EXHIBIT 10.6
EXCLUSIVE INTERNET ADVERTISING SERVICES AGREEMENT
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EXCLUSIVE INTERNET ADVERTISING SERVICES AGREEMENT (this "Agreement"), dated
as of February 1, 2000, by and between PHASE2MEDIA, INC., a Delaware corporation
with its principal place of business at 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, XX 00000 ("P2M"), and HACHETTE FILIPACCHI MAGAZINES, INC., a Delaware
Corporation, with its principal place of business at 0000 Xxxxxxxx, X.X., X.X.
00000 ("Hachette").
W I T N E S S E T H :
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WHEREAS, Hachette is the owner and/or operator of the Internet web sites
specified on Exhibit 1 annexed hereto (collectively, the "Existing Web Sites");
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WHEREAS, P2M is in the business of providing (1) advertising services (the
"Sales and Marketing Services"), consisting of soliciting advertisers,
advertising agencies, buying services and others located throughout the world
(collectively, the "Advertisers") in connection with the solicitation, placement
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and sale of advertising banners, sponsorships and tile advertisements
(collectively, "Advertising") for display on pages, screens and other spaces
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(collectively, "Pages") on Internet World Wide Web sites(s) (collectively, "Web
Sites") and to which the P2M Tags (as such term is defined in Section 4a.
hereof) can be affixed; and (2) Internet adserving software services, systems,
system management, and advisory services (collectively, the "Adserving
Services"); and
WHEREAS, Hachette wishes to engage P2M to provide the Sales and Marketing
Services and the Adserving Services, and P2M is willing to be so retained,
subject to the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration for the mutual promises and covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be bound hereby, agree as follows:
1. Formation of P2M/Hachette USA Interactive Sales.
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a. As an inducement to cause Hachette to enter into this Agreement,
and in order for P2M to more efficiently and effectively provide
the Exclusive Sales and Marketing Services (as hereinafter
defined) and Adserving
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Services, P2M shall offer to employ, effective as of February 1,
2000 (the "Effective Date"), the interactive sales individuals
listed on Exhibit 2 annexed hereto (collectively, the "HFM
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Employees"), provided that each of the HFM Employees shall, on or
prior to the Effective Date, execute P2M's standard Agreement
regarding terms and conditions of employment (the "Terms and
Conditions Agreement").
b. Each of the HFM employees who accepts employment with P2M
(including executing the Terms and Conditions Agreement) will
(i), subject to the Terms and Conditions Agreement, be employed
by P2M at at least the same base salary and total annual
compensation as set forth on Exhibit 2 (with respect to such
employee), and (ii) be provided by P2M with benefits and stock
options commensurate with their applicable level within P2M.
c. Hachette hereby represents and warrants that (i) Exhibit 2
contains a true, correct and complete list of all employees and
independent contractors of Hachette (and any direct or indirect
wholly-owned subsidiary) of Hachette; Hachette together with such
subsidiaries, being hereinafter referred to collectively as, the
"Hachette Group") that perform interactive sales services for the
Hachette Group (or any portion thereof), and (ii) neither
Hachette, nor any other member of the Hachette Group, is a party
to nor threatened to be made a party to, any collective
bargaining agreement with respect to any of the HFM Employees,
(iii) none of the HFM Employees is a party to any written
agreement with any member of the Hachette Group except as set
forth on Exhibit 2 annexed hereto, and (iv) none of the HFM
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Employees is a party to any litigation with the Hachette Group,
or other proceeding involving their employment with any member of
the Hachette Group, nor does Hachette have any reason to be aware
of the basis for the same.
d. Hachette hereby agrees to indemnify and hold P2M and its
officers, directors and shareholders harmless from and against
any losses, costs, expenses (including reasonable legal fees),
damages and claims relating to the HFM Employees (i) arising or
accruing prior to the Effective Date and/or (ii) related to the
termination of their employment with Hachette or any other member
of the Hachette Group (including, without limitation, any claims
for severance with respect to the period of their employment with
any member of the Hachette Group). In furtherance thereof,
Hachette acknowledges and agrees that it is not assigning or
otherwise transferring to P2M, and P2M is not assuming, any
existing (or hereafter arising by
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virtue of the termination of their employment or as a consequence
of this Agreement) obligations of the Hachette Group with respect
to any of the HFM Employees.
e. From and after the Effective Date, (i) the HFM Employees will no
longer be employees of any member of the Hachette Group and (ii)
those HFM Employees who accept employment with P2M will, subject
to the final sentence of this Section 1e, be employees of P2M
subject to the Terms and Conditions Agreement. Provided Xxxxxxx
Xxxxxxx accepts employment with P2M and executes the Terms and
Conditions Agreement, P2M agrees that P2M shall not transfer
Xxxxxxx Xxxxxxx from the P2M/Hachette Division (as hereinafter
defined) to any other division at P2M at any time prior to the
first anniversary of the Effective Date without the Advisory
Board's prior written consent. Nothing contained herein
(including, without limitation, anything contained in the
immediately preceding sentence of this Section 1e) shall be
deemed an employment agreement or employment contract with any of
the HFM Employees nor confer upon any of the HFM Employees any
right to employment on other than an "at will" basis.
f. On or immediately following the Effective Date, P2M shall create
a new division within P2M entitled "P2M/Hachette USA Interactive
Sales" (the "P2M/Hachette Division"). The P2M/Hachette Division
shall be staffed solely by employees of P2M which shall initially
include all of the HFM Employees (that have accepted employment
with P2M and executed the Terms and Conditions Agreement) and
those other employees of P2M which P2M from time to time (in
consultation with the Advisory Board (as hereinafter defined))
believes are necessary and appropriate in order for the
P2M/Hachette Division to effectively perform the Exclusive Sales
and Marketing Services and Adserving Services. P2M/Hachette
Division staff shall be placed in P2M's offices in the cities
listed on Exhibit 3 annexed hereto (the "Included Territories").
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Each of the P2M employees assigned to the P2M/Hachette Division
shall, during the term such employees are so assigned and
employed by P2M (i) provide services solely to the P2M/Hachette
Division, and (ii) be given separate business cards identifying
their assignment to the P2M/Hachette Division. The "Advisory
Board" shall mean for purposes of this Agreement a board to be
comprised initially of Xxx Xxxxx, Xxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx
and a fourth (4th) individual to be agreed upon by the existing
three members. In the event that, at any time during the term of
this Agreement, any of the existing board members of the Advisory
Board are unable to serve thereon
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for an extended period, the other existing members of the
Advisory Board together with the P2M executive team shall select
a replacement for such member, provided that the Advisory Board
shall always include at least an equal number of Hachette members
and P2M members.
g. Throughout the term, P2M shall staff the P2M/Hachette Division
with the following dedicated staff:
i. one (1) director of sales (New York);
ii. two (2) account executives (New York);
iii. two (2) account executives (California);
iv. one (1) account executive (Detroit);
v. one (1) director of e-commerce; and
vi. three (3) assistants.
h. The P2M/Hachette Division will have a vice president responsible
for the Division (and such vice president cannot be removed from
such position, without cause, without consent of the Advisory
Board), and such vice president will report directly to Xxx
Xxxxx, V.P., New Media for Hachette (or his successor, as the
case may be), and a senior member of the P2M executive team
(which senior member shall be determined by P2M at a later date).
Notwithstanding the foregoing, it is understood and agreed that
all decisions regarding the terms and conditions of employment of
the staff of the P2M/Hachette Division shall be P2M's sole
responsibility. Hachette shall, however, have the right, within
ten (10) days after written notice, to approve (not to be
unreasonably withheld) any employee P2M proposes to add to the
P2M/Hachette Division. Failure by Hachette to reject any such
replacement within such ten (10) day period shall be deemed an
approval by Hachette.
i. P2M covenants that with respect to all P2M/Hachette Division
employees, it will comply with all applicable Federal, State and
Local employment laws and regulations including, without
limitation, laws and regulations concerning wages, hours and
discrimination.
2. Engagement.
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a. Hachette hereby retains P2M on an exclusive basis during the term of
this Agreement, to provide the following services:
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i. P2M shall (through the P2M/Hachette Division, unless the services
of a P2M office located in a city other than those contained in
the Included Territories (the "Other Territories") shall be
required, in which event P2M shall provide such Exclusive Sales
and Marketing Services by appropriate P2M personnel located in
P2M's office in such Other Territory (the "Other P2M Personnel"),
and such services shall be deemed performed by the P2M/Hachette
Division for all purposes hereunder) provide the following Sales
and Marketing Services (collectively, the "Exclusive Sales and
Marketing Services"):
Except as expressly set forth on Exhibit 4 annexed hereto, all
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promotion, solicitation, placement and sale of Advertising on the
Existing Web Sites (and any other Web Sites hereafter owned
and/or operated by Hachette or any member of the Hachette Group,
as the same may change from time to time; the Existing Web Sites
together with such additional Web Sites hereafter owned and/or
operated by Hachette being hereinafter referred to collectively
as, the "E-Sites" and said Advertising sales are hereinafter
collectively referred to as, the "Ad Sales"); and
ii. P2M shall provide the following Adserving Services, utilizing
software, systems and technology for implementation, execution
and delivery of the Adserving Services:
(A) all Adserving Services with respect to the Ad Sales; and
(B) all other Adserving Services as Hachette may request from
time to time, in accordance with the provisions of Section
21D hereof.
b. It is understood that P2M is an independent contractor of, and an
agent acting for, Hachette, with the rights of agent set forth in
Section 2(c) hereof.
c. Subject to the second to last sentence of this Section 2c., P2M shall
be entitled to, and is hereby granted all rights, powers, and
authority to act as Hachette's exclusive agent in the negotiation,
preparation, execution, and delivery of all contracts for Ad Sales
(collectively, the "Exclusive Contracts"). Without limiting the
foregoing, P2M is authorized, as Hachette's agent, to execute and
deliver any and all Exclusive Contracts in
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Hachette's name, and upon such execution and delivery, Hachette shall
be bound thereby with the same force and effect as if the same were
signed by an authorized officer of Hachette. Further, in the event
Hachette is involved in P2M's sales process by reason of an Advertiser
request or otherwise, Hachette shall ensure that P2M is present in
closing the sale, or, if P2M is unable to be present for any reason,
Hachette shall accept and sign the Exclusive Contract with no loss of
the Rep Commission (as such term is defined in Section 7a. hereof) or
any other right which P2M has under this Agreement with respect to
said Exclusive Contract. Notwithstanding the foregoing, P2M shall
cause the creative file and insertion order for each proposed
advertisement to be delivered to a designated Hachette employee (as
designated by Xxx Xxxxx, or his then successor) prior to such
advertisement being placed on any E-Site. Hachette shall have three
(3) business days from receipt of such file and insertion order to
reject the proposed advertisement and/or insertion order by giving e-
mail notice of such rejection to Xxxxxxx Xxxxxxx or the then vice
president of the P2M/Hachette Division (such individual's e-mail
address to be provided promptly to Hachette). Failure to timely reject
shall be deemed an approval by Hachette of such proposed advertisement
except that insertion orders for the Advertisers listed on Exhibit 2-C
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annexed hereto must be affirmatively approved by Hachette.
3. Term. Subject to Article 23 hereof, the term of this Agreement
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shall be for an initial period (the "Initial Term") of three (3) years
commencing on the Effective Date and ending on the day immediately
preceding the third (3rd) anniversary of the Effective Date, unless
sooner terminated as herein provided.
4. Additional Responsibilities of P2M. P2M covenants, during the term
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of this Agreement and subject to the other terms and conditions
hereof, to fulfill the following obligations:
a. provide Hachette (solely for use in the performance of this
Agreement) with unique tags in HTML/Java or other languages
chosen by P2M (collectively, "P2M Tags");
b. use best efforts to solicit Advertising and otherwise fully
perform the Exclusive Sales and Marketing Services;
c. use best efforts to fully provide the Adserving Services;
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d. manage all inquiries from Advertisers and their agents and
provide support regarding Advertising space;
e. maintain regular contact on a bi-monthly basis with each
Advertiser and/or its agent in connection with such Advertiser's
advertising campaign;
f. make the following reports available to Hachette via on-line
posting at a secure URL on the Internet:
i. regular business reports on the status of:
A. Actual sales of Advertising space to Advertisers with
respect to each E-Site (including, but not limited to,
name of Advertisers, sale values, and reference
numbers, if any); and
B. information and feedback received by P2M from
Advertisers in the course of providing the services as
described in this Agreement;
ii. monthly business reports on the status of potential sales of
Advertising to Advertisers with respect to each E-Site
(including, but not limited to, name of Advertisers, sale
values, forecasts and reference numbers, if any);
iii. weekly user statistics with respect to each E-Site (which
shall include advertisement impressions, pages and click-
through data) compiled in connection with user access to
Advertising sold pursuant to this Agreement;
iv. monthly customary and standard billing and collection
reports; and
v. such other reports as are reasonably requested from time to
time by Hachette.
g. coordinate sales and marketing services to take into account
current Hachette advertisers.
h. provide all Advertisers which (i) P2M solicit to place
Advertising on the E-Sites and (ii) desire to provide such
Advertising, with Hachette's General Terms and Conditions, a copy
of which is annexed hereto as
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Exhibit 4-h.
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5. Obligations of Hachette. Hachette covenants, during the term of this
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Agreement and subject to the other terms and conditions hereof, to
fulfill the following obligations:
a. use best efforts to maintain and enhance the E-Sites and the
right for P2M to solicit, place and sell Ad Sales on the E-Sites
(provided nothing herein shall preclude Hachette or the
applicable member of the Hachette Group from selling (subject to
Article 19 hereof) or terminating, any E-Sites;
b. insert or affix the P2M Tags on each of the E-Sites in such a
manner as to (i) enable the P2M/Hachette Division and P2M to
provide Advertising to the E-Site and (ii) assure that the
Advertising to be affixed to said P2M Tags is fully and clearly
visible on the first Page viewed on each E-Site when that Page is
viewed at a 640 x 480 pixel (or better) resolution;
c. insert a button with P2M's logo on the home page of each E-Site
directing potential Advertisers to P2M's Web Site and the
P2M/Hachette Division;
d. furnish P2M with all information regarding the E-Sites as is
reasonably available to Hachette and is or may be appropriate for
use by P2M in connection with Advertising on the E-Sites;
e. except as expressly permitted by Section 6 hereof, not engage,
contract with, license or permit any person, firm or entity
(including Hachette, and all other members of the Hachette Group
and each of their employees, other than P2M (through the
P2M/Hachette Division and the Other P2M Personnel) to promote,
solicit, place or sell, or represent Hachette for or with respect
to the sale of Advertising on the E-Sites;
f. at least two (2) full calendar months prior to the beginning of
each calendar month during the term of this Agreement, provide to
P2M, in writing on such form or forms as P2M may from time to
time prescribe and/or if P2M shall request, on-line, Hachette's
best faith estimate as to the Advertising inventory it expects to
have available during such calendar month; and
g. unless Hachette elects to use the Adserving Services by notice to
P2M, place, run and serve (or make its own arrangements to place,
run and serve), at its sole cost and expense, all Advertising.
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6. (A) Bundled Inventory Exception to Exclusivity. Notwithstanding
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anything to the contrary contained herein, Hachette shall be
permitted (through its in-house sales force (which Hachette
represents and warrants is primarily dedicated to non-interactive
sales) to sell Advertising on the E-Sites provided each such sale
of Advertising is part and parcel of a bundled sale (a "Bundled
Sale") of Advertising covering advertising for both non-
interactive media (e.g., magazines) and one or more E-Sites. As
further provided herein, any such sales of Advertising on the E-
Sites shall be deemed, for all purposes of this Agreement, to be
a sale of Advertising by the P2M/Hachette Division pursuant to
this Agreement (and hence, P2M to be entitled to a Rep Commission
in connection therewith).
(B) Additional Exception to Exclusivity. In addition to the
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exception from exclusively provided in Section 6A above, Hachette
shall be permitted, solely through the representatives and/or in-
house as expressly set forth on Exhibit 4 hereto, to sell
advertising for Hachette to be place on the E-Sites (the "Other
Sales") subject to the express terms and limitations contained on
Exhibit 4, and P2M shall not be entitled to any Rep Commissions
in connection with the Other Sales.
7. Compensation and Payments.
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a. P2M shall be entitled to a commission (the "Rep Commission") with
respect to (i) each Exclusive Contract, (ii) each Bundled Sale
and (iii) each Prior Sale (as hereinafter defined) payable as
hereinafter provided, with respect to (I) all Exclusive Contracts
(A) entered into on or after the Effective Date and prior to the
first anniversary of the Effective Date, in an amount equal to
twenty-six percent (26%), and (B) entered into on or after the
first anniversary of the Effective Date, in an amount equal to a
reduced percentage to be determined by the Advisory Board
(provided, however, (1) unless and until the Advisory Board makes
such determination, the percentage will be and remain 26% and (2)
once the determination is made by the Advisory Board, there shall
be a retroactive adjustment to the first anniversary of the
Effective Date), of the result of (x) the total gross revenues
received with respect to each Exclusive Contract after all
discounts granted minus (y) any advertising agency commissions
(the "Outside Commissions") paid with respect to such Exclusive
Contract (or retained by the relevant advertising agency or
agencies), (II) all Bundled Sales (A) relating to contracts which
were executed prior to the first anniversary of the Effective
Date in an amount equal to (1) twenty-one percent (21%) and (B)
relating to contracts which were executed on or
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after the first anniversary of the Effective Date, in an amount
equal to a reduced percentage to be determined by the Advisory
Board (provided, however, (1) unless and until the Advisory Board
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makes such determination, the percentage will be and remain 21%
and (2) once the determination is made by the Advisory Board,
there shall be a retroactive adjustment to the first anniversary
of the Effective Date), of the result of (A) the total gross
revenues received (the "X-X Xxxxx Revenues") with respect to each
Bundled Sale (allocable to the portion related to the E-Sites)
after all discounts granted minus (B) any Outside Commissions
allocable to the sale on the E-Sites (the "Bundled Outside
Commissions") paid with respect to each Bundled Sale (or retained
by the relevant advertising agency or agencies); and (III) each
Prior Sale, in an amount equal to seventeen and one-half percent
(17.5%) of the result of (A) the total gross revenues received
with respect to each Prior Sale after all discounts granted
(allocable to the sale on the E-Sites) minus (B) Outside
Commissions paid with respect to each Prior Sale (or retained by
the relevant advertising agency or agencies).
b. Within forty-five (45) days after the end of each calendar month,
P2M shall pay to Hachette an amount equal to the sum of all gross
revenues payable (whether or not collected) with respect to
Exclusive Contracts, the Bundled Sales and Prior Sales for such
month, less (i) the applicable Rep Commission(s) and (ii) the
applicable Outside Commissions or Bundled Outside Commissions, as
the case may be.
c. With respect to each Exclusive Contract, Advertisers shall be
directed to make all payments (the "Payments") directly to P2M
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(it being understood and agreed that, (i) to the extent
the Hachette Group (or any third party) sells any Advertising on
any of the E-Sites, as and to the extent (i) permitted under
Section 6A above or (ii) included as a Prior Sale, all such sales
(collectively, the "Other Sales") shall be deemed to have been
made by the P2M/Hachette Division and, in connection therewith,
Hachette shall immediately advise P2M of the Other Sales, P2M
shall directly xxxx such Advertisers for such Advertising, and
such Advertisers shall be directed to make all Payments (with
respect thereto) directly to P2M. P2M shall retain the Payments
with respect to each Exclusive Contract, Bundled Sale (applicable
to that portion relating to the E-Sites), and Prior Sale. In the
event any Advertiser remits any Payment directly to Hachette
(including (x) any payment related to a Prior Sale or (y) that
portion of any payment resulting from a Bundled Sale relating to
Advertising on an E-Site), or Hachette otherwise receives any
such Payment (otherwise than from P2M
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as provided by Section 7b. above), Hachette shall forthwith
deliver such Payment directly to P2M within ten (10) business
days after receipt thereof. It being understood that P2M will
xxxx and collect all amounts due from Advertisers in accordance
with applicable laws and shall bear the risk of non-payment from
all Advertisers.
d. With respect to the Adserving Services, Hachette shall pay to P2M
the following amounts as compensation (collectively, the "AdServe
Fees"):
with respect to all Advertising whether or not (in connection
with an Exclusive Contract); an amount equal to the then
applicable P2M Rate (as hereinafter defined).
e. The obligations contained in this Article 7 shall survive the
expiration or earlier termination of this Agreement.
f. P2M shall be entitled to a Rep Commission, as provided in Section
7(a)(iii) and 7(a)(III) above, with respect to any advertising
that has been ordered from any of the Hachette Group prior to the
date hereof and is to be displayed on any E-Site after the date
hereof (each, a Prior Sale, and collectively, the "Prior Sale").
Hachette represents and warrants that all of the Prior Sales are
listed on Exhibit 5 annexed hereto.
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8. Acknowledgment and Agreement of P2M and Hachette. Hachette and P2M
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acknowledge and agree that (a) Hachette shall not have or acquire any
proprietary or intellectual property, or other rights of any nature in
the P2M Tags, and (b) all records and information provided or
otherwise made available to P2M pursuant to Section 5d hereof and
otherwise hereunder shall be and remain the property of Hachette and
shall be returned to Hachette, as contemplated by the last sentence of
Section 11 hereof.
9. Representations and Warranties.
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a. Hachette represents and warrants to P2M as follows:
i. Hachette is a corporation duly formed and validly existing
or subsisting under the laws of Delaware;
ii. all corporate actions necessary or appropriate to authorize
the execution, delivery and performance of this Agreement by
and on behalf of Hachette has been duly authorized, taken
and remains in
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full force and effect;
iii. this Agreement constitutes a valid and binding obligation of
Hachette, enforceable against Hachette in accordance with
its terms;
iv. the execution, delivery and performance by Hachette of this
Agreement in accordance with its terms does not and will not
constitute a breach or violation by Hachette of any
agreement, law or order to which it is a party or by which
it, or any of its material property or assets or capital
stock, is otherwise bound;
v. Hachette is the owner of the and/or operator, as the case
may be, of the Existing Web Sites, as shown on Exhibit 1
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hereto;
vi. Except for the Web Sites described on Exhibit 1 hereto,
Hachette neither owns nor controls any other Web Sites on
the date of this Agreement; and
vii. Hachette has not granted, assigned or transferred to any
other party any rights with respect to the promotion,
solicitation, placement or sale of Advertising on the E-
Sites except as noted on Exhibit 4 annexed hereto.
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b. P2M represents and warrants to Hachette as follows:
i. P2M is a corporation duly formed and validly existing under
the laws of the State of Delaware;
ii. all corporate actions necessary or appropriate to authorize
the execution, delivery and performance of this Agreement by
and on behalf of Hachette has been duly authorized, taken
and remains in full force and effect;
iii. this Agreement constitutes a valid and binding obligation of
P2M, enforceable against P2M in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and similar laws for
the relief or benefit of debtors and principles of equity;
and
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iv. the execution, delivery and performance by P2M of this
Agreement in accordance with its terms does not and will not
constitute a breach or violation by P2M of any agreement to
which it is a party or by which it, or any of its material
property or assets or capital stock, is otherwise bound.
10. Default
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In the event either party (the "Defaulting Party") (a) shall make an
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assignment for the benefit of creditors, (b) shall become unable, or
admit in writing its inability, to pay its debts and obligations
generally as they become due, (c) shall file, or consent to or
acquiesce in the filing of, any petition in bankruptcy against such
party or any of its property or assets, (d) shall have filed against
it any petition in any bankruptcy, insolvency, reorganization,
moratorium or similar proceeding or action, which petition is not
dismissed within thirty (30) days, (e) shall have a receiver, trustee
or similar official appointed over it or any of its business and
assets or (f) shall default with respect to any of its
representations, warranties, covenants and other agreements set forth
herein, which default shall not have been cured or remedied within
thirty (30) days after receipt of written notice from the other party
specifying such default (other than (i) breaches of material
representations or warranties, with respect to which there shall be no
notice required or cure period whatsoever and (ii) a breach of any of
the covenants contained in Section 12 hereof, with respect to which
the cure period provided after notice is given shall be seven (7)
business days), then the other party hereto shall have the right to
terminate this Agreement by written notice to such effect given to the
Defaulting Party during the continuation of any of the events or
circumstances set forth in the foregoing clauses (a) through (f).
11. Intellectual Property. All hardware, software (in object code and
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source code form), programs, codes, trade names, technology,
intellectual property, licenses, patents, trademarks, tradenames,
copyrights, trade secrets, know-how and processes, artistic, graphic
and design elements and all content including images, photographs,
illustrations, graphics, audio clips, video clips, and text, script,
together with all related methodologies and processes developed or
provided by each party suppliers under (or in connection with) this
Agreement (collectively, the "Protected Technology") used by either
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party under or in connection with this Agreement or the performance of
its obligations hereunder shall remain the sole property of the party
providing such Protected Technology. Neither party shall have any
right, title or interest in or to any of the other party's Protected
Technology. Upon the expiration or earlier termination of this
Agreement for any reason whatsoever, each party shall promptly return
all information, documents,
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manuals and other materials belonging to the other party, except as
otherwise expressly provided in this Agreement.
12. Confidentiality.
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a. Each of the parties hereto (the "Covenanting Party") covenants to
the other that the Covenanting Party shall not disclose to any
third party (other than the Covenanting Party's employees and
directors, in their capacity as such, and the employees and
directors of any affiliate on a need to know basis so long as
they are bound by the terms of this Agreement) any information
regarding the terms and provisions of this Agreement or any non-
public confidential information regarding the other party hereto
except (i) to the extent necessary to comply with any law or
valid order of a court of competent jurisdiction (or any
regulatory or administrative tribunal), in which event the party
so complying shall so notify the other party as promptly as
reasonably practicable (and, if possible, prior to making any
disclosure) and shall seek confidential treatment of such
information, if available, (ii) as part of its normal reporting
or review procedures to its auditors and/or attorneys, as the
case may be, so long as they are notified of the provisions of
this Agreement, (iii) in order to enforce its rights pursuant to
this Agreement, (iv) in connection with any filing with any
governmental body or as otherwise required by law, including the
federal securities laws and any applicable rules and regulations
of any stock exchange or quotation system, and (v) in a
confidential disclosure made in connection with a contemplated
financing, merger, consolidation or issuance or sale of capital
stock or assets of the Covenanting Party or any parent thereof.
b. Information that is, or should be reasonably understood to be,
confidential or proprietary includes, without limitation,
information about sales, cost and other unpublished financial
information, product and business plans, projections, marketing
data and sponsors, but shall not include information (i) already
lawfully known to or independently developed by the party
disclosing same, (ii) disclosed in published material or
otherwise generally known or available to the public, (iii)
lawfully obtained from any third party not under an obligation to
maintain such information in confidence or (iv) required to be
disclosed by law.
c. Nothing contained herein shall, or shall be deemed to, prohibit
or in any manner impair or limit each party during or after the
term of this Agreement from using, leasing, selling or otherwise
distributing, licensing
14
or disposing the Protected Technology provided or developed by
such party, for profit or otherwise.
13. Non-Compete. During the Initial Term, P2M will not provide any Sales
-----------
and Marketing Services at any time for any publications which are, at
such time, directly competitive with Hachette's then existing
publications, without the prior written consent of Hachette.
14. Indemnification.
---------------
a. Each party hereby agrees to indemnify and hold harmless the other
party from and against any and all loss, cost or expense
(including reasonable attorneys' fees and disbursements) suffered
by such party resulting from any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by such
party under this Agreement, or any claim made by any third party
against a party hereto in connection with this Agreement arising
from the acts of the other party hereto.
b. Hachette's indemnity of P2M shall include any loss, cost or
expense arising as a result of or related to the contents of any
E-Site.
15. Limitation On Damages.
---------------------
IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER UNDER THIS
AGREEMENT OR OTHERWISE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER, ARISING OUT OF
OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
16. Non-Solicitation. Except as otherwise expressly set forth herein,
----------------
each party covenants and agrees that, during the term of this
Agreement and for a period of one (1) year thereafter, it will not
solicit, recruit, hire or employ, or encourage any third party to
solicit, recruit, hire or employ, or assist any third party in
soliciting, recruiting, hiring or employing, the services of any of
the other party's officers or employees without the prior written
consent of such other party.
17. No Waiver. This Agreement shall not be waived, modified or amended
---------
except as expressly set forth in writing and signed by the parties
hereto. Without limiting the generality of the foregoing, neither this
Agreement nor any provision
15
hereof shall be deemed amended or modified by, and no waiver of any
term or condition hereof shall be implied from, or deemed to have
occurred on account of, any course of conduct or course of dealing by
either of the parties hereto or between the parties hereto.
18. Assignment.
----------
a. Except as provided below, neither party may assign, transfer or
otherwise encumber this Agreement or any right or interest herein
without the express prior written consent of the other party.
Either party may pledge or otherwise collaterally assign its
rights under this Agreement in order to secure any financing or
other obligation. Either party may assign this Agreement upon ten
(10) days prior written notice to the other party to (i) any
entity (the "Surviving Entity") into which it merges, combines or
consolidates or which acquires all or substantially all of its
assets, or (ii) any affiliate of such party, provided in either
case the Surviving Entity or affiliate, as the case may be,
agrees in a writing delivered to the other party, within five (5)
days after the effective date of such assignment, to assume such
party's obligation contained herein. Any assignment or transfer
(or attempt to assign or transfer) in violation of the foregoing
shall be null and void and of no effect. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
b. In the event an E-Site is sold or assigned to a third party
(other than a third party controlled by any of the members of the
Hachette Group (each, a "Controlled Third Party")), Hachette has
the option of terminating this Agreement with respect to that E-
Site or assigning this Agreement to the acquiror of such E-Site
(to the extent applicable with respect solely to that E-Site);
provided, however, in the event Hachette elects to assign this
Agreement
i. such assignee shall assume in writing Hachette's obligations
under this Agreement with respect such E-Site arising from
and after the effective date of such assignment;
ii. Hachette shall give ten (10) days prior written notice of
such election and
iii. P2M shall have the right effective as of the effective date
of such assignment to terminate this Agreement as it relates
solely to such
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E-Site. It being understood that any sale of an E-Site by
Hachette to a Controlled Third Party shall only be permitted
if this Agreement with respect to such E-Site is assigned to
and assumed by such Controlled Third Party.
c. Hachette shall have the right upon one hundred twenty (120) days
prior written notice to terminate this Agreement in the event
that Xxxx Xxxxxxxxx is no longer employed by P2M (or the
Surviving Entity, as the case may be).
19. Governing Law. This Agreement shall be governed by, and construed
-------------
and enforced in accordance with, the internal laws of the State of New
York applicable to contracts made and to be performed wholly therein,
without regard to principles of conflicts of laws. The parties hereby
irrevocably consent that any action, proceeding or other dispute
arising under or with respect to this Agreement or any term, condition
or provision hereof shall be resolved in New York County, New York,
which courts shall have exclusive jurisdiction with respect to any
such action, proceeding or other dispute.
20. Notices. All notices required or permitted to be given hereunder
-------
shall be in writing and shall be either hand-delivered, telecopied,
mailed by both first class and registered or certified class mail
(return receipt requested), postage prepaid, or sent via Federal
Express, to the other party hereto at the address(es) set forth above
or below. A notice shall be deemed given (a) when delivered
personally, or (b) when the telecopied notice is transmitted by the
sender and receipt thereof has been confirmed (electronically or
otherwise), or (c) three (3) business days after mailing, or (d) the
next business day after the sender delivers the notice (together with
a Fedex account number or applicable payment) to Federal Express. A
copy of all notices to P2M shall be sent by Hachette simultaneously
(and in the same manner) to Xxxxxxxx Xxxx & Brandeis, LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attn: Xxxxxx X. Xxxxxxxx, Esq., facsimile
no. (000) 000-0000. A copy of all notices to Hachette shall be sent by
P2M simultaneously (and in the same manner) to General Counsel.
21. Miscellaneous
-------------
In order for (a) the P2M/Hachette Division to adequately service the
interactive Advertising needs of Hachette and (b) P2M to properly
account for (i) Exclusive Sales and Marketing Services rendered to
Hachette by the P2M/Hachette Division and the Other P2M personnel and
(ii) the Adserving Services rendered to Hachette by P2M, the parties
further agree as follows:
17
A. All data including, without limitation, pricing, contract terms,
and viewer impressions with respect solely to the Exclusive Sales
and Marketing Services and Adserving Services shall be segregated
and maintained separately by the P2M/Hachette Division (although
P2M shall also maintain such data elsewhere for their records to
the extent it deems appropriate);
B. P2M shall, to the extent it deems necessary, employ additional
personnel in order to properly perform ad trafficking services
with respect to the Exclusive Sales and Marketing Services it is
to provide hereunder;
C. To the extent Hachette requires, P2M shall provide periodic
reporting to Hachette relating to existing Exclusive Contracts,
invoices for Advertising and similar information; and
D. With respect to Advertising for which P2M is not being
compensated for pursuant to the terms of this Agreement, Hachette
shall advise P2M of the existing rate(s) it is paying for various
adserving services from third parties and, to the extent P2M's
then rate for Adserving Services is lower than those being paid
by Hachette, Hachette shall transfer such adserving to P2M and
Hachette shall pay to P2M the then applicable P2M rate with
respect to such Adserving Services, as the same may thereafter be
adjusted; it being understood that the rate P2M shall charge for
Adserving Services hereunder (the "P2M Rate") shall be equal to
P2M's then cost (subject to subsequent adjustments for additional
costs) for providing such Adserving Service.
E. P2M will, at P2M's sole cost and expense, develop, for Hachette's
approval, all trade and marketing materials to be used by the
P2M/Hachette Division in connection with all Advertising on the
E-Sites and other e-commerce of Hachette.
22. Entire Agreement. This Agreement constitutes the entire agreement by
----------------
and between the parties with respect to the subject matter hereof and
supersedes and
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incorporates all prior or contemporaneous agreements and
understandings (written or oral) of the parties with respect to such
subject matter and, except as otherwise expressly provided herein, is
not intended to confer upon any other person any rights or remedies
hereunder.
23. Unilateral Termination Right. Notwithstanding anything to the
----------------------------
contrary contained herein, in the event the sum of (i) all gross
revenues invoiced in calendar year 2001 for all Exclusive Contracts
and Prior Sales, plus (ii) all X-X Xxxxx Revenues invoiced in calendar
year 2001 for all Bundled Sales, is less than $5,000,000, Hachette
shall thereafter have the right, during the balance of the Initial
Term, to terminate this Agreement upon thirty (30) days prior written
notice to P2M.
24. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original and all of which together shall
constitute one and the same document. Facsimile signatures shall be
binding.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written:
PHASE2MEDIA, INC. HACHETTE FILIPACCHI MAGAZINES, INC.
By: /s/ Xxxxxxx Xxxxxxxxx By: /s/ Xxxxxx Xxxxx
---------------------------- ----------------------------------
Name: Xxxxxxx Xxxxxxxxx Name: Xxxxxx Xxxxx
-------------------------- ----------------------------------
Title: Chairman/CEO Title: VP New Media
------------------------- ----------------------------------
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