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Exhibit 10.17
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by [****], have been
separately filed with the Commission.
[N2K LOGO]
October 28, 1996
Xxxxxxx Xxxxxx
Virgin Records America. Inc.
000 Xxxxx Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
Re: Virgin Records America, Inc. -w- N2K Inc./Letter of Agreement
Dear Xxxxxxx:
This letter when signed by both of us below shall confirm the agreement between
Virgin Records America, Inc., 000 Xxxxx Xxxxxxxx Xxxx, Xxxxxxx Xxxxx, XX 00000
("Virgin") and N2K Inc., 00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 ("N2K") regarding
linking the Virgin Records site ("Virgin Site") with N2K's online music retail
store, Music Boulevard ("Music Boulevard").
1. Description of Project:
a. N2K and Virgin are entering into an agreement to link together
portions of web sites separately owned and operated by N2K and
Virgin. These sites are Music Boulevard, the site currently
located on the world wide web at xxxx://xxx.xxxxxxxxx.xxx, and
the Virgin Site, currently located on the world wide web at
http//xxx.xxxxxxxxxxxxx.xxx.
b. For any Virgin artist page on the Virgin Site where album
artwork is displayed, the 'Order Info' button (or such other
button as determined by Virgin) would be placed near each
album cover and would seamlessly connect the user to a
transition page ("Transition Page") containing the album
information corresponding to that particular artist album.
c. The Transition Page will reside on the N2K server and contain
the following items: album cover artwork, album pricing, the
ordering link to Music Boulevard, an option to return to the
Virgin Site, and a statement that orders from non-U.S.
residents cannot be fulfilled for customers linking from the
Virgin Site. The Transition Page will be created by N2K for
mutual approval by Virgin, not to be unreasonably withheld.
N E E D T O K N O W
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2. Business Model:
a. Product Sales: N2K will pay to Virgin a royalty of [****] of
the Music Boulevard item selling price (excluding shipping,
handling or other charges incurred by the customer) on sales
of all products sold by N2K to customers who have linked from
the Virgin Site prior to making a purchase. The royalty on
Sale items, which are items listed below the Music Boulevard
selling price, is [****] of the item sales price (excluding
shipping, handling or other charges incurred by the customer).
No more than [****] of the catalog of items on Music Boulevard
can be considered a sale item at any given time. N2K and
Virgin shall mutually agree prior to the listing of any Virgin
albums as 'sale items' on the Virgin Site, since pricing will
be dynamically driven from the Music Boulevard database to the
Transition Page. Pricing will reside on the Transition Page
and not on the Virgin Site to avoid any inaccuracies.
Therefore, any revision to the pricing would need to be
implemented by N2K in the Music Boulevard database.
b. Term: the term of this agreement shall commence upon the
execution of this Agreement by both parties and continue for a
period extending one (1) year from the date written above.
This Agreement shall automatically renew for an indefinite
period. Either party may terminate the term thereafter by
giving the other party written notice that the term will
expire thirty (30) days after date of such notice.
c. Exclusivity: Music Boulevard shall be the exclusive online
product fulfillment source for the Virgin Site. The exclusive
nature of this agreement prohibits any and all other online
retail stores from being promoted on the Virgin Site. However,
this exclusivity provision does not prevent other web sites or
online service sites from stocking and/or selling Virgin
product nor does it prevent Virgin's site on America Online
from linking with another online product fulfillment source.
In addition, Virgin retains the right to sell Virgin product
via "800" numbers and/or direct mail orders which are promoted
from the Virgin Site.
3. Responsibilities of Virgin:
a. Virgin shall place all 'Order Info' buttons within its site
where the artist album artwork is positioned, which will
link to the Transition Page during the term of the agreement.
The 'Order Info' button will be designed and created by
Virgin, for mutual approval by N2K not to be unreasonably
withheld.
b. Virgin will code in the Album Identification numbers from the
Music Boulevard site which will correspond to the buttons or
links located on the Virgin Site that will connect the user to
the Transition Page. Virgin will handle the ongoing
maintenance of these buttons or links on the Virgin Site.
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N2K will maintain an online help area on Music Boulevard with
full instructions for this procedure.
4. Responsibilities of N2K:
a. N2K shall receive and process all orders on Music Boulevard.
N2K will sort orders for non-U.S. residents to assure that
customers that link from the Virgin Site are unable to have
product shipped outside the U.S. This process will be handled
manually by Music Boulevard until such time that Music
Boulevard can implement the technology online.
b. All order processing, credit card verification, EDI and
fulfillment services will take place on the Music Boulevard
site.
c. N2K will provide accounting to Virgin on a monthly basis.
Accounting statements will include artist, album, number of
units sold, and total income earned. In addition, N2K shall
provide Virgin along with the monthly accounting a list of
purchasers including name, address and the specific product
ordered for those purchasers who have linked from the Virgin
Site to Music Boulevard.
d. N2K shall inform Virgin of any changes in the relationship
with its one-stop distributor, for approval of the one-stop
distributor by Virgin. For the purposes of this agreement, N2K
has informed Virgin that its current one-stop distributor is
Valley and Virgin has confirmed acceptance of Valley as the
one-stop distributor.
e. N2K shall maintain books and records concerning the sale of
Virgin products. Virgin may, at its own expense, examine and
make extracts of those books and records solely for the
purpose of verifying the accuracy of the monthly accountings
rendered by N2K hereunder, one (1) time per year during the
term of the agreement during N2K's normal business hours and
upon five (5) business days written notice.
5. Responsibilities of Virgin and N2K:
a. Virgin and N2K shall both provide language on its own site to
explain to customers linking from the Virgin Site that orders
from non-U.S. residents cannot be fulfilled. N2K shall place
this information on the Transition Page for Virgin Site
customers. Virgin shall place this information near the 'Order
Info' button or near any ordering areas on the Virgin Site.
b. Both parties agree to exchange server traffic information and
all other
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information of the users of this select area of both our sites
which can be determined by server log reports.
c. Both companies will exchange demographic information if both
companies can provide such information on a mutual basis.
d. All notices hereunder shall be in writing and shall either be
served by certified or registered mail (return receipt
requested), facsimile or telegraph, all charges prepaid.
Except as otherwise provided herein, such notices shall be
deemed given when telecopied, mailed or delivered to a
telegraph office, all charges prepaid, except that notices of
change of address shall be effective only after the actual
receipt thereof. Notices to be given to Virgin hereunder and
all accountings and payments to be sent to Virgin hereunder
shall be addressed to Virgin at the address set forth on page
1 hereof or at such other address as Virgin shall designate in
writing from time to time. Notices to be given to N2K
hereunder shall be addressed to N2K at the address set forth
on page 1 hereof or at such other address as N2K shall
designate from time to time.
If the foregoing conforms with your understanding of the terms, please
acknowledge your acceptance of such terms by signing below.
Very truly yours,
N2K INC.
By: /s/ X. X. Xxxxx
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X. X. Xxxxx
Xx. VP & General Manager
N2K Entertainment
ACCEPTED AND AGREED TO:
VIRGIN RECORDS AMERICA, INC.
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
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