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EXHIBIT 10.32
PROMOTIONAL AGREEMENT
This Promotional Agreement (the "Agreement") is entered into and effective as
of May 21, 1999 (the "Effective Date"), by and between MICROSOFT CORPORATION, a
Washington corporation located at Xxx Xxxxxxxxx Xxx, Xxxxxxx, XX 00000
("Microsoft"), and DIGITAL ENTERTAINMENT NETWORK, INC. a Delaware corporation
located at 0000 Xxxxxxxx, Xxxxx Xxxxxx, XX 00000 ("DEN").
RECITALS
Microsoft and DEN are entering into a separate Digital Entertainment Networks,
Inc. Series B Preferred Stock Purchase Agreement as of the Effective Date (the
"Investment Agreement").
Microsoft and DEN wish to enter into this Agreement for certain promotional
activities and to make Microsoft a preferred technology platform provider for
DEN.
The Parties hereby agree as follows:
AGREEMENT
1. DEFINITIONS
1.1 "ASF" means the proposed industry standard multimedia file format which, as
of the Effective Date, is in comment/revision processes within industry
standards bodies, and also any successors or replacements for such format
that Microsoft Corp. may support.
1.2 "Component Versions" means versions of Microsoft software which are
generally made available to third party developers and/or end users
without payment of a flat-rate or per-copy royalty separate from the cost
of the Platform, either as integral components of client and/or server
configurations, as developer toolkits, or otherwise. By way of example, a
developer may pay a yearly subscription fee for access to Microsoft
software development kits ("SDKs"), but such SDK would be considered a
Component Version unless a per-copy royalty was charged with respect to
the software included with such SDK. "Professional", "plus" or similar
extended versions or configurations which Microsoft may offer as for-fee
products separate from the WMT components that are a part of the Platforms
would not be considered Component Versions.
1.3 "Confidential Information" means: (i) any pre-release or beta Microsoft
software and any Microsoft source code other than Sample Source; (ii) any
trade secrets and/or other proprietary non-public information not
generally known relating to either party's product plans, designs, costs,
prices and names, finances, marketing plans, business opportunities,
personnel, research, development or know-how; and (iii) the terms and
conditions of this Agreement. "Confidential Information" shall not include
information that: (A) is or becomes generally known or available by
publication, commercial use or otherwise through no fault of the receiving
party; (B) is known and has been reduced to tangible form by the receiving
party prior to the time of disclosure and is not subject to restriction;
(C) is independently developed by the receiving party without the use of
the other party's Confidential Information; (D) is lawfully obtained from
a third party that has the right to make such disclosure; (E) is made
generally available by the disclosing party without restriction on
disclosure; or (F) as otherwise provided in Section 5 of this Agreement.
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1.4 "Content" means data, text, video, graphics, photographs, artwork and
other technology and materials, as well as audio content such as music,
voice and sounds (and including optional, metadata such as song title and
artist's name related to such audio content).
1.5 "DEN Network" means the programming and infrastructure used to deliver
DEN created or licensed Content across a network including internet,
dial-up, cable modem, xDSL or settop boxes.
1.6 "Microsoft Software" means Windows Media Technologies and Windows NT.
1.7 "Platforms" means Windows NT, Windows 9x and/or Windows 2000 operating
system-based systems on Intel x86 and Alpha hardware platforms.
"Platforms" does not include Windows CE or any other Microsoft or
non-Microsoft operating systems, nor any hardware platform other than
Intel x86 and Alpha.
1.8 "Term" means a period of two (2) years commencing upon the Effective Date.
1.9 "Windows Media Player" means Microsoft's client operating system software
for multimedia (including audio and video) playback on the Platforms,
including Updates thereof.
1.10 "Windows Media SDKs" means the Windows Media Services SDK and the WMAudio
SDK.
1.11 "Windows Media Services" means Component Versions of Microsoft's server
operating system software for multimedia (including audio and video)
streaming on the Platforms, including Windows Media Tools and Updates
thereof.
1.12 "Windows Media Technologies" or "WMT" means Component Versions of Windows
Media Player, Windows Media Services and Windows Media SDKs that
Microsoft generally makes commercially available during the Term.
1.13 "Windows Media Tools" means the software tools provided with Windows
Media Services that provide capabilities to encode and format, and stream
audio and video files on the Internet.
1.14 "Windows NT" means Microsoft's Windows NT Server and Windows NT
Workstation, version 4.x operating system software.
1.15 "WMA" means Content encoded using the Microsoft's Windows Media Audio
codec, contained within an ASF file using a ".wma" file extension.
1.16 Updates means, as to any Microsoft software, all subsequent Component
Version public releases thereof (including public beta releases) during
the Term, including Component Versions of public maintenance releases,
error corrections, upgrades, enhancements, additions, improvements,
extensions, modifications and successor versions.
All other initially capitalized terms shall have the meanings assigned to
them in this Agreement.
2. MICROSOFT OBLIGATIONS
2.1 Microsoft Software. During the Term, Microsoft shall provide DEN, at no
cost to DEN, with (i) an unlimited number of royalty-free copies of
Windows Media Technologies for use with the DEN Network and (ii) up to [*]
copies of Windows NT for use with the DEN Network solely as (A) Windows
Media Technologies content servers, (B) servers for the delivery of web or
database content using other Microsoft technologies and/or (C) in-house
workstations used by DEN.
(a) License Terms. This Section 2.1 shall not be considered a license
to any Microsoft Software. Any and all copies of Microsoft Software
licensed to DEN shall be licensed under the applicable terms,
conditions and restrictions associated with the applicable
component of
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Microsoft Software, at no cost to DEN. Use of Windows NT, Windows
Media Player and Windows Media Services, for example, shall be
governed by the end user license agreement ("XXXX") accompanying
each copy thereof. Window Media SDKs shall be used pursuant to the
specific licenses accompanying them. Violation of any material term
or restriction of the EULAs and/or license agreements governing use
of the Microsoft Software shall be a material breach of this
Agreement, subject to notice and a reasonable opportunity to cure
under Section 9.2.
(b) Support. Microsoft will provide a Microsoft Professional Support
Services contract for technical support to DEN regarding Windows
Media Technologies for [*], after which DEN may purchase
per-incident or flat rate support from Microsoft Professional
Support Services at standard terms and conditions. Other technical
assistance will be covered by the agreement mentioned in Section
3.3.
2.2 Advertising Promotion. During calendar years 1999 and 2000 during the
Term, Microsoft will purchase [*] worth of non-category-exclusive
advertising on DEN's network valued under DEN's standard advertising rate
card ("Advertising Commitment"). Microsoft may, at its sole discretion,
purchase such Advertising Commitment using (i) cash, (ii) [*] of barter
promotion and advertising on WebEvents or other Microsoft web sites,
(subject to acceptability thereof to DEN, granting of permission for
which, subject to DEN's reasonable business judgment, shall not be
unreasonably withheld or delayed), under the Microsoft sites' standard
advertising rate card ("Barter Advertising") or (iii) [*].
2.3 DEN Affiliate. During the sixty (60) days period following the Effective
Date, Microsoft shall negotiate in good faith with DEN to establish (i)
the Microsoft Network ("MSN"); (ii) the Microsoft Network Internet Access
("MSNIA"); or (iii) both MSN and MSNIA as a DEN Affiliate. For purposes of
this Section 2.3, a "DEN Affiliate" means a licensee of DEN which
distributes DEN Content and its network including internet, dial-up, cable
modem, xDSL, or settop boxes.
2.4 Technology Platform. During the term, DEN may, at its discretion,
integrate Microsoft technologies into the DEN Network including Microsoft
Passport Services, HotMail, Instant Messaging and Commerce Server. Such
integration shall be governed by Microsoft's customary terms and
conditions for the software and/or services.
3. DEN OBLIGATIONS
3.1 Promotion of Windows Media Technologies. During the Term, and so long as
DEN has obtained "Technical Satisfaction" with the performance of Windows
Media Technologies (and related formats, WMA and ASF), DEN shall market
and promote Windows Media Technologies (and related WMT formats, WMA and
ASF) on its websites and the DEN Network as DEN's default and preferred
technologies and formats for all DEN download and streaming audio and
streaming video content. Such promotion shall include, but not be limited
to, DEN completing the following: (i) causing the Windows Media Player
preference checkbox to be checked by default; (ii) prominently promoting
WMT branding on DEN websites under appropriate Microsoft trademark
licenses and guidelines; (iii) promoting, on DEN websites, WMT icons,
buttons and/or branding no less prominently than it promotes any other
icon, button or branding from any and all other streaming technology
vendors; and (iv) ensuring any codecs used by DEN for streaming and
download Content production via Windows Media Technologies shall be as
mutually agreed by Microsoft and DEN, and such codecs shall include at
least Microsoft's MPEG4 video codec and
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Windows Media Audio music/sound codec. The foregoing shall not restrict DEN
from providing users, in addition to a WMT version of DEN content, any
other format of content based on an alternate technology. For the purposes
of this Section 3.1, DEN's "Technical Satisfaction" shall mean (A) that DEN
has evaluated and tested current versions of Windows Media Technologies
(with assistance from Microsoft where appropriate) and found WMT to meet
DENs reasonable performance and quality requirements with respect to DEN's
"default and preferred technologies" for the DEN Network, and (B) that in
the event that DEN finds WMT not to meet its reasonable quality and
performance requirements, DEN shall provide Microsoft with prompt notice of
any such deficiencies and the parties shall work together in good faith to
satisfy the quality and performance problems. If the Technical Satisfaction
criteria is not met, DEN's obligations to promote Windows Media as its
default and preferred technologies format shall be replaced with an
obligation to continue to feature it as DEN-approved technologies until
Microsoft can demonstrate Windows Media Technologies are able to meet the
Technical Satisfaction criteria. When able to meet the Technical
Satisfaction criteria, Windows Media Technologies shall revert to the
default and preferred technologies as described herein.
3.2 Announcement of MSN as a DEN Affiliate. Upon execution of the agreement
contemplated in Section 2.3, DEN will issue a press release announcing
Microsoft's MSN as a DEN Affiliate.
3.3 Development Relationship. During the ninety (90) days period following the
Effective Date, DEN shall negotiate in good faith with Microsoft regarding
entering into a strategic alliance utilizing WMT and the development of new
technologies and functionality ("New Technologies") for purposes of
designing a system that maximizes the delivery of targeted advertising and
other technical applications relating to DEN's use of Microsoft
technologies.
4. ANNOUNCEMENT(S)
Microsoft and DEN shall jointly announce this Agreement as set forth in a
press release and announcement plan to be mutually agreed upon by the
parties. The parties will cooperate with each other on additional press
releases and similar communications regarding the non-confidential subject
matter of this Agreement. The content, timing and necessity of any and all
such communications, including the proposed announcement attached as
Attachment 2, will be agreed upon in writing by both parties.
5. CONFIDENTIALITY
5.1 Each party shall protect the other's Confidential Information from
unauthorized dissemination and use with the same degree of care that such
party uses to protect its own like information. Neither party will use the
other's Confidential Information for purposes other than those necessary to
directly further the purposes of this Agreement. Neither party will
disclose to third parties the other's Confidential Information without the
prior written consent of the other party; provided, however, that DEN may
disclose this Agreement to investors, potential investors, investment
bankers and it's underwriters and as may be necessary for DEN to comply
with disclosure obligations pursuant to law or regulation (including,
without limitation, SEC reporting obligations) or legal compulsion or
process (provided that DEN notifies Microsoft so that Microsoft may have a
reasonable opportunity to obtain an appropriate protective order protecting
the confidentiality of and Confidential Information to be disclosed).
Except as expressly provided in this Agreement, no ownership or license
rights is granted in any Confidential Information.
5.2 The parties' obligations of confidentiality under this Agreement shall not
be construed to limit either party's right to independently develop or
acquire products without use of the other party's Confidential Information.
Further, either party shall be free to use for any purpose the residuals
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resulting from access to or work with such Confidential Information,
provided that such party shall maintain the confidentiality of the
Confidential Information as provided herein. The term "residuals" means
information in non-tangible form, which may be retained by persons who
have had access to the Confidential Information, including ideas,
concepts, know-how or techniques contained therein. Neither party shall
have any obligation to limit or restrict the assignment of such persons
or to pay royalties for any work resulting from the use of residuals.
However, the foregoing shall not be deemed to grant to either party a
license under the other party's copyrights or patents.
6. WARRANTY
6.1 DEN. DEN warrants and covenants that it has the full power to enter into
and perform according to the terms of this Agreement.
6.2 Microsoft. Microsoft warrants and covenants that it has the full power to
enter into and perform according to the terms of this Agreement.
6.3 Continuous Nature. The representations and warranties contained in this
Section 6 are continuous in nature and shall be deemed to have been given
by the warrantor at execution of this Agreement and at each stage of
performance hereunder.
7. DISCLAIMER OF FURTHER WARRANTIES
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6, ANY AND ALL SOFTWARE, CONTENT, OR
CONFIDENTIAL INFORMATION PROVIDED BY EITHER PARTY TO THE OTHER HEREUNDER IS
PROVIDED "AS IS," WITHOUT WARRANTY OF ANY KIND. EACH PARTY DISCLAIMS ALL
WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND
NONINFRINGEMENT.
8. DISCLAIMER OF CONSEQUENTIAL DAMAGES
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT,
OR CONSEQUENTIAL DAMAGES WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR
LOSS OF PROFITS OR CONFIDENTIAL OR OTHER INFORMATION, FOR BUSINESS
INTERRUPTION, FOR PERSONAL INJURY, FOR LOSS OF PRIVACY, FOR FAILURE TO MEET ANY
DUTY INCLUDING OF GOOD FAITH OR OF REASONABLE CARE, FOR NEGLIGENCE, AND FOR ANY
OTHER PECUNIARY OR OTHER LOSS WHATSOEVER) ARISING OUT OF OR IN ANY WAY RELATED
TO ANY PROVISION OF AGREEMENT, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
9. TERMINATION
9.1 Term. This Agreement shall continue for the Term unless earlier
terminated pursuant to Section 9.2.
9.2 Termination. Either party may suspend performance and/or terminate
this Agreement immediately upon written notice at any time if:
(a) The other party is in material breach of any material warranty,
term, condition or covenant of this Agreement, other than those
contained in Section 5, and fails to cure that breach within fifteen
(15) days after written notice thereof; or
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(b) The other party is in material breach of Section 5.
9.3 Survival. In the event of termination or expiration of this Agreement for
any reason, Sections 5, 6, 7, 8 and 10 shall survive. Neither party shall
be liable to the other for damages of any sort resulting solely from
terminating this Agreement in accordance with its terms.
10. GENERAL PROVISIONS
10.1 Notices. All notices and requests in connection with this Agreement shall
be deemed given as of the day they are received either by messenger,
delivery service, or in the United States of America mails, postage
prepaid, certified or registered, return receipt requested, to the
addresses below:
To DEN: To Microsoft:
Digital Entertainment Network, Inc. Microsoft Corporation
0000 Xxxxxxxx Xxx Xxxxxxxxx Xxx
Xxxxx Xxxxxx, XX 00000 Xxxxxxx, XX 00000-0000
Attention: General Counsel Attention:
Phone: 000-000-0000 Phone: (000) 000-0000
Fax: 000-000-0000 Fax: (000) 000-0000
Copy to: Copy to:
Xxxxx X. Xxxxx Microsoft Corporation
Katten, Muchin & Zavis One Microsoft Way
1999 Avenue of the Stars Xxxxxxx, XX 00000-0000
Xxx Xxxxxxx, XX 00000 Attention: Law & Corporate Affairs
Fax: Fax: (000) 000-0000
or to such other address as a party may designate pursuant to this notice
provision.
10.2 Independent Parties. Nothing in this Agreement shall be construed as
creating an employer-employee relationship, an agency relationship, a
partnership, or a joint venture between the parties.
10.3 Governing Law. This Agreement will be governed by the laws of the State of
California, as though entered into between California residents and
performed entirely within the State of California. Any action or
litigation concerning this Agreement will take place exclusively in the
federal or state courts in Los Angeles County, California, and the parties
expressly consent to jurisdiction of and venue in such courts and waive
all defenses of lack of personal jurisdiction and forum non conveniens
with respect to such courts. DEN hereby agrees to service of process by
mail or other method acceptable under the laws of the State of California.
10.4 Attorneys' Fees. In any action or suit to enforce any right or remedy
under this Agreement or to interpret any provision of this Agreement, the
prevailing party shall be entitled to recover its costs, including
reasonable outside attorneys' fees and costs.
10.5 Assignment. This Agreement and any rights or obligations hereunder may not
be assigned by DEN without Microsoft's prior written approval except to
DEN's wholly owned subsidiaries. Any attempted assignment, sub-license,
transfer, encumbrance or other disposal by DEN without such consent will
be void and will constitute a material default and breach of this
Agreement for which Microsoft may terminate this Agreement in accordance
with Section 9.2. Except as otherwise provided, this Agreement will be
binding upon and inure to the benefit of the parties' successors and
lawful assigns.
10.6 Force Majeure. Neither party shall be liable to the other under this
Agreement for any delay or failure to perform its obligations under this
Agreement if such delay or failure arises from any
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cause (for example, labor disputes, strikes, earthquake, floods, fire,
lightning, utility or communications failures, earthquakes, vandalism,
war, acts of terrorism, riots, insurrections, embargoes, or laws,
regulations or orders of any governmental entity) beyond such party's
reasonable control.
10.7 Construction. If for any reason a court of competent jurisdiction finds
any provision of this Agreement, or portion thereof, to be unenforceable,
that provision of the Agreement will be enforced to the maximum extent
permissible so as to effect the intent of the parties, and the remainder
of this Agreement will continue in full force and effect. Failure by
either party to enforce any provision of this Agreement will not be
deemed a waiver of future enforcement of that or any other provision.
This Agreement has been negotiated by the parties and their respective
counsel and will be interpreted fairly in accordance with its terms and
without any strict construction in favor of or against either party.
10.8 Entire Agreement. This Agreement does not constitute an offer by
Microsoft and it shall not be effective until signed by both parties.
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and merges all prior and
contemporaneous communications. It shall not be modified except by a
written agreement dated subsequent to the date of this Agreement and
signed on behalf of DEN and Microsoft by their respective duly authorized
representatives.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
Effective Date written above.
MICROSOFT CORPORATION DIGITAL ENTERTAINMENT NETWORK, INC.
/s/ XXXXXXX XXXXX /s/ H. XXXXX XXXXX III
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By(sign) By(sign)
Xxxxxxx Xxxxx H. Xxxxx Xxxxx III
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Name(print) Name(print)
Senior Director Chief Executive Officer
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Title Title
June 16, 1999 May 25, 1999
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Date Date
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