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