EXHIBIT 10.27
AMENDED AND RESTATED
MAGAZINE CONTENT LICENSE AND HOSTING AGREEMENT
This Magazine Content License and Hosting Agreement (the "Agreement")
is made and entered into on the 29th day of January, 2001 (the "Amended Date")
and is effective as of the 27th day of January 1999 (the "Effective Date"), by
and between Xxxxx.xxx Networks, Inc., successor in interest to Xxxxx.xxx
Networks, LLC, formerly a Delaware limited liability company ("Xxxxx.xxx, LLC"),
and Hearst Communications, Inc., a Delaware corporation ("Hearst").
Recitals
Whereas, Xxxxx.xxx, LLC is in the business of, among other things,
developing and maintaining a network of interrelated Web sites, which Web sites
contain content focused primarily on topics of interest to women.
Whereas, Hearst is the sole and exclusive owner of certain magazines
that contain content focused primarily on topics of interest to women, each of
which magazines currently maintains, or intends to develop and maintain, an
affiliated Web site.
Whereas, Xxxxx.xxx, LLC and Hearst mutually desire: (i) to incorporate
the magazine Web sites into the network of sites maintained by Xxxxx.xxx, LLC;
(ii) for Xxxxx.xxx, LLC to provide Internet hosting services for all such
magazine Web sites, and to produce certain of such sites; and (iii) that
Xxxxx.xxx, LLC have the right to use and publish content from the magazines on
and in connection with the Xxxxx.xxx, LLC network.
Now, Therefore, in consideration of the mutual covenants and
representations set forth herein, the parties hereby agree as follows.
Agreement
1. Definitions.
1.1 "Advertisement" means any banner advertisements, site sponsorship
arrangements, performance-based advertising, referrals, click-throughs, leads
and bounties, and all other similar activities which do not produce revenues
through direct selling, sold with respect to any Magazine Site.
1.2 "Content" means the text, pictures, sound, video, graphical
elements and other data contained in any Web site, excluding all Marks.
1.3 The "Copyright Act" means Title 17 of the United States Code, as
amended from time- to-time, or any successor statute thereto.
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1.4 "Derivative Work" is original copyrightable material such as a
translation, musical arrangement, dramatization, fictionalization, motion
picture version, sound recording, art reproduction, abridgment, condensation, or
any other form in which a work may be recast, transformed, or adapted; and such
copyrightable material is based upon Proprietary Content but in the case of
Hearst Content and Magazine Content, only to the extent the such Content
appearing on the Magazine Site contains Enhancements
1.4A "Enhancements" means the addition by Xxxxx.xxx, LLC of new textual
or graphic elements to Hearst Content or Proprietary Content to render it
distinct from the way such Hearst Content and Magazine Content appear as
published by Hearst in a publication other than on a Magazine Site (other than
such formatting changes as are necessary to display it on the Internet), such as
by the incorporation of Interactive Elements (as hereafter defined). For
purposes of this Agreement, excerpts and abridgements made pursuant to Section
3.3 or formatting revisions to Hearst Content or Magazine Content made by
Xxxxx.xxx, LLC in the normal course of producing or hosting any Magazine Site
shall not be deemed Enhancements.
1.5 The "Hearst Content" means the Content that is proprietary to
Hearst or its third party licensors, which Content Hearst provides for inclusion
on any Magazine Site whether before or after the Effective Date, provided,
however, that Hearst Content provided to Xxxxx.xxx, LLC under this Agreement
shall only include material with respect to which Hearst owns sufficient
electronic rights to license the use and display of such material for use on the
Network, it being understood that Hearst shall not have any obligation to obtain
such rights except with respect to Hearst Content that Hearst has provided to
Xxxxx.xxx, LLC.
1.5A "Hearst Reserved Derivative Work" means original copyrightable
material such as a translation, musical arrangement, dramatization,
fictionalization, motion picture version, sound recording, art reproduction,
abridgment, condensation, or any other form in which a work may be recast,
transformed, or adapted created by Hearst based on Hearst Content and/or
Magazine Content; it being agreed that Hearst may create a Hearst Reserved
Derivative Work based on Hearst Content and Magazine Content regardless of
whether such Content has appeared on a Magazine Site, provided Hearst may not
use in any Hearst Reserved Derivative Work any Enhancements made to Hearst
Content and Magazine Content, nor may it incorporate Interactive Elements. For
the avoidance of doubt, any copyrightable work based on Hearst Content or
Magazine Content that contains Enhancements or Interactive Elements and any
copyrightable work based on Original Site Content or Third Party Work shall be
deemed a Derivative Work and any copyrightable work based on Hearst Content or
Magazine Content that does not contain Enhancements or Interactive Elements
shall be deemed a Hearst Reserved Derivative Work.
1.6 "Hosting Services" means those Internet hosting services to be
performed by Xxxxx.xxx, LLC on behalf of Hearst under the terms of this
Agreement, all as more fully described on Exhibit A.
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1.7 "Internet" means that certain worldwide system of computer networks
existing as of the Effective Date, conceived by the Advanced Research Projects
Agency of the United States Government in 1969 and originally known as ARPANet,
which is as of the Effective Date a public, cooperative and self-sustaining
facility accessible to millions of people worldwide, and is distinguished by its
use of TCP/IP protocols, and hypertext links, and incorporates, among other
features, the World Wide Web.
1.8 The "Magazines" means the U.S. edition of each of the following
print publications (so long as such publications are published by Hearst):
Cosmopolitan; Country Living; Country Living Gardener (subject to the provisions
of Section 3.4(c) herein); Country Living's Healthy Living (subject to the
provisions of Section 3.4(c)herein); Good Housekeeping; House Beautiful;
Redbook; Town & Country; and Victoria, each of which is wholly owned by Hearst.
If following the Effective Date, Hearst becomes the sole owner of any other
magazine(s), such magazine(s) may be added to the foregoing list upon the mutual
agreement of the parties. Further, the parties may, by mutual written agreement,
add any or all of the international versions of any of the foregoing Magazines
to the scope of this Agreement. The "Magazines" shall also include Xxxxx-Xxxxxx
(which is operated as a joint venture between Hearst and Xxxxx-Xxxxxx Album
S.A.), if following the Effective Date Hearst obtains the consent of
Xxxxx-Xxxxxx Album S.A. to include Xxxxx-Xxxxxx within the scope of this
Agreement, which consent Hearst agrees to use commercially reasonable efforts to
obtain.
1.9 "Magazine Content" means any and all Content (other than
advertising and advertorials) published in any of the Magazines whether prior to
or following the Effective Date, and including, by way of example and without
limitation, articles, reportage, features, editorials, letters to the editor,
reviews and commentary, provided, however, that Magazine Content provided to
Xxxxx.xxx, LLC under this Agreement shall only include material with respect to
which Hearst owns sufficient electronic rights to license the use and display of
such material for use on the Network, it being understood that Hearst shall not
have any obligation to obtain such rights except with respect to Magazine
Content that Hearst has provided to Xxxxx.xxx, LLC.
1.10 "Magazine Site" means the U.S. edition of a Web site that is
provided by or on behalf of Hearst as an on-line version of a Magazine and/or is
maintained as an on-line adjunct to a Magazine, including all Proprietary
Content contained on such site. If following the Effective Date, Hearst becomes
the sole owner of any other magazine(s) which are appropriate for incorporation
in the Network or obtains the consent of Xxxxx-Xxxxxx Album S.A. as described in
Section 1.7, the related Magazine Site(s) may be added to the scope of this
Agreement upon the mutual written agreement of the parties. Notwithstanding
anything contained herein to the contrary, in no event shall xxxxxx000.xxx be
deemed to be a Magazine Site for purposes of this Agreement.
1.11 "Xxxx" means any and all trademarks, trade names, service marks,
trade dress, logos, URLs, or identifying slogans of a party, whether or not
registered.
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1.12 Net Advertising Revenues" means gross revenues recognized by
Xxxxx.xxx, LLC from the sale of Advertisements on (a) the Magazine Sites, (b)
any page of the Network that primarily contains Proprietary Content (other than
teasers), and (c) any other page of the Network on which any article or feature
that is Proprietary Content is reproduced or duplicated substantially in its
entirety, less agency fees (which shall not exceed fifteen percent (15%) of
gross revenues from the sale of Advertisements), commissions (which shall not
exceed eight percent (8%) of gross revenues from the sale of Advertisements),
credits due to cancellations, and provision for bad debt. In no event shall Net
Advertising Revenues for any period be less than the product of (A) gross
revenues recognized from the sale of all advertising on the Network, multiplied
by (B) (i) the result of dividing the total number of advertisements served
(impressions) on the Magazine Sites by the total number of advertisements served
(impressions) on the Network; or (ii) the result of dividing the number of page
views on the Magazine Sites by the total number of page views on the Network (in
the case of (i) and (ii), whichever result is greater).
1.13 The "Network" means that network of Web sites operated by
Xxxxx.xxx, LLC some of which bear the Xxxxx.xxx, LLC brand and each directly
linked to the Network Portal Site, including any Web sites that may be added to
the Network during the term of this Agreement.
1.14 "Network Portal Site" means the portal site for the Network, which
site is currently located at xxx.xxxxx.xxx, or any successor URL.
1.14A "Original Site Content" means any original text, pictures, sound,
video, graphical elements and other data prepared by Xxxxx.xxx, LLC specifically
for inclusion on a Magazine Site based on ideas generated by either Xxxxx.xxx,
LLC, or Hearst and that is actually included on any Magazine Site. Original Site
Content includes but is not limited to, functional interactive elements
("Interactive Elements") and Enhancements added to Hearst Content and Magazine
Content. Interactive Elements do not include interactive elements that
Xxxxx.xxx, LLC has prepared or licensed for use generally and not specifically
for Magazine Sites.
1.14B "Proprietary Content" means Hearst Content, Magazine Content,
Original Site Content and Third Party Work when referred to collectively.
1.15 "Production Services" means those Magazine Site production
services to be performed by Xxxxx.xxx, LLC on behalf of Hearst under the terms
of this Agreement, all as more fully described on Exhibit B.
1.16 "Promotional Activity" means the placing of Advertisements, or the
provision of headlines or teasers (e.g. excerpts of Hearst Content or Magazine
Content).
1.16A "Third Party Work" means content prepared by a Third Party
retained by Xxxxx.xxx, LLC to contribute Content to a Magazine Site.
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1.17 The "Web" means the World Wide Web portion of the Internet.
1.18 "Xxxxx.xxx, LLC Competitor" means: (a) any Women's Portal Site
that is primarily targeted to any country or region of the world where
Xxxxx.xxx, LLC is targeted and (b) any Web site that primarily provides Content,
substantially competes with a Xxxxx.xxx, LLC site, is targeted specifically to
women, is used primarily by women and is primarily targeted to any country or
region of the world where Xxxxx.xxx, LLC is targeted, or (c) any channel or area
of an online Content aggregation service (such as AOL, Compuserve, Yahoo,
Excite, etc.), which channel or area substantially competes with a Xxxxx.xxx,
LLC site, is targeted specifically to women, is used primarily by women and is
primarily targeted to any country or region of the world where Xxxxx.xxx, LLC is
targeted.
1.18A "Xxxxx.xxx Content" means Content other than Proprietary Content
used by Xxxxx.xxx, LLC on the Network or any Magazine Site.
1.19 "Women's Portal Site" means a Web site that is primarily targeted
to any country or region of the world where Xxxxx.xxx, LLC is targeted and that
is meant to function as an anchor site or entry point for users to the Internet
and offers a broad array of resources and services such as articles, e-mail,
discussion forums, search engines, weather information, stock quotes, phone and
map information and on-line shopping malls that contains Content of interest
primarily to women, is primarily targeted specifically to women and is used
primarily by women (e.g.: iVillage, Oxygen Media, and LookSmart).
2. Incorporation of the Magazine Sites Into the Network.
2.1 General. The incorporation of the Magazine Sites into the Network
is to be accomplished by way of the rights and obligations described in this
Agreement. In addition to such rights and obligations, the parties agree that
they shall, during the term of this Agreement, work together in good faith and
take whatever other actions are reasonably necessary or prudent to accomplish
the goals of this Agreement.
2.2 Linking and Distribution.
(a) During the term of this Agreement, Xxxxx.xxx, LLC agrees that it
will place direct links to at least four Magazine Sites (to be mutually agreed
upon by Hearst and Xxxxx.xxx, LLC on the Network. These links will be placed on
the homepage of the Network Portal Site if links to any non-Magazine Site appear
on such page, and if such other links to other websites appear above the fold,
the links to the Magazine Sites will likewise appear above the fold. These links
and additional links will also be placed individually or grouped, throughout the
Network on appropriate homepages and any other appropriate pages on the Network,
including, without limitation, any appropriate pages where other relevant
non-Magazine site links appear, and will be no less favorable in terms of size,
placement, rotation, prominence, frequency and ease of use, than any other link,
brand or name of any other site on the Network. Without limiting the generality
of the foregoing, in the event any Magazine Site link or links appear on the
Network together with any non-Magazine site link that is in the form of a logo,
such Magazine Site link or links shall also be in the form of a logo. During the
term of this Agreement, Hearst shall create and place links to the Network
Portal Site homepage from the homepage of each Magazine Site (and elsewhere
within each such Magazine Site, as the parties may mutually determine).
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(b) Xxxxx.xxx, LLC shall distribute the Magazine Sites throughout the
Network in a manner no less favorable than any other site on the Network.
2.3 Branding. Hearst shall prominently place Xxxxx.xxx, LLC's branding
above the fold, adjacent to the masthead on each Magazine Site. Hearst will also
place links to the Network on the site Hearst maintains for Xxxxxx'x Bazaar in
such manner as Hearst determines. All Xxxxx.xxx, LLC branding on each Magazine
Site must comply with Xxxxx.xxx, LLC's branding standards as communicated to
Hearst from time to time, and shall be subject to the prior approval of
Xxxxx.xxx, LLC, which shall be deemed given if Xxxxx.xxx, LLC does not respond
within five (5) business days of receipt of request for approval. Xxxxx.xxx, LLC
shall provide navigation capabilities on the Network to and from each of the
Magazine Sites. Such navigation capabilities shall be at least equal (including,
without limitation, with respect to size, placement, prominence, frequency and
ease of use) to the navigation capabilities provided by Xxxxx.xxx, LLC on the
Network with respect to non-Magazine sites. Without limiting the foregoing,
navigation from the Network to each of the Magazine Sites shall exist from every
place on the Network where navigation to all other non-Magazine Sites exists. In
addition, where a navigational tool is used to link to a majority of
non-Magazine Sites exists, relevant Magazine Sites will also be linked with such
navigational tool. All Hearst and Magazine branding on the Network must comply
with applicable branding standards as communicated by Hearst to Xxxxx.xxx, LLC
from time to time, and shall be subject to the prior approval of Hearst, which
shall be deemed given if Hearst does not respond within five (5) business days
of receipt of request for approval.
2.4 Development Schedule. Following the Effective Date, the parties
shall work together in good faith in order to complete all tasks necessary or
desirable to incorporate the Magazine Sites into the Network (the
"Implementation"). Within thirty (30) days following the Effective Date, the
parties shall develop a mutually acceptable schedule ("Schedule") that will
cover each party's respective tasks and obligations with respect to the
Implementation and establish a targeted launch date for each Magazine Site. Each
party shall assign a project manager to be the primary point of contact between
the parties with respect to such efforts. The parties agree to use commercially
reasonable efforts to complete their respective Implementation obligations with
respect to each Magazine Site by the launch date set forth for such in the
Schedule.
2.5 License. During the term of this Agreement, Hearst hereby grants to
Xxxxx.xxx, LLC a non-exclusive (except as provided in Section 2.7(a)),
royalty-free, worldwide license, with no right to sublicense or to sell, to:
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(a) Electronically reproduce and distribute, and publicly perform and
display the Proprietary Content on the Web, all in connection with the Hosting
Services to be provided by Xxxxx.xxx, LLC pursuant to Section 3 and the
incorporation of the Magazine Sites into the Network as contemplated by this
Agreement; and
(b) Abridge and excerpt, add Enhancements to and otherwise edit Hearst
Content and Magazine Content and make such changes to Proprietary Content as are
necessary to display it electronically on the Magazine Sites and Network; and
(c) electronically reproduce and distribute, and publicly perform and
display Proprietary Content both (i) on the Network, and (ii) otherwise on the
Web in connection with Xxxxx.xxx, LLC's fulfillment of its distribution
commitments to its on-line distribution partners (e.g. America OnLine);
provided, that electronic publishing rights have been obtained by Hearst with
respect to such Proprietary Content and provided, further, that Hearst shall not
be obligated to deliver to Xxxxx.xxx, LLC any Magazine Content or Hearst Content
that was published, in print or electronically, prior to the Effective Date,
where the cost of delivery to Xxxxx.xxx, LLC would, in Hearst's reasonable
estimation, be economically impractical; and
(d) reproduce and distribute through any media now known or hereafter
developed excerpts of the Proprietary Content in advertisements for and
marketing and promotional materials related to the Network and the Magazine
Sites; and
(e) [intentionally omitted]
(f) electronically reproduce and distribute on the Web, and publicly
perform and display on the Web any banner advertisements delivered by Hearst to
Xxxxx.xxx, LLC for placement on the Magazine Site(s) and/or the Network.
2.6 Magazine Specific Restrictions. The rights granted pursuant to
Section 2.5 are subject to any guidelines that may be established by Hearst or
each Magazine from time-to-time with respect to Proprietary Content. Further,
Hearst and each Magazine shall have the right to request, based on reasonable
objections, the removal of, or editorial revisions to, any of its Proprietary
Content that is published through the Network. Xxxxx.xxx, LLC agrees to take
appropriate remedial action with respect to any such request within twenty-four
(24) hours after receipt of such request; provided, that after taking such
remedial action, Xxxxx.xxx, LLC shall have the right to appeal such request
directly to the designated personnel at the applicable Magazine.
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2.7 Additional Rights and Restrictions.
(a) Exclusivity. (i) Except as otherwise expressly provided herein,
during the term of this Agreement, Hearst agrees that it will not: (i) grant
Internet distribution or Internet publication rights to any of the Proprietary
Content to any Xxxxx.xxx, LLC Competitor including, without limitation, through
a direct data feed, cobranding arrangement, or premium placement arrangement;
(ii) advertise or promote the Magazine Sites on or in connection with any
Xxxxx.xxx, LLC Competitor; (iii) grant any entity the right to distribute or
display on the Internet any Hearst Content or Magazine Content that has been
displayed on a Magazine Site in substantially the same form and format as such
Content was displayed on a Magazine Site without the consent of Xxxxx.xxx, LLC
(it being understood that notwithstanding the foregoing, Hearst may, without
Xxxxx.xxx, LLC's consent, grant any entity other than a Xxxxx.xxx, LLC
Competitor the right the right to distribute and display on the Internet Hearst
Content and Magazine Content which was displayed on a Magazine Site verbatim to
the way it was published by Hearst (i.e., no abridgements or excerpts were
made), and it being further understood that where Hearst Content or Magazine
Content were displayed on a Magazine Site in an abridged or excerpted form,
Hearst may, without Xxxxx.xxx, LLC's consent, grant any entity the right to
distribute and display on the Internet a different selection or arrangement of
such Hearst Content or Magazine Content that is not substantially similar to
that displayed on the Magazine Site)(for the avoidance of doubt, Hearst shall be
under no restriction other than that set forth at Section 2.7(a)(i)(i) above
with respect to Hearst Content and Magazine Content that is not displayed on the
Magazine Sites at all); (iv) grant any entity the right to distribute and
display on the Internet any Original Site Content or Third Party Work without
the consent of Xxxxx.xxx, LLC; or (v) license any of its Magazine Marks for use
on the Web site of any Xxxxx.xxx, LLC Competitor. Further, Hearst agrees that
during the term of this Agreement (x) it will not license to any Xxxxx.xxx, LLC
Competitor the right to use any URL incorporating either the name of a Magazine
or derivative or diminutive form of the name of a Magazine (e.g. "Cosmo", "T&C",
"Healthy Living", etc.) and (y) it will not use any URL incorporating either the
name of a Magazine or derivative or diminutive form of the name of a Magazine
except, (1) on a site that is part of the Network, and (2) in connection with
any projects with which Hearst or the Magazines may become involved in
compliance with Section 2.8(b).
(ii) The foregoing shall not be construed to preclude: (i)
grants of rights to online databases, libraries and information storage and
retrieval services, in any media whether now known or hereafter invented, to use
Proprietary Content for archival purposes; (ii) third-party proprietors of
material contained in Proprietary Content who have retained copyright ownership
in such material from publishing such material on the Internet following the
expiration of any periods of exclusivity that may have been granted to Hearst;
(iii) Hearst from using the name of a Magazine or derivative or diminutive form
of the name of a Magazine embedded in the URL of any sites( but not as the
primary name of a URL) for the purpose of soliciting sales of magazine
subscriptions or any other purpose not precluded under section 2.7(a)(i) above
or Hearst from using the name of a Magazine or derivative or diminutive form of
the name of a Magazine anywhere in the URL of any sites associated with
international editions of the Magazines; (iv) international editions of the
Magazines from using Hearst Content or Magazine Content that has appeared in
such international editions from using such Content on the Internet; or (v)
Xxxxx.xxx, LLC's right, with respect to users residing outside the United
States, to make the Network accessible, promote the Network, or otherwise target
such users.
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(b) Magazine-Specific Offerings. Hearst agrees that during the term of
this Agreement, Xxxxx.xxx, LLC will have the right, subject to the mutual
agreement of the parties, to enter into arrangements specific to each individual
Magazine in order to: (i) develop Magazine-branded offerings to be made
available on areas of the Network other than the associated Magazine Site and
through product and service offerings of Xxxxx.xxx, LLC other than the Network;
and (ii) to distribute the Magazine Content to third parties on the Web.
Xxxxx.xxx, LLC shall have no right to sublicense or to sell Proprietary Content
to anyone without Hearst's prior written consent.
(c) Right of First Offer. During the term of this Agreement, Hearst
agrees that Xxxxx.xxx, LLC shall have a right of first offer on all new
Internet-based development projects ("Projects") initiated by the Hearst
Magazine Group or any of the Magazines or Magazine Sites that are appropriate
for placement on the Network, based on the Network demographics, Content and
similar factors. If Xxxxx.xxx, LLC expresses an interest in any such Project,
the Hearst Magazine Group (or the applicable Magazine or Magazine Site) shall
negotiate the terms of such Project with Xxxxx.xxx, LLC in good faith. In the
event the parties are not able to enter into a definitive agreement, letter of
intent, memorandum of understanding or like document within thirty (30) days (or
such longer period as the parties may agree to) following Xxxxx.xxx, LLC's
receipt of notice of such Project from the Hearst Magazine Group or the
applicable Magazine or Magazine Site, the Hearst Magazine Group (or the
applicable Magazine or Magazine Site) shall have the right to offer the Project
to a third party; provided, however that prior to executing a definitive
agreement with such third party with respect to the applicable Project, the
Hearst Magazine Group (or the applicable Magazine or Magazine Site) shall
provide Xxxxx.xxx, LLC with a summary of the general terms of the proposed
agreement and discuss with Xxxxx.xxx, LLC ways in which Xxxxx.xxx, LLC might
participate in the Project.
2.8 Reservation of Rights by Hearst.
(a) For Promotional Purposes. Notwithstanding anything to the contrary
in this Agreement, Hearst retains the right to conduct Promotional Activities
with respect to each of the Magazine Sites in conjunction with any party that is
not a Women's Portal Site, provided that none of Hearst, the Magazines or the
Magazine Sites receives payments for those Promotional Activities.
(b) Other Online Projects. Subject only to the requirements of Section
2.7(c), Hearst retains the right on behalf of the Magazines to permit the
Magazines to enter into agreements of any nature with any third party that is
not a Xxxxx.xxx, LLC Competitor with respect to projects focused on specific
topics or applications.
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(c) Derivative Works. (i) Subject only to the requirements of Section
2.7(a) and (c), Hearst retains the right to make Derivative Works in any media
and to disseminate them in manner whatsoever, provided such Derivative Works
will not be exploited on the Internet without Xxxxx.xxx LLC's prior consent,
which shall not unreasonably be withheld, but which may be conditioned on mutual
agreement on compensation to Xxxxx.xxx, LLC (provided the foregoing shall not
restrict Hearst from making incidental advertising for or delivery of, as
opposed to display for full viewing (in the form, for example, of a downloaded
print book or e-book delivered via the Internet to a personal digital assistant)
a Derivative Work on the Internet. In the event that Hearst or a third party
authorized by Hearst exploits a Derivative Work, Xxxxx.xxx LLC shall be entitled
to a share of Hearst's revenues from such exploitation as follows: (i) where
Hearst itself or a Hearst Affiliate (as defined at Section 7.3) exploits such
Derivative Work, fifty (50%) percent of net revenues, meaning actual receipts
less agency fees or commissions, actual out-of-pocket costs incurred in
connection with the exploitation, and an overhead factor of twenty percent 20%
of gross revenues; (ii) where an unaffiliated third party exploits the
Derivative Work, fifty (50%) percent of Hearst's actual receipts from such third
party, less any actual out-of-pocket costs incurred in connection with such
exploitation. Xxxxx.xxx LLC's entitlement to such fee shall survive termination
of this Agreement for so long as any Derivative Work created during the Initial
Term or any Renewal Term generates revenues. Xxxxx.xxx, LLC shall have no right
to create a Derivative Work without the prior written consent of Hearst. All
Derivative Works which Hearst may permit to be made or developed by Xxxxx.xxx,
LLC shall be jointly owned by Hearst and Xxxxx.xxx, LLC ("Joint Derivative
Works"), each such work being a "joint work" as defined in ss.101 of the
Copyright Act, and the parties shall be co-owners of the copyrights in such
works as set forth in ss. 201(a) of the Copyright Act. Notwithstanding such
joint ownership, it is agreed that Hearst shall not itself exploit any Joint
Derivative Work during the Initial Term or any Renewal Term without the prior
written consent of Xxxxx.xxx, LLC, and if such consent is given, Hearst shall
account to Xxxxx.xxx, LLC in the same manner as it accounts for a Derivative
Work. Hearst shall be entitled to receive a fee as follows, in respect of any
Joint Derivative Work made or developed by Xxxxx.xxx as permitted hereunder: (i)
where Xxxxx.xxx, LLC itself or an affiliate (being an entity that controls, is
controlled by, or under common control with Xxxxx.xxx, LLC, as those terms are
defined at Section 7.3) exploits such Joint Derivative Work, fifty (50%) percent
of net revenues, meaning actual receipts less agency fees or commissions, actual
out-of-pocket costs incurred in connection with the exploitation and an overhead
factor of 20% of gross revenues; (ii) where an unaffiliated third party exploits
the Joint Derivative Work, fifty (50%) percent of Xxxxx.xxx, LLC's actual
receipts from such third party less actual out-of-pocket costs incurred in
connection with such exploitation. Hearst's entitlement to such fee shall
survive termination of this Agreement for so long as any such Joint Derivative
Work created during the Initial Term or any Renewal Term generates revenues.
(ii) In the event Hearst creates or authorizes the creation of a
Hearst Reserved Derivative Work Xxxxx.xxx, LLC shall have no entitlement to any
revenue in connection with such Hearst Reserved Derivative Work, and Hearst
shall be under no restriction with respect to the exploitation of such Hearst
Reserved Derivative Work other than the restrictions set forth herein at Section
2.7(a) and (c) and it being further understood that nothing herein shall
restrict Hearst from making incidental advertising for or delivery of as opposed
to display for full viewing (in the form, for example, of a downloaded print
book or e-book delivered via the Internet to a personal digital assistant) a
Hearst Reserved Derivative Work on the Internet.
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(d) Reuse in Magazines. Nothing herein shall be construed to prevent
Hearst from using or reusing in the print pages of its Magazines any Proprietary
Content or user-generated Content without compensation to Xxxxx.xxx, LLC, and
such Proprietary Content or user-generated Content may be used or reused in the
form it appeared on the Magazine Sites or in edited fashion.
2.9 Exclusivity Obligations of Xxxxx.xxx, LLC. Xxxxx.xxx, LLC hereby
agrees that during the term of this Agreement it will not, without the prior
written consent of Hearst, enter into any agreement to produce and/or include as
part of the Network any magazine site or Content related to a print publication
that is not a Hearst publication, if such magazine site may reasonably be
construed to be competitive with any of the Magazines. Notwithstanding the
foregoing, nothing herein shall prohibit Xxxxx.xxx, LLC from performing under or
renewing its agreements with Rodale Press regarding (i) Prevention and (ii) New
Woman Magazine with respect to their Web site, which agreements are in effect as
of the Effective Date.
3. Magazine Site Development and Maintenance.
3.1 Hosting Services. Hearst agrees that during the term of this
Agreement, Xxxxx.xxx, LLC will provide Internet Hosting Services for each
Magazine Site, regardless of the source of production of such site, in
consideration for the license granted herein. In connection therewith, and
independent of the source of production of each Magazine Site, Xxxxx.xxx, LLC
will provide to Hearst during the term of this Agreement Hosting Services with
respect to each Magazine Site. Xxxxx.xxx, LLC shall make the Hearst Content
publicly available to Internet users on a basis consistent with the performance
standards set forth on Exhibit A, which may be amended from time to time.
Xxxxx.xxx, LLC shall upload all Proprietary Content, including updates.
Xxxxx.xxx, LLC shall, using industry standard methods, prevent unauthorized
access to any shadow site of any Magazine Site, any restricted areas of each
Magazine Site and any databases or other sensitive material generated from or
used in conjunction with such Magazine Site, as required by Hearst. Xxxxx.xxx,
LLC agrees that Xxxxx.xxx, LLC will host selected non-Magazine sites for Hearst
during a transition period not to exceed ninety (90) days from and after the
Effective Date (the "Transition Hosting Services"). Hearst agrees that it shall
pay Xxxxx.xxx, LLC the sum of six thousand six hundred dollars ($6,600.00) for
each period of thirty (30) days during which Xxxxx.xxx, LLC provides Transition
Hosting Services. In the event the final period during which Xxxxx.xxx, LLC
provides Transition Hosting Services consists of fewer than thirty (30) days,
then Hearst shall pay Xxxxx.xxx, LLC for such final period of Transition Hosting
Services at the rate of two hundred and twenty dollars ($220.00) per day.
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3.2 Delivery of Hearst Content. Except as set forth in Section 3.4,
Hearst will deliver, and will be solely responsible for providing, to Xxxxx.xxx,
LLC all of Hearst Content and Magazine Content that Hearst intends to be
published and distributed on each Magazine Site. At its option, Hearst may
electronically transmit or upload the Hearst Content directly to the Web site.
Unless otherwise agreed to by Xxxxx.xxx, LLC, the Hearst Content and Magazine
Content will be in the format(s) specified by Xxxxx.xxx, LLC in Exhibit A and
conform to any other technical specifications required by Xxxxx.xxx, LLC from
time to time. Hearst will bear all costs associated with the telecommunications
and computer hardware, software and services necessary to generate the Hearst
Content and deliver it to Xxxxx.xxx, LLC.
3.3 Hearst Content Control. Notwithstanding anything to the contrary
contained herein, Hearst retains complete editorial and creative control over
all aspects, including Original Site Content and Third Party Work, of the
Magazine Sites. Hearst will be solely responsible for creating (other than
Original Site Content, Third Party Work and Xxxxx.xxx Content), managing,
editing, reviewing, deleting and otherwise controlling all Content, including
the Hearst Content, Magazine Content and all user-generated Content, with
respect to the Magazine Sites. Xxxxx.xxx, LLC shall post no Content other than
Proprietary Content and user-generated Content to the Magazine Sites without
Hearst's prior written approval. Proprietary rights to Xxxxx.xxx Content posted
to a Magazine Site with Hearst's approval shall remain with Xxxxx.xxx, LLC or
its licensors, and Hearst shall not acquire any ownership rights in such
Xxxxx.xxx Content even though it appears on a Magazine Site. Xxxxx.xxx, LLC
shall not supplement, modify, alter or excerpt the Hearst Content and Magazine
Content (other than modifications strictly necessary to upload the Hearst
Content and Magazine Content to the Web site), without Hearst's prior written
consent; provided, however, that Xxxxx.xxx, LLC may, without seeking Hearst's
prior written consent, use reasonable excerpts of any Proprietary Content both
on and off the Network in connection with its promotion, marketing and
advertising of the Magazine Sites and the Network and other activities
calculated to draw traffic to the Magazine Sites and the Network. No article,
excerpt or other subset of subject matter of the Proprietary Content may be
reproduced on the Network without the proper attribution to the Magazine or
Magazine Site in which such Proprietary Content appeared and to the author or
authors (where required) and the copyright owner to the same extent and in the
same manner set forth in the original form of the Hearst Content or Magazine
Content provided by Hearst or in its original form on a Magazine Site. Hearst
acknowledges that, by only providing Hearst with the ability to publish and
distribute the Content of third parties (being user postings but
xxxxxxxxxXxxxx.xxx Content), Xxxxx.xxx, LLC is acting, to the maximum extent
allowable by law, as a passive conduit for the distribution and publishing of
such user-generated Content. Xxxxx.xxx, LLC has no obligation to Hearst, and
undertakes no responsibility, to review Hearst Content, Magazine Content or
user-generated Content to determine whether any such Content may incur liability
to third parties. Notwithstanding anything to the contrary contained herein, if
Xxxxx.xxx, LLC reasonably believes that any Content on a Magazine Site may
create liability for Xxxxx.xxx, LLC, Hearst agrees that, after prior notice to
Hearst (if reasonably possible under the circumstances), Xxxxx.xxx, LLC may
remove such Content and/or the applicable Web site(s) as Xxxxx.xxx, LLC believes
is prudent or necessary to minimize or eliminate Xxxxx.xxx, LLC's potential
liability.
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3.4 Production Services.
(a) Transition. From the date of this Agreement until such time when
the parties agree to the final terms of the Production Services to be provided
pursuant to Section 3.4(b), Xxxxx.xxx, LLC shall assume and perform all
obligations of the HomeArts business unit of the New Media and Technology
Division of Hearst ("HomeArts") to provide Production Services to the Magazine
Sites, in the manner provided by HomeArts at the date hereof. Xxxxx.xxx, LLC
shall be paid for: (i) Xxxxx.xxx, LLC staff employees - the sum of (1) direct
cost of salary and benefits of those personnel performing the Production
Services, plus (2) the cost of overhead expenses, up to a maximum amount equal
to fifteen percent 15% of the salary and benefit costs described in (1), plus
(3) fifteen percent 15% of the sum of the amounts described in (1) and (2); and
(ii) for subcontracted services, including but not limited to manuscripts, art,
photography, software development, and talent -the actual cost of the services
plus a fifteen percent 15% profit margin. All amounts paid to Xxxxx.xxx, LLC
shall be credited to amounts to be paid to Xxxxx.xxx, LLC pursuant to Section
3.4(b).
(b) Work Orders. Effective as of the Amended Date Hearst hereby agrees
to purchase from Xxxxx.xxx, LLC and Xxxxx.xxx, LLC agrees to provide to Hearst,
Production Services in the amount set forth at Exhibit B, which services include
the creation of Original Site Content and Third Party Work. The precise
Production Services to be performed with respect to each Magazine Site shall be
determined by mutual agreement of the parties as soon as reasonably practicable
following the mutual execution of this Agreement and shall be consistent with
the performance and quality standards set forth in Exhibit B. A written work
order, signed by both parties, shall be issued with respect to all Production
Services to be rendered. The parties acknowledge that as soon as reasonably
possible following the Effective Date, they shall identify those Magazine Sites
for which Xxxxx.xxx, LLC will have primary production responsibility during the
term of this Agreement, including any renewals thereof. Any Original Site
Content will be a work made for hire for Hearst as a contribution to a
collective work in accordance with 17 USC Sec 101 et.seq. To the extent any
Original Site Content may not constitute a work made for hire, Xxxxx.xxx LLC
hereby grants and assigns exclusively to Hearst all right, title and interest in
and to such Content for the term of applicable copyright. Xxxxx.xxx, LLC will
use diligent efforts to secure ownership rights to Third Party Work for Hearst.
In the event Xxxxx.xxx, LLC is not able to secure ownership of Content from any
third party, it will consult with Hearst and based on Hearst's direction, will
either refrain from securing any Content from that third party or will license
such other rights to that Content in Hearst's favor as Hearst may approve. In
the event that Hearst Content or Magazine Content is edited or abridged by
Xxxxx.xxx, LLC for posting to a Magazine Site, such edited or abridged version
shall nonetheless be considered Hearst Content or Magazine Content, as
applicable.
(c) A Discontinuance and Transfer of Magazine Sites. The parties
acknowledge that prior to the Amended Date, Hearst has discontinued the Magazine
Site that had been devoted to Country Living's Healthy Living. The parties
further acknowledge that it is Hearst's intent to withdraw from Xxxxx.xxx, LLC
the right and obligation to perform Production Services (but not Hosting
Services) for the Country Living Gardener Site. Until such time as the Country
Living Gardener Site is withdrawn, Xxxxx.xxx LLC will continue to produce such
site for the fee set forth herein at Exhibit B. Upon request by Hearst,
Xxxxx.xxx LLC will deliver to Hearst all Proprietary Content that has appeared
on Country Living's Healthy Living Site and Country Living Gardener Site in the
manner set forth at Section 8.1. If Hearst withdraws from Xxxxx.xxx, LLC the
right and obligation to perform Production Services for any other Magazine Site
during the Initial Term or any Renewal Term of this Agreement, such Magazine
Site will nonetheless remain a part of the Network for so long as Hearst
continues production of such Magazine Site itself or through a third party and
Xxxxx.xxx, LLC will continue to host. The parties acknowledge, however, that the
Xxxxxx'x Bazaar site will not be a part of the Network.
13
(d) Performance Standards. Hearst understands and agrees that any
Magazine Site that is not produced by Xxxxx.xxx, LLC must conform to the
technical and production standards as may be promulgated by Xxxxx.xxx, LLC from
time-to-time. Hearst shall be solely responsible for ensuring that such sites
meet such requirements, all at Hearst's sole cost and expense. All Magazine
Sites produced by Xxxxx.xxx, LLC pursuant to Section 3.5 shall conform to the
same technical and production standards as those imposed by Xxxxx.xxx, LLC with
respect to third party-produced Magazine Sites.
4. Promotion.
4.1 Both parties shall actively promote the rollout and availability of
the Magazine Sites via the Network. Hearst, for its part, agrees to provide the
cable and broadcast television and the print promotion described in Section 3.02
of the Limited Liability Company Agreement of Xxxxx.xxx, LLC. Further, the
parties shall from time-to-time work together in good faith to identify, develop
and pursue joint marketing and promotional activities that are designed to
enhance the value of the Magazine Sites and the Network. The parties will also
work together in good faith to promote the availability of subscription sales to
Hearst's Magazines on the Internet, including on the Network. The parties shall
mutually agree on the budget, Content and development schedule of any such
activities prior to the launch thereof. Each party shall assign a point of
contact within such party's organization to coordinate any joint marketing or
promotional activities. Costs and expenses incurred in support of such joint
marketing and promotional activities shall be determined by mutual agreement of
the parties.
4.2 Press Releases. The parties shall issue a joint press release
describing the parties' relationship pursuant to this Agreement and any xxxxxx
xxxxx releases relating to this Agreement, which press releases shall be
mutually approved in writing by the parties prior to any distribution thereof.
5. Xxxxx.xxx, LLC Software and Technology.
Hearst understand and agrees that Xxxxx.xxx, LLC, in performing its
obligations hereunder, may incorporate or use in connection with the Hosting
Services, Production Services and incorporation of the Magazine Sites into the
Network such software tools or programs or other technology that Xxxxx.xxx, LLC
has developed as of the Effective Date, or which Xxxxx.xxx, LLC may hereafter
develop ("Xxxxx.xxx, LLC Tools"). By way of example, Xxxxx.xxx, LLC Tools could
include without limitation toolbars for maneuvering between pages, search
engines, and Java applets. In the event any Xxxxx.xxx, LLC Tools are
incorporated by Xxxxx.xxx, LLC into or are used by Xxxxx.xxx, LLC in connection
with any Magazine Site, or any Xxxxx.xxx, LLC Tools are used to manipulate
Hearst Content for distribution on the Magazine Site or through the Network,
then Xxxxx.xxx, LLC hereby grants to Hearst during the terms of this Agreement a
worldwide, non-exclusive, nontransferable, royalty-free, free right to use the
Xxxxx.xxx, LLC Tools on and in connection with the Magazine Sites solely in
connection with such use. In the event that any Xxxxx.xxx, LLC Tools are created
and used exclusively for the Magazine Sites, such Xxxxx.xxx LLC tools shall be
considered joint works of authorship pursuant to 17 USC sec. 101, et. seq., and
Hearst may use such Xxxxx.xxx, LLC Tools without accounting to Xxxxx.xxx, LLC.
In the event Hearst would like to license any other Xxxxx.xxx, LLC Tools for any
other purpose or after the termination of this Agreement, Xxxxx.xxx, LLC agrees
to negotiate such licenses in good faith with Hearst; provided, however, that
nothing herein shall be deemed to obligate Xxxxx.xxx, LLC to enter into any such
license in the event the parties are unable to reach mutually agreeable terms
within thirty (30) days of the commencement of such negotiations, or in the
event Xxxxx.xxx, LLC reasonably believes that under such a license, Hearst would
be able to use the Xxxxx.xxx, LLC tools in a manner that may compete with any
then-existing or reasonably anticipated products and/or services of Xxxxx.xxx,
LLC.
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6. Advertising.
6.1 Net Revenue Split. Xxxxx.xxx, LLC agrees that Hearst shall be
entitled to receive from Xxxxx.xxx, LLC no later than forty-five (45) days
following the termination of each calendar quarter a royalty (the "Royalty")
computed on Net Advertising Revenues from the preceding quarter. The Royalty
payable to Hearst shall be equal to twenty percent (20%) of the aggregate Net
Advertising Revenues from the applicable quarter, until such time as Hearst has
recouped the cumulative production costs incurred from and after the Effective
Date in the ongoing production of the Magazine Sites as set forth on Exhibit D,
whether or not such Magazine Sites are produced by Xxxxx.xxx, LLC, plus
interest, calculated at an annual rate equal to six percent (6%). Thereafter,
the Royalty shall equal eight percent (8%) of the aggregate Net Advertising
Revenues from the applicable quarter, until such time as the gross revenues
recognized by Xxxxx.xxx, LLC in any period of twelve (12) consecutive months
exceed forty million dollars ($40,000,000.00), whereupon the Royalty payable to
Hearst shall be reduced to seven percent (7%) of the aggregate Net Advertising
Revenues from the applicable quarter, until such time as the gross revenues
recognized by Xxxxx.xxx, LLC in any calendar year exceeds sixty million dollars
($60,000,000). Thereafter, the Royalty payable to Hearst shall be reduced to six
percent (6%) of the aggregate Net Advertising Revenues from the applicable
quarter through and including the expiration or earlier termination of this
Agreement.
15
6.1A Xxxxxx'x Bazaar. Any Xxxxxx'x Bazaar Internet Site launched by
Hearst primarily targeted to users in the United States (the "HB Site") is not a
part of the Network nor is it within the scope of this Agreement except as set
forth at Section 2.2 and this Section 6.1A and 6.4. Hearst agrees to design the
HB Site so that (i) a link to the Xxxxx.xxx, LLC Network appears on each page of
the HB Site above the fold, but otherwise in a style, design and placement
determined by Hearst; (ii) an ad banner will appear on the home page below the
fold; and (iii) an ad banner will appear on each page other than the home page
above the fold. Notwithstanding anything herein contained to the contrary, the
parties agree that Xxxxx.xxx, LLC shall have the exclusive right to sell banner
advertising space inventory on such site and Xxxxx.xxx LLC agrees to use
diligent efforts to sell banner advertisements on any such site provided it
complies with such reasonable policies as Hearst may from time to time require,
it being understood that the advertising sold on such banners (including run of
site advertisements) will be for advertisers of comparable prestige to the
advertisements appearing in the print version of Xxxxxx'x Bazaar during the two
year period prior to the Amended Date, unless Hearst otherwise agrees, it being
further understood that Hearst will not exercise its discretion over the
categories of acceptable advertisers in a manner that would thwart Xxxxx.xxx,
LLC's ability to sell ads, but taking into account the targeted demographics of
the HB Site) Xxxxx.xxx, LLC will manage all such banner advertising inventory
and the distribution of banner advertising on such site. Xxxxx.xxx, LLC shall be
entitled to eighty percent (80%) of the Net Advertising Revenues from banner
advertising inventory it sells on the Xxxxxx'x Bazaar site, and shall remit the
remaining twenty percent 20% of Net Advertising Revenues to Hearst. Hearst shall
have the exclusive right to sell sponsorships and any other form of advertising
or promotional space on such site (other than banner advertising) and shall
remit to Xxxxx.xxx, LLC a fee of twenty percent (20%) of Net Advertising
Revenues from such sales if they are in cash, and if not in cash, a fee in the
amount of twenty percent (20%) of the "Attributed Net Value" of such sales. As
used herein, Attributed Net Value means the cash value such sales could have
generated based on cost-per-thousand viewers had the consideration been cash
(rather than in-kind consideration), less agency fees and commissions, taking
into account then-prevailing market rates for comparable arrangements, which the
parties agree to negotiate from time to time in good faith. The parties shall
account to one another no later than forty-five (45) days following the
termination of each calendar quarter. In consideration of the fact that no
banner ad will appear above the fold on the home page of the HB Site, Hearst
agrees to purchase $190,000 of advertisements in the Network in the initial year
following the Amended Date, escalating by 20% during each subsequent year
following the Amended Date until the conclusion of the Term (pro rated if the
Term ends prior to an anniversary date of the Amended Date of this Agreement).
This commitment is predicated on Xxxxx.xxx LLC delivering the following number
of page views on the Magazine Sites, and shall be subject to pro rata reduction
of the number of page views are less that these amounts: 24, 000,000 in the
first year following the Amended Date; 35,000,000 in the second year following
the Amended Date; and 47,000,000 in the third year following the Amended Date.
This commitment will cease if at any time Hearst elects to place a banner ad
above the fold on the home page of the HB Site.
16
6.2 Sales by Hearst. Hearst may only sell Advertisements (which sales
are to be made by the Hearst Magazine Division) on the Magazine Sites with the
prior written approval of Xxxxx.xxx, LLC, which approval shall not be
unreasonably withheld. Xxxxx.xxx, LLC shall pay to Hearst a commission with
respect to such sales in an amount to be mutually agreed upon by the parties.
6.3 Advertising Policies and Cooperation. In the allocation and sale of
Advertisements throughout the Network, Xxxxx.xxx, LLC agrees to treat the
Magazine Sites at least as favorably as the other non-Magazine sites. Xxxxx.xxx,
LLC agrees not to place any advertising on the Magazine Sites or any other place
on the Network where Proprietary Content appears that is in violation of the
then current and applicable advertising policies and standards established by
the applicable Magazine (including Xxxxxx'x Bazaar); provided, that such
policies have been communicated to Xxxxx.xxx, LLC in advance. Further, the
parties agree to coordinate their advertising sales efforts as permitted under
this Agreement to ensure that none of such efforts conflict with either party's
contractual arrangements with third parties.
6.4 Merchandising Advertisements. Hearst shall have the right to
purchase advertising space throughout the Network on behalf of Hearst's
advertisers, subject to the availability of inventory, and Xxxxx.xxx agrees to
sell Hearst advertising space for such purposes at such discounted rate as the
parties may from time to time agree to. The current understanding is set forth
herein at Exhibit X. Xxxxxx shall not be entitled to any Royalty on such sales.
7. E-Commerce.
Notwithstanding anything in this Agreement to the contrary, Hearst reserves the
right to sell goods and services on any Internet site or area, including,
without limitation, through the Magazine Sites, both directly and through third
party commerce partners ("e-commerce"), and in connection therewith, Hearst
retains the right to conduct Promotional Activities with respect to such
e-commerce; provided, however that for the benefit of Xxxxx.xxx, LLC, Hearst
agrees that all e-commerce shall be conducted in accordance with applicable
local, state and Federal law including, without limitation, consumer protection
laws. For the avoidance of doubt, Hearst's decision to conduct e-commerce
activities shall not be subject to the provisions of Section 2.7(c) hereunder.
Xxxxx.xxx, LLC shall have no entitlement to any commission or compensation with
respect to Hearst's e-commerce activities unless Hearst elects, in its
discretion, to conduct such activities on the Magazine Site, in which case
Xxxxx.xxx, LLC shall be entitled to commission in accordance with Section 7.2
below. Further, with respect to e-commerce, the parties hereby agree as follows:
7.1 Magazine Subscriptions. Xxxxx.xxx, LLC shall be entitled to a
commission equal to thirty percent (30%) of gross revenues (less credit for
returns, and provision for bad debt and cancellations) derived from the sale of
Magazine subscriptions made through the Network, whether or not such sales are
made through the Magazine Sites or any non-Magazine site of the Network,
including, without limitation, the Network Portal Site, and without regard to
the entity actually making such sale.
17
7.2 Direct Sales. Xxxxx.xxx, LLC shall be entitled to a commission
equal to five percent (5%) of gross revenues (less shipping and handling
charges, credit for returns, and provision for bad debt) derived from the direct
sale of goods and services on the Magazine Sites or on any e-commerce site owned
by Hearst or an affiliate (as defined at Section 7.3 below) which sales are
generated by a user entering the e-commerce site via the Magazine Site (other
than Magazine subscriptions) ("Direct Sales"), i.e. where the order processing,
customer handling, billing and collection for such sale (whether or not Hearst
fulfills such sale itself or by drop-shipment from a third party) is handled by
Hearst and not where the sale is between the customer and any non-Hearst entity
(e.g. Xxxxxx.xxx, Music Boulevard, etc.). Unless otherwise agreed to in writing
by Xxxxx.xxx, LLC, it shall be the sole responsibility of Hearst to provide all
services related to Direct Sales. Hearst and its third party vendors, if any,
will bear full responsibility for all customer service, including without
limitation, order processing, billing, fulfillment, shipment, collection and
other customer service associated with any Direct Sales offered, sold or
licensed through each Magazine Site, and Xxxxx.xxx, LLC will have no obligations
whatsoever with respect thereto. Hearst will, using no less than industry
standard methods for online-order fulfillment, ensure that all Direct Sales are
received, processed, fulfilled and delivered on a timely and professional basis.
7.3 Commerce Partners. The parties agree that for purposes of this
Agreement royalties paid to Hearst (or any entity that controls, is controlled
by, or under common control with Hearst (any such entity, a "Hearst Affiliate"))
by Hearst's third party commerce partners (e.g. Xxxxxx.xxx), which royalties are
attributable to the sale of goods or services arising from traffic on the
Magazine Sites (but excepting Direct Sales as defined above), shall be deemed to
be performance-based advertising and, consequently, shall contribute to Net
Advertising Revenues. For purposes hereof, the terms "controls", "is controlled
by", and "under common control with" refer to the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
polices of a business entity, whether through ownership of voting securities, by
contract, or otherwise.
7.4 Payment. All amounts due Xxxxx.xxx, LLC from Hearst pursuant to
this Section 7 shall be paid on a quarterly basis within thirty (30) days
following the end of the quarter in which the applicable Commerce Revenues are
generated and shall be accompanied by a report detailing the calculation of the
applicable payment.
7.5 Non-Magazine Site Transactions. Hearst understands and agrees that,
except as explicitly set forth in Section 6 or this Section 7, neither Hearst,
nor any Hearst Affiliate, shall be entitled to any commission, royalty or
payment of any sort by virtue of the sale of goods or services on the Network.
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8. Ownership.
8.1 Proprietary Content. Title to and ownership of all intellectual
property rights embodied by or otherwise incorporated into the Proprietary
Content shall remain with Hearst and/or its third party licensors, if any.
Nothing herein shall be construed to grant to Hearst any right, title or
interest in or to any other Content that may be published on or through the
Network. Xxxxx.xxx LLC will provide Hearst access to digital files in a form to
be mutually agreed on containing all Proprietary Content in accordance with a
schedule that the parties will establish and, in addition, upon request from
Hearst within a reasonable time frame.
8.2 Xxxxx.xxx, LLC Tools. All Xxxxx.xxx, LLC Tools, including all
intellectual property rights and other proprietary rights embodied therein or
otherwise applicable thereto, are and shall remain the sole and exclusive
property of Xxxxx.xxx, LLC and/or its licensors, except as set forth at Section
5 herein. All rights not specifically granted to Hearst herein with respect to
the Xxxxx.xxx, LLC Tools are retained by Xxxxx.xxx, LLC.
8.3 Xxxxx.xxx Content. All Xxxxx.xxx Content used on or in connection
with the Network exclusive of Proprietary Content, is and shall remain the sole
and exclusive property of Xxxxx.xxx, LLC and/or its third party licensors and
Content providers. Nothing herein shall be construed to grant to Hearst any
right, title or interest in or to any such Xxxxx.xxx Content, and Hearst agrees
that it shall not at any time make any claim to any right, title or interest in
or to the such Xxxxx.xxx Content, provided, however that Hearst shall have the
right during the Initial Term and any Renewal Term of this Agreement to publish
such Xxxxx.xxx Content solely on the specific Magazine Site for which it has
been provided by Xxxxx.xxx, LLC and for the specific duration, if any, for which
it has been provided.
8.4 URL'S. The Magazine Site URL's shall be the sole and exclusive
property of Hearst. If any Site is removed from the XxxxxxxXxxxx.xxx LLC will
take all necessary steps to transfer ownership and control of all associated
URL'S to Hearst. The Network Portal Site URL is and shall remain the sole and
exclusive property of Xxxxx.xxx, LLC. All other Network URL's shall remain the
property of Xxxxx.xxx, LLC or its Network partners, as the case may be.
8.5 User Information. The parties agree that any and all user data that
is collected through any user registration process on the Network Sites (e.g.
name, address, e-mail address, etc.) from user that "opt-in" to sharing their
information with Hearst, together with all data regarding user tracking, page
views, unique visitors and other user information that may be obtained with
respect to the Magazine Sites ("User Data") shall be jointly owned by Xxxxx.xxx,
LLC and Hearst; and each party shall be free to use such information without the
consent of the other party (ii) solely in accordance with all applicable law and
privacy policies, including any restrictions on transfer or disclosure of such
information to third parties ; and (iii) free of any duty to account to the
other party for profits arising from such use. Xxxxx.xxx, LLC agrees to deliver
such User Data to Hearst on a monthly basis in a mutually agreed upon format.
All data collected from users with respect to the Network other than that
included in User Data shall be the sole and exclusive property of Xxxxx.xxx, LLC
and Hearst shall have no right, title or interest in or to such data.
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9. Warranties.
9.1 Hearst Warranties. Hearst hereby warrants to and for the benefit of
Xxxxx.xxx, LLC that Hearst shall not provide any Hearst Content or Magazine
Content to Xxxxx.xxx, LLC or publish any Hearst Content or Magazine Content or
direct Xxxxx.xxx, LLC to create or have created any Original Site Content or
Third Party Work in any manner that: (a) infringes on any third party's
copyright, patent, trademark, trade secret or other proprietary rights or rights
of publicity or privacy; (b) violates any law, statute, ordinance or regulation
(including without limitation the laws and regulations governing export
control); (c) is defamatory, trade libelous, unlawfully threatening or
unlawfully harassing; (d) is obscene or pornographic or contains child
pornography; (e) violates any laws regarding unfair competition,
antidiscrimination or false advertising, or (f) to the best of Hearst's
knowledge, contains any viruses, Trojan horses, worms, time bombs, cancelbots or
other computer programming routines that are intended to damage, detrimentally
interfere with, surreptitiously intercept or expropriate any system, data or
personal information. Furthermore, Hearst warrants that to the best of its
knowledge, based on representations and warranties made by third parties,
technology used or supplied by or on behalf of Hearst pursuant to this Agreement
(exclusive of technology supplied by Xxxxx.xxx, LLC) ("Hearst Technology") shall
be Year 2000 Compliant. As used in this Section 9.1, "Year 2000 Compliant" means
that the Hearst Technology is designed to be used prior to, during and after the
calendar Year 2000 A.D., and will accurately receive, provide and process
date/time data (including, but not limited to, calculating, comparing and
sequencing) from, into and between the 20th and 21st centuries, including the
years 1999 and 2000, and leap-year calculations and will not malfunction, cease
to function, or provide invalid or incorrect results as a result of date/time
data; provided that all other hardware, software or firmware used in conjunction
with the Hearst Technology properly exchange accurate and properly formatted
date data with the Hearst Technology being evaluated for Year 2000 Compliance.
Hearst agrees to use commercially reasonable practices (including without
limitation periodic inspections of each Magazine Site) to ensure that
user-generated Content published or distributed on such Magazine Sites does not
create liability for Xxxxx.xxx, LLC.
9.2 Xxxxx.xxx, LLC Warranties. Xxxxx.xxx, LLC hereby warrants to and
for the benefit of Hearst that Xxxxx.xxx, LLC shall not post on the Magazine
Sites or otherwise provide any: (i) Xxxxx.xxx Content or Xxxxx.xxx, LLC Tools;
(ii) to the extent not created pursuant to Hearst's request, any Original Site
Content or Third Party Work; (iii) additions to or edits of Hearst Content or
Magazine Content; in any manner that (a) infringes on any third party's
copyright, patent, trademark, trade secret or other proprietary rights or rights
of publicity or privacy; (b) violates any law, statute, ordinance or regulation
(including without limitation the laws and regulations governing export
control); (c) is defamatory, trade libelous, unlawfully threatening or
unlawfully harassing; (d) is obscene or pornographic or contains child
pornography; (e) violates any laws regarding unfair competition,
antidiscrimination or false advertising; or (f) to the best of Xxxxx.xxx, LLC's
knowledge, contains any viruses, Trojan horses, worms, time bombs, cancelbots or
other computer programming routines that are intended to damage, detrimentally
interfere with, surreptitiously intercept or expropriate any system, data or
personal information. Xxxxx.xxx, LLC warrants that it shall not use any
Proprietary Materials in a manner or for any purpose other than that authorized
by this Agreement. Furthermore, Xxxxx.xxx, LLC warrants that to the best of its
knowledge, based on representations and warranties made by third parties, the
software, hardware and equipment (the "Information Technology") owned, leased or
licensed by Xxxxx.xxx, LLC on the date hereof is Year 2000 Compliant. As used in
this Section 9.2, "Year 2000 Compliant" means the Information Technology is
designed to be used prior to, during and after the calendar Year 2000 A.D., and
the Information Technology used during each such time period will accurately
receive, provide and process date/time data (including, but not limited to,
calculating, comparing and sequencing) &cm, into and between the 20th and 21st
centuries, including the years 1999 and 2000, and leap-year calculations and
will not malfunction, cease to function, or provide invalid or incorrect results
as a result of date/time data; provided that all other hardware, software or
firmware used in conjunction with the Information Technology properly exchange
accurate and properly formatted date data with the Information Technology being
evaluated for Year 2000 Compliance. Xxxxx.xxx, LLC agrees to use commercially
reasonable practices (including without limitation periodic inspections of the
Network) to ensure that user-generated Content published or distributed on
Network sites (other than the Magazine Sites) does not create liability for
Hearst.
20
9.3 Recourse and Remedies. Each party agrees that its sole and
exclusive remedy for a breach of any warranty made by the other party pursuant
to this Section 9 shall be indemnification as set forth in Section 11 hereof.
10. Trademarks.
Each party acknowledges and agrees for all purposes that all Marks associated
with the other party and/or the other party's services, products, literature,
promotional materials or otherwise, whether or not registered, constitute the
other party's exclusive property. Each party ("Licensor") hereby grants to the
other party ("Licensee") a non-exclusive, non-transferable, non- assignable,
royalty-free license to use those Marks of Licensor set forth on Exhibit C
solely for purposes of performing Licensee's obligations under this Agreement
including, without limitation, in connection with any advertising, marketing and
promotional activities undertaken and materials developed pursuant to this
Agreement. All uses by Licensee of Licensor's Marks shall be in accordance with
such quality control standards as the Licensor may promulgate from time to time,
and Licensee agrees to refrain from all uses of Licensor's Marks to which
Licensor objects. All uses of Licensor's Marks by Licensee, including all
goodwill arising therefrom shall inure solely to the benefit of Licensor. All
promotional literature and other materials prepared by either party in
connection with its promotional obligations hereunder shall bear appropriate
copyright and/or trademark notices as prescribed by the party whose Content or
branding is included therein. Licensee agrees it will not use, register or
attempt to register in any jurisdiction, or otherwise appropriate or adopt any
name, xxxx or logo that is confusingly similar to Licensor's Marks. Licensor
retains all rights with respect to Licensor's Marks that are not specifically
granted to Licensee herein. At no time during the term of the Agreement or
thereafter shall Licensee attack, challenge or file any application with respect
to any Licensor Xxxx.
11. Indemnity.
11.1 Hearst agrees to defend, indemnify and hold harmless Xxxxx.xxx,
LLC and its directors, officers, agents and employees from and against any and
an claims, suits, damages, losses, costs, liabilities, expenses and fees
(including without limitation reasonable attorneys' and expert witnesses' fees)
incurred or arising from (a) any breach of the warranties set forth in Section
9. 1, (b) any Proprietary Content, or user-generated Content on the Magazine
Sites, except (i) to the extent arising from Xxxxx.xxx, LLC's unauthorized or
unapproved use of Hearst Content or Magazine Content on the Magazine Sites; and
(ii) to the extent arising from the creation by Xxxxx.xxx, LLC of Original Site
Content and Third Party Work other than in accordance with the specific
instructions of Hearst and to the extent the claim or liability arises for
reasons other than as a result of Xxxxx.xxx, LLC's compliance with those
instructions, or (c) e- commerce conducted on any Magazine Site. Xxxxx.xxx, LLC
may, at its own expense, participate in any defense or settlement negotiations
with respect to any claim to which it is entitled to indemnification with
counsel of its own choosing. Hearst agrees not to enter into any settlement of
any claim without the prior written consent of Xxxxx.xxx, LLC, which consent
shall not be unreasonably withheld or delayed.
11.2 Xxxxx.xxx, LLC agrees to defend, indemnify and hold harmless
Hearst and its directors, officers, agents and employees from and against any
and all claims, suits, damages, losses, costs, liabilities, expenses and fees
(including without limitation reasonable attorneys' and expert witnesses' fees)
incurred or arising from (a) any breach of the warranties set forth in Section
9.2, (b) any Content (excluding (i) Hearst Content, Magazine Content when used
on the Magazine Sites in the manner authorized or approved by Hearst; (ii)
user-generated Content on the Magazine Sites; and (iii) Original Site Content
and Third Party Work but only to the extent such Content was created by or for
Xxxxx.xxx, LLC in accordance with the specific instructions of Hearst and to the
extent the claim or liability arises as a result of Xxxxx.xxx, LLC's compliance
with those instructions) created, developed, published or distributed by
Xxxxx.xxx, LLC (c) the manner in which Xxxxx.xxx, LLC uses any of the
Proprietary Content on the Network, other than on the Magazine Sites and (d)
e-commerce conducted other than on a Magazine Site. Hearst may, at its own
expense, participate in any defense or settlement negotiations with respect to
any claim to which it is entitled to indemnification with counsel of its own
choosing. Xxxxx.xxx, LLC agrees not to enter into any settlement of any claim
without the prior written consent of Hearst, which consent shall not be
unreasonably withheld or delayed.
21
12. Limitations on Liability.
To the extent permitted by applicable law, in no event shall either
party be liable to the other party for any special, indirect, incidental or
consequential damages arising out of or in connection with this agreement
(including but not limited to such damages arising from tort, including
negligence and strict liability, breach of contract or warranty), including
without limitation damages for interrupted communications, lost data or lost
profits, even if such party has been advised of (or knows or should know of) the
possibility of such damages and notwithstanding the failure of essential purpose
of any remedy.
13. Term and Termination.
13.1 The Term. This Agreement shall be effective from and after the
Effective Date for a period of six consecutive years (the "Initial Term").
Following the Initial Term, this Agreement shall automatically renew for three
consecutive terms of six (6) years each (each, a "Renewal Term"); provided that
prior to the commencement of each Renewal Term the parties shall reach agreement
as to any modifications to be made to the royalties or commissions to be paid
hereunder. In the event the parties do not reach such agreement, the applicable
Renewal Term shall, nevertheless, commence on a month-to-month basis under the
then-existing terms of the Agreement until such time as the parties agree to any
new terms or either party provides the other with no less than ninety (90) days
notice of termination of this Agreement.
13.2 Termination for Cause. In the event either party materially
breaches this Agreement, the other party may terminate this Agreement by
providing the breaching party with no fewer than ninety (90) days notice of
termination; provided, that in the event of breaches capable of cure, the
breaching party shall have the right to cure the default within such period (or
such longer period as then non-breaching party may agree to in writing) and
thereby forestall termination of this Agreement.
13.3 Effect of Termination. Upon the expiration or termination of this
Agreement, Xxxxx.xxx, LLC shall (i) download all Proprietary Content to a medium
of Hearst's choosing and deliver such Proprietary Content to Hearst within five
(5) business days following such expiration or termination, (ii) immediately
cease using the Proprietary Content, including but not limited to, all
electronic copies and reproductions on the Network except as permitted at 13.3A
hereunder, (iii) within forty-five (45) days of such termination, pay to Hearst
any amounts of Royalty that as of the effective date of termination were due and
owed to Hearst pursuant to this Agreement and (iv) after receipt by Hearst of
the Proprietary Content in the manner requested, upon the direction of Hearst,
delete all Hearst's Marks from the entire Network, including the Magazine Sites
and any other place in which such Marks appear as promptly as practicable.
13.3A Continued Use. Notwithstanding Section 13.3 above, following
termination or expiration of the Agreement, Xxxxx.xxx LLC shall have the
continued right, in perpetuity, to exploit Proprietary Content and Joint
Derivative Works created during the Initial Term and any Renewal Term (but not
to make new Joint Derivative Works) on the Network provided all reference to any
branding and indicia or Marks of Hearst are removed. Following termination or
expiration, Hearst shall also have the right to exploit Joint Derivative Works
created during the Initial Term or any Renewal Term, provided Hearst shall
account to Xxxxx.xxx, LLC for 50% of the net profits from such exploitation in
the same manner as Hearst accounts for Derivative Works as set forth at Section
2.8(c) above.
22
13.4 Survival. The terms of Sections 1, 8, 9, 11, 12, 13.3, 13.4, 14,
15, and 16 shall survive the expiration or earlier termination of this Agreement
for any reason.
14. Confidential Information.
14.1 Definition of Confidential Information. "Confidential Information"
as used in this Agreement shall mean any and all technical and non-technical
information of a party (the "Disclosing Party") to this Agreement (including,
without limitation, patents, copyrights and works of authorship, trade secrets,
and proprietary information, techniques, sketches, drawings, models, inventions,
know-how, processes, apparatus, equipment, algorithms, software programs, and
software source documents) related to the current, future and proposed business,
products and services of such party, and its suppliers and customers, and
includes, without limitation, information concerning development, design details
and specifications, engineering, customer lists, business forecasts, sales, and
marketing plans and any other similar information or data which is disclosed to
the other party (the "Recipient") or to which the Recipient otherwise gains
access as a result of performing under this Agreement. "Confidential
Information" also includes proprietary or confidential information of any third
party that may disclose such information to the Disclosing Party in the course
of the Disclosing Party's business. Confidential Information does not include
information, technical data or know-how which: (i) is in the Receiving Party's
possession at the time of disclosure as shown by the Receiving Party's files and
records immediately prior to the time of disclosure; (ii) before or after it has
been disclosed to the Receiving Party, enters the public domain, not as a result
of any action or inaction of the Receiving Party; (iii) is approved for release
by written authorization of the Disclosing Party; (iv) is disclosed to the
Receiving Party by a third party not in violation of any obligation of
confidentiality; or (v) is independently developed by the Receiving Party
without reference to the Disclosing Party's Confidential Information.
14.2 Use and Disclosure. The Receiving Party agrees not to use the
Confidential Information of the Disclosing Party for any purpose except to the
extent necessary to fulfill its obligations under this Agreement. The Receiving
Party agrees not to copy, alter, modify, disassemble, reverse engineer or
decompile any of the materials comprising Confidential Information, unless
permitted in writing by the Disclosing Party. The Receiving Party agrees not to
disclose the Confidential Information to any third parties or to any of its
employees, contractors or agent except those of whom who have a need to know the
Disclosing Party's Confidential Information to enable the Receiving Party to
fulfill its obligations under this Agreement; provided, that such parties shall
be made aware that such Confidential Information is confidential to the
Disclosing Party and shall be under a written contractual restriction on
non-disclosure and proper treatment of Confidential Information that is
consistent with and no less restrictive than the terms of this Section 15.
Notwithstanding the foregoing, the Receiving Party may disclose the Disclosing
Party's Confidential Information to the extent required by a valid order of a
court or other governmental body or by applicable law; provided, however, that
the Receiving Party will use all reasonable efforts to notify the Disclosing
Party of the obligation to make such disclosure in advance so that the
Disclosing Party will have a reasonable opportunity to object to such
disclosure. The Receiving Party agrees that it shall treat the Confidential
Information with the same degree of care as it accords its own Confidential
Information of a similar nature; provided that in no event shall the Receiving
Party exercise less than reasonable care to protect the Disclosing Party's
Confidential Information. The Receiving Party agrees to advise the Disclosing
Party in writing of any misappropriation or misuse by any person of the
Disclosing Party's Confidential Information of which the Receiving Party may
become aware. The Receiving Party will not communicate any information to the
Disclosing Party in violation of the proprietary rights of any third party.
23
14.3 Return of Materials. Any Confidential Information furnished to the
Receiving Party, and all copies thereof, at the earlier of the Disclosing
Party's request, or the termination of the business relationship between the
Disclosing Party and the Receiving Party, at the Disclosing Party's option, will
either be: (i) promptly returned to the Disclosing Party; or (ii) destroyed by
the Receiving Party (with the Receiving Party providing written certification of
such destruction to the Disclosing Party).
15. Books and Records.
15.1 Records. Each party shall during the term of this Agreement and
for a period of three years thereafter, keep and maintain full and complete
records and books of account, maintained in accordance with generally accepted
accounting principals, related to its activities under this Agreement
("Records") including, without limitation, relating to any payments of any kind
to be made to the other party pursuant to this Agreement.
15.2 Audit Right. During the term of this Agreement and for a period of
three years thereafter, each party shall have the right, on no more than one
occasion in any consecutive twelve (12) month period, to audit, or to engage a
third party auditor, reasonably acceptable to the other party, to audit the
Records of the other party to ensure compliance with the terms of this Agreement
and the accuracy of all amounts paid to the auditing party pursuant to this
Agreement; provided, that the auditing party provide the other party with no
fewer than fifteen (15) days notice of such audit and conducts such audit in a
manner calculated to minimize interference with the other party's business.
Unless otherwise agreed to by the parties, any such audit shall be conducted on
the audited party's premises. The auditing party shall bear the cost of the
audit; provided, however, that in the event the audit reveals an underpayment to
the auditing party in excess of five percent (5%), the audited party shall
reimburse the auditing party for the cost of the audit.
24
16. General Provisions.
16.1 Taxes. Each party shall be responsible for, and shall indemnify
and hold the other party harmless from and against, any and all taxes, customs,
duties or other amounts that may be imposed by any governmental authority on any
amount paid to such party by the other party hereunder, except for taxes based
upon the other party's net income or gross receipts.
16.2 Late Payments. Each party reserves the right to charge the other
party interest at the lower of 1 1/2% per month or the highest rate permissible
under applicable law on any amount due such party from the other party under
this Agreement, which amount is not paid when due.
16.3 Governing Law/Jurisdiction/Venue. This Agreement will be governed
and interpreted in accordance with the laws of the State of New York as applied
to agreements made, entered into and performed entirely in New York and solely
by New York residents. The parties hereby agree that all causes of action
brought in connection with this Agreement shall be brought in the State or
Federal Courts located in New York County, New York, and each party hereby
irrevocably consents to the personal jurisdiction of such courts for such
purpose.
16.4 Expenses. Unless otherwise set forth herein to the contrary, each
party shall be solely responsible for payment of any expenses such party incurs
in connection with its performance under this Agreement.
16.5 Severability; Waiver. If any provision of this Agreement is held
to be invalid or unenforceable for any reason, the remaining provisions will
continue in full force without being impaired or invalidated in any way. The
parties agree to replace any invalid provision with a valid provision that most
closely approximates the intent and economic effect of the invalid provision.
The waiver by either party of a breach of any provision of this Agreement will
not operate or be interpreted as a waiver of any other or subsequent breach.
16.6 Headings. Headings used in this Agreement are for reference
purposes only and in no way define, limit, construe or describe the scope or
extent of such section, or in any way affect this Agreement.
16.7 Successors and Assigns; Change in Control. Xxxxx.xxx LLC may not
assign this Agreement by operation of law or otherwise without the prior written
consent of Hearst and any purported assignment in violation hereof shall be null
and void. Subject to the foregoing, the parties' rights and obligations will
bind and inure to the benefit of their respective successors, heirs, executors
and administrators and permitted assigns. Xxxxx.xxx, LLC may subcontract all or
any portion of its service obligations hereunder; provided that Xxxxx.xxx, LLC
remains primarily responsible for such subcontracted service obligations and
that Hearst reserves the right to remove and/or have a subcontractor replaced if
Hearst is not reasonably satisfied with such subcontractor's performance. Hearst
shall have the right to terminate this Agreement effective immediately upon
written notice in the event Xxxxx.xxx LLC undergoes a "change in control",
provided such notice is given within ten (10) business days following such
change in control. As used above, change in control means (i) a sale of all or
substantially all of the assets of Xxxxx.xxx LLC, (ii) a merger or consolidation
of Xxxxx.xxx LLC with or into another corporation or other entity with the
effect that, immediately after such merger or consolidation, none of the
existing holders of Xxxxx.xxx LLC voting stock (meaning securities having the
right to vote in the election of directors) immediately before such merger or
consolidation holds, and the existing holders of Xxxxx.xxx LLC's voting stock
immediately before such merger or consolidation do not hold in the aggregate, at
least fifty percent (50%) of the combined voting power of the then voting stock
of the surviving corporation of such merger or the corporation or other entity
resulting from such consolidation, (iii) the acquisition of twenty percent (20%)
or more of the voting stock of Xxxxx.xxx, LLC by any entity other than Hearst;
(iv) the adoption by Xxxxx.xxx, LLC of a plan of complete or partial
liquidation; or (v) if a petition shall be filed against Xxxxx.xxx, LLC under
any provision of the Bankruptcy Code or amendments thereto or if a receiver
shall be appointed for Xxxxx.xxx, LLC or any of its property.
25
16.8 Attorneys' Fees. If any legal action is brought to construe or
enforce any provision of this Agreement, the prevailing party shall be entitled
to receive its reasonable attorneys' fees and court costs in addition to any
other relief it may receive.
16.9 Force Majeure. If the performance of this Agreement, or any
obligation hereunder, except the making of payments hereunder, is prevented,
restricted or interfered with by any act or condition whatsoever beyond the
reasonable control of the affected party, the party so affected, upon giving
prompt notice to the other party, shall be excused from such performance to the
extent of such prevention, restriction or interference.
16.10 Independent Contractors. The parties to this Agreement are
independent contractors, and no agency, partnership, joint venture or
employee-employer relationship is intended or created by this Agreement.
16.11 Notice. Any notices required or permitted hereunder shall be
given to the appropriate party at the address specified below or at such other
address as the party shall specify in writing. Such notice shall be deemed
given: upon personal delivery; if sent by telephone facsimile, upon confirmation
of receipt; if sent by electronic mail, upon confirmation of delivery; or if
sent by certified or registered mail, postage prepaid, five (5) days after the
date of mailing.
16.12 Modifications. This Agreement may only be modified or revised by
a written agreement or amendment hereto that is executed by both of the parties.
16.13 Entire Agreement. This Agreement, including the Exhibits attached
hereto, sets forth the complete and final statement of the agreement between the
parties with respect to the subject matter hereof, and supersedes any and all
oral or written agreements, negotiations or understandings between the parties
as to such subject matter. Any terms on any Hearst work order that purport to
modify the terms of this Agreement, or that are in addition to or different from
the terms of this Agreement shall be void and of no force or effect,
notwithstanding Xxxxx.xxx, LLC's provisions of the services requested in such
work order, unless specifically agree to in writing by Xxxxx.xxx, LLC.
Wheresoever the terms of any mutually executed work order differ from or
conflict with the terms of this Agreement, the terms of the work order shall
prevail, but only to the extent of the specific project covered by such work
order.
26
In Witness Whereof, each of the parties hereto have executed this
Agreement as of the date first written above.
Xxxxx.xxx, Networks, Inc.: Hearst Communications, Inc.:
By: /s/ Xxxxxxx X. XxXxxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------- ----------------------------------
[Name] Xxxxxxx X. XxXxxxxx Xxxxx X. Xxxxx
Title: CEO and President SR V.P.
Street Address: 0000 Xxxxxxx Xxxxx Xxxxxx Address:
Mail Address: Xxx Xxxxx, XX 00000 Mail Address:
Fax: 000-000-0000 Fax:
E-Mail: xxxxxxxxx@xxxxx.xxx E-Mail:
27
Exhibit A
HOSTING SERVICES
Hearst agrees that during the term of this Agreement, Xxxxx.xxx, LLC will
provide Internet hosting services for each Magazine Site, regardless of the
source of production of such site.
Xxxxx.xxx, LLC shall provide Internet hosting services that are equal to, or
improve on, the quality of Internet hosting services currently available to the
Magazines through the Internet hosting facility maintained at Exodus
Communication's Internet Data Center in Jersey City, New Jersey as of the
Amended Date. The specific hardware configuration, software and connectivity
shall be mutually agreed upon by the parties as soon as reasonably practicable
following the Effective Date.
Hosting services provided by Xxxxx.xxx, LLC to Hearst shall be fully managed
services that conform to Network operational standards established by Xxxxx.xxx,
LLC. Fully managed means that, in addition to providing all hardware, software,
connectivity and bandwidth required to insure that Hearst Content is publicly
available to Internet users, Xxxxx.xxx, LLC will provide appropriate monitoring
of all systems, and full systems' administration support for all Magazine Sites
hosted by Xxxxx.xxx, LLC.
Xxxxx.xxx, LLC shall, using industry standard methods, prevent unauthorized
access to any production system, Magazine Site, any restricted area of a
Magazine Site and any database or other sensitive material generated from or
used in conjunction with a Magazine Site, as required by Hearst. As part of this
security consideration, Xxxxx.xxx, LLC shall have periodic security audits
performed by an independent third party, the frequency of which audits shall be
mutually agreed upon.
Xxxxx.xxx, LLC will provide and fully manage both live servers and staging
servers used for the production of Magazine Sites, whether Content is produced
by Xxxxx.xxx, LLC or a third party. Xxxxx.xxx, LLC shall also put in place and
support promotion scripts for the timely updating of Proprietary Content to the
sites by production teams employed to produce Magazine Sites, whether at
Xxxxx.xxx, LLC or at third party location. The specific requirements for
promotion of Proprietary Content shall be mutually agreed to as soon as
reasonably practicable following the Effective Date.
Xxxxx.xxx, LLC shall insure that the best commercially available service level
agreement is in place for hosting services provided to Hearst and the Magazines.
In particular, the terms of the Xxxxx.xxx, LLC service level agreement shall be
at least as favorable to Hearst as the service level agreement which is
currently in place at Exodus Communications including, without limitation, the
terms regarding remedies for interruption of services, and at least as favorable
as the terms offered any other partner on the Network.
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As part of its hosting services, Xxxxx.xxx, LLC shall make available to the
Magazine Sites all core functionality of the Network, whether the Content for
the Magazine Sites is produced by Xxxxx.xxx, LLC or a third party. The scope of
this functionality shall be mutually agreed as soon as reasonably practicable
following the Effective Date. Core functionality of the Network shall include,
but not be limited to, all functionality currently available to the Magazines as
of the Amended Date, e.g., engineering functionality (i.e. registration, ad
management, surveys, polls, quizzes, use of relational database systems, user
profiling, personalization techniques for delivery of Content or advertising,
and standard user tracking reports made available to Magazines in an online
format), and third party functionality (i.e. search, chat, forums, email,
listserve, ad serving, and third party auditing).
Additionally, Xxxxx.xxx, LLC shall make available to the Magazine Sites any new
functionality at the time it is introduced to the Network; provided, that some
production or third party fees may arise for the Magazine Sites if they choose
to implement the functionality offered.
Hearst agrees that all Magazine Sites, whether produced by Xxxxx.xxx, LLC or a
third party, shall be produced in compliance with Network standards. Xxxxx.xxx,
LLC will make available to Hearst documentation of Network standards and permit
Hearst to provide the documentation to all third parties producing Content for
Magazine Sites.
Xxxxx.xxx, LLC shall provide Magazine Site-specific maintenance and end user
support, periodic technical consulting as required by Hearst, and technical
phone support for any third parties contracted to produce Content for Magazine
Sites that will be hosted by Xxxxx.xxx, LLC.
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Exhibit B
PRODUCTION SERVICES
Xxxxx.xxx, LLC will collaborate with designated Magazines in the development of
a Magazine Web strategy, plan and budget.
Xxxxx.xxx, LLC will make available Production Services to Hearst upon request at
the rates set forth below effective as of the Amended Date for one year
following the Amended Date. At the conclusion of that one year period, the rates
shall be mutually agreed upon; however, the basis for the rate structure shall
be as follows: (i) for Xxxxx.xxx, LLC staff employees - the sum of (1) direct
cost of salary and benefits of those personnel performing the Production
Services, plus (2) the cost of overhead expenses up to a maximum amount equal to
fifteen percent (15%) of the salary and benefit costs described in (1), plus (3)
fifteen percent (15%) of the sum of the amounts described in (1) and (2); and
(ii) for subcontracted services, including but not limited to manuscripts, art,
photography, software development, and talent -- the actual cost of the services
plus fifteen percent (15%) profit margin.
The rates for the one year period following the Amended Date are: Good
Housekeeping, Redbook, Cosmopolitan, Country Living - $950,000 per site
House Beautiful $575,000
Victoria, Town & Country $275,000 per site
Country Living Gardener $275,000 per annum, pro rated to the date of transfer.
In addition, if Xxxxx Xxxxxx is added to the scope of this Agreement, the
parties acknowledge that the fee for Production Services will be not less than
$350,000 nor more than $450,000 in the initial year following addition of Xxxxx
Claire, provided the scope of the production commitment is within the boundaries
of the commitment discussed as of the Amended Date.
The number of sites to be produced by Xxxxx.xxx, LLC and the development plan
and budget for those sites will be determined by Hearst during the Term of this
Agreement.
Xxxxx.xxx, LLC will provide full Production Services for the selected Magazine
Sites. These services shall include, but shall not be limited to:
1. overall management and direction of the site;
2. creation of editorial features for the site, including original and
interactive Content;
3. software/coding support for all features;
4. conversion of Hearst Content to HTML or other formats appropriate for Web
presentation, as designated by Hearst;
5. all site quality control;
30
6. interactive design and navigation;
7. all graphic design work and conversions, including art, photos and
illustration;
8. rich media production support; and
9. all production tools, processes, and systems necessary to support production
personnel, which are part of the Network standard, including template-based
production systems used to streamline or automate production. The production
tools, processes and systems that are part of the Network standard shall be
available and supported for all Magazine Site production whether provided by
Xxxxx.xxx, LLC or a third party, so long as the Magazine Site is hosted by
Xxxxx.xxx, LLC. The management of the Hearst Magazine Division and its
representatives will be viewed by Xxxxx.xxx, LLC as a "customer" of Xxxxx.xxx,
LLC and as such will provide ongoing input and direction to Xxxxx.xxx, LLC
regarding all aspects of the Magazine Sites.
Hearst will secure electronic rights and inform Xxxxx.xxx, LLC regarding any
limitations to these rights for Content supplied by Hearst for inclusion on the
Magazine Sites. The formats in which Hearst will deliver Content to Xxxxx.xxx,
LLC and the methods of transmission or transport, and timing, will be mutually
agreed during the production planning process.
In supporting Xxxxx.xxx, LLC's production of Magazine Sites, the editorial staff
of the applicable Magazines will:
1. provide all appropriate Content in formats to be mutually agreed;
2. provide ongoing direction to and liaison with Xxxxx.xxx, LLC; and
3. be responsible for final approval of their brand's on-line representation.
In providing these Production Services, Xxxxx.xxx, LLC will assign dedicated
personnel for the production of Magazine Sites, including editorial, creative,
production and technical support to production. The exact structure of the terms
will be mutually agreed between Xxxxx.xxx, LLC and the Magazines. As part of
that organizational structure, primary points of contact and liaison will also
be established between Xxxxx.xxx, LLC and the Magazines to facilitate efficient
communications between Hearst and Xxxxx.xxx, LLC regarding production of the
Magazine Sites.
31
For Magazine Sites not produced by Xxxxx.xxx, LLC, Xxxxx.xxx, LLC will provide
management and technical resources to ensure the efficient integration of the
site into the Network. These services shall include:
1. ongoing assistance in the efficient application of Network standards and
tools;
2. assistance in the development of special features;
3. assistance in marketing and distribution programs; and
4. support for other needs as appropriate.
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Exhibit C
TRADEMARKS
I Xxxxx.xxx, LLC Marks:
II. Hearst Marks:
Registered Trademarks
---------------------
After College
Bedside Astrologer
Better Way (The)
Cosmopolitan
Cosmopolitan All About Men
Country Living Country Travels
Country Living Restoration
Cosmopolitan (stylized)
Good Housekeeping
Good Housekeeping Decorating & Home Improvement
Good Housekeeping Editors Entertain
Good Housekeeping Holiday Best
Good Housekeeping Smart Cooking
Green Watch
House Beautiful
House Beautiful Building Manual
House Beautiful Holidays
House Beautiful Home Remodeling & Decorating
House Beautiful's Home Remodeling
Houses & Plans
Life After College
Redbook
Stylewatch
Town & Country
Applied For
-----------
Country Living's Healthy Living
Easy Cooking
Fun-Fearless-Female
Good Housekeeping Family Adventures
Common Law
----------
Country Living
Victoria
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Exhibit D
Recoupable Magazine-Specific Initial Production Costs
Up to Five Million Dollars ($5,000,000) of production costs may be recouped on
account of the first year of the term of the Agreement. For each subsequent year
of the term, such amount shall equal 110% of the recoupable production costs for
the prior year of the term.
34
Exhibit E
Merchandising Advertisements
See attached
35
