shall exceed (a) [***] (the "First Annual
Hurdle") but is less than [***] (the "Second Annual
Hurdle"), MP shall pay AOL an amount equal to [***] of
the Transaction Revenues derived by MP between the First
Annual Hurdle and the Second Annual Hurdle or (b) the
Second Annual Hurdle, MP shall pay to AOL an amount equal
to [***] of the Transaction Revenues derived by MP after
the Second Annual Hurdle is met. MP will pay all of the
foregoing amounts to AOL within thirty (30) days
following the end of the quarter in which the applicable
Transaction Revenues were generated.
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4.4. SHARING OF ADVERTISING REVENUES. MP shall pay AOL an
amount equal to [***] of all Advertising Revenues
generated hereunder. MP shall make the foregoing payments
to AOL on a quarterly basis within thirty (30) days
following the end of the quarter in which such amounts
were generated by MP.
4.5. PAYMENTS ON RENEWAL/EXPIRATION. Pursuant to Section 6.2
hereof, upon renewal or expiration of this Agreement (as
the case may be), MP will pay to AOL either (i) a
percentage of Transaction Revenues that is equal to the
most favorable percentage of Transaction Revenues paid by
MP to any other third party that enters into a similar
marketing arrangement with MP (provided that such amount
does not exceed, in any given year, twenty five percent
(25%) of MP's gross margins as reported by MP from time
in MP's audited financial statements) and an amount equal
to [***] of Advertising Revenues (the "Renewal Revenue
Share") or (ii) the Renewal Revenue Share less amounts
derived by MP from AOL Purchasers acquired during the
Initial Term.
4.6. ALTERNATIVE REVENUE STREAMS. In the event MP or any of
its affiliates (a) receives or desires to receive,
directly or indirectly, any compensation in connection
with the Affiliated MP Site other than Site Revenues (an
"Alternative Revenue Stream"), MP will promptly inform
AOL in writing, and the Parties will negotiate in good
faith regarding whether MP will be allowed to market
Products producing such Alternative Revenue Stream
through the Affiliated MP Site, and if so, the equitable
portion of revenues from such Alternative Revenue Stream
(if applicable) that will be shared with AOL (in no event
less than the percentage of Transaction Revenues to be
paid to AOL pursuant to this Section 4).
4.7. LATE PAYMENTS; WIRED PAYMENTS. All amounts owed hereunder
not paid when due and payable will bear interest from the
date such amounts are due and payable at the prime rate
in effect at such time. All payments required hereunder
will be paid in immediately available, non-refundable US
funds wired to the "America Online" account, Account
Number 323070752 at The Chase Manhattan Bank, 0 Xxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000 (ABA: 000000000).
4.8. AUDITING RIGHTS. MP will maintain complete, clear and
accurate records of all expenses, revenues and fees in
connection with the performance of this Agreement. For
the sole purpose of ensuring compliance with this
Agreement, AOL will have the right, at its expense, to
direct an independent certified public accounting firm to
conduct a reasonable and necessary inspection of portions
of the books and records of MP which are relevant to MP's
performance pursuant to this Agreement. Any such audit
may be conducted after twenty (20) business days prior
written notice only once during any twelve (12) month
period.
4.9. TAXES. MP will collect and pay and indemnify and hold AOL
harmless from, any sales, use, excise, import or export
value added or similar tax or duty not based on AOL's net
income, including any penalties and interest, as well as
any costs associated with the collection or withholding
thereof, including attorneys' fees.
4.10. REPORTS.
4.10.1. SALES REPORTS. MP will provide AOL in an
automated manner with a monthly report in an
AOL-designated format, detailing the following
activity in such period (and any other
information mutually agreed upon by the Parties
or reasonably required for measuring revenue
activity by MP through the Affiliated MP Site):
(i) summary sales information by day (date,
number of Products, number of orders, total
Transaction Revenues); and (ii) detailed sales
information (order data/timestamp (if
technically feasible), purchaser name and
screenname, SKU or Product description) (in
information in clauses (i) and (ii), "Sales
Reports"). AOL will be entitled to use the
Sales Reports in its business operations,
subject to
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the terms of this Agreement. More generally,
each payment to be made by MP pursuant to this
Section 4 will be accompanied by a report
containing information which supports the
payment, including information identifying (i)
gross Transaction Revenues and all items
deducted or excluded from gross Transaction
Revenues to produce Transaction Revenues,
including, without limitation, chargebacks and
credits for returned or canceled goods or
services (and, where possible, an explanation
of the type of reason therefor, e.g., bad
credit card information, poor customer service,
etc.) and (ii) any applicable Advertising
Revenues. AOL shall provide MP with standard
monthly usage information related to the
Promotions (e.g. a schedule of the Impressions
delivered by AOL at such time) which are similar
in substance and form to the reports provided
by AOL to other interactive marketing partners
similar to MP.
4.10.2. FRAUDULENT TRANSACTIONS. To the extent
permitted by applicable laws, MP will provide
AOL with an prompt report of any fraudulent
order, including the date, screenname or email
address and amount associated with such order,
promptly following MP obtaining knowledge that
the order is, in fact, fraudulent.
5. WARRANTS. In connection with the obligations of the Parties
hereunder, and subject to the provisions hereof, MP shall enter
into the Common Stock Subscription Warrant Agreement substantially
in the form of Exhibit H attached hereto (the "Warrant Agreement").
Provided, however, that in the event MP shall not have entered into
the Warrant Agreement within sixty (60) days after the execution
date hereof, AOL shall not be required to perform its obligations
hereunder.
6. TERM; RENEWAL; TERMINATION.
6.1. TERM. Unless earlier terminated as set forth herein, the
initial term of this Agreement will be thirty eight (38)
months from the Effective Date (the "Initial Term").
6.2. RENEWAL. Upon conclusion of the initial term of this
Agreement, AOL will have the right to renew the Agreement
for successive one-year renewal terms (each a "Renewal
Term" and together with the Initial Term, the "Term").
During any such Renewal Term: (i) MP will not be required
to pay any guaranteed, fixed payment or perform the
cross-promotional obligations specified in Section 1;
and (ii) AOL will not be required to provide MP with
prominent promotional placements as described on Exhibit
A; provided that (iii) for so long as AOL may elect to
continue to provide MP with prominent promotional
placements (including permanent placements in video
related and shopping areas) during a Renewal Term, MP will
continue to perform its cross-promotional obligations and
MP will pay to AOL the payments provided for pursuant to
Section 4.4(i) hereof. In the event that AOL does not
elect to continue to provide MP with prominent promotional
placements, then MP will pay to AOL the payments provided
for in Section 4.4(ii) hereof. A Renewal Term shall
automatically commence following the expiration of the
Initial Term (or prior Renewal Term, as the case may be),
provided that AOL shall be entitled to terminate any such
Renewal Term with thirty (30) days prior written notice
to MP.
6.3. EXPIRATION OF TERM. Upon expiration of the Initial Term
or the Term, as the case may be, AOL shall have the right
to promote one or more "pointers" or links from the AOL
Network to the Affiliated MP Site or, at MP's option, to
an MP Interactive Site selling products substantially
similar to the MP products, and use MP's tradenames,
trademarks and service marks in connection with such
promotion. In such event, MP shall make the payments
provided for in Section 4.4(ii) hereof, and the Parties
will continue to be bound by the legal provisions of
Exhibit G attached hereto.
6.4. TERMINATION FOR BREACH. Except as expressly provided
elsewhere in this Agreement, either Party may terminate
this Agreement at any time in the event of a material
breach of
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the Agreement by the other Party which remains uncured
after thirty (30) days written notice thereof to the
other Party (or such shorter period as may be specified
elsewhere in this Agreement); provided that AOL will not
be required to provide notice to MP in connection with
MP's failure to make any payment to AOL required
hereunder, and the cure period with respect to any
scheduled payment will be fifteen (15) days from the date
for such payment provided for herein. Notwithstanding the
foregoing, in the event of a material breach of a
provision that expressly requires action to be completed
within an express period shorter than 30 days, either
Party may terminate this Agreement if the breach remains
uncured after written notice thereof to the other Party.
6.5. TERMINATION FOR BANKRUPTCY/INSOLVENCY. Either Party may
terminate this Agreement immediately following written
notice to the other Party if the other Party (i) ceases
to do business in the normal course, (ii) becomes or is
declared insolvent or bankrupt, (iii) is the subject of
any proceeding related to its liquidation or insolvency
(whether voluntary or involuntary) which is not dismissed
within (90) calendar days or (iv) makes an assignment for
the benefit of creditors.
6.6. TERMINATION ON CHANGE OF CONTROL. In the event of (i) a
Change of Control of MP resulting in control of MP by an
Interactive Service or (ii) a Change of Control of AOL,
AOL may terminate this Agreement by providing thirty (30)
days prior written notice of such intent to terminate.
6.7. EARLY TERMINATION RIGHT. Notwithstanding anything to the
contrary contained herein, AOL shall have the right to
cancel this Agreement by providing MP with no less than
thirty (30) days written notice, on the one (1) year
anniversary of the Effective Date. In the event that AOL
exercises its termination right pursuant to this Section
6.7, and provided that MP shall not have generated
Transaction Revenues in excess of [***] as of the
termination date, then AOL shall pay to MP [***] within
thirty (30) days after the termination becomes effective,
and MP shall not be required to make the payments
provided for in Sections 4.1(iv)(b) and 4.1(v).
7. MANAGEMENT COMMITTEE/ARBITRATION.
7.1. MANAGEMENT COMMITTEE. The Parties will act in good faith
and use commercially reasonable efforts to promptly
resolve any dispute, claim, controversy or disagreement
(each a "Dispute") between the Parties or any of their
respective subsidiaries, affiliates, successors and
assigns under or related to this Agreement or any
document executed pursuant to this Agreement or any of
the transactions contemplated hereby. If the Parties
cannot resolve the Dispute within such time frame, the
Dispute will be submitted to the Management Committee for
resolution. For ten (10) days following submission of the
Dispute to the Management Committee, the Management
Committee will have the exclusive right to resolve such
Dispute; provided further that the Management Committee
will have the final and exclusive right to resolve
Disputes arising from any provision of the Agreement
which expressly or implicitly provides for the Parties to
reach mutual agreement as to certain terms. If the
Management Committee is unable to amicably resolve the
Dispute during the ten-day period, the the Management
Committee will consider in good faith the possibility of
retaining a third party mediator to facilitate resolution
of the Dispute. In the event the Management Committee
elects not to to retain a mediator, the dispute will be
subject to the resolution mechanisms described below.
"Management Committee" will mean a committee made up of a
senior executive from each of the Parties for the purpose
of resolving Disputes under this Section 7 and generally
overseeing the relationship between the Parties
contemplated by this Agreement. Neither Party will seek,
nor will be entitled to seek, binding outside resolution
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of the Dispute unless and until the Parties have been unable
amicably to resolve the Dispute as set forth in this Section 7
and then, only in compliance with the procedures set forth in
this Section 7.
7.2. ARBITRATION. Except for Disputes relating to issues of
(i) proprietary rights, including but not limited to intellectual
property and confidentiality, and (ii) any provision of the
Agreement which expressly or implicitly provides for the
Parties to reach mutual agreement as to certain terms (which
will be resolved by the Parties solely and exclusively through
amicable resolution as set forth in Section 7.1), any Dispute
not resolved by amicable resolution as set forth in Section 7.1
will be governed exclusively and finally by arbitration. Such
arbitration will be conducted by the American Arbitration
Association ("AAA") in Washington, D.C. and will be initiated
and conducted in accordance with the Commercial Arbitration
Rules ("Commercial Rules") of the AAA, including the AAA
Supplementary Procedures for Large Complex Commercial Disputes
("Complex Procedures"), as such rules will be in effect on the
date of delivery of a demand for arbitration ("Demand"), except
to the extent that such rules are inconsistent with the
provisions set forth herein. Notwithstanding the foregoing, the
Parties may agree in good faith that the Complex Procedures
will not apply in order to promote the efficient arbitration of
Disputes where the nature of the Dispute, including without
limitation the amount in controversy, does not justify the
application of such procedures.
7.3. SELECTION OF ARBITRATORS. The arbitration panel will consist
of three arbitrators. Each Party will name an arbitrator within
ten (10) days after the delivery of the Demand. The two
arbitrators named by the Parties may have prior relationships
with the naming Party, which in a judicial setting would be
considered a conflict of interest. The third arbitrator,
selected by the first two, should be a neutral participant,
with no prior working relationship with either Party. If the
two arbitrators are unable to select a third arbitrator within
ten (10) days, a third neutral arbitrator will be appointed by
the AAA from the panel of commercial arbitrators of any of the
AAA Large and Complex Resolution Programs. If a vacancy in the
arbitration panel occurs after the hearings have commenced, the
remaining arbitrator or arbitrators may not continue with the
hearing and determination of the controversy, unless the
Parties agree otherwise.
7.4. GOVERNING LAW. The Federal Arbitration Act, 9 U.S.C. Secs. 1-16,
and not state law, will govern the arbitrability of all
Disputes. The arbitrators will allow such discovery as is
appropriate to the purposes of arbitration in accomplishing a
fair, speedy and cost-effective resolution of the Disputes. The
arbitrators will reference the Federal Rules of Civil Procedure
then in effect in setting the scope and timing of discovery.
The Federal Rules of Evidence will apply in toto. The
arbitrators may enter a default decision against any Party who
fails to participate in the arbitration proceedings.
7.5. ARBITRATION AWARDS. The arbitrators will have the authority to
award compensatory damages only. Any award by the arbitrators
will be accompanied by a written opinion setting forth the
findings of fact and conclusions of law relied upon in reaching
the decision. The award rendered by the arbitrators will be
final, binding and non-appealable, and judgment upon such award
may be entered by any court of competent jurisdiction. The
Parties agree that the existence, conduct and content of any
arbitration will be kept
9
confidential and no Party will disclose to any person any
information about such arbitration, except as may be required by
law or by any governmental authority or for financial reporting
purposes in each Party's financial statements.
7.6. FEES. Each Party will pay the fees of its own attorneys,
expenses of witnesses and all other expenses and costs in
connection with the presentation of such Party's case
(collectively, "Attorneys' Fees"). The remaining costs of the
arbitration, including without limitation, fees of the
arbitrators, costs of records or transcripts and administrative
fees (collectively, "Arbitration Costs") will be born equally
by the Parties. Notwithstanding the foregoing, the arbitrators
may modify the allocation of Arbitration Costs and award
Attorneys' Fees in those cases where fairness dictates a
different allocation of Arbitration Costs between the Parties
and an award of Attorneys' Fees to the prevailing Party as
determined by the arbitrators.
7.7. NON ARBITRATABLE DISPUTES. Any Dispute that is not subject to
final resolution by the Management Committee or to arbitration
under this Section 7 or by law (collectively, "Non-Arbitration
Claims") will be brought in a court of competent jurisdiction
in the Commonwealth of Virginia. Each Party irrevocably
consents to the exclusive jurisdiction of the courts of the
Commonwealth of Virginia and the federal courts situated in the
Commonwealth of Virginia, over any and all Non-Arbitration
Claims and any and all actions to enforce such claims or to
recover damages or other relief in connection with such claims.
8. STANDARD TERMS. The Standard Online Commerce Terms & Conditions set
forth on Exhibit F attached hereto and Standard Legal Terms &
Conditions set forth on Exhibit G attached hereto are each hereby made
a part of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.
AMERICA ONLINE, INC. DVD EXPRESS, INC.
By: /s/ [illegible] By: /s/ Xxxxxxx Xxxxxxx
-------------------------- --------------------------
Name Name: Xxxxxxx Xxxxxxx
Title: Title: President
10
EXHIBIT A
PLACEMENT/PROMOTION
AOL SERVICE, DCI, AOL INTERNATIONAL
--------------------------------------------------------------------------------
SCREEN DESCRIPTION TYPE OF PLACEMENT
------ ----------- -----------------
--------------------------------------------------------------------------------
LEVEL 1 PROMOTIONS
--------------------------------------------------------------------------------
1 Entertainment Channel- Permanent Branded Presence; Premier Screen*
Home Video Main (placement scheduled for 11/98)
--------------------------------------------------------------------------------
2 Entertainment Channel, Rotational Banners
Run of Channel (Movies,
Video, etc.)
--------------------------------------------------------------------------------
3 Network Programming- Seasonal and Holiday Premium
Seasonal/Holiday Promotional Packages; Rotational
Contextual Packages Banners
--------------------------------------------------------------------------------
4 AOL Shopping Channel: Anchor Tenant Placement
Electronics & Video
Department
--------------------------------------------------------------------------------
5 AOL Shopping Channel: Tenant Placement
Computing Software
Department
--------------------------------------------------------------------------------
6 AOL Shopping Channel: Seasonal and Holiday Premium
Holiday Gift Programs Rotational Banners
--------------------------------------------------------------------------------
7 DCI National Page Rotational placements-banners or
graphic/text integration
--------------------------------------------------------------------------------
8 DCI Main City Level Page Rotational placements-banners or
graphic/text integration
--------------------------------------------------------------------------------
9 DCI-Movie Guide Permanent Anchor Tenant
--------------------------------------------------------------------------------
10 DCI Entertainment Main Rotational placements-banners or
Screens graphic/text integration
--------------------------------------------------------------------------------
11 Sports, Lifestyles, Contextual Promotion and/or
Interests, Personal Rotational Banners
Finance, Health, Travel,
Research & Learn,
Infuluence and Games
Channels; AOL Live
--------------------------------------------------------------------------------
12 Three (3) AOL Service Three (3) permanent Keywords for
keywords, DVD Express brand
--------------------------------------------------------------------------------
* To the extent that MP develops Content in connection with the Exclusive
Products which is satisfactory to AOL in its reasonable judgement and
discretion, AOL will provide MP with greater contextual integration of such
Content on this screen.
11
AOL NETWORK (CONT'D)
--------------------------------------------------------------------------------
LEVEL 2 PROMOTIONS
--------------------------------------------------------------------------------
1 People Connection: Rotational Banners in Contextually Relevent Chat
Arts and Entertainment
--------------------------------------------------------------------------------
2 Run of Service- Rotational Banners Targeted by Key Demographic/
Demographically Psychographic Variables
Targeted Banners
--------------------------------------------------------------------------------
3 Entertainment Channel Rotational Banners
Newsletters
--------------------------------------------------------------------------------
4 AOL Find Placement in Products area of AOL Find
--------------------------------------------------------------------------------
5 International (AOL Asia Placement in Entertainment and Shopping areas
and AOL Europe)
--------------------------------------------------------------------------------
LEVEL 3 PROMOTIONS
--------------------------------------------------------------------------------
1 Run of Service- Rotational Banners; Random Serving
General
--------------------------------------------------------------------------------
2 Other Comparable As determined by the Parties
Promotions
--------------------------------------------------------------------------------
TOTAL IMPRESSIONS: [ * * * ]
--------------------------------------------------------------------------------
XXX.xxx
--------------------------------------------------------------------------------
SCREEN DESCRIPTION
------ -----------
--------------------------------------------------------------------------------
LEVEL 1 PROMOTIONS
--------------------------------------------------------------------------------
1 XXX.xxx Shopping Permanent Anchor Tenant Placement (or equivalent
Channel: Books, Music, in case of redesign)
Video Department (or
equivalent case of
redesign)
--------------------------------------------------------------------------------
2 XXX.xxx Shopping Tenant Placement
Channel: Computing
Software Department
--------------------------------------------------------------------------------
3 XXX.xxx movies, Contextual Placement and/or Rotational Promotion
Entertainment, other
channels
--------------------------------------------------------------------------------
4 XXX.xxx Keyword Entertainment Keyword Packages, Computing
Package Software keyword package
--------------------------------------------------------------------------------
LEVEL 2 PROMOTIONS
--------------------------------------------------------------------------------
1 XXX.xxx Home Page Banner on Home Page
--------------------------------------------------------------------------------
2 Other Comparable As determined by the Parties
Broad Reach
Promotions
--------------------------------------------------------------------------------
TOTAL IMPRESSIONS [ * * * ]
--------------------------------------------------------------------------------
BONUS IMPRESSIONS POOL
--------------------------------------------------------------------------------
LEVEL 1 PROMOTIONS [ * * * ]
--------------------------------------------------------------------------------
OR
--------------------------------------------------------------------------------
LEVEL 2 PROMOTIONS [ * * * ]
--------------------------------------------------------------------------------
OR
--------------------------------------------------------------------------------
LEVEL 3 PROMOTIONS [ * * * ]
--------------------------------------------------------------------------------
*** CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
12
During the first year of the Initial Term, AOL shall have the right, in its
sole discretion, to provide MP with the foregoing "bonus" Impressions in the
manner specified above and the Impressions Commitment will be adjusted
accordingly.
ESTIMATED AGGREGATE
ANNUAL IMPRESSIONS
TARGETS
Year 1 [***]
Year 2 [***]
Year 3 [***]
TOTAL [***]
*** CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
13
EXHIBIT B
DEFINITIONS
The following definitions will apply to this Agreement:
ADDITIONAL MP CHANNEL. Any other distribution channel (e.g., an Interactive
Service other than AOL) through which MP makes available an offering
comparable in nature to the Affiliated MP Site.
ADVERTISING REVENUES. The combination of AOL Advertising Revenues and
Internet Advertising Revenues:
AOL ADVERTISING REVENUES. Aggregate amounts collected plus the fair
market value of any other compensation received (such as barter
advertising) by MP, AOL or either Party's agents, as the case may be,
arising from the license or sale of advertisements, promotions, links or
sponsorships ("Advertisements") that appear within any pages of the
Affiliated MP Site which may be exclusively available to AOL Users, less
applicable Advertising Sales Commissions. AOL Advertising Revenues does
not include amounts arising from Advertisements on any screens or forms
preceding, framing or otherwise directly associated with the Affiliated
MP Site, which will be sold exclusively by AOL.
INTERNET ADVERTISING REVENUES. For each Advertisement on a page of the
Affiliated MP Site or any MP Interactive Site which is not exclusively
available to AOL Users, the product of : (a) the amount collected plus
the fair market value of any other compensation received (such as barter
advertising) by MP or its agents arising from the license or sale of
such Advertisement attributable to a given period of time less
applicable Advertising Sales Commissions and (b) the quotient of (i)
Impressions on the page containing such Advertisement by AOL Users for
such period of time divided by (ii) total Impressions on the page
containing such Advertisement by all users for such period of time (the
"Internet Advertising Quotient") (or such other percentage or formula as
is mutually agreed upon in writing by the Parties). MP will be
responsible for calculating the Internet Advertising Quotient related to
Internet Advertising Revenues. For any period during which MP fails to
calculate the Internet Advertising Quotient (other than as a sole result
of AOL's failure to provide necessary Impressions information), such
quotient will be deemed to be one hundred percent (100%).
ADVERTISING SALES COMMISSION. (i) Actual amounts paid as commission to third
party agencies by either buyer or seller in connection with sale of the
Advertisement or (ii) [***] in the event the Party has sold the Advertisement
directly and will not be deducting any third party agency commissions.
AFFILIATED MP SITE. The specific MP Interactive Site to be promoted and
distributed by AOL hereunder through which MP can market and complete
transactions regarding its Products.
AGGREGATE REVENUE THRESHOLD. Site Revenues generated by MP hereunder equal to
[***].
AOL INTERACTIVE SITE. Any Interactive Site which is managed, maintained,
owned or controlled by AOL or its agents.
AOL LOOK AND FEEL. The elements of graphics, design, organization,
presentation, layout, user interface, navigation and stylistic convention
(including the digital implementations thereof) which are generally
associated with Interactive Sites within the AOL Service or XXX.xxx.
AOL MEMBER. Any authorized user of the AOL Service, including any
sub-accounts using the AOL Service under an authorized master account.
*** CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
14
AOL NETWORK. (i) The AOL Service, (ii) XXX.xxx and (iii) any other product or
service owned, operated, distributed or authorized to be distributed by or
through AOL or its affiliates worldwide (and including those properties
excluded from the definitions of the AOL Service or XXX.xxx). It is
understood and agreed that the rights of MP relate only to the AOL Service
and XXX.xxx and not generally to the AOL Network.
AOL PURCHASER. (i) Any person or entity who enters the Affiliated MP Site
from the AOL Network including, without limitation, from any third party area
therein (to the extent entry from such third party area is traceable through
both Parties' commercially reasonable efforts), and generates Transaction
Revenues (regardless of whether such person or entity provides an e-mail
address during registration or entrance to the Affiliated MP Site which
includes a domain other than an "XXX.xxx" domain); and (ii) any other person
or entity who, when purchasing a product, good or service through an MP
Interactive Site, provides an XXX.xxx domain name as part of such person or
entity's e-mail address; provided that any person or entity who has
previously satisfied the definition of AOL Purchaser will remain an AOL
Purchaser, and any subsequent purchases by such person or entity will also
give rise to Transaction Revenues hereunder (and will not be conditioned on
the person or entity's satisfaction of clauses (i) or (ii) above).
AOL SERVICE. The standard narrow-band U.S. version of the America
Online-Registered Trademark- brand service, specifically excluding (a)
XXX.xxx or any other AOL Interactive Site, (b) the international versions of
an America Online service (e.g., AOL Japan), (c) "ICQ," "AOL NetFind-TM-,"
"AOL Instant Messenger-TM-," "Digital Cities,"NetMail-TM-," "Electra",
"Thrive", "Real Fans", "Love@AOL", "Entertainment Asylum" or any similar
independent product, service or property which may be offered by, through or
with the U.S. version of the America Online-Registered Trademark- brand
service, (d) any programming or Content area offered by or through the U.S.
version of the America Online-Registered Trademark- brand service over which
AOL does not exercise complete operational control (including, without
limitation, Content areas controlled by other parties and member-created
Content areas), (e) any yellow pages, white pages, classifieds or other search,
directory or review services or Content offered by or through the U.S. version
of the America Online-Registered Trademark- brand service, (f) any property,
feature, product or service which AOL or its affiliates may acquire subsequent
to the Effective Date and (g) any other version of an America Online service
which is materially different from the standard narrow-band U.S. version of the
America Online brand service, by virtue of its branding, distribution,
functionality, Content and services, including, without limitation, any
co-branded version of the service and any version distributed through any
broadband distribution platform or through any platform or device other than a
desktop personal computer.
AOL USER. Any user of the AOL Service, XXX.xxx or the AOL Network.
XXX.xxx. AOL's primary Internet-based Interactive Site marketed under the
"AOL.COM-TM-" brand, specifically excluding (a) the AOL Service, (b) any
international versions of such site, (c) "ICQ, "AOL NetFind-TM-," "AOL
Instant Messenger-TM-,"NetMail-TM-" or any similar independent product or
service offered by or through such site or any other AOL Interactive Site,
(d) any programming or Content area offered by or through such site over
which AOL does not exercise complete operational control (including, without
limitation, Content areas controlled by other parties and member-created
Content areas), (e) any programming or Content area offered by or through the
U.S. version of the America Online-Registered Trademark- brand service which
was operated, maintained or controlled by the former AOL Studios division
(e.g., Electra), (f) any yellow pages, white pages, classifieds or other
search, directory or review services or Content offered by or through such
site or any other AOL Interactive Site, (g) any property, feature, product or
service which AOL or its affiliates may acquire subsequent to the Effective
Date and (h) any other version of an America Online Interactive Site which is
materially different from AOL's primary Internet-based Interactive Site
marketed under the "AOL.COM-TM-" brand, by virtue of its branding,
distribution, functionality, Content and services, including, without
limitation, any co-branded versions and any version distributed through any
broadband distribution platform or through any platform or device other than
a desktop personal computer.
CHANGE OF CONTROL. (a) The consummation of a reorganization, merger or
consolidation or sale or other disposition of substantially all of the assets
of a party; or (b) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1933, as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) or more
15
than 50% of either (i) the then outstanding shares of common stock of such
party; or (ii) the combined voting power of the then outstanding voting
securities of such party entitled to vote generally in the election of
directors.
CONFIDENTIAL INFORMATION. Any information relating to or disclosed in the
course of the Agreement, which is or should be reasonably understood to be
confidential or proprietary to the disclosing Party, including, but not
limited to, the material terms of this Agreement, information about AOL
Members, AOL Users, AOL Purchasers and MP customers, technical processes and
formulas, source codes, product designs, sales, cost and other unpublished
financial information, product and business plans, projections, and marketing
data. "Confidential Information" will not include information (a) already
lawfully known to or independently developed by the receiving Party, (b)
disclosed in published materials, (c) generally known to the public, or (d)
lawfully obtained from any third party.
CONTENT. Text, images, video, audio (including, without limitation, music
used in synchronism or timed relation with visual displays) and other data,
Products, advertisements, promotions, links, pointers and software, including
any modification, upgrades, updates, enhancements and related documentation.
DCI. Local interactive consumer content and services for particular
metropolitan or other local areas in the United States which is developed,
assembled, packaged and marketed by Digital City, Inc.
FINANCING EVENT. At any time after the Effective Date, the receipt by MP, in
a single transaction or series of related transactions, of funding of at
least [***] but less than [***].
IMPRESSION. User exposure to the applicable Promotion, as such exposure may
be reasonably determined and measured by AOL in accordance with its standard
methodologies and protocols.
INTERACTIVE SERVICE. An entity offering one or more of the following: (i)
online or Internet connectivity services (e.g., an Internet service
provider); (ii) a broad selection of aggregated third party interactive
content (or navigation thereto) (e.g., an online service or search and
directory service); (iii) communications software capable of serving as the
principal means through which a user creates, sends and receives electronic
mail or real time online messages.
INTERACTIVE SITE. Any interactive site or area, including, by way of example
and without limitation, (i) an MP site on the World Wide Web portion of the
Internet or (ii) a channel or area delivered through a "push" product such as
the Pointcast Network or interactive environment such as Microsoft's Active
Desktop.
KEYWORD SEARCH TERMS. The Keyword-TM- online search terms made available on
the AOL Service for use by AOL Members, combining AOL's Keyword-TM- online
search modifier with a term or phrase specifically related to MP (and
determined in accordance with the terms of this Agreement).
LICENSED CONTENT. All Content offered through the Affiliated MP Site pursuant
to this Agreement or otherwise provided by MP or its agents in connection
herewith (e.g., offline or online promotional Content, Promotions, AOL
"slideshows", etc.), including in each case, any modifications, upgrades,
updates, enhancements, and related documentation.
MAJOR FINANCING EVENT. At any time after the Effective Date, the occurrence
of either (i) the receipt by MP, in a single transaction or series of related
transactions, of funding of at least [***] or (ii) the receipt of funding by MP
as a result of the initial public offering of securities of MP pursuant to an
effective registration statement under the Securities Act of 1993, as amended
MP INTERACTIVE SITE. Any Interactive Site (other than the Affiliated MP Site)
which is managed, maintained, owned or controlled by MP or its agents.
PREMIER PRODUCTS. Consumer movies and other consumer oriented video content
delivered in fixed media formats (including, without limitation, VHS
cassettes, digital video disks, DIVX and laserdiscs,
*** CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
16
("Video Products"), specifically excluding, however, (i) music audio
entertainment products, (ii) any form of computer software (e.g. games and
entertainment programs) and (iii) any movie or video content or other
products distributed or delivered through an electronic data transfer format.
PRODUCT. Any product, good or service which MP (or others acting on its
behalf or as distributors) offers, sells, provides, distributes or licenses
to AOL Users directly or indirectly through (i) the Affiliated MP Site
(including through any Interactive Site linked thereto), (ii) any other
electronic means directed at AOL Users (e.g., e-mail offers), or (iii) an
"offline" means (e.g., toll-free number) for receiving orders related to
specific offers within the Affiliated MP Site requiring purchasers to
reference a specific promotional identifier or tracking code, including,
without limitation, products sold through surcharged downloads (to the extent
expressly permitted hereunder).
SITE REVENUES. The combination of Transaction Revenues and Advertising
Revenues.
TRANSACTION REVENUES. Aggregate amounts paid by AOL Purchasers in connection
with the sale, licensing, distribution or provision of any Products,
including, in each case, service charges, and excluding, in each case, (a)
amounts collected for sales or use taxes or duties and (b) credit card
processing fees and shipping and handling charges (provided that, if these
charges represent (at any time during the Term) a source of profit for MP,
such charges will be included in the definition of Transaction Revenues),
credits and chargebacks for returned or canceled goods or services, but not
excluding cost of goods sold or any similar cost.
17
EXHIBIT C
MPA CROSS-PROMOTION
A. Within each MP Interactive Site, MP shall include the following (the "AOL
Promo"): a prominent promotional banner (at least 90 x 30 in size)
appearing on the first screen of the MP Interactive Site, to promote such
AOL products or services as AOL may designate (for example, the America
Online-Registered Trademark- brand service, the CompuServe-Registered
Trademark- brand service, the AOL.com-Registered Trademark- site, any of
the Digital City-Registered Trademark- services or the AOL Instant
Messenger-TM- service). AOL, in consultation with MP, will provide the
creative content to be used in the AOL Promo (including designation of
links from such content to other content pages). MP shall post (or
update, as the case may be) the creative content supplied by AOL within
the spaces for the AOL Promos within five days of its receipt of such
content from AOL. Without limiting any other reporting obligations of the
Parties contained herein, MP shall provide AOL with monthly written
reports specifying the number of Impressions to the pages containing the
AOL Promo during the prior month. In addition, within each MP Interactive
Site, MP shall provide prominent promotion for the keywords associated
with MP's Online Area and links from the MP Interactive Site to the
relevant topic areas on AOL's XXX.xxx site. In connection with the
foregoing, AOL will pay MP a standard bounty fee for any new subscribers
to the AOL Service who subscribe to the AOL Service through the AOL Promo.
B. In MP's television, radio, print and "out of home" (e.g., buses and
billboards) advertisements and in any publications, programs, features or
other forms of media over which MP exercises at least partial editorial
control, MP will include specific references or mentions (verbally where
possible) of the availability of MP's Online Area through the America
Online-Registered Trademark- brand service, which are at least as
prominent as any references that MP makes to any MP Interactive Site (by
way of site name, related company name, URL or otherwise). Without
limiting the generality of the foregoing, MP's listing of the "URL" for
any MP Interactive Site will be accompanied by an equally prominent
listing of the "keyword" term on AOL for MP's Online Area.
18
EXHIBIT D
DESCRIPTION OF PRODUCTS AND OTHER CONTENT
DVD - Video products
DVD - ROM products
DVD - Audio products
DVD - Recordable media
DVD - Enhanced DVD products, (e.g., products currently in development by VM
Labs)
Laserdisc
Videotape
Sega
Playstation
Movie memorabilia
Home Theater accessories (e.g., replacement cases, cd wipes, disk cleaners,
etc.)
Hats and T-Shirts, provided that any hats or t-shirts that are sold in the
Affiliated MP Site must be related to Video Products or contain an MP logo or
trademark, and cannot represent a substantial portion of Transaction Revenues.
19
EXHIBIT E
OPERATIONS
1. GENERAL. The Affiliated MP Site (including the Products and other Content
contained therein) will be in the top three (3) in the video sale and rental
industry, as determined by each of the following methods : (a) based on a
cross-section of third-party reviewers who are recognized authorities in such
industry and (b) with respect to all material quality averages or standards
in such industry, including each of the following: (i) pricing of Products,
(ii) scope and selection of Products, (iii) quality of Products, (iv)
customer service and fulfillment associated with the marketing and sale of
Products and (v) ease of use. In addition, the Affiliated MP Site will, with
respect to each of the measures listed above, be competitive in all respects
with that which is offered by any MP Competitors.
2. AFFILIATED MP SITE INFRASTRUCTURE. MP will be responsible for all
communications, hosting and connectivity costs and expenses associated with
the Affiliated MP Site. MP will provide all hardware, software,
telecommunications lines and other infrastructure necessary to meet traffic
demands on the Affiliated MP Site from the AOL Network. MP will design and
implement the network between the AOL Service and Affiliated MP Site such
that (i) no single component failure will have a materially adverse impact on
AOL Members seeking to reach the Affiliated MP Site from the AOL Network and
(ii) no single line will run at more than 70% average utilization for a
5-minute peak in a daily period. In this regard, MP will provide AOL, upon
request, with a detailed network diagram regarding the network infrastructure
supporting the Affiliated MP Site. In the event that MP elects to create a
custom version of the Affiliated MP Site in order to comply with the terms of
this Agreement, MP will bear responsibility for all aspects of the
implementation, management and cost of such mirrored site.
3. OPTIMIZATION; SPEED. MP will use commercially reasonable efforts to
ensure that: (a) the functionality and features within the Affiliated MP Site
are optimized for the client software than in use by AOL Members; and (b) the
Affiliated MP Site is designed and populated in a manner that minimizes
delays when AOL Members attempt to access such site. At a minimum, MP will
ensure that the Affiliated MP Site's data transfers initiate within fewer
than fifteen (15) seconds on average. Prior to commercial launch of any
material promotions described herein, MP will permit AOL to conduct
performance and load testing of the Affiliated MP Site (in person or through
remote communications), with such commercial launch not to commence until
such time as AOL is reasonably satisfied with the results of any such testing.
4. USER INTERFACE. MP will maintain a graphical user interface within the
Affiliated MP Site that is competitive in all material respects with
interfaces of other similar sites based on similar form technology. AOL
reserves the right to review and approve the user interface and site design
prior to launch of the Promotions and to conduct focus group testing to
assess compliance with respect to such consultation and with respect to MP's
compliance with the preceding sentence.
5. TECHNICAL PROBLEMS. MP agrees to use commercially reasonable efforts to
address material technical problems (over which MP exercises control)
affecting use by AOL Members of the Affiliated MP Site (a "MP Technical
Problem") promptly following notice thereof. In the event that MP is unable
to promptly resolve a MP Technical Problem following notice thereof from AOL
(including, without limitation, infrastructure deficiencies producing user
delays), AOL will have the right to regulate the promotions it provides to MP
hereunder until such time as MP corrects the MP Technical Problem at issue.
6. MONITORING. MP will ensure that the performance and availability of the
Affiliated MP Site is monitored on a continuous basis. MP will provide AOL
with contact information (including e-mail, phone, pager and tax information,
as applicable, for both during and after business hours) for Partner's
principal business and technical representatives for use in cases when issues
or problems arise with respect to the Affiliated MP Site.
7. TELECOMMUNICATIONS. The Parties agree to explore encryption methodology
to secure data communications between the Parties' data centers. The network
between the Parties will be configured such that no single component failure
will significantly impact AOL Users. The network will be sized such that no
single line runs at more than 70% average utilization for a 5-minute peak in
a daily period.
8. SECURITY. MP will utilize Internet standard encryption technologies
(e.g., Secure Socket Layer - SSL) to provide a secure environment for
conducting transactions and/or transferring private member information (e.g.
credit card numbers, banking/financial information, and member address
information) to and from the Affiliated MP Site. MP will facilitate periodic
reviews of the Affiliated MP Site by AOL in order to evaluate the security
risks of such site. MP will promptly remedy any security risks or breaches of
security as may be identified by AOL's Operations Security team.
20
9. TECHNICAL PERFORMANCE.
i. MP will design the Affiliated MP Site to support the Windows
version of the Microsoft Internet Explorer 3.0 and 4.0 browser, the
Macintosh version of the Microsoft Internet Explorer 3.0, and make
commercially reasonable efforts to support all other AOL browsers
listed at:
"xxxx://xxxxxxxxx.xxxx.xxx/XxxxXxxxx.xxxx."
ii. To the extent MP creates customized pages on the Affiliated MP Site
for AOL Members, MP will configure the server from which it serves
the site to examine the HTTP User-Agent field in order to identify
the "AOL Member-Agents" listed at:
"xxxx://xxxxxxxxx.xxxx.xxx.xxx/Xxxx0Xxxx.xxxx."
iii. MP will periodically review the technical information made
available by AOL at xxxx://xxxxxxxxx.xxxx.xxx.xxx/XxxxxXxxx.xxxx.
iv. MP will design its site to support HTTP 1.0 or later protocol as
defined in RFC 1945 (available at "xxxx://xx.xxxxxxxx.xxx/xxx/xxx
1945.text") and to adhere to AOL's parameters for refreshing cached
information listed at xxxx://xxxxxxxxx.xxxx.xxx.xxx/XxxxxXxxx.xxxx.
v. Prior to releasing material, new functionality or features through
the Affiliated MP Site ("New Functionality"), MP will use
commercially reasonable efforts to either (i) test the New
Functionality to confirm its compatibility with AOL Service client
software or (ii) provide AOL with written notice of the New
Functionality so that AOL can perform tests of the New
Functionality to confirm its compatibility with the AOL Service
client software.
10. AOL INTERNET SERVICES MP SUPPORT. AOL will provide MP with access to the
standard online resources, standards and guidelines documentation, technical
phone support monitoring and after-hours assistance that AOL makes generally
available to similarly situated web-based customers. AOL support will not, in
any case, be involved with content creation on behalf of MP or support for
any technologies databases, software or other applications which are not
supported by AOL or are related to any MP area other than the Affiliated MP
Site. Support to be provided by AOL is contingent on MP providing to AOL demo
account information (where applicable), a detailed description of the
Affiliated MP Site's software, hardware and network architecture and access
to the Affiliated MP Site for purposes of such performance and load testing
as AOL elects to conduct.
21
EXHIBIT F
STANDARD ONLINE COMMERCE TERMS & CONDITIONS
1. AOL NETWORK DISTRIBUTION. MP will not authorize or permit any third
party to distribute or promote the Products or any MP Interactive Site
through the AOL Network absent AOL's prior written approval. The Promotions
and any other promotions or advertisements purchased from or provided by AOL
will link only to the Affiliated MP Site, will be used by MP solely for its
own benefit and will not be resold, traded, exchanged, bartered, brokered or
otherwise offered to any third party.
2. PROVISION OF OTHER CONTENT. In the event that AOL notifies MP that (i)
as reasonably determined by AOL, any Content within the Affiliated MP Site
violates AOL's then-standard Terms of Service (as set forth on the America
Online-Registered Trademark- brand service at Keyword term "TOS"), the terms
of this Agreement or any other standard, written AOL policy or (ii) AOL
reasonably objects to the inclusion of any Content within the Affiliated MP
Site (other than any specific items of Content which may be expressly
identified in this Agreement), then MP will take commercially reasonable
steps to block access by AOL Users to such Content using MP's then-available
technology. In the event that MP cannot, through its commercially reasonable
efforts, block access by AOL Users to the Content in question, then MP will
provide AOL prompt written notice of such fact. AOL may then, at its option,
restrict access from the AOL Network to the Content in question using
technology available to AOL. MP will cooperate with AOL's reasonable requests
to the extent AOL elects to implement any such access restrictions.
3. CONTESTS. MP will take all steps necessary to ensure that any contest,
sweepstakes or similar promotion conducted or promoted through the Affiliated
MP Site (a "Contest") complies with all applicable federal, state and local
laws and regulations.
4. NAVIGATIONAL ICONS. Subject to the prior consent of MP, which consent
will not be unreasonably withheld, AOL will be entitled to establish
navigational icons, links and pointers connecting the Affiliated MP Site (or
portions thereof) with other content areas on or outside of the AOL Network.
5. DISCLAIMERS. Upon AOL's request, MP agrees to include within the
Affiliated MP Site a product disclaimer (the specific form and substance to
be mutually agreed upon by the Parties) indicating that transactions are
solely between MP and AOL Users purchasing Products from MP.
6. AOL LOOK AND FEEL. MP acknowledges and agrees that AOL will own all
right, title and interest in and to the elements of graphics, design,
organization, presentation, layout, user interface, navigation and stylistic
convention (including the digital implementations thereof) which are
generally associated with online areas contained within the AOL Network,
subject to MP's ownership rights in any MP trademarks or copyrighted material
with the Affiliated MP Site.
7. MANAGEMENT OF THE AFFILIATED MP SITE. MP will manage, review, delete,
edit, create, update and otherwise manage all Products available on or
through the Affiliated MP Site, in a timely and professional manner and in
accordance with the terms of this Agreement. MP will ensure that each
Affiliated MP Site is current, accurate and well-organized at all times. MP
warrants that the Products and other Licensed Content: (i) will not infringe
on or violate any copyright, trademark, U.S. patent or any other third party
right, including without limitation, any music performance or other
music-related rights; (ii) will not violate AOL's then-applicable Terms of
Service; and (iii) will not violate any applicable law or regulation,
including those relating to contests, sweepstakes or similar promotions.
Additionally, MP represents and warrants that it owns or has a valid license
to all rights to any Licensed Content used in AOL "slideshow" or other
formats embodying elements such as graphics, animation and sound, free and
clear of all encumbrances and without violating the rights of any other
person or entity. MP also warrants that a reasonable basis exists for all
Product performance or comparison claims appearing through the Affiliated MP
Site. MP shall not in any manner, including, without limitation in any
Promotion, the Licensed Content or the Materials state or imply that AOL
recommends or endorses MP or MP's Products (e.g., no statements that MP is an
"official" or "preferred" provider of products or services for AOL). AOL will
have no obligations with respect to the Products available on or through the
Affiliated MP Site, including, but not limited to, any duty to review or
monitor any such Products.
8. DUTY TO INFORM. MP will promptly inform AOL of any information related to
the Affiliated MP Site which could reasonably lead to a claim, demand, or
liability of or against AOL and/or its affiliates by any third party.
9. CUSTOMER SERVICE. It is the sole responsibility of MP to provide
customer service to persons or entities purchasing Products through the AOL
Network ("Customers"). MP will bear full responsibility for all
22
customer service, including without limitation, order processing, billing,
fulfillment, shipment, collection and other customer service associated with
any Products offered, sold or licensed through the Affiliated MP Site, and
AOL will have no obligations whatsoever with respect thereto. MP will receive
all emails from Customers via a computer available to MP's customer service
staff and generally respond to such emails within one business day of
receipt. MP will receive all orders electronically and generally process all
orders within one business day of receipt, provided Products ordered are not
advance order items. MP will ensure that all orders of Products are received,
processed, fulfilled and delivered on a timely and professional basis. MP
will offer AOL Users who purchase Products through such Affiliated MP Site a
money back satisfaction guarantee. MP will bear all responsibility for
compliance with federal, state and local laws in the event that Products are
out of stock or are no longer available at the time an order is received. MP
will also comply with the requirements of any federal, state or local
consumer protection or disclosure law. Payment for Products will be collected
by MP directly from customers. MP's order fulfillment operation will be
subject to AOL's reasonable review.
10. PRODUCTION WORK. In the event that MP requests AOL's production
assistance in connection with (i) ongoing programming and maintenance related
to the Affiliated MP Site, (ii) a redesign of or addition to the Affiliated
MP Site (e.g., a change to an existing screen format or construction of a new
custom form), (iii) production to modify work performed by a third party
provider or (iv) any other type of production work, MP will work with AOL to
develop a detailed production plan for the requested production assistance
(the "Production Plan"). Following receipt of the final Production Plan, AOL
will notify MP of (i) AOL's availability to perform the requested production
work, (ii) the proposed fee or fee structure for the requested production and
maintenance work and (iii) the estimated development schedule for such work.
To the extent the Parties reach agreement regarding implementation of
agreed-upon Production Plan, such agreement will be reflected in a separate
work order signed by the Parties. To the extent MP elects to retain a third
party provider to perform any such production work, work produced by such
third party provider must generally conform to AOL's standards & practices
(as provided on the America Online brand service at Keyword term
"styleguide"). The specific production resources which AOL allocates to any
production resources which AOL allocates to any production work to be
performed on behalf of MP will be determined by AOL in its sole discretion.
11. OVERHEAD ACCOUNTS. To the extent AOL has granted MP any overhead
accounts on the AOL Service, MP will be responsible for the actions taken
under or through its overhead accounts, which actions are subject to AOL's
applicable Terms of Service and for any surcharges, including, without
limitation, all premium charges, transaction charges, and any applicable
communication surcharges incurred by any overhead Account issued to MP but MP
will not be liable for charges incurred by any overhead account relating to
AOL's standard monthly usage fees and standard hourly charges, which charges
AOL will bear. Upon the termination of this Agreement, all overhead accounts,
related screen names and any associated usage credits or similar rights, will
automatically terminate. AOL will have no liability for loss of any data or
content related to the proper termination of any overhead account.
12. NAVIGATION TOOLS. Any Keyword Search Terms to be directed to the
Affiliated MP Site shall be (i) subject to availability for use by MP and
(ii) limited to the combination of the Keyword-TM- search modifier combined
with a registered trademark of MP. AOL reserves the right to revoke at any
time MP's use of any Keyword Search Terms which do not incorporate registered
trademarks of MP. MP acknowledges that its utilization of a Keyword Search
Term will not create in it, nor will it represent it has, any right, title or
interest in or to such Keyword Search Term, other than the right, title and
interest MP holds in MP's registered trademark independent of the Keyword
Search Term. Without limiting the generality of the foregoing, MP will not:
(a) attempt to register or otherwise obtain trademark or copyright protection
in the Keyword Search Term; or (b) use the Keyword Search Term, except for
the purposes expressly required or permitted under this Agreement. To the
extent AOL allows AOL Users to "bookmark" the URL or other locator for the
Affiliated MP Site, such bookmarks will be subject to AOL's control at all
times. Upon the termination of this Agreement, MP's rights to any Keyword
Search Terms and bookmarking will terminate.
13. AOL USER COMMUNICATIONS. To the extent MP sends any form of
communications to AOL Users, MP will promote the Affiliated MP Site as the
location at which to purchase Products (as compared to any more general or
other site or location). In addition, in any communication to AOL Users or on
the Affiliated MP Site, MP will not encourage AOL Users to take any action
inconsistent with the scope and purpose of this Agreement, including without
limitation, the following actions: (a) using Content other than the Licensed
Content; (b) bookmarking of Interactive Sites; (c) using Interactive Sites
other than those covered by the revenue-sharing provisions herein; (d)
changing the default home page on the AOL browser, or (e) using any
Interactive Service other than AOL. Any email newsletters sent to AOL Users
by MP or its agents
23
will (i) be subject to AOL's policies on use of the email functionality,
including but not limited to AOL's policy on unsolicited bulk email, (ii) be
sent only to AOL Users requesting to receive such newsletters, (iii) not
contain Content which violates AOL's Terms of Service, and (iv) not contain
any advertisements, marketing or promotion for any other Interactive Service.
In any commercial e-mail communications to AOL Users which are otherwise
permitted hereunder, MP will provide the recipient with a prominent and easy
means to "opt-out" of receiving any future commercial e-mail communications
from MP.
14. MERCHANT CERTIFICATION PROGRAM. MP will participate in any generally
applicable "Certified Merchant" program operated by AOL or its authorized
agents or contractors. Such program may require merchant participants on an
ongoing basis to meet certain reasonable, generally applicable standards
relating to provision of electronic commerce through the AOL Network
(including, as a minimum, use of 40-bit SSL encryption and if requested by
AOL, 128-bit encryption) and may also require the payment of certain
reasonable certification fees to the applicable entity operating the program.
Each Certified Merchant in good standing will be entitled to place on its
affiliated Interactive Site an AOL designed and approved button promoting the
merchant's status as an AOL Certified Merchant.
24
EXHIBIT G
STANDARD LEGAL TERMS & CONDITIONS
1. PROMOTIONAL MATERIALS/PRESS RELEASES. Each Party will submit to the
other Party, for its prior written approval, which will not be unreasonably
withheld or delayed, any marketing, advertising, press releases, and all
other promotional materials related to the Affiliated MP Site and/or
referencing the other Party and/or its trade names, trademarks, and service
marks (the "Materials"); provided, however, that either Party's use of screen
shots of the Affiliated MP Site for promotional purposes will not require the
approval of the other Party so long as America Online-Registered Trademark-
is clearly identified as the source of such screen shots; and provided
further, however, that following the initial public announcement of the
business relationship between the Parties in accordance with the approval and
other requirements contained herein, either Party's subsequent factual
reference to the existence of a business relationship between the Parties
will not required the approval of the other Party. Each Party will solicit
and reasonably consider the views of the other Party in designing and
implementing such Materials. Once approved, the Materials may be used by a
Party and its affiliates for the purpose of promoting the Affiliated MP Site
and the content contained therein and reused for such purpose until such
approval is withdrawn with reasonably prior notice. In the event such
approval is withdrawn, existing inventories of Materials may be depleted.
Notwithstanding the foregoing, either Party may issue press releases and
other disclosures as required by law or as reasonably advised by legal
counsel without the consent of the other Party and in such event, the
disclosing Party will provide at least five (5) business days prior written
notice of such disclosure.
2. LICENSE. MP hereby grants AOL a non-exclusive worldwide license to
market, license, distribute, reproduce, display, perform, transmit and
promote the Licensed Content (or any portion thereof) through such areas or
features of the AOL Network as AOL deems appropriate. MP acknowledges and
agrees that the foregoing license permits AOL to distribute portions of the
Licensed Content in synchronism or timed relation with visual displays
prepared by MP or AOL (e.g., as part of an AOL "slideshow"). In addition,
AOL Users will have the right to access and use the Affiliated MP Site.
3. TRADEMARK LICENSE. In designing and implementing the Materials and
subject to the other provisions contained herein, MP will be entitled to use
the following trade names, trademarks, and service marks of AOL: the
"America Online-Registered Trademark-" brand service, "AOL-TM-"
service/software and AOL's triangle logo; and AOL and its affiliates will be
entitled to use the trade names, trademarks and service marks of MP for which
MP holds all rights necessary for use in connection with this Agreement
(collectively, together with the AOL marks listed above, the "Marks");
provided that each Party: (i) does not create a unitary composite xxxx
involving a Xxxx of the other Party without the prior written approval of
such other Party; and (ii) displays symbols and notices clearly and
sufficiently indicating the trademark status and ownership of the other
Party's Marks in accordance with applicable trademark law and practice.
4. OWNERSHIP OF TRADEMARKS. Each Party acknowledges the ownership of the
other Party in the Marks of the other Party and agrees that all use of the
other Party's Marks will inure to the benefit, and be on behalf, of the other
Party. Each party acknowledges that its utilization of the other Party's
Marks will not create in it, nor will it represent it has, any right, title,
or interest in or to such Marks other than the licenses expressly granted
herein. Each Party agrees not to do anything contesting or impairing the
trademark rights of the other Party.
5. QUALITY STANDARDS. Each Party agrees that the nature and quality of its
products and services supplied in connection with the other Party's Marks
will conform to quality standards set by the other Party. Each Party agrees
to supply the other Party, upon request, with a reasonable number of samples
of any Materials publicly disseminated by such Party which utilize the other
Party's Marks. Each Party will comply with all applicable laws, regulations,
and customs and obtain any required government approvals pertaining to use of
the other Party's marks.
6. INFRINGEMENT PROCEEDINGS. Each Party agrees to promptly notify the other
Party of any unauthorized use of the other Party's Marks of which it has
actual knowledge. Each Party will have the sole right and discretion to bring
proceedings alleging infringement of its Marks or unfair competition related
thereto; provided, however, that each Party agrees to provide the other Party
with its reasonable cooperation and assistance with respect to any such
infringement proceedings.
7. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to the
other Party that: (i) such Party has the full corporate right, power and
authority to enter into this Agreement and to perform the acts required of if
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it
is otherwise bound; (iii) when executed and delivered by such
25
Party, this Agreement will constitute the legal, valid and binding obligation
of such Party, enforceable against such Party in accordance with its terms;
and (iv) such Party acknowledges that the other Party makes no
representations, warranties or agreements related to the subject matter
hereof that are not expressly provided for in this Agreement. MP hereby
represents and warrants that it possesses all authorizations, approvals,
consents, licenses, permits, certificates or other rights and permissions
necessary to sell the MP Products.
8. CONFIDENTIALITY. Each Party acknowledges that Confidential Information
may be disclosed to the other Party during the course of this Agreement. Each
Party agrees that it will take reasonable steps, at least substantially
equivalent to the steps it takes to protect its own proprietary information,
during the term of this Agreement, and for a period of three years following
expiration nor termination of this Agreement to prevent the duplication or
disclosure of Confidential Information of the other Party, other than by or
to its employees or agents who must have access to such Confidential
Information to perform such Party's obligations hereunder, who will each
agree to comply with this section. Notwithstanding the foregoing, either
Party may issue a press release or other disclosure containing Confidential
Information without the consent of the other Party, to the extent such
disclosure is required by law, rule, regulation or government or court order.
In such event, the disclosing Party will provide at least five (5) business
days prior written notice of such proposed disclosure to the other Party.
Further, in the event such disclosure is required of either Party under the
laws, rules or regulations of the Securities and Exchange Commission or any
other applicable governing body, such Party will (i) redact mutually
agreed-upon portions of this Agreement to the fullest extent permitted under
applicable laws, rules and regulations and (ii) submit a request to such
governing body that such portions and other provisions of this Agreement
receive confidential treatment under the laws, rules and regulations of the
Securities and Exchange Commission or otherwise be held in the strictest
confidence to the fullest extent permitted under the laws, rules or
regulations of any other applicable governing body.
9. LIMITATION OF LIABILITY; DISCLAIMER; INDEMNIFICATION.
9.1 LIABILITY. UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY
DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES), ARISING FROM BREACH OF THE AGREEMENT, THE SALE OF PRODUCTS, THE USE
OR INABILITY TO USE THE AOL NETWORK, THE AOL SERVICE, AOL COM OR THE
AFFILIATED MP SITE, OR ARISING FROM ANY OTHER PROVISION OF THIS AGREEMENT,
SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST
BUSINESS (COLLECTIVELY, "DISCLAIMED DAMAGES"); PROVIDED THAT EACH PARTY
WILL REMAIN LIABLE TO THE OTHER PARTY TO THE EXTENT ANY DISCLAIMED DAMAGES
ARE CLAIMED BY A THIRD PARTY AND ARE SUBJECT TO INDEMNIFICATION PURSUANT TO
SECTION 9.3 EXCEPT AS PROVIDED IN SECTION 9.3 (I) LIABILITY ARISING UNDER
THIS AGREEMENT WILL BE LIMITED TO DIRECT, OBJECTIVELY MEASURABLE DAMAGES, AND
(II) THE MAXIMUM LIABILITY OF ONE PARTY TO THE OTHER PARTY FOR ANY CLAIMS
ARISING IN CONNECTION WITH THIS AGREEMENT WILL NOT EXCEED THE AGGREGATE
AMOUNT OF PAYMENT OBLIGATIONS OWED TO THE OTHER PARTY HEREUNDER IN THE YEAR
IN WHICH THE EVENT GIVING RISE TO LIABILITY OCCURS; PROVIDED THAT EACH PARTY
WILL REMAIN LIABLE FOR THE AGGREGATE AMOUNT OF ANY PAYMENT OBLIGATIONS OWED
TO THE OTHER PARTY PURSUANT TO THE AGREEMENT.
9.2 NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING
THE AOL NETWORK, THE AOL SERVICE, AOL COM OR THE AFFILIATED MP SITE.
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF
PERFORMANCE WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AOL
SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING THE PROFITABILITY OF THE
AFFILIATED MP SITE.
9.3 INDEMNITY. Either Party will defend, indemnify, save and hold harmless
the other Party and the officers, directors, agents, affiliates,
distributors, franchisees and employees of the other Party from any and all
third party claims, demands, liabilities, costs or expenses, including
reasonable attorneys' fees ("Liabilities"), resulting from the Indemnifying
Party's material breach of any duty, representation or warranty of this
Agreement.
9.4 CLAIMS. If a Party entitled to indemnification hereunder (the
"Indemnified Party") becomes aware of any matter it believes is
indemnifiable hereunder involving any claim, action, suit, investigation,
arbitration or other proceeding against the Indemnified Party by any third
party (each an "Action"), the Indemnified Party will give the other
26
Party (the "Indemnifying Party") prompt written notice of such Action. Such
notice will (i) provide the basis on which Indemnification is being asserted
and (ii) be accompanied by copies of all relevant pleadings, demands, and
other papers related to the Action and in the possession of the Indemnified
Party. The Indemnifying Party will have a period of ten (10) days after
delivery of such notice to respond. If the Indemnifying Party elects to
defend the Action or does not respond within the requisite ten (10) day
period, the Indemnifying Party will be obligated to defend the Action, at its
own expense, and by counsel reasonably satisfactory to the Indemnified
Party. The Indemnified Party will cooperate, at the expense of the
Indemnifying Party, with the Indemnifying Party and its counsel in the
defense and the Indemnified Party will have the right to participate fully,
at its own expense, in the defense of such Action. If the Indemnifying Party
responds within the required ten (10) day period and elects not to defend
such Action, the Indemnified Party will be free, without prejudice to any of
the Indemnified Party's rights hereunder, to compromise or defend (and
control the defense of) such Action. In such case, the Indemnifying Party
will cooperate at its own expense, with the Indemnified Party and the
counsel in the defense against such Action and the Indemnifying Party will
have the right to participate fully, at its own expense, in the defense of
Action. Any compromise or settlement of an Action will require the prior
written consent of both Parties hereunder, such consent not to be
unreasonably withheld or delayed.
9.5. ACKNOWLEDGMENT. AOL and MP each acknowledges that the provisions of
this Agreement were negotiated to reflect an informed, voluntary allocation
between them of all risks (both known and unknown) associated with the
transactions contemplated hereunder. The limitations and disclaimers related
to warranties and liability contained in this Agreement are intended to limit
the circumstances and extent of liability. The provisions of this Section 9
will be enforceable independent of and severable from any other enforceable
or unenforceable provision of this Agreement.
10. SOLICITATION OF AOL USERS. During the term of the Agreement and for a
two year period thereafter, MP will not use the AOL Network (including,
without limitation, the e-mail network contained therein) to solicit AOL
Members on behalf of another Interactive Service. More generally, MP will not
send unsolicited, commercial e-mail (i.e., "spam") through or into AOL's
products or services, absent a Prior Business Relationship. For purposes of
this Agreement, a "Prior Business Relationship" will mean that the AOL Member
to whom commercial e-mail is being sent has voluntarily either (i) engaged in
a transaction with MP or (ii) provided information to MP through a contest,
registration or other communication, which included clear notice to the AOL
Member that the information provided could result in commercial e-mail being
sent to that AOL Member by MP or its agents. Any commercial e-mail to be sent
through or into AOL's products or services shall also be subject to AOL's
then-standard restrictions on distribution of bulk e-mail (e.g., related to
the time and manner in which such e-mail can be distributed through or into
the AOL product or service in question).
11. COLLECTION AND USE OF USER INFORMATION. MP shall ensure that its
collection, use and disclosure of information obtained from AOL Members under
this Agreement ("Member Information") complies with (i) all applicable laws
and regulations and (ii) AOL's standard privacy policies, available on the
AOL Service at the keyword term "Privacy" (or, in the case of the Affiliated
MP Site, MP's standard privacy policies so long as such policies are
prominently published on the site and provide adequate notice, disclosure and
choice to users regarding MP's collection, use and disclosure of user
information). MP will not disclose Member Information collected hereunder to
any third party in a manner that identifies AOL Members as end users of an
AOL product or service or use Member Information collected under this
Agreement to market another Interactive Service.
12. EXCUSE. Neither Party will be liable for, or be considered in breach of or
default under this Agreement on account of, any delay or failure to perform as
required by this Agreement as a result of any causes or conditions which are
beyond such Party's reasonable control and which such Party is unable to
overcome by the exercise of reasonable diligence.
13. INDEPENDENT CONTRACTORS. The Parties to this Agreement are independent
contractors. Neither Party is an agent, representative or MP of the other
Party. Neither Party will have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. This Agreement will not be interpreted or
construed to create an association, agency, joint venture or partnership
between the Parties or to impose any liability attributable to such a
relationship upon either Party.
14. NOTICE. Any notice, approval, request, authorization, direction or other
communication under this Agreement will be given in writing and will be
deemed to have been delivered and given for all purposes (i) on the delivery
date if delivered by electronic mail on the AOL Network (to screenname
"XXXXxxxxx@XXX.xxx" in the case of AOL) or by confirmed facsimile; (ii) on
the delivery date if delivered personally to the Party to whom the same is
directed; (iii) one business day after deposit with a commercial overnight
carrier, with written verification of receipt; or (iv) five business days
after the mailing date, whether or not actually received, if sent by U.S.
mail, return
27
receipt requested, postage and charges prepaid, or any other means of rapid
mail delivery for which a receipt is available. In the case of AOL, such
notice will be provided to both the Senior Vice President for Business
Affairs (fax no. 000-000-0000) and the Deputy General Counsel (fax no.
000-000-0000); each at the address of AOL set forth in the first paragraph
of this Agreement. In the case of MP, except as otherwise specified
herein, the notice address will be the address for MP set forth in
the first paragraph of this Agreement, with the other relevant notice
information, including the recipient for notice and, as applicable, such
recipient's fax number or AOL e-mail address, to be as reasonably identified
by AOL.
15. LAUNCH DATES. In the event that any terms contained herein relate to or
depend on the commercial launch date of the Affiliated MP Site contemplated
by this Agreement (the "Launch Date"), then it is the intention of the
Parties to record such Launch Date in a written instrument signed by both
Parties promptly following such Launch Date; provided that, in the absence of
such a written instrument, the Launch Date will be as reasonably determined
by AOL based on the information available to AOL.
16. NO WAIVER. The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement or to
exercise any right under this Agreement will not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same will
be and remain in full force and effect.
17. RETURN OF INFORMATION. Upon the expiration or termination of this
Agreement, each Party will, upon the written request of the other Party,
return or destroy (at the option of the Party receiving the request) all
confidential information, documents, manuals and other materials specified
the other Party.
18. SURVIVAL. Section 6.3 of the body of the Agreement, Section 13 of
Exhibit F, and Sections 8 through 28 of this Exhibit, will survive the
completion, expiration, termination or cancellation of this Agreement.
19. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
supersedes any and all prior agreements of the Parties with respect to the
transactions set forth herein. Neither Party will be bound by, and each Party
specifically objects to, any term, condition or other provision which is
different from or in addition to the provisions of this Agreement (whether or
not it would materially alter this Agreement) and which is proffered by the
other Party in any correspondence or other document, unless the Party to be
bound thereby specifically agrees to such provision in writing.
20. AMENDMENT. No change, amendment or modification of any provision of this
Agreement will be valid unless set forth in a written instruments signed by
the Party subject to enforcement of such amendment, and in the case of AOL,
by an executive of at least the same standing to the executive who signed the
Agreement.
21. FURTHER ASSURANCES. Each Party will take such action (including, but not
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or
continuing performance of this Agreement.
22. ASSIGNMENT. MP will not assign this Agreement or any right, interests
or benefit under this Agreement without the prior written consent of AOL.
Assumption of the Agreement by any successor to MP that is an Interactive
Service (including, without limitation, by way of merger or consolidation),
will be subject to AOL's prior written approval. Subject to the foregoing,
this Agreement will be fully binding upon, inure to the benefit of and be
enforceable by the Parties hereto and their respective successors and assigns.
23. CONSTRUCTION SEVERABILITY. In the event that any provision of this
Agreement conflicts with the law under which this Agreement is to be
construed or if any such provision is held invalid by a court with
jurisdiction over the Parties to this Agreement, (i) such provision will be
deemed to be restated to reflect as nearly as possible the original
intentions of the Parties in accordance with applicable law, and (ii) the
remaining terms, provisions, covenants and restrictions of this Agreement
will remain in full force and effect.
24. REMEDIES. Except where otherwise specified, the rights and remedies
granted to a Party under this Agreement are cumulative and in addition to,
and not in lieu of, any other rights or remedies which the Party may possess
at law or in equity; provided that, in connection with any dispute hereunder,
MP will be not entitled to offset any amounts that it claims to be due and
payable from AOL against amounts otherwise payable by MP to AOL.
25. APPLICABLE LAW. Except as otherwise expressly provided herein, this
Agreement will be interpreted, construed and enforced in all respects in
accordance with the laws of the Commonwealth of Virginia except for its
conflicts of laws principles.
26. EXPORT CONTROLS. Both Parties will adhere to all applicable laws,
regulations and rules relating to the export of technical data and will not
export or re-export any technical data, any products received from the other
Party or the direct product of such technical data to any prescribed
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country listed in such applicable laws, regulations and rules unless properly
authorized.
27. HEADINGS. The captions and headings used in this Agreement are inserted
for convenience only and will not affect the meaning or interpretation of
this Agreement.
28. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which will be deemed an original and all of which together will constitute
one and the same document.
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FIRST AMENDMENT TO INTERACTIVE MARKETING AGREEMENT
This First Amendment (the "Amendment") dated as of May 1, 1999, is
entered into by and between American Online, Inc. ("AOL"), a Delaware
corporation with principal offices located at 00000 XXX Xxx, Xxxxxx, XX 00000
and DVD EXPRESS, Inc. ("MP"), a California corporation, with offices located
at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000, and modifies
that certain Interactive Marketing Agreement dated as of August 1, 1998 by and
between AOL and MP (the "Original Agreement"). AOL and MP may be referred to
individually as a "Party" and collectively as the "Parties". Defined terms
used herein but not defined in this Amendment shall have the meanings
ascribed to such terms in the Original Agreement.
INTRODUCTION
WHEREAS, the Parties desire to modify certain terms of the Original
Agreement, as provided below.
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Amendment and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, AOL and MP hereby agree to amend
the Original Agreement in accordance with the following terms and conditions:
TERMS
1. EARLY TERMINATION RIGHT. Section 6.7 of the Original Agreement is hereby
amended by adding the following language to the end of the first sentence
of such Section: "(collectively, the 'Early Termination Right');
PROVIDED, HOWEVER, that in the event of the occurrence of an "IPO" prior
to such one (1) year anniversary of the Effective Date, such Early
Termination Right shall expire. For the purposes of this Section 6.7, an
'IPO' shall mean the receipt of equity funding by MP as a result of the
initial public offering of securities of MP pursuant to an effective
registration statement under the Securities Act of 1933, as amended."
2. ORDER OF PRECEDENCE. This Amendment is supplementary to and modifies the
Original Agreement. The terms of this Amendment supersede provisions of
the Original Agreement only to the extent that it is expressly provided
for herein, or to the extent that the terms hereof expressly conflict
with the terms of the Original Agreement. However, nothing contained in
this Amendment should be interpreted as invalidating the Original
Agreement, and provisions of the Original Agreement will continue to
govern relations between the Parties insofar as they do not
expressly conflict with this Amendment.
3. COUNTERPARTS. This Amendment may be executed in counterparts, each of
which will be deemed an original and all of which together will constitute
one and the same document.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
AMERICA ONLINE, INC. DVD EXPRESS, INC.
By: /s/ XXXX X. XXXXXX By: /s/ XXXXXXX XXXXXXX
------------------------------ -------------------------------
Print Name: Xxxx X. Xxxxxx Print Name: Xxxxxxx Xxxxxxx
---------------------- -----------------------
Title: Vice President Title: CEO
--------------------------- ----------------------------
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