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* Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 230.406
EXHIBIT 10.21
By Telecopy
July 12, 1999
Xx. Xxxxx Xxxxx
President and CEO
XxxxxxxXxxx.xxx, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Re: Private Label XxxxxxxXxxx.xxx Store for Lightspan
Dear Xxxxx:
In accordance with our discussions, this letter agreement ("Agreement") sets
forth the terms agreed to between The Lightspan Partnership, Inc., a California
corporation ("Lightspan"), and XxxxxxxXxxx.xxx, Inc., a Massachusetts
corporation ("SmarterKids") for the development and operation, by
SmarterKids, for Lightspan, of a "private label" version of SmarterKids'
e-commerce store XxxxxxxXxxx.xxx.
This Agreement will be effective as of the date set forth above when executed by
an authorized representative of each party where indicated below.
Following the execution of this Agreement, the parties agree to work
expeditiously in good faith to negotiate and execute a long form agreement
("Long Form Agreement"). Unless and until the Long Form Agreement is executed
and delivered by the parties, this Letter Agreement shall be valid and binding
upon the parties.
1. General
Xxxxxxxxxxx.xxx will create, own and operate a co-branded on-line store for
Lightspan (the "Lightspan Store") that will become the premier educational
products e-commerce site on (i) Lightspan's Page One and the Lightspan Education
Portal; and (ii) if Lightspan elects to add e-commerce to Lightspan's
subscription education service, the Lightspan Network, on The Lightspan Network.
Lightspan Page One, the Lightspan Education Portal and The Lightspan Network are
referred to collectively herein as the "Lightspan Internet Services."
2. Branding
The name of the Lightspan store will, at Lightspan's election, include
"Lightspan" in some fashion (e.g. "The Lightspan Learning Store") and will also
carry the Xxxxxxxxxxx.xxx brand as a secondary identifier (e.g. "Powered by
Xxxxxxxxxxx.xxx"). The Xxxxxxxxxxx.xxx brand will be at least 25% of the
Lightspan identifier in the home page for the store. This will be comparable to
Yahoo's presence in the branding of Lightspan PageOne. Unless the parties
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otherwise agree, the name of the store will be presented as follows on the home
page for the store:
[LIGHTSPAN LEARNING STORE LOGO]
3. Description of Lightspan Store
a. The Lightspan Store will include a customized "home page" that will be
arrived at from a Lightspan owned and branded URL. The look and feel of
this "home page" will be differentiated from Xxxxxxxxxxx.xxx but
functionally the same as Xxxxxxxxxxx.xxx in all material respects.
Lightspan may market additional product offerings not found in
Xxxxxxxxxxx.xxx from this home page. The parties will work together to
determine a mutually agreeable process and time line for SmarterKids'
addition of such products and mutually agreeable arrangements for the
handling of purchase, inventory ownership and other similar issues related
to the offering of such products. Every Xxxxxxxxxxx.xxx page that is
reached off the Lightspan Store home page (in other words the whole user
session originated from the Lightspan store) will have the co-branded logo,
as described in paragraph 2, indicating the user is in the Lightspan Store.
The Xxxxxxxxxxx.xxx "Nav bar" will be arranged so that clicking on "home"
or "about us" will take the user to the appropriate pages as differentiated
between Xxxxxxxxxxx.xxx and the Lightspan Store.
b. SmarterKids will provide all customer service for the Lightspan Store.
Customer service for the Lightspan Store will be equal to or superior to
that of Xxxxxxxxxxx.xxx in all material respects. If customer service for
the Lightspan Store falls materially below other comparable category
members as measured by an independent party, such as BizRate, or falls
materially below that of XxxxxxxXxxx.xxx, and SmarterKids fails to rectify
the situation within 30 days of Lightspan's provision of written notice
requesting it to do so, Lightspan will be entitled to terminate this
Agreement.
c. Lightspan will have a right of approval (not to be unreasonably
withheld) with respect to all Lightspan Store content that shows up
uniquely within the Lightspan Store. The process for this approval will be
further defined to avoid slowdowns in the development process.
d. Lightspan will not have a right of approval with respect to content
which is common to XxxxxxxXxxx.xxx and the Lightspan Store; provided,
however, that SmarterKids agrees that such content will not vary,
fundamentally, from that currently included on XxxxxxxXxxx.xxx, and will
not, under any circumstances, include content inappropriate for children or
content that could otherwise jeopardize the business or
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reputation of Lightspan or impugn the integrity of the Lightspan Internet
Services. Without limiting the generality of the foregoing, SmarterKids
agrees that all product reviews included in the Lightspan Store will be
unbiased and not influenced by any benefit or incentive offered by a
product supplier.
e. Smarter Kids will not, in any way, encourage customers of the Lightspan
Store to instead become customers of XxxxxxxXxxx.xxx. In order to ensure
that promotions for SmarterKids do not encourage customers of the
Lightspan Store to become customers of XxxxxxxXxxx.xxx, SmarterKids agrees
that, to the extent to which SmarterKids runs "customer days" or other
promotions for customers of SmarterKids, it will run an equivalent
promotion for the Lightspan Store which is specifically designed to drive
return visits to the Lightspan Store. Thus, by way of example, a customer
days promotion for XxxxxxxXxxx.xxx which provides XxxxxxxXxxx.xxx
customers a special URL that allows them to obtain discounts that are not
then generally available on XxxxxxxXxxx.xxx would be accompanied by an
equivalent promotion for Lightspan Store customers providing Lightspan
Store customers with their own unique Lightspan Store promotion URL.
4. Links from Lightspan Internet Services to Lightspan Store
a. A special link or interface for the Lightspan Store will be included in
an e-commerce section in Lightspan Page One and an e-commerce section
in the Lightspan Portal and, if Lightspan elects to include e-commerce
links from the Lightspan Network, in an e-commerce page in the Lightspan
Network. The "real estate" permanently assigned by Lightspan for such links
will be generally equivalent to or superior to the "real estate"
permanently assigned by Lightspan within the e-commerce section to any
other third-party vendor (i.e. non-Lightspan owned vendor) within the
e-commerce section. The forgoing shall not prohibit Lightspan from
providing a third party vendor superior "real estate" in the e-commerce
section during temporary promotional events.
b. The parties agree to work together to determine a mutually acceptable
way to prominently integrate product recommendations generated by
Xxxxxxxxxxx.xxx into Learning Activities on certain portions of Lightspan
Page One, certain portions of the Lightspan Education Portal and, at
Lightspan's election, certain portions of the Lightspan Network (e.g. a
visitor looking for math learning activities for a 2 year old with a
particular learning style would be offered math learning products for a 2
year old with that learning style). Ideally, these links will be available
both on the initial pages of the Learning Activities as well as in the
results of Learning Activity searches within the Lightspan Learning
Search. The recommendations will be linked directly to the Lightspan Store
in a way that allows the user of Lightspan to make an immediate purchase
of the products recommended. Lightspan will consult with Xxxxxxxxxxx.xxx
regarding the placement of the links, but Lightspan will ultimately
control all placement, editorial, layout, navigation, content and
other aspects of the Lightspan Internet Services in its sole discretion.
Smarterkids acknowledges that it is Lightspan's intention that the links
be included in a way that would allow them to be
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directed specifically to parents, and not to children and that would allow
them to be tied only to Learning Activities intended for use outside the
classroom.
c. In the event Lightspan elects to include other links to the Lightspan
Store from the Lightspan Internet Services, SmarterKids agrees to work with
Lightspan to add the links as quickly as reasonably practicable.
5. Links from XxxxxxxXxxx.xxx and Lightspan Store to Lightspan Internet
Services
Smarterkids will work with Lightspan to correlate the Lightspan Learning
Activity categories to Xxxxxxxxxxx.xxx's proprietary categorization of products.
Provided that Lightspan offers Learning Activities that are educationally sound
and that include functionality which is generally equivalent or superior to the
functionality of Learning Activities included in Internet sites comparable to
the Lightspan Internet Services, SmarterKids will integrate recommendations for
Lightspan Learning Activities in appropriate locations within MySmarterKids and
the Xxxxxxxxxxx.xxx and Lightspan Store sites. Such recommendations will relate
to the products the Xxxxxxxxxxx.xxx/ Lightspan Store user is looking for at that
time (e.g. a shopper looking for math products for a 2 year old with a
particular learning style would be offered Lightspan math learning activities
for 2 year olds with that learning style). The Learning Activities will be
hosted by Lightspan and the recommendations will link users directly to the
specific Lightspan Learning Activity on the Lightspan Internet Services.
Smarterkids will consult with Lightspan regarding the links and Lightspan will
have a right of approval, not to be unreasonably denied, with respect to the
links, but Xxxxxxxxxxx.xxx will ultimately control all placement, editorial,
layout, navigation content and other aspects of Xxxxxxxxxxx.xxx.
6. MySmarterkids Functionality/ Coordination of Registration Processes
a. The Lightspan Store will include XxXxxxxxxxxxx.xxx functionality for
personalized product recommendations.
b. The parties agree that, ideally, registration for the Lightspan Internet
Services and for the Lightspan Store will be coordinated so that a
registrant of one site who wishes to use the other will not be required to
re-register. The parties will work together in good faith to determine a
process that -- while not "automatically" registering users for both the
Lightspan Store and the Lightspan Internet Services -- avoids
re-registration or, failing that, simplifies the second registration so
that the user is only required to provide additional information required
for the second registration and is not required to provide the same
information twice. The parties agree that any such coordinated registration
process would need to meet both parties' requirements and standards for
children's registration and parental approvals of children's registration.
7. Lightspan Content included in XxxxxxxXxxx.xxx Parent Center and Lightspan
Store Parent Center
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Within the new layout of the Xxxxxxxxxxx.xxx Parent Center (also available in
the Lightspan Store), Lightspan will contribute a "bylined" article(s) on a
regular and rotating basis, based on the Xxxxxxxxxxx.xxx editorial calendar,
editorial guidelines and mutually agreed upon topics. The Lightspan bylined area
will include links to Xxxxxxxxx.xxx through "tell me more" icons and/or prompts.
Xxxxxxxxxxx.xxx will have editorial approval rights, not to be unreasonably
denied, for content hosted by Xxxxxxxxxxx.xxx. Xxxxxxxxxxx.xxx and Lightspan
will discuss the desirability and investigate the feasibility of including
Lightspan Learning Search for Lightspan activities within the Parent Center.
8. [***]
[***]
a. [***]
b. [***]
c. [***]
d. [***]
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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[***]
e. [***]
9. Data Tracking
Xxxxxxxxxxx.xxx will separately identify, in its database, all Lightspan Store
registrants and all Xxxxxxxxxxx.xxx registrants who have some on-going
relationship with Lightspan that SmarterKids is aware of (e.g. who are
subscribers to the Lightspan subscription network, a member of a Lightspan
PageOne club or who have established a MyLightspan account) ("Lightspan
Shoppers"). Xxxxxxxxxxx.xxx will [***] to be determined by the parties in
accordance with terms to be included in the Long Form Agreement. Lightspan will
be entitled to a copy of all registration, shopping, traffic, customer service
and other data Xxxxxxxxxxx.xxx collects with respect to users of the Lightspan
Store. SmarterKids will send the data to Lightspan in a weekly report in
standard CSV or Microsoft Excel format.
10. Sharing of registration data
Both XxxxxxxXxxx.xxx and Lightspan will jointly own the registration data
collected on customers and registrants from the Lightspan Store. XxxxxxxXxxx.xxx
will provide Lightspan copies of this data on an ongoing basis throughout the
Term. SmarterKids will create a weekly report in standard CSV or Microsoft Excel
format to be transmitted to Lightspan that will contain the Lightspan Store
customers and all registration information other than credit card numbers.
Neither SmarterKids nor Lightspan shall be entitled to sell any Lightspan Store
registration data to any third party. SmarterKids will make changes in its
registration and privacy policy statements for use in connection with the
Lightspan Store to include Lightspan as appropriate and to allow for the sharing
of registration information with Lightspan as contemplated in this Agreement.
11. Implementation Schedule
SmarterKids will launch the Lightspan Store as early as September 1, 1999
and no later than October 15, 1999. Assuming Lightspan provides SmarterKids
with the content it requires, SmarterKids also agrees to add to XxxxxxxXxxx.xxx
the Lightspan content and links referenced above in accordance with the same
schedule. [***]
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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12. Fees/Revenue Sharing
Xxxxxxxxxxx.xxx will pay Lightspan a commission on the Net Revenue of all
purchases made at the Lightspan Store during the Term (i.e. all Lightspan Store
purchases, whether or not the purchaser accessed the Lightspan Store from any of
the Lightspan Internet Services and including, by way of example and not by way
of limitation, all purchases commenced during one session and concluded in
another session). The amount of the commission shall be 11% of Net Revenue. As
used herein, Net Revenue means [***] SmarterKids will also be entitled to
exclude [***] from Net Revenues and to exclude [***] from Net Revenues. By way
of example, a purchase of three items regularly priced at [***] each, but sold
as part of a buy 2 get one free promotion would yield Net Revenue of [***].
SmarterKids agrees that the only revenues, other than standard MDF or co-op ad
funds, it will accept with respect to the Lightspan Store will be revenues from
customers and that it will not sell or carry advertising on the Lightspan Store
or otherwise seek revenues from suppliers of products carried on the Lightspan
Store.
13. Exclusivity
a. During the Term, Smarterkids will not engage in any arrangement
whereby branded content provided by a "Lightspan competitor" or links to a
"Lightspan competitor" are included on Xxxxxxxxxxx.xxx or the Lightspan
Store or whereby SmarterKids builds, for a "Lightspan competitor," a club
program similar to the Page One club program or a "private label store"
similar to that defined in this Agreement, where "Lightspan competitor"
means Family Education Network, Electric School House, Scholastic Network,
Classroom Connect, ZapMe, American School Directory or Jostens Learning or
any other comparable provider of educational content or services over the
Internet which is not under common ownership with SmarterKids.
b. During the Term, Lightspan will not include links from content or
activity areas of the Lightspan Internet Services (as opposed to e-commerce
areas of the Lightspan Internet Services) to any of the following sites:
etoys,XxxXxxXxxx.xxx, RedRocket, Toysmart, XxxxXXx.xxx or XxxxXxxxxx.xxx
or any other comparable e-commerce site targeted primarily to parents which
primarily sells children's merchandise similar to that carried by
Xxxxxxxxx.xxx and which is not under common ownership with Lightspan. The
foregoing will not, in any way, restrict Lightspan's sale of ads to such
sites, which ads may also serve as links to such sites.
14. Ownership
Each party shall continue to own its intellectual property rights. Lightspan
will own the URL for the Lightspan Store and the name of the Lightspan Store,
any URL for the Page One clubs program and any new names and trademarks that
may be associated with the Page One Clubs
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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program. The long form agreement shall include, inter alia, non-exclusive
intellectual properties licenses between the parties appropriate to implement
the terms of this Agreement.
15. Term/ Renewal/ Effect of Termination
a. This Agreement will have an initial term (the "Term") of eighteen (18)
months and will be renewable annually thereafter by the mutual agreement of
the parties.
b. At the conclusion of the Term, the parties' respective links will be
dismantled. Lightspan and Xxxxxxxxxxx.xxx shall each own all data regarding
Lightspan Store users and the Page One clubs purchase program.
Xxxxxxxxxxx.xxx shall provide such data to Lightspan in an electronic
format in standard CSV or Microsoft Excel format. Xxxxxxxxxxx.xxx shall not
have any ownership or usage rights to Lightspan Internet Services
registrant information provided to it by Lightspan unless the customer data
came through the Lightspan Store. Neither party shall otherwise be entitled
to keep a copy of nor use any other registration data provided to it by the
other party during the Term.
16. Joint Promotional Activities.
The parties will work together to create Joint on/offline promotional programs
that will be mutually beneficial, including an initial press release. At least
[***] such programs shall be initiated during the first [***] of the Term. All
aspects of such programs, including, without limitation, the text of any press
release, will be subject to the mutual approval of the parties.
17. Indemnities
SmarterKids shall indemnify Lightspan against any third-party claim or loss with
respect to any aspect of SmarterKids operation of XxxxxxxXxxx.xxx or the
Lightspan Store. Lightspan shall indemnify SmarterKids against any third-party
claim or loss with respect to Lightspan's operation of the Lightspan Internet
Services. The Long Form Agreement shall include xxxxxx indemnification
provisions.
18. Confidentiality
Concurrently with the signature of this Agreement, the parties shall enter into
a mutual non-disclosure agreement. For purposes of such agreement, the terms of
this Agreement and all financial, traffic and other information shared by the
parties pursuant to the terms of this Agreement shall be deemed confidential
information.
*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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If the forgoing is acceptable, please have two copies of this Agreement
executed where indicated below by an authorized representative of SmarterKids
and returned to us by telecopy and by express mail service.
Thanks for your assistance in putting this deal together. We are excited by
the opportunities it creates.
Very truly yours,
Xxxxxxx X. Xxxxxx
Senior Vice President, Corporate Development
ACCEPTED AND AGREED:
XxxxxxxXxxx.xxx, Inc. Lightspan Partnership, Inc.
By: [ILLEGIBLE] By: [ILLEGIBLE]
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Its: CEO Its: SR VP & GM
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