Promotional Services and Customer Database Services and License Agreement - MTV Networks and Blockbuster Inc.
Form
of
PROMOTIONAL SERVICES AND
CUSTOMER DATABASE SERVICES AND LICENSE
AGREEMENT
between
MTV NETWORKS, a division of
VIACOM INTERNATIONAL INC.
and
BLOCKBUSTER INC.
dated as of
_______, 1999
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TABLE OF CONTENTS
SECTION PAGE
SECTION 1. DEFINITIONS........................................................1
SECTION 2. TERM...............................................................1
SECTION 3. PROMOTIONAL SERVICES...............................................1
SECTION 4. LICENSE............................................................2
SECTION 5. CONSIDERATION......................................................3
SECTION 6. MTV OPTION.........................................................3
SECTION 7. TERMINATION........................................................3
SECTION 8. NONEXCLUSIVITY.....................................................4
SECTION 9. NO WARRANTY........................................................4
SECTION 10. OWNERSHIP OF CUSTOMER DATABASE.....................................4
SECTION 11. CONFIDENTIALITY....................................................5
SECTION 12. INJUNCTIVE RELIEF..................................................5
SECTION 13. INDEMNIFICATION....................................................5
SECTION 14. MISCELLANEOUS......................................................6
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Agreement dated as of _______, 1999 between MTV Networks, a division of
Viacom International Inc., a Delaware corporation ("MTV"), and Blockbuster Inc.,
a Delaware corporation ("BLOCKBUSTER").
W I T N E S S E T H:
WHEREAS, Blockbuster desires to grant to MTV a nonexclusive license to
use certain Blockbuster proprietary information, specifically (i) customer names
and addresses within the United States and (ii) demographic data within the
United States unrelated to customer names and addresses (collectively the
"Customer Database"); and
WHEREAS, Blockbuster desires to provide certain promotional services to
MTV;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. DEFINITIONS. Capitalized terms used and not otherwise
defined herein have the meanings set forth in the Initial Public Offering and
Split-Off Agreement dated the date hereof among Viacom Inc. ("VIACOM"), Viacom
International Inc. and Blockbuster Inc.
SECTION 2. TERM. The term of this Agreement shall commence on the date
hereof and end on June 30, 2000, unless earlier terminated pursuant to Section 7
or extended pursuant to Section 6.
SECTION 3. PROMOTIONAL SERVICES. During the Term, Blockbuster shall
provide MTV with the following promotional services (the "PROMOTIONAL
SERVICES"):
(a) run a thirty-second advertisement furnished by MTV on its
BLOCKBUSTER ENTERTAINMENT NETWORK(R) in all Blockbuster corporate-owned
stores in the United States (the "BLOCKBUSTER STORES"). Blockbuster
shall run such MTV advertisement every fifteen minutes during the
operating hours of the Blockbuster Stores in each cycle included in the
Term.
(b) feature one advertisement banner furnished by MTV and provide a
direct link with an icon to an MTV web site designated by MTV from the
home page of Blockbuster's primary web site, www.blockbuster.com, on
the internet;
(c) run one one-half panel advertisement furnished by MTV in a
Blockbuster direct mail campaign that is distributed to not less than 6
million households during a month mutually agreed upon by Blockbuster
and MTV; and
(d) run one full page advertisement furnished by MTV in the BLOCKBUSTER
Rewards(TM) newsletter that is distributed to the members of
BLOCKBUSTER Rewards(TM) during a month mutually agreed upon by MTV and
Blockbuster.
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SECTION 4. LICENSE.
(a) Blockbuster grants to MTV a nonexclusive license during the Term in
the United States (the "LICENSE") to use internally the Customer
Database as updated by Blockbuster or its duly authorized agent from
time to time, including without limitation, any modifications,
additions or deletions made thereto by Blockbuster or MTV, subject to
any limitations of use contained in any agreement between Blockbuster
and a third party, of which reasonable notice is provided to MTV.
(b) MTV may use the Customer Database only for the purposes of
conducting Blockbuster's current and future business and sublicensing
the Customer Database for internal use only to any Affiliate of Viacom;
PROVIDED that any such use by MTV or an Affiliate of Viacom shall
comply with any applicable license, law or regulation of any
governmental authority, including without limitation, the Video Privacy
Protection Act of 1988, as amended, or any state laws governing video
privacy.
(c) Blockbuster or its duly authorized agent shall make the Customer
Database available to MTV or an Affiliate of Viacom, as the case may
be, at such times, in such format and updated to such times as MTV or
an Affiliate of Viacom, as the case may be, may request, except as may
be limited by law or by instruction of any customer and as may be
reasonably delayed due to technological difficulties or other time
constraints that occur in the ordinary course of business; PROVIDED
that Blockbuster or its duly authorized agent shall make available to
MTV or an Affiliate of Viacom, as the case may be, any portion of such
information that is permitted to be made available. MTV acknowledges
that Blockbuster or its authorized agent shall make available the
information contained in the Customer Database, and not any physical
form of the Customer Database containing such information. MTV shall
pay to Blockbuster, upon 30 days written notice, any reasonable and
incremental out-of-pocket costs incurred by Blockbuster in making the
Customer Database available to MTV or an Affiliate of Viacom, as the
case may be. MTV or an Affiliate of Viacom, as the case may be, in its
sole discretion, may make any modifications, additions or deletions to
the Customer Database, subject to (i) any law or (ii) any license
rights of any third party, of which reasonable notice is provided to
MTV or an Affiliate of Viacom, as the case may be. MTV or an Affiliate
of Viacom, as the case may be, shall provide reasonable notification to
Blockbuster of any such modifications, additions or deletions that are
material, and upon reasonable notice by Blockbuster, MTV or an
Affiliate of Viacom, as the case may be, shall make such revised
Customer Database available to Blockbuster for its use in conducting
its business at no cost to Blockbuster. Subject to Section 10, MTV
acknowledges and agrees that it does not own or have any interest in or
title to the Customer Database, including as modified, added to or
deleted.
SECTION 5. CONSIDERATION. In consideration of the Promotional Services
to be provided and the License granted hereunder, MTV shall pay to Blockbuster
$4.5 million in cash on, or if such date is not a Business Day, on a Business
Day immediately following, each of
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September 10, 1999, December 10, 1999, March 10, 2000 and June 10, 2000 for an
aggregate consideration of $18 million.
SECTION 6. MTV OPTION.
(a) Blockbuster grants to MTV an option (the "MTV OPTION"), exercisable
during the Term upon written notice of five Business Days, to extend
the License in perpetuity (the "PERPETUAL LICENSE") under the terms and
conditions of this Agreement. In consideration of the Perpetual
License, MTV shall (i) pay to Blockbuster $5 million in cash at the
time of exercise and no later than July 10, 2000 and (ii) provide to
Blockbuster for internal use its Leisure Time Studies as long as they
are commissioned by and produced for MTV or an Affiliate of Viacom.
(b) At any time during the Term, or after the exercise of the MTV
Option, Blockbuster may terminate the License and the MTV Option or the
Perpetual License, as the case may be, and any related sublicense, upon
written notice of five Business Days. In consideration of such
termination, Blockbuster shall pay to MTV $25 million in cash (the "MTV
OPTION CONSIDERATION") no later than 5 Business Days after receipt of
such written notice of termination. Upon such termination,
Blockbuster's access to MTV's Leisure Time Studies shall also
terminate.
SECTION 7. TERMINATION.
(a) Either party may terminate this Agreement, upon written notice of
10 Business Days to the other party, if such other party:
(i) defaults in the payment when due of any amount payable by
it under this Agreement and such default continues for a
period of thirty days following written notice and such
default is continuing at the time such notice of termination
is given, PROVIDED that in the event Blockbuster fails to pay
to MTV the MTV Option Consideration, the MTV Option or the
Perpetual License, as the case may be, shall not terminate and
continue in full force and effect pursuant to the terms
hereof;
(ii) defaults in the performance or observance of its other
material obligations under this Agreement and such default
continues for a period of thirty days following written notice
to such defaulting party and such default is continuing at the
time such notice of termination is given;
(iii) takes any action in violation of any video privacy laws;
(iv) makes an assignment for the benefit of its creditors or
files or consents to the filing of a petition in bankruptcy;
(v) has filed against an involuntary petition in bankruptcy
and such petition is not dismissed within sixty days of such
filing; or
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(vi) is appointed a receiver or similar official for such
other party or its business, or if such other party seeks to
take advantage of any legislation relating to insolvency,
arrangement or relief of debtors.
The provisions of this section are in addition to any other
rights and remedies available to any party in the event of the
breach by the other party of any of its obligations under this
Agreement.
(b) Upon termination of this Agreement:
(i) the License and the MTV Option or the Perpetual License,
as the case may be, and any related sublicense, shall
terminate;
(ii) MTV shall cease to use the Customer Database and shall
promptly return to Blockbuster, or destroy, all copies of the
Customer Database, any original files and copies of the
Customer Database as it has been modified, added to or
deleted, and any extracts made from the Customer Database;
(iii) MTV shall execute and deliver to Blockbuster any
document requested by Blockbuster to confirm Blockbuster's
ownership of the Customer Database;
(iv) Blockbuster shall promptly return to MTV, or destroy, all
copies of the Leisure Time Studies; and
(v) this Agreement shall cease except any obligation which
expressly survives the termination of this Agreement shall
continue in full force and effect subsequent to and
notwithstanding such termination.
SECTION 8. NONEXCLUSIVITY. Nothing in this Agreement is intended to
prevent Blockbuster from entering into any license agreement with any other
third party with respect to all or any part of the Customer Database.
SECTION 9. NO WARRANTY. Blockbuster makes no warranty, and MTV makes no
warranty, either express or implied, with respect to the Customer Database, or
the Leisure Time Studies, respectively, including any warranty of
merchantability or fitness for a particular purpose.
SECTION 10. OWNERSHIP OF CUSTOMER DATABASE. All information contained
in the Customer Database, including any copies, translations or compilations of
all or any part thereof, and any revisions, modifications or additions thereto
made by Blockbuster or MTV, or an Affiliate of Viacom, as the case may be, are
and shall remain the sole exclusive property of Blockbuster, except for any
additions thereto which are made solely by MTV, or an Affiliate of Viacom, as
the case may be, which MTV or an Affiliate of Viacom, as the case may be, shall
own and shall make available to Blockbuster for its use in conducting its
business. This Section 10 shall survive the termination of this Agreement.
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SECTION 11. CONFIDENTIALITY. (a) MTV acknowledges that the Customer
Database constitutes valuable, confidential and proprietary information and
trade secrets of Blockbuster. Accordingly, MTV shall not, directly or
indirectly, disclose or divulge to any third party, or permit any third party to
use or have access to, any information contained in the Customer Database
without the prior written consent of Blockbuster.
(b) Blockbuster acknowledges that the Leisure Time Studies constitute
valuable, confidential and proprietary information of MTV. Accordingly,
Blockbuster shall not, directly or indirectly, disclose or divulge to
any third party, or permit any third party to use or have access to,
any information contained in the Leisure Time Studies without prior
written consent of MTV.
(c) This Section 11 shall survive the termination of this Agreement.
SECTION 12. INJUNCTIVE RELIEF. Each party acknowledges that money
damages would not adequately compensate the other party in the event of a breach
by such party of its obligations hereunder and that injunctive relief would be
essential for the other party to adequately protect itself hereunder.
Accordingly, each party agrees that, in addition to any other remedies available
to the other party at law or in equity, the other party shall be entitled to
injunctive relief in the event such party is in breach of any covenant or
agreement contained herein. This Section 12 shall survive the termination of
this Agreement.
SECTION 13. INDEMNIFICATION.
(a) Blockbuster and its successors and assigns agree to indemnify and
hold harmless MTV, its affiliates, subsidiaries, successors and
assigns, and their respective directors, officers, agents and
employees, from and against any and all claims, suits, damages, losses,
liabilities, obligations, fines, penalties, costs and expenses,
including without limitation, legal fees and expenses, incurred by an
indemnified party in any action or proceeding between an indemnifying
party and an indemnified party or between any third party and an
indemnified party (collectively "LOSS"), arising out of or based on any
failure by Blockbuster to perform any of the terms, covenants or
conditions of this Agreement. MTV may participate in the defense of the
claims by counsel of its own choosing, at its cost and expense. An
indemnified party will give prompt notice to an indemnifying party of
any occurrence for which it will seek indemnification.
(b) MTV and its successors and assigns agree to indemnify and hold
harmless Blockbuster, its affiliates, subsidiaries, successors and
assigns, and their respective directors, officers, agents and
employees, from and against any and all Loss, arising out of or based
on any failure by MTV to perform any of the terms, covenants or
conditions of this Agreement. Blockbuster may participate in the
defense of the claims made by counsel of its own choosing, at its cost
and expense. An indemnified party will give prompt notice to an
indemnifying party of any occurrence for which it will seek
indemnification.
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SECTION 14. MISCELLANEOUS.
(a) WAIVER. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively
or prospectively) by the party entitle to enforce such term, but such
waiver shall be effective only if it is in writing signed by a duly
authorized officer of the party against which such waiver is to be
asserted. Unless otherwise expressly provided in this Agreement, no
delay or omission on the part of any party in exercising any right or
privilege under this Agreement shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any right or privilege
under this Agreement operate as a waiver of any other right or
privilege under this Agreement, nor shall any single or partial
exercise of any right or privilege preclude any other or future
exercise thereof or the exercise of any other right or privilege under
this Agreement. No failure by either party to take any action or assert
any right or privilege hereunder shall be deemed to be a waiver of such
right or privilege in the event of the continuation or repetition of
the circumstances giving rise to such right unless expressly waived in
writing by the party against whom the existence of such waiver is
asserted.
(b) REFERENCES; CONSTRUCTION. The headings and subheadings contained in
this Agreement are solely for the purpose of reference, are not part of
the agreement of the parties hereto, and shall not in any way affect
the meaning or interpretation of this Agreement. All references to days
or months shall be deemed references to calendar days or months. Unless
the context otherwise requires, any reference to a "Section" shall be
deemed to refer to a section of this Agreement. The words "hereof,"
"herein" and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. This Agreement shall be construed without
regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing the document to be
drafted.
(c) AMENDMENTS. This Agreement shall not be supplemented, amended or
modified in any manner whatsoever (including without limitation by
course of dealing or of performance or usage of trade) except in
writing signed by the parties.
(d) SUCCESSORS AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any party by
operation of law or otherwise without the express written consent of
the other party; PROVIDED that MTV may assign its rights and
obligations under this Agreement to any Affiliate of Viacom; PROVIDED
FURTHER that Blockbuster may assign its rights and obligations under
this Agreement to any party who is fully qualified and capable of
maintaining, updating and providing the Customer Database to MTV at a
level of standard equal to or greater than that with which
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Blockbuster maintained, updated and provided the Customer Database to
MTV immediately prior to such assignment.
(e) SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid
under applicable law. If any portion of this Agreement is declared
invalid for any reason in any jurisdiction, such declaration shall have
no effect upon the remaining portions of this Agreement, which shall
continue in full force and effect as if this Agreement had been
executed with the invalid portions thereof deleted; PROVIDED that the
entirety of this Agreement shall continue in full force and effect in
all other jurisdictions.
(f) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior agreements and undertakings, both
written and oral, between the parties with respect to the subject
matter hereof and thereof.
(g) NOTICES. All notices, consents, requests, approvals and other
communications provided for or required herein, and all legal process
in regard thereto, must be in writing and shall be deemed validly
given, made or served, (i) when delivered personally or sent by
telecopy to the facsimile number indicated below with a required
confirmation copy sent in accordance with subsection (iii) below; or
(ii) on the next Business Day after delivery to a nationally-recognized
express delivery service with instructions and payment for overnight
delivery; or (iii) on the fifth day after deposited in any depository
regularly maintained by the United States postal service, postage
prepaid, certified or registered mail, return receipt requested,
addressed to the following addresses or to such other address as the
party to be notified shall have specified to the other party in
accordance with this section:
If to MTV:
1515 Broadway
New York New York 10036
Attention: Michael D. Fricklas, General Counsel of Viacom Inc.
Phone Number: 212-258-6070
Fax Number: 212-258-6099
If to Blockbuster:
Blockbuster Inc.
1201 Elm Street
Dallas, Texas 75270
Attention: Ed Stead, General Counsel
Phone Number: 214-854-3499
Fax Number: 214-854-3677
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(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. This Section 14(h)
shall survive the termination of this Agreement.
(i) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first written above.
MTV NETWORKS, a division of
VIACOM INTERNATIONAL INC.
By: _______________________________
Name:
Title:
BLOCKBUSTER INC.
By: _______________________________
Name:
Title:
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