EXHIBIT 12
A REQUEST FOR CONFIDENTIAL TREATMENT HAS BEEN FILED WITH THE COMMISSION
WITH RESPECT TO PORTIONS OF THIS EXHIBIT AND SUCH PORTIONS HAVE THEREFORE BEEN
OMITTED, AS INDICATED BY A BRACKETED ASTERISK [*], AND FILED SEPERATELY WITH THE
COMMISSION.
PROMOTIONAL SERVICE AGREEMENT
THIS PROMOTIONAL SERVICE AGREEMENT (this "AGREEMENT") is entered into as of
June 17, 1998 by and between AMERICAN BROADCASTING COMPANIES, INC., a New York
corporation ("ABC") and INFOSEEK CORPORATION, a California corporation
("INFOSEEK"); provided that, this Agreement shall only become effective upon the
Effective Time, as defined in and pursuant to that certain Agreement and Plan of
Reorganization, of even date herewith, by and among Infoseek Corporation, a
California corporation, ICO Holding Company, a Delaware corporation, Starwave
Corporation, a Washington corporation, and Disney Enterprises, Inc., a Delaware
corporation and shall cease and be of no further force and effect in the event
that the Effective Time does not occur; and provided further that, each of the
parties hereto agrees not to terminate, amend or otherwise alter this Agreement,
or waive any of its rights hereunder, at any time prior to immediately following
the Effective Time.
RECITALS
1. Pursuant to a license agreement, dated as of the date hereof (the "License
Agreement"), Disney Enterprises, Inc. ("DEI") has agreed to license to Infoseek
certain names, brands, URLs, and associated intellectual property for the
development, production and operation by Infoseek of an internet portal service
named "Go Networks" or another name, including all brands, trademarks, names,
sections, sites, features and applications relating thereto (the "Portal
Products").
2. In connection with the development, production and operation by Infoseek of
the Portal Products, ABC has agreed to provide certain promotional services and
has agreed to cause certain of its affiliated entities to provide certain other
promotional services, on the terms and conditions set forth herein, and Infoseek
agrees to accept and pay for such promotional services, on the terms and
conditions set forth herein.
THEREFORE, for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, ABC and Infoseek hereby agree as follows:
1. AMOUNTS. Infoseek agrees to purchase from ABC, and ABC agrees to
provide to Infoseek, promotional services for the Portal Products in the amount
of $165,000,000, over the five year period after the Effective Date (as defined
in Section 4(a)); provided, however, that (i) Infoseek and ABC agree that under
no circumstances shall the amounts required to be paid by Infoseek for
promotional services in an Annual Period exceed the amount set forth in the
Annual Marketing Plan for such promotional services without Infoseek's consent,
and (ii) the amounts set forth for such promotional services in the Annual
Marketing Plan for the Annual Period shall be no less than $25,000,000 or
greater than $41,000,000, with the exact amount within such range at Infoseek's
option, notwithstanding DEI's tie-breaking control with respect to the Annual
Marketing Plan. For the avoidance of doubt and without limiting the foregoing,
with respect to any Annual Period, under no circumstances shall ABC xxxx
Infoseek in an amount that exceeds the amount set forth in the Annual Marketing
Plan for such Annual Period,
-1-
without Infoseek's prior written consent. Infoseek agrees to pay ABC for the
promotional services from traditional media sources on ABC's customary payment
terms for the applicable media source. With respect to non-traditional media
sources, the parties agree to match the required payment dates of the most
similar traditional media source. The Annual Marketing Plan shall have the
meaning set forth in and shall be prepared and approved in accordance with the
terms and conditions of the Product Management Agreement, dated as of the date
hereof between DEI and Infoseek (the "Product Management Agreement"). "Annual
Period" shall mean the twelve (12) month period mutually agreed upon and
included within the Annual Marketing Plan notwithstanding DEI's tie-breaking
control with respect to the Annual Marketing Plan, or if no such period is set
forth in the Annual Marketing Plan, the twelve (12) month period commencing upon
the first date promotional services are provided by ABC to Infoseek hereunder,
and each one year period thereafter. Notwithstanding the foregoing, the
promotional obligations of ABC are subject to the current agreement between ABC
and America Online, Inc., dated March 5, 1998, as amended, which shall not be
renewed.
2. MENU AND RATES. The promotional services will be derived from
traditionally available media sources and non-traditional media sources.
(a) TRADITIONAL MEDIA SOURCES. For purposes of this Agreement,
promotion from traditional media sources shall mean promotion that, from time to
time, may be commercially available for any particular media source, generally
on a rate card basis. Attachment A lists those traditional media sources
available as of the date of this Agreement for providing promotional services
hereunder. The estimated average representative rates (inclusive of standard
agency commissions, if applicable) for the traditional media sources are also
set forth on Attachment A. ABC acknowledges that it shall be responsible for the
payment of standard and customary agency commissions, if necessary. Infoseek
acknowledges that such rates are representational in nature and the exact rates
will depend on, with respect to any particular media source, availability,
market conditions, frequency of use and other factors. ABC agrees that the rates
charged to Infoseek for the use of any particular promotional service (e.g., a
specific prime time program or magazine issue) will reflect average rates for
the purchase of the same or a similar promotion or advertisement paid by a
similarly situated third party (i.e., a party that purchases the same or similar
promotions or advertisements as may be purchased by Infoseek, in approximately
the same amounts, and having a similar amount of overall spending on traditional
media sources and non-traditional media sources at ABC.)
(b) NON-TRADITIONAL MEDIA SOURCES. For purposes of this Agreement,
promotion from non-traditional media sources shall mean promotion that is not
commercially available at the date hereof for any particular media source. As a
general principle, the rates for promotion from non-traditional media sources
shall be based on the rates then available for related traditional media
sources, with such rates adjusted by the duration factor and the value factor,
if applicable, and the co-branding factor, if applicable, as set forth on
Attachment B. The duration factor is a comparison of the length of a particular
promotion from a non-traditional media source as compared with the length of a
corresponding promotion available from a traditional media source. Infoseek
acknowledges that the duration factor does not necessarily reflect the exact
timed amount of any particular promotion and that promotions for
-2-
any particular non-traditional media source may be of longer or shorter duration
yet will retain the same duration factor. [*] On the six month anniversary of
the Effective Date and each year thereafter, Infoseek shall be entitled to
request a review of the duration factors for any particular category of
promotion. ABC agrees to act as promptly as possible to complete such review,
with assistance from Infoseek. ABC and Infoseek agree that if, as a result of
such review, the parties reasonably determine that the actual amount of
promotional time for a particular category is less or greater than reflected by
the duration factor for that category of promotion, the parties will adjust that
duration factor appropriately. The duration factor review shall only be
available for request by Infoseek one time in any twelve month period. The value
factor is a measure of the relative value of a promotion from any specific non-
traditional media source (e.g., a specific prime time program) as compared to a
corresponding promotion available from the same or similar traditional media
source (i.e., the same program or a program with an equivalent rate card). With
respect to all promotions for the Portal Products that also promote an ABC or
Disney-branded online service (e.g., XXXX.xxx, ABC Xxxx.xxx. XXX.xxx,
Xxxxxx.xxx), as set forth on Attachment B, a co-branding factor shall apply
(after application of the duration factor and the value factor). ABC agrees to
co-brand all promotions for XXXX.xxx and ABC Xxxx.xxx in non-traditional media
sources with promotions for the Portal Products; provided that in-program
mentions which, for practical or creative reasons, in ABC's good faith
judgement, preclude any such mentions are not required to be co-branded and
further provided that inadvertent failures to co-brand shall not be a breach of
this provision. Attachment C establishes a priority list for promotions
available from non-traditional media sources, as selected by ABC and approved by
Infoseek. From time to time during the term of this Agreement, ABC may, in its
discretion, amend the first column of Attachment B to include additional
categories (i.e., new promotional sources) or temporarily restrict access to a
particular category due to unavailability, remove any particular category due to
the sale or disposition of the underlying media assets or the end of a "one-
time" promotional opportunity (e.g., an event at Disney World). Any other
amendments to Attachment B (i.e., to the value factors or duration factors) or
to Attachment C shall require the mutual agreement of ABC and Infoseek.
(c) MIX. Infoseek agrees to purchase, and ABC agrees to provide, (i)
up to twenty five percent (25%) (with the percentage at Infoseek's option) of
the annual aggregate amount for promotional services from promotion made
available by ABC from traditional media sources and (ii) at least seventy-five
percent (75%) of the annual aggregate amount for promotional services from
promotion made available by ABC from non-traditional media sources. With
respect to the promotions made available from non-traditional media sources,
Infoseek and ABC agree that at least seventy percent (70%) of such promotions
shall be those identified as an "A" priority on Attachment C, and that no more
than fifteen percent (15%) of such promotions shall be those identified as a "C"
priority on Attachment C.
-3-
(d) CREATIVE CONTROLS. Subject to the approvals of the Advisory
Committee, Infoseek shall be entitled to creative control and approval over all
promotional materials produced for traditional media sources (which materials
shall be prepared at Infoseek's cost). With respect to promotional materials
produced for non-traditional media sources, Infoseek may develop suggested tag
lines, artwork and logo templates for such sources and ABC shall consider such
tag lines, artwork, and logo templates in good faith; provided, that Infoseek
acknowledges and agrees that the use of any such suggested tag lines and artwork
will remain at the discretion of the business unit controlling the applicable
non-traditional media source and that such business unit may utilize different
materials in providing promotional services from non-traditional media sources.
(e) BROADBAND. To the extent that ABC offers any promotional services
during the term of this Agreement to third parties for use in any Narrowband
service or program owned or controlled by ABC that is made available for
transmission at data rates that would enable real time, full screen, full motion
video at equal to or better than NTSC resolution, ABC agrees to use reasonable
diligent efforts to provide Infoseek with opportunities to purchase both
commercially available and non-commercially available promotion on any such
service or program. In such event, ABC will amend Attachments A, B, and C as
appropriate to reflect the provision by ABC, and the opportunity to purchase by
Infoseek, of traditional and non-traditional promotional services from any such
service or program. For purposes of this Agreement, "Narrowband" means
programming that does not require transmission at data rates which would enable
real time, full screen, full motion video at equal to or better than NTSC
resolution.
(f) PERIODIC REPORTS. ABC will deliver to Infoseek, within thirty
days after the end of each month of the term of this Agreement, reports setting
forth the amounts and sources of promotional services from traditional media
sources delivered during such month. ABC will deliver to Infoseek, within
ninety days after the end of each month of the term of this Agreement, reports
setting forth the amounts and sources of promotional services from non-
traditional media sources delivered during such month.
(g) AUDIT RIGHTS. ABC agrees to retain, for three (3) years after the
term, accurate records of all transactions relating to this Agreement. No more
than one time during any twelve month period during the term of this Agreement
and for a period of three years thereafter, Infoseek shall have the right,
during ABC's normal business hours, upon fifteen business days' prior notice to
ABC, to have an independent auditor mutually agreed upon by the parties examine
and make extracts of all records of ABC that specifically relate to the
promotional services provided to Infoseek hereunder, subject to reasonable
confidentiality protections with respect to information disclosed by ABC,
provided, that ABC shall only be required to provide copies of the actual
audio/video promotion to the extent available.
3. NON-PORTAL PRODUCTS PROMOTION. Promotional services provided by ABC
that reference ESPN Sportszone, ABC Xxxx.xxx or any other ABC-branded service or
site which promotion does not mention the Portal Products shall not be charged
to Infoseek and shall not
-4-
be included in determining the mix of promotional services provided hereunder
pursuant to Section 2(c).
4. TERM AND TERMINATION
(a) TERM. The term of this Agreement shall commence as of the later
of (i) the Effective Time and (ii) the date of the launch of the Portal
Products, as mutually agreed between the parties (such date being the "Effective
Date") and shall continue until the earlier of (i) the fifth anniversary of the
Effective Date and (ii) the date of termination of the License Agreement. In
the event that this Agreement has not been terminated prior to the fifth
anniversary of the Effective Date, Infoseek shall be entitled to renew this
Agreement on the terms stated herein; provided, that ABC shall not be required
to co-brand promotions for ABC Xxxx.xxx and XXXX.xxx with promotions for the
Portal Products during the renewal term.
(b) TERMINATION. Without prejudice to any other rights or remedies
available to the parties, ABC and Infoseek shall each have the right, in its
sole discretion, to terminate this Agreement upon written notice to the other in
the event that the other party makes any assignment for the benefit of creditors
or files a petition in bankruptcy (provided, that with respect to ABC's ability
to terminate in the event that Infoseek files a petition in bankruptcy, such
petition shall have been approved by a decision of the majority of Infoseek's
Disinterested Directors (as defined in that certain Governance Agreement by and
between Infoseek and Disney Enterprises, Inc.) or is adjudged bankrupt or is
placed in the hands of a receiver or if the equivalent of any of the proceedings
or acts referred to in this clause, though known and/or designated by some other
name or term, occurs.
(c) INJUNCTIVE RELIEF. Each party acknowledges and agrees that the
other party will be irreparably harmed by any material breach of this Agreement
by it. Therefore, each party agrees that in the event that it breaches any of
its obligations hereunder, the other parties in addition to all other remedies
available to it under this Agreement, or at law or in equity, shall be entitled
to all forms of injunctive relief including decrees of specific performance,
without showing or proving that it sustained any actual damages and without
posting bond.
5. GENERAL PROVISIONS.
(a) NOTICES. All notices which either party is required or may desire
to serve upon another party shall be in writing and addressed as follows:
-5-
(i) if to ABC :
American Broadcasting Companies, Inc.
c/o The Xxxx Disney Company
000 X. Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Buena Vista Internet Group
000 X. Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) if to Infoseek:
Infoseek Corporation
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, President
Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any such notice may be served personally or by mail (postage prepaid),
facsimile (provided oral confirmation of receipt is immediately obtained and a
hard copy is concurrently sent by internationally commercially recognized
overnight delivery service), internationally commercially recognized overnight
delivery service (such as Federal Express or D.H.L.) or courier. Notice shall
be deemed served upon personal delivery or upon actual receipt. Any
-6-
party may change the address to which notices are to be delivered by written
notice to the other parties served as provided in this Section 5(b).
(b) ENTIRE AGREEMENT. This Agreement, together with the Attachments
hereto and hereby incorporated herein by reference, constitutes the complete,
final and exclusive understanding and agreement between the parties with respect
to the transactions contemplated, and supersedes any and all prior or
contemporaneous oral or written representation, understanding, agreement or
communication between the parties concerning the subject matter hereof.
(c) AMENDMENTS. All amendments or modifications of this Agreement
shall be binding upon the parties so long as the same shall be in writing and
executed by each of the parties hereto.
(d) WAIVERS. No waiver of any provision of this Agreement or any
rights or obligations of any party hereunder shall be effective, except pursuant
to a written instrument signed by the party waiving compliance, and any such
waiver shall be effective only in the specific instance and for the specific
purpose stated in such writing.
(e) NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended or shall be construed to give any person, other than the parties
hereto, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
(f) ASSIGNMENT. No party shall, directly or indirectly, assign its
obligations hereunder to any third party, except that either party may assign
this Agreement to its parent corporation or any entity of which its parent owns
at least 80% of the voting equity.
(g) HEADINGS. The section and subsection headings and captions
appearing in this Agreement are inserted only as a matter of convenience and
shall not be given any legal effect.
(h) SEVERABILITY. If any restriction, covenant or provision of this
Agreement shall be adjudged by a court of competent jurisdiction to be void as
going beyond what is reasonable in all the circumstances for the protection of
the interests of the party seeking to enforce such restriction, covenant or
provision, such restriction, covenant or provision shall apply with such
modifications as may be necessary to make it valid and effective. In the event
that any provision of this Agreement should be found by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
shall not in any way be affected or impaired thereby.
(i) GOVERNING LAW. This Agreement shall be governed by the laws of
the State of California without giving effect to principles of conflicts of law.
Any action arising out of or relating to this Agreement shall be filed only in
the courts of the State of California for the Country of Los Angeles, or the
United States District Court for the Central District of
-7-
California. The parties hereby consent and submit to the personal jurisdiction
of such courts for the purposes of litigating any such action.
IN WITNESS WHEREOF, the duly authorized representatives of each party have
executed this Agreement as of the day and year first written above.
AMERICAN BROADCASTING COMPANIES, INFOSEEK CORPORATION
INC.
By: /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxx
------------------------------- -----------------------------
Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxx
Title: Vice President Title: President and CEO
-8-
