EXHIBIT 10.13
Cyberian Outpost, Inc. has omitted from this Exhibit 10.13 portions of the
Agreement for which Cyberian Outpost, Inc. has requested confidential treatment
from the Securities and Exchange Commission. The portions of the Agreement for
which confidential treatment has been requested are marked with X's in brackets
and such confidential portions have been filed separately with the Securities
and Exchange Commission.
PROMOTION AGREEMENT
This Promotion Agreement (the "Agreement") is dated as of January 26, 1998
between CNET, Inc. ("CNET") and Cyberian Outpost, Inc. (the "Company"). Pursuant
to this Agreement, CNET will provide various links and other online and
television promotions (collectively, the "Promotions") to the Company to assist
the Company in promoting its products and services and facilitating the sale of
products to potential buyers through its Internet site. CNET will be compensated
by the Company for providing the Promotions. Accordingly, the parties hereby
agree as follows:
1. Background.
1.1 The Company. The Company operates an electronic retailing operation
through its Internet sites located at ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or
▇▇▇.▇▇▇▇▇▇▇.▇▇▇ (together with any successors to such sites, the
"Company Site"). Through the Company Site, the Company sells or
facilitates the sale of various products and services, either directly
or as an agent for third party vendors. All products and services
offered for sale through the Company Site are referred to as the
"Products."
1.2 CNET. CNET produces television programs and operates a network of
Internet sites on the world wide web. For purposes of this Agreement,
the "CNET Sites" refer to any Internet sites operated by CNET or its
subsidiaries, including without limitation the sites referenced in
Section 2.5 and Exhibit A.
2. CNET's Obligations.
2.1 TV Promotions. CNET will provide the Company one 15 second "spot" for
Promotions on its syndicated weekly TV program, ▇▇.▇▇▇. Promotions
will run on each weekly episode of ▇▇.▇▇▇ during the Term; provided
that ▇▇.▇▇▇ remains on the air throughout such period. Should ▇▇.▇▇▇
not be run on the air during a portion of the Term, CNET will run two
▇▇▇▇▇▇▇▇.▇▇▇ banner advertising programs per month during such portion
of the Term in lieu of the foregoing ▇▇.▇▇▇ Promotions.
2.2 Banner Promotions. CNET will provide advertising banners to the
Company during the Term as described in Exhibit A.
2.3 Retail Promotions.
2.3.1 CNET will provide for various retail Promotions across the CNET
Sites, which may include text/HTML links, buttons, portals and
other fixed Promotions that include embedded links to the
Company Site (the "Retail Promotions" and, together with the
advertising banners contemplated in the preceding paragraph,
the "Online Promotions").
2.3.2 Subject to Section 4 below, CNET will provide the Company with
a total of at least (a) [XXXXXX] Retail Impressions during
the first three months of the Term, (b) [XXXXXX] Retail
Impressions during the second three months of the Term, (c)
[XXXXXX] Retail Impressions during the third three months
of the Term, and (d) [XXXXXX] Retail Impressions during
the fourth three months of the Term. For such purposes, a
"Retail Impression" means the display of one page of a CNET
Site that contains at least one Retail Promotion. If CNET fails
to provide the Retail Impressions required by the preceding
sentence during the Term, then CNET will continue to display
Retail Impressions in accordance with this Agreement following
the Term (notwithstanding the termination or expiration of the
Term) until the required number of Retail Impressions has been
delivered.
2.4 Placement of Retail Promotions. CNET will determine the location and
type of each Retail Promotion displayed throughout the CNET Sites and
may phase in certain types of Retail Promotions as they are developed.
CNET currently intends to display Retail Promotions consisting of
text/HTML links, pre-filled with an appropriate query string or link
("Pre-Filled Links"), as set forth in this Section. The Retail
Promotions contemplated by this Section will be displayed above the
fold where the graphical layout of the page reasonably permits such
positioning (as determined by CNET), and in other cases the Retail
Promotions will be prominently positioned below the fold. For the
purposes of clarity, the "fold" is defined as the visible portion of
the screen on a standard 640 x 480 screen size.
2.4.1 On ▇▇▇▇▇▇.▇▇▇, CNET intends to display a Pre-Filled Link on the
search query page related to Shopping and on every search
results page served by CNET.
2.4.2 On ▇▇▇▇.▇▇▇, CNET intends to display a Pre-Filled Link on pages
within the site except the Front Door and except for pages
within the Personalities and Community sections.
2.4.3 On ▇▇▇▇▇▇▇.▇▇▇, CNET intends to display a Pre-Filled Link on
pages within the site except the Front Door and the "Builder
Buzz" section.
2.4.4 On ▇▇▇▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇.▇▇▇, ▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇▇▇▇▇▇.▇▇▇,
CNET will display a Pre-Filled Link on pages within the site
except the Front Door.
2.4.5 Other pages of the CNET Sites, CNET will display additional
Retail Promotions as appropriate and as mutually agreed upon.
2.5 Design and Production of Online Promotions. The Company will design
any graphics required for the Online Promotions and provide pre-filled
query strings or links for all of the Pre-Filled Links, with
reasonable assistance from CNET, and the Company will supply digital
copies of such graphics and other materials to CNET. CNET will be
responsible for incorporating the Online Promotions into the CNET
Sites and for ensuring that the Online Promotions are accessible to
users of the CNET Sites ("Users").
2.6 Reporting. Within 30 days after the end of each month during the Term,
CNET will provide a report to the Company indicating the number of
Retail Promotions displayed on the CNET Sites during such month and
the number of times that a User clicked on a Retail Promotion during
such month. CNET will also provide standard reporting for banner
advertisements and television Promotions.
3. The Company's Obligations:
3.1 Operation of Company Site. The Company will be responsible for
ensuring that each link embedded within an Online Promotion takes the
User to the appropriate area within the Company Site, and that the
Company Site functions with reasonable reliability and in a
commercially reasonable manner throughout the Term. In particular, the
Company agrees that the Company Site will comply with the performance
standards set forth in Exhibit B throughout the Term. Any failure by
the Company to comply with this paragraph will be deemed to be a
material breach of this Agreement.
3.2 Reporting. Within 30 days after the end of each month during the Term,
the Company will provide a report to CNET indicating the aggregate
number of referrals from the CNET Sites to the Company Site during
such month, the resulting number of buyers, the aggregate behavior
(including orders and sales volume) of those buyers, and the total
revenue attributable to the Online Promotions minus applicable sales
tax, shipping costs, returns and cancellations (the "CNET Sales"). The
"CNET Sales" will be counted as sales by the Company to each User who
accesses the Company Site through a link from an Online Promotion for
a period of 4 hours from the referral, CNET and The Company will agree
on technical procedures to allow the easy and accurate reporting of
CNET Sales. The Company will make this information available in a
manner which
allows CNET and the Company to understand the performance of the
various Online Promotions.
3.3 Cash Consideration.
3.3.1 For each month during the Term, the Company will pay CNET a
minimum of [XXXX] in cash, plus [XXX] of CNET Sales. Payments
under this paragraph will be based on the reports prepared by
the Company under Section 3.2 (although CNET may challenge such
reports as contemplated by Section 9.5) and will be due within
30 days after the end of each month of the Term.
3.3.2 Payments under this Section 3.3 will be made by wire transfer
of immediately available funds and are nonrefundable once paid.
3.4 User Information. At least once each calendar quarter, the Company
will deliver to CNET all aggregate data collected as a result of the
CNET Sales, including but not limited to, demographic data, buying
behavior as measured by conversion to sale, frequency of purchasing,
average order size, and a comparison to the respective average for the
Company.
3.5 Reciprocal Marketing. For the duration of the Term, the Company will
place a link within the Beta Report Newsletter, the Cyberian Express
Newsletter, the Gamer's Express newsletter, or any newsletter to which
users can subscribe to which is provided by the Company to its users
(expressly excluded from this obligation are emails that are sent by
the Company for product announcements, or personalized emails sent to
users upon product purchase. This link will be a text phrase or series
of text phrases encouraging the users to sign up for CNET's free email
newsletters for technology News, CNET Dispatch, and Software &
Hardware Services. CNET will provide all entry forms and operate the
production and sending of the newsletter. CNET agrees not to
specifically target these subscribers separately from the general
database of subscribers to CNET's various newsletters. Should the
Company provide a persistent link or series of links (as distinguished
from occasional and ad hoc links to product reviews either on the
Company Site or in any communication by the Company to its customers)
to a "Technology Content Provider", CNET shall be given at least equal
prominence to any other Technology Content Provider provided that CNET
offers comparable editorial content. A Technology Content Provider is
defined as a company providing news product information or reviews
about technology products that is not a manufacturer of those
products.
4. Term and Termination. The term of this Agreement (the "Term") will begin on
February 1, 1998 and end on the first anniversary of the date of this
Agreement; provided that (a) either party may terminate this Agreement,
effective at any time after the first three
months of the Term, by giving 30 days' written notice of termination to the
other party, and (b) either party may terminate this Agreement at any time
by giving written notice of termination to the other party, if the other
party commits a material breach of its obligations hereunder that is not
cured within 30 days after notice thereof from the non-breaching party. If
this Agreement is terminated during any of the three month periods
referenced in Section 2.3.2, then the required number of Retail Impressions
applicable thereunder to such three month period will be pro rated
accordingly.
5. Exclusivity. For purposes of this agreement "Competing Computer Products
Retailer" means any company other than the Company that is engaged in the
retail sale of computer products, with the exception of CNET Direct, which
operates ▇▇▇▇▇▇▇▇▇.▇▇▇. During the Term, CNET will not enter into more than
two other agreements under which CNET receives consideration from a
Competing Computer Products Retailer for displaying permanent links to or
other fixed promotions for such Competing Computer Products Retailer on any
CNET Site; provided that the foregoing will not restrict the display of(a)
standard advertisements for any Competing Computer Products Retailer or its
products or (b) any promotions within ▇▇▇▇▇▇▇▇▇.▇▇▇ or within CNET's Snap!
Online service (which are expressly excluded from this provision). The
parties acknowledge that the foregoing will not prevent CNET from
displaying text links and other references to Competing Computer Products
Retailers as reasonably necessary to provide appropriate editorial and
search related services on the CNET Sites. The Retail Promotions granted to
the Company shall be placed in such a way as to provide no more or less
prominence to the Company than is provided to any other Competing Computer
Retailer signing an agreement with CNET.
6. Trademark Licenses.
6.1 The Company hereby grants to CNET a non-exclusive, royalty-free
license, effective throughout the Term, to use, display and publish
any of the Company trademarks, tradenames, service marks and logos
that may be delivered by the Company to CNET expressly for inclusion
in the Promotions, solely for use in connection with the Promotions.
Any use of the Company Marks by CNET must comply with any reasonable
usage guidelines communicated by the Company to CNET from time to
time. Nothing contained in this Agreement will give CNET any right,
title or interest in or to the Company Marks or the goodwill
associated therewith, except for the limited usage rights expressly
provided above. CNET acknowledges and agrees that, as between the
Company and CNET, the Company is the sole owner of all rights in and
to the Company Marks.
6.2 The Company hereby represents and warrants to CNET that the Company
has, and will have throughout the Term, all necessary rights in and to
the Company Marks to grant CNET the licenses and usage rights
contemplated by this Agreement without violating the rights of any
third party.
7. Responsibility for the Company Products. The Company acknowledges and
agrees that, as between the Company and CNET, the Company will be solely
responsible for any claims or other losses associated with or resulting
from the marketing or operation of the Company Site or the offer or sale of
any Products by the Company or through the Company Site. CNET is not
authorized to make, and agrees not to make, any representations or
warranties concerning the Products, except to the extent (if any) contained
within Promotions delivered to CNET by the Company.
8. Mutual Indemnification.
8.1 Indemnification by CNET. CNET shall indemnify and hold the Company
harmless from and against any costs, losses, liabilities and expenses,
including all court costs, reasonable expenses and reasonable
attorney's fees (collectively, "Losses") that the Company may suffer,
incur or be subjected to by reason of any legal action, proceeding,
arbitration or other claim by a third party, whether commenced or
threatened, arising out of or as a result of (a) any breach or alleged
breach by CNET of its representations, warranties or covenants
hereunder; or (b) the operation of the CNET Sites (except in cases
where the Company is required to indemnify CNET under the following
paragraph), including claims of infringement or misappropriation of
intellectual property rights.
8.2 Indemnification by the Company. The Company shall indemnify and hold
CNET harmless from and against any Losses that CNET may suffer, incur
or be subjected to by reason of any legal action, proceeding,
arbitration or other claim by a third party, whether commenced or
threatened, arising out of or as a result of (a) any breach or alleged
breach by the Company of its representations, warranties or covenants
hereunder; (b) the use by CNET of the Company Marks or any content
provided by the Company to CNET expressly for display in connection
with or as part of the Promotions, including claims of infringement or
misappropriation of intellectual property rights; or (c) the operation
of the Company Site or the offer or sale of the Products by the
Company or through the Company Site.
8.3 Indemnification Procedures. If any party entitled to indemnification
under this section (an "Indemnified Party") makes an indemnification
request to the other, the Indemnified Party shall permit the other
party (the "Indemnifying Party") to control the defense, disposition
or settlement of the matter at its own expense; provided that the
Indemnifying Party shall not, without the consent of the Indemnified
Party enter into any settlement or agree to any disposition that
imposes an obligation on the Indemnified Party that is not wholly
discharged or dischargeable by the Indemnifying Party, or imposes any
conditions or obligations on the Indemnified Party other than the
payment of monies that are readily measurable for purposes of
determining the monetary indemnification or reimbursement obligations
of Indemnifying Party. The Indemnified Party shall
notify Indemnifying Party promptly of any claim for which Indemnifying
Party is responsible and shall cooperate with Indemnifying Party in
every commercially reasonable way to facilitate defense of any such
claim; provided that the Indemnified Party's failure to notify
Indemnifying Party shall not diminish Indemnifying Party's obligations
under this Section except to the extent that Indemnifying Party is
materially prejudiced as a result of such failure. An Indemnified
Party shall at all times have the option to participate in any matter
or litigation through counsel of its own selection and at its own
expense.
9. Miscellaneous.
9.1 LIMITATION OF DAMAGES. NEITHER PARTY WILL BE LIABLE FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES ARISING OUT OF OR
RELATED TO THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY (INCLUDING NEGLIGENCE), AND EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
9.2 Assignment. This Agreement may not be assigned by either party, except
(a) to the transferee of substantially all of the business operations
of such party (whether by asset sale, stock sale, merger or otherwise)
or (b) to any entity that controls, is controlled by or is under
common control with such party.
9.3 Relationship of Parties. This Agreement will not be construed to
create a joint venture, partnership or the relationship of principal
and agent between the parties hereto, nor to impose upon either party
any obligations for any losses, debts or other obligations incurred by
the other party except as expressly set forth herein.
9.4 Entire Agreement. This Agreement constitutes and contains the entire
agreement between the parties with respect to the subject matter
hereof and supersedes any prior oral or written agreements. This
Agreement may not be amended except in writing signed by both parties.
Each party acknowledges and agrees that the other has not made any
representations, warranties or agreements of any kind, except as
expressly set forth herein.
9.5 Audit Rights. Each party will have the right to engage an independent
third party to audit the books and records of the other party relevant
to the calculation of Retail Impressions or CNET Sales, upon
reasonable notice and during normal business hours, and the other
party will provide reasonable cooperation in connection with any such
audit. The party requesting the audit will pay all expenses of the
auditor unless the audit reveals an underpayment by the other party of
more than 5%, in which case the other party will reimburse all
reasonable expenses of the auditor.
9.6 Applicable Law. This Agreement will be construed in accordance with
and governed by the laws of the State of California, without regard to
principles of conflicts of law.
9.7. Confidentiality. The material terms of this agreement and any
information exchanged in connection herewith shall be covered by the
Non-Disclosure Agreement between CNET and the Company dated December
5, 1997 (the "NDA"). Notwithstanding the foregoing the following
information will not be considered "Confidential Information" for
purposes of the NDA provided that such information is not publicly
identified as belonging to or coming from the Company: (a) information
contained in the reports described in Section 3.2, (b) the names and
e-mail addresses referenced in Section 3.4 and (c) any information
obtained by CNET from Users who affirmatively request to be added to
an e-mail newsletter pursuant to Section 3.5.
9.8 Press Release. Each party may issue a press release concerning the
business relationship contemplated by this Agreement, and each party
will provide an appropriate quote from one of its senior executive
officers for use in the other party's release. The Company agrees
that CNET's press release may disclose the total consideration payable
to CNET hereunder. Each Party will provide the other with a
reasonable opportunity to review and comment on its press release.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date first written above.
CNET, INC. Cyberian Outpost
By: /s/ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------ ---------------------------
Title: Director, Business Development Title: President and CEO
------------------------------ ----------------------
EXHIBIT A
ADVERTISING BANNERS
For each of the first 12 calendar months of the Term, CNET will provide the
Company with one advertising banner "program" (which has a retail value of
$20,000) on each of the following CNET Sites:
1. ▇▇▇▇.▇▇▇ ([XXXXX] impressions per month)
2. ▇▇▇▇▇▇.▇▇▇ ([XXXXX]impressions per month)
3. ▇▇▇▇▇▇▇▇▇▇.▇▇▇ ([XXXXX] impressions per month) (two programs per month)
4. ▇▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇▇.▇▇▇ ([XXXXX] impressions per month; this is a
single unit, which may be satisfied by delivering banners on either site)
EXHIBIT B
PERFORMANCE STANDARDS
The Company Site and the Company's related operations must comply with the
following performance standards throughout the Term
1. The Company Site will be operational and fully functional in all material
respects (i.e. capable of displaying information, receiving purchases and
conducting transactions as contemplated in the ordinary course of business)
at least 97% of the time during any 30 day period.
2. Without limiting the effect of 1, the Company shall provide to users coming
to the Company Site from the Retail Promotions at least the same level of
service as is offered to users coming directly to the Company Site or from
agreements with other distribution partners.