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EXHIBIT 10.25
ADVERTISING, PROMOTION AND MARKETING AGREEMENT
THIS ADVERTISING, PROMOTION AND MARKETING AGREEMENT ("Agreement") is
made and entered into as of July 10, 1999 ("Effective Date"), by and between
XX0.XXX, INC., a Delaware corporation ("XX0.xxx"), having an address at 00000
Xxxxxxx Xxxxxx Xx., Xxxxxxxx #00, Xxx Xxxxx, XX 00000, and GROUPE ARNAULT, a
French corporation ("Buyer"). XX0.xxx and Buyer may be referred to individually
as a "Party" and collectively as the "Parties." XX0.xxx owns and operates the
website located at xxx.xx0.xxx (the "Website").
1. PURPOSE OF THIS AGREEMENT. This Agreement sets forth the terms
and conditions under which (i) an affiliate of Buyer will purchase $150 million
of advertising, promotion and marketing services to be provided by XX0.xxx for
use primarily with brands associated with Buyer's affiliate LVMH Moet Xxxxxxxx
Xxxxx Vuitton ("LVMH"); and (ii) Buyer shall have the exclusive right, for a
period of ninety (90) days following the effective date of the IPO, to negotiate
the terms of a joint venture between Buyer (or another entity affiliated with
Buyer) and XX0.xxx covering the territories of Europe and Asia. Concurrently
with the execution of this Agreement, an affiliate of Buyer will enter into an
IPO Equity Offer Agreement whereby XX0.xxx will offer such affiliate an
opportunity to purchase registered shares of common stock of XX0.xxx directly
from XX0.xxx in connection with XX0.xxx's initial public offering (the "IPO").
2. ADVERTISING, PROMOTION AND MARKETING COMMITMENT. Buyer agrees to
purchase from XX0.xxx various global advertising, promotional and marketing
items and services, in the amounts and in the manner set forth in this Section
2. Such items and services shall include, but not be limited to, banner ads,
portals, graphical buttons, e-mail marketing sponsorships, event and tour
sponsorships, CD sampler sponsorships, webcast sponsorships, co-branded media
programs, artist acquisition programs, artist and consumer education programs,
other sponsorships and on- and off-line promotions and related services
(collectively, "Media"). Subject to the payment conditions in Section 2.3
herein, Buyer further agrees that it shall purchase, on a prepaid basis for each
quarter during the term of this Agreement, no less than the full dollar amount
of Media as set forth on Exhibit A attached hereto. Should Buyer not fully use
any amount of Media that it has paid for in any given quarterly period (except
as provided in Section 9 herein), all of Buyer's rights to such Media shall
terminate, all payment obligations of Buyer shall remain in effect and any
advance payments for such quarter shall remain the sole property of XX0.xxx with
no further obligations whatsoever with respect to the Media scheduled for such
quarter.
2.1 INITIAL QUARTER. The initial quarterly period under this
Agreement shall commence on October 1, 1999 and end on December 31, 1999.
2.2 QUARTERLY MEDIA ALLOCATION; DEFAULT ALLOCATION. No later
than two weeks prior to the beginning of each quarter, Buyer and XX0.xxx shall
meet to discuss the manner in which the Media to be purchased during such
quarter shall be allocated. XX0.xxx and Buyer shall use their best efforts to
mutually agree upon the specific allocation of such Media, and shall set forth
such allocation in a written document signed by both parties no later than the
first day of each quarter. Notwithstanding the foregoing, in the event XX0.xxx
and
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Buyer are unable to mutually agree upon the specific allocation of any quarter's
Media, such quarter's Media shall be allocated in the same manner as in the
prior quarter unless a particular type of Media is not available in such
quarter, in which event the amount attributable to that particular Media shall
be allocated proportionately among the other categories in the prior quarter.
XX0.xxx and Buyer agree to negotiate in good faith with respect to the type,
quantity, frequency, placement and price of the Media to be purchased during
each quarter. Notwithstanding anything in this Agreement to the contrary, Buyer
shall be required to pay, for any particular form of Media to be delivered in
any quarter, a rate equal to the average price paid to XX0.xxx by its three
largest purchasers (or, if there are less than three purchasers during the
period, such lesser number of purchasers) for similar types of such Media in the
immediately preceding quarter, provided, that in no event shall such rate exceed
XX0.xxx's standard published pricing rate for such type of Media. If there were
no purchasers of a particular type of Media in the immediately preceding
quarter, Buyer and XX0.xxx shall negotiate in good faith to determine the
appropriate rate for such type of Media.
2.3 PAYMENT. Buyer shall prepay to XX0.xxx in immediately
available, non-refundable U.S. funds $45 million no later than July 13, 1999.
XX0.xxx may terminate all arrangements pursuant to this Agreement and the IPO
Equity Offer Agreement between XX0.xxx and Arkaro S.A. of even date herewith
(the "IPO Equity Offer Agreement") if it has not received such $45 million by
July 15, 1999, in which event no party shall have any obligation under this
Agreement or the IPO Equity Offer Agreement. Beginning with the first quarter of
2001 and for the remainder of this Agreement, on the first day of the first
month for each quarter Buyer shall pay XX0.xxx scheduled payments in the exact
amount listed on Exhibit A attached hereto by draw-downs against the letter of
credit contemplated by Section 2.5. Buyer shall make all such prepayments
referred to herein to XX0.xxx in the form of (i) a wire transfer to MP3's
account at Imperial Bank, 000 "X" Xxxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000,
Routing# 000000000, Account# 0000-000-000, or any other account previously
approved in writing by XX0.xxx, (ii) actual delivery of a cashier's check to
XX0.xxx, or (iii) as otherwise agreed to in writing by XX0.xxx.
2.4 LATE PAYMENTS; TAXES. Any late payments under this
Agreement will be assessed a service fee of one and one-half percent (1.5%) per
month, to the extent allowed by law. All fees owed by Buyer to XX0.xxx are
exclusive of, and Buyer shall pay, all sales, use, excise and other taxes which
may be levied upon either party in connection with this Agreement, except for
taxes based on XX0.xxx's net income.
2.5 LETTER OF CREDIT. No later than July 16, 1999, in order
to secure Buyer's remaining payment obligations following receipt of the payment
contemplated by Section 2.3(i), Buyer shall cause to be delivered to XX0.xxx an
irrevocable letter of credit in the face amount of $105 million issued by a
financial institution acceptable to XX0.xxx in its sole discretion and naming
XX0.xxx as beneficiary thereunder. Such letter of credit shall be in form and
substance satisfactory to XX0.xxx in its reasonable discretion and shall provide
for the drawing of funds upon receipt of a certificate from an officer of
XX0.xxx.
3. LVMH AS PRINCIPAL ADVERTISER. Buyer agrees that the Media
purchased under this Agreement is expected and intended to be primarily for use
with brands affiliated with LVMH. Buyer may request that Media purchased be used
for brands of a similar quality of other
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entities in which Buyer affiliates have investments, subject to XX0.xxx's
approval of any other such brands which approval shall not be unreasonably
withheld.
4. DELIVERY OF ADVERTISER CONTENT. Buyer will deliver to XX0.xxx
such materials, logos and designs as may be reasonably requested by XX0.xxx in
connection with the performance of XX0.xxx's obligations under this Agreement.
Any materials so delivered are hereinafter referred to as "Advertiser Content."
In the event that any Advertiser Content as delivered does not conform to the
technical specifications supplied by XX0.xxx, or any Advertiser Content does not
arrive when specified by XX0.xxx in order to meet the agreed-upon start date for
delivery of the related Media under this Agreement, then XX0.xxx may, in its
discretion: (a) refuse such Advertiser Content and, if available, substitute any
prior Advertiser Content in XX0.xxx's possession or (b) delay delivery of the
related Media until Buyer shall have delivered a corrected copy of such
Advertiser Content. At all times, XX0.xxx will use its best efforts to emulate
and display Advertiser Content with a similar quality of presentation and an
overall look-and-feel of the LVMH brands (or other mutually agreed-upon
providers' brands) to which the Advertiser Content relates.
5. LICENSE.
5.1 ADVERTISER CONTENT LICENSE. XX0.xxx's obligations to
deliver Media under this Agreement is conditioned upon LVMH (or any other
mutually agreed-upon provider of Advertiser Content) granting to XX0.xxx a
non-exclusive, royalty-free, worldwide license to use, reproduce, distribute,
create derivative works of, publicly perform, publicly display and digitally
perform the Advertiser Content on or in conjunction with the Website and the
Media delivered hereunder. Title to and ownership of all intellectual property
rights of the Advertiser Content shall remain with LVMH (or such other mutually
agreed-upon provider of Advertiser Content) or its third party licensors.
XX0.xxx hereby confirms that the foregoing license shall be used solely in
connection with the production and delivery of Media under this Agreement.
5.2 TRADEMARKS. None of the Parties hereto may use any other
party's trademarks, service marks, trade names, logos, or other commercial or
product designations (collectively, "Marks") for any purpose whatsoever without
the prior written consent of the other Party. Notwithstanding the foregoing,
XX0.xxx's obligation to deliver Media under this Agreement is conditioned upon
LVMH (or such other mutually agreed-upon provider of Advertiser Content)
granting to XX0.xxx a non-exclusive, nontransferable, royalty-free, worldwide
license to use LVMH's (or such other mutually agreed upon provider of Advertiser
Content's) Marks on the Website for the purposes of marketing, promotion, and
content directories or indexes, and in electronic or printed advertising,
publicity, press releases, newsletters and mailings about the Website or
XX0.xxx. Such use of LVMH's marks shall be subject to the prior approval of
LVMH, which approval shall not be unreasonably withheld.
6. REPORTS. Within sixty (60) days of the end of each quarter,
XX0.xxx will provide Buyer standard XX0.xxx reports summarizing the quantity,
frequency, placement and distribution of the Media delivered during the
preceding quarter. Buyer acknowledges and agrees that any statistics or other
information provided to Buyer pursuant to this Section 5 shall be deemed
"Confidential Information" of XX0.xxx. Buyer agrees to hold such Confidential
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Information in strict confidence and not to disclose such Confidential
Information to any third parties.
7. RECORDS AND AUDITS. XX0.xxx shall keep complete and accurate
records pertaining to the pricing and sale or other disposition of the Media in
sufficient detail to permit Buyer to confirm the accuracy of all purchases made
hereunder. Buyer shall have the right to cause an independent, certified public
accountant reasonably acceptable to XX0.xxx to audit such records to confirm the
determination of pricing hereunder for the preceding year. Such audits may be
exercised during normal business hours upon at least 30 working days' prior
written notice to XX0.xxx. Audits may be conducted no more than once in any
calendar quarter. Buyer shall bear the full cost of any such audits.
8. REPRESENTATIONS AND WARRANTIES.
8.1 ADVERTISER MATERIAL. Buyer shall be solely responsible
for any legal liability arising out of or relating to the composition of the
Advertiser Content and any material to which users can link through the
Advertiser Content (collectively, the "Advertiser Material"). Buyer represents
and warrants that the Advertiser Material does not and will not: (a) infringe on
any third party's copyright, patent, trademark, trade secret or other
proprietary rights or right of publicity or privacy; (b) violate any law,
statute, ordinance or regulation, including without limitation the laws and
regulations governing export control, unfair competition, antidiscrimination or
false advertising; (c) be defamatory or trade libelous; (d) be defamatory,
harmful to minors, obscene or child pornographic; (e) be materially false,
misleading or inaccurate or cannot be promptly fulfilled, or (f) contain
viruses, trojan horses, worms, time bombs, cancelbots or other similar harmful
or deleterious programming routines. Buyer agrees to defend, indemnify and hold
harmless XX0.xxx and its directors, officers, agents and employees for any and
all losses, costs, liabilities or expenses (including without limitation
reasonable attorneys' and expert witnesses' fees) incurred or arising from: (a)
any breach of the foregoing representations or warranties; (b) any claim arising
from the sale of license of Buyer's or LVMH's (or such other mutually
agreed-upon provider's) goods or services; or (c) any other act, omission or
representation by Buyer. XX0.xxx may participate in the defense at its option
and expense.
8.2 USE OF ADVERTISER CONTENT. XX0.xxx represents and
warrants that it shall not place Advertiser Content with other content that: (a)
infringes on any third party's copyright, patent, trademark, trade secret or
other proprietary rights or right of publicity or privacy; (b) violates any law,
statute, ordinance or regulation, including without limitation the laws and
regulations governing export control, unfair competition, antidiscrimination or
false advertising; (c) is defamatory or trade libelous; (d) is defamatory,
harmful to minors, obscene or child pornographic; (e) is materially false,
misleading or inaccurate or cannot be promptly fulfilled, or (f) contains
viruses, trojan horses, worms, time bombs, cancelbots or other similar harmful
or deleterious programming routines. XX0.xxx agrees to defend, indemnify and
hold harmless Buyer and its directors, officers, agents and employees for any
and all losses, costs, liabilities or expenses (including without limitation
reasonable attorneys' and expert witnesses' fees) incurred or arising from any
breach of the foregoing representations or warranties.
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8.3 DUE AUTHORIZATION. Each Party has all necessary
corporate power and authority under all applicable provisions of law to execute
and deliver this Agreement and to carry out its provisions. All corporate action
on each Party's part required for the lawful execution and delivery of this
Agreement and any related agreements has been effectively taken. Upon its
execution and delivery, this Agreement will be a valid and binding obligation of
each Party, enforceable in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights and (b) general
principles of equity that restrict the availability of equitable remedies.
9. DISCLAIMER OF WARRANTIES; LIMITED REMEDY. Except as set forth in
Section 8.2, XX0.xxx provides the Website and all services performed hereunder
"AS IS" and without any warranty of any kind. EXCEPT AS SET FORTH IN SECTION
8.2, XX0.XXX MAKES NO REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND,
EITHER EXPRESS OR IMPLIED WITH RESPECT TO THE MEDIA PROVIDED, THE ADVERTISER
CONTENT OR THE FUNCTIONALITY, PERFORMANCE OR RESULTS OF USE THEREOF, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR OTHER WARRANTIES ARISING BY USAGE OF TRADE, COURSE OF DEALING OR
COURSE OF PERFORMANCE. XX0.xxx does not guarantee continuous or uninterrupted
display or distribution of any Advertiser Content. In the event of interruption
of display or distribution of the Advertiser Content, XX0.xxx's sole obligation
shall be to restore service as soon as commercially practicable. If XX0.xxx does
not deliver a specific Media that it had previously agreed to deliver within a
given quarter, Buyer's sole remedy shall be to receive a refund of an amount
equal to the dollar amount allocated for that specific Media in such quarter;
provided, however, that if such failure to deliver specific Media is due to an
interruption in service on the Website, in lieu of such a refund, XX0.xxx agrees
to deliver the specific Media as soon as practicable in the following quarter.
10. CONSEQUENTIAL DAMAGES DISCLAIMER. IN NO EVENT SHALL XX0.XXX BE
LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING
BUT NOT LIMITED TO SUCH DAMAGES ARISING FROM BREACH OF CONTRACT OR WARRANTY OR
FROM NEGLIGENCE OR STRICT LIABILITY), OR FOR INTERRUPTED COMMUNICATIONS, LOSS OF
USE, LOST BUSINESS, LOST DATA OR LOST PROFITS, INCOME OR GOODWILL, THE REJECTION
OR REMOVAL OF ANY Advertiser Content, OR ANY DELAY IN DISPLAYING OR THE FAILURE
TO DISPLAY ANY LVMH CONTENT, ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
11. LIMITATION OF LIABILITY. NOTWITHSTANDING ANY OTHER PROVISIONS OF
THIS AGREEMENT, XX0.XXX'S AGGREGATE LIABILITY TO BUYER AND/OR ANY THIRD PARTY
UNDER ANY CLAIMS RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL NOT EXCEED
AN AMOUNT GREATER THAN THE AMOUNTS RECEIVED UNDER THIS AGREEMENT DURING THE
TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING SUCH CLAIM.
12. TERM AND TERMINATION.
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12.1 TERM OF AGREEMENT. The term of this Agreement shall
commence on the Effective Date and shall remain in full force and effect until
June 30, 2002.
12.2 TERMINATION FOR DEFAULT. Buyer or XX0.xxx may terminate
this Agreement:
(a) Except as set forth in Section 9, immediately
upon written notice if the other Party breaches a material term or condition of
the Agreement and does not cure such breach (or commence a cure in a manner
reasonably satisfactory to the non-breaching party) within ninety (90) days (or
ten (10) days in the event of nonpayment of money) after written notice of such
breach; or
(b) Immediately upon written notice if the other
ceases to do business, or otherwise terminates its business operations, except
as a result of a permitted assignment; or
(c) Immediately upon written notice if the other
shall fail to promptly secure or renew any license, registration, permit,
authorization or approval for the conduct of its business in the manner
contemplated by this Agreement or if any such license, registration, permit,
authorization or approval is revoked or suspended.
12.3 RIGHTS AND OBLIGATIONS UPON TERMINATION. In the event
this Agreement expires or is terminate: (a) each Party shall cooperate with the
others in order to effect an orderly termination of the relationship created by
this Agreement, including each Party's prompt return of any Confidential
Information. Termination of this Agreement shall not limit any Party from
pursuing other remedies available to it, including injunctive relief. The
parties' rights and obligation under Sections 8, 9, 10, 11 and 12, and the
provisions regarding "Confidential Information" under Section 6, shall survive
termination or expiration of this Agreement.
13. EXCLUSIVE RIGHT OF FIRST NEGOTIATION FOR JOINT VENTURE
AGREEMENT. Buyer shall have the exclusive right to negotiate the terms of a
joint venture between Buyer (or such other entity affiliated with Buyer) and
XX0.xxx covering the territories of Europe and Asia (the "Joint Venture
Agreement"). Buyer and XX0.xxx shall negotiate in good faith for a period of
ninety (90) days following the effective date of XX0.xxx's IPO to enter into the
definitive Joint Venture Agreement on mutually-acceptable terms and to establish
the joint venture. If Buyer and XX0.xxx do not enter into a definitive Joint
Venture Agreement within ninety (90) days of the effective date of the IPO, such
right shall terminate and each party shall have no further obligations of any
kind or nature to each other with respect to the joint venture. The Parties
hereto agree that the failure to enter into a joint venture, for any reason or
no reason at all, shall not constitute a breach of this Agreement. Buyer further
agrees that it would have entered into this Agreement and made the specific
commitments in Section 2 herein irrespective of whether or not the joint venture
was established.
14. GENERAL PROVISIONS.
14.1 ENTIRE AGREEMENT. This Agreement, together with any
Exhibits attached hereto, represents the entire agreement between the Parties
with respect to the subject matter hereof and thereof and shall supersede all
prior agreements and communications of the Parties, oral or written.
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14.2 AMENDMENT AND WAIVER. No amendment to, or waiver of, any
provision of this Agreement shall be effective unless in writing and signed by
all Parties hereto. The waiver by any party of any breach or default shall not
constitute a waiver of any different or subsequent breach or default.
14.3 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California without
giving effect to principles of conflicts of laws. Buyer agrees to submit to
jurisdiction in California and further agrees that any cause of action arising
under this Agreement must be brought exclusively in a court in San Diego County,
California.
14.4 SUCCESSORS AND ASSIGNS. No Party shall assign its rights
or obligations under this Agreement without the prior written consent of the
other Party, which shall not unreasonably be withheld or delayed.
Notwithstanding the foregoing, each Party may assign this Agreement to an entity
who acquires substantially all of the stock or assets of a Party to this
Agreement; provided that consent will be required in the event that the
non-assigning Party reasonably determines that the assignee will not have
sufficient capital or assets to perform its obligations hereunder, or that the
assignee is a direct competitor of the non-assigning party. All terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted transferees, successors and
assigns.
14.5 FORCE MAJEURE. No Party shall be liable for failure to
perform or delay in performing any obligation (other than the payment of money)
under this Agreement if such failure or delay is due to fire, flood, earthquake,
strike, war (declared or undeclared), embargo, blockade, legal prohibition,
governmental action, riot, insurrection, damage, destruction or any other
similar cause beyond the control of such party.
14.6 NOTICES. All notices, requests and other communications
called for by this agreement shall be deemed to have been given immediately if
made by telecopy or electronic mail (confirmed by concurrent written notice sent
via overnight courier for delivery by the next business day), if to XX0.xxx at
00000 Xxxxxxx Xxxxxx Xx., #00, Xxx Xxxxx, XX 00000, attention President (e-mail:
xxxxx@xx0.xxx), with a copy to its Director of Legal Affairs (e-mail:
xxxxx@xx0.xxx), and if to Buyer at the physical and electronic mail addresses
set forth on the signature page of this Agreement, or to such other addresses as
each Party shall specify to the other Party. Notice by any other means shall be
deemed made when actually received by the Party to which notice is provided.
14.7 SEVERABILITY. If any provision of this Agreement is held
to be invalid, illegal or unenforceable for any reason, such invalidity,
illegality or unenforceability shall not effect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
14.8 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which taken together shall constitute a single
instrument. Execution and delivery of this Agreement may be evidenced by
facsimile transmission.
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14.9 AUTHORITY. Each of the Parties represents and warrants
that the negotiation and entry of this Agreement will not violate, conflict
with, interfere with, result in a breach of, or constitute a default under any
other agreement to which they are a party.
14.10 ATTORNEYS FEES. The prevailing party in any action to
enforce this Agreement shall be entitled to reimbursement of its expenses,
including reasonable attorneys' fees.
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The Parties have caused this Agreement to be duly executed as of the Effective
Date.
XX0.XXX, INC. GROUPE ARNAULT
By:__________________________________________ By:____________________________________________
Name: Xxxxx Xxxxxxxx Name: Xxxx-Xxxxxxx Xxxxxx
Title: President and Chief Operating Officer Title: Vice President Investments and
Information Technology
Date: July 10, 1999 Date: July 10, 1999
Address: 00000 Xxxxxxx Xxxxxx Xxxxx Address: 00 Xxx. Xxxxx
Xxxxxxxx #00 Xxxxx 00000
Xxx Xxxxx, XX 00000 France
e-mail: xxxxx@xx0.xxx e-mail: xx.xxxxxx@xxxx.xx
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EXHIBIT A
MEDIA PURCHASE SCHEDULE
QUARTERLY PAYMENT SCHEDULE: PURCHASE AMOUNT:
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1999 Q4 $ 5,000,000*
2000 Q1 $ 6,500,000*
Q2 $ 8,500,000*
Q3 $11,000,000*
Q4 $14,000,000*
2001 Q1 $15,000,000
Q2 $17,000,000
Q3 $18,500,000
Q4 $19,500,000
2002 Q1 $17,500,000
Q2 $17,500,000
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TOTAL: $150,000,000
* -- Amounts to be prepaid no later than July 13, 1999.
