EXHIBIT 10.6
JOINT OPERATING AGREEMENT
THIS JOINT OPERATING AGREEMENT ("Agreement"), effective as of March 1, 1994,
(the "Effective Date"), is made between VDI, a California corporation, with
principal offices at 6920 Sunset Boulevard, Hollywood, CA 90028 ("VDI") and
Vyvx, Inc., a Delaware corporation, with principal offices at Tulsa Union
Depot, 111 East 1st Street, Tulsa, Oklahoma 74103 ("Vyvx").
RECITALS
WHEREAS, Vyvx and VDI desire to enter into an agreement in order to
provide a joint product offering;
WHEREAS, such desired product offering shall consist of supplying to a
customer electronic delivery of spot advertisements with verification of
delivery to broadcast stations;
WHEREAS, Vyvx and VDI wish to set out the terms and conditions under
which the parties shall cooperate and share with respect to such product
offering.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, Vyvx and VDI hereby agree as follows:
1. TERM
1.1 The term of this Agreement shall extend from the date first set
forth above for a period of five (5) years (the "Term").
1.2 After the expiration of the Term, this Agreement shall be
automatically extended for one year periods, subject to termination upon
sixty (60) days written notice from either party prior to any anniversary date
of this Agreement.
2. PROVISION OF SERVICES
2.1 VDI and Vyvx shall cooperate to provide to customers the electronic
delivery of Spot Advertisements, with verification of delivery, to Broadcast
Stations ("Ad Placement"). For the purposes of this Agreement, "Spot
Advertisements" shall be defined as television commercials distributed to a
variety and any number of Broadcast Stations nationwide and "Broadcast
Stations" shall be defined as television stations providing an off-air,
antenna-delivered signal between the frequency ranges of 47 megahertz and
900 megahertz. Approximately 1,000 Broadcast Stations, consisting of a mix of
network, independent and public stations available to any consumer with an
off-air receiving antenna, exist throughout the United States.
2.2 Ad Placement shall be sold by both VDI and Vyvx.
2.3 VDI and Vyvx shall jointly establish the charge to customers for Ad
Placement and any retransmission thereof.
2.4 Each party warrants that it will not order Ad Placement for a
customer until such customer has executed an agreement between customer, Vyvx
and VDI which contains appropriate indemnification and limitation of
liability provisions for the protection of VDI and Vyvx. The parties agree
that an agreement substantially in the form of Exhibit A shall be used with
respect to Ad Placement customers.
3. EXCLUSIVITY
3.1 VDI shall use Vyvx exclusively during the Term or any extension
thereof for all electronic transmission of advertising distributed by VDI.
3.2 Vyvx shall not during the Term or any extension thereof join in any
written agreement with any other entity to form a joint venture for the sole
purpose of distributing Spot Advertisements to Broadcast Stations. The
prohibitions of this Subsection 3.2 shall not apply with respect to an entity
in the business of selling Spot Advertisements to Broadcast Stations which is
merged with, acquired by or acquires Vyvx or its affiliates. Both parties
understand and agree that newly developed technologies may provide Vyvx with
opportunities to expand the parameters of delivery of Spot Advertisements
beyond what is contemplated by this Agreement. Vyvx grants to VDI the first
right to transfer all advertising traffic to the new technologies. However,
Vyvx shall not be liable under or prevented by this Agreement from proceeding
on its own or joining into agreements and working with other companies to
utilize such technologies in the distribution of any and all types of
advertisements to any or all types of television entities including, but not
limited to, Broadcast Stations. Further, VDI and Vyvx shall, separately and
together, use reasonable efforts to increase the availability of Ad Placement
by connecting the Vyvx network to an increasing number of Broadcast Stations.
Should either VDI or Vyvx fail to make such reasonable efforts as agreed per
the guidelines set forth below, neither party may restrict the other from
individually seeking continued Broadcast Station connectivity by entering
into agreements with other companies or utilizing or developing technologies
to create such connectivity nor shall either party incur any liability
hereunder for doing so. Table 1 of Exhibit B (attached hereto and
incorporated herein) shows the Broadcast Stations operating in markets served
by Vyvx as of September 1993 (the "Initial Market"). It is understood that
not all Broadcast Stations in these markets are connected to the Vyvx
network, and VDI shall make best practical marketing and sales efforts to
increase connectivity of Broadcast Stations in these markets to the Vyvx
network by July 1, 1994. In addition to the Initial Market, Table 2 of
Exhibit B lists twenty-eight (28) markets (the "Additional Market") in which
Vyvx shall establish availability to its network during a "Phase 2" roll-out by
July 1, 1995, if eighty percent of the Broadcast Stations have successfully
been connected to the Vyvx network in the Initial Market. VDI and Vyvx shall
make best practical marketing and sales efforts to connect each Broadcast
Station in the Additional Market within six
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(6) months thereafter. Table 1, Table 2 and the dates set forth in this
Subparagraph 3.2 may be amended from time to time by written agreement of
both parties. Additionally, VDI shall make best efforts to recruit Ad
Placement customers who are nationally prominent spot advertisers in addition
to those currently listed in Table 3 of Exhibit B. VDI and Vyvx agree to
jointly solicit and procure the companies listed in Table 3 as Ad Placement
customers. It shall be the collective responsibility of the designated sales
force to secure working relationships with no less than five (5) major
advertisers from Table 3, by January 1, 1995. The joint sales effort shall be
required to further increase its customer base from Table 3 by an additional
thirty percent (30%) or eight (8) new customers by January 1, 1996. From
January 1, 1996 forward, a sales management structure shall be implemented
and realistic goals and projections shall be established by no later than
November 1st of each subsequent year for the following year.
3.3 In consideration of this Joint Operating Agreement, Vyvx shall not
during the Term or any extension thereof join in any written agreement with
any other entity to form a joint venture for the sole purpose of distributing
syndicated programming for the customers listed in Exhibit C. Exhibit C is
attached hereto and made a part hereof. The prohibitions of this
Subsection 3.3 shall not apply with respect to an entity which distributes
syndicated programming to any customers listed in Exhibit C which is merged
with, acquired by or acquires Vyvx or its affiliates. Both parties understand
and agree that newly developed technologies may provide Vyvx with
opportunities to expand the parameters of delivery of syndicated programming
beyond what is contemplated by this Agreement. Vyvx grants to VDI the first
right to transfer all programming traffic to the new technologies. However,
Vyvx shall not be liable under or prevented by this Agreement from proceeding
on its own or joining into agreements and working with other companies to
utilize such technologies in the distribution of any and all types of
programming to any or all types of television entities including, but not
limited to, Broadcast Stations.
4. VDI'S RESPONSIBILITIES
4.1 VDI shall be responsible for all billing of customers with respect
to Ad Placement. VDI shall send appropriate invoices to customers within
ten (10) days after completion of any Ad Placement. There shall be no charge
to Vyvx for such billing responsibilities.
4.2 VDI shall be solely responsible for all Broadcast Station
coordination including, but not limited to, the following:
a. Contacting any Broadcast Stations prior to delivery of an Ad
Placement to notify them of the date and time of such delivery.
b. Provide an 800 number (operable twenty-four (24) hours a day,
seven (7) days a week) for customers and Broadcast
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Stations to call for coordination of Ad Placement or any other customer
service related inquiries.
c. Contact Broadcast Stations to verify delivery of the Ad Placement.
4.3 With respect to verification of the delivery of the Ad Placement,
such verification shall initially be done manually via telephone. However,
within six (6) months, VDI shall develop or have a third party develop
electronics and software which shall provide for the automatic verification
of receipt or non-receipt of the Ad Placements (the "Remote Video
Confirmation System"); the specifications for such are set forth in
Exhibit D, attached hereto and incorporated herein. VDI shall be solely
responsible for all costs and expenses with respect to the development and
implementation of the Remote Video Confirmation System. During the
development of Vyvx's management and control system, VDI shall provide the
supplier of Vyvx's management and control system with sufficient information
to enable such supplier to establish compatibility with the Remote Video
Confirmation System.
4.4 VDI shall be responsible for coordinating with Vyvx with respect to
any Ad Placement, e.g., list of Broadcast Stations to receive Ad Placement,
times of transmission, customer service problems, etc.
4.5 VDI shall designate five (5) personnel to interface with Vyvx for
making reservations for Ad Placement. Such personnel shall be set forth in
Exhibit E, attached hereto and incorporated herein. The five (5) personnel so
designated may be changed from time to time, as necessary, by submitting to
Vyvx a revised Exhibit E. Such revised Exhibit E shall be sent to the address
for Vyvx as set forth in Section 12 to the attention of the Director of
Operations.
4.6 VDI shall provide one (1) full time employee, who will spend
fifty percent (50%) of his/her time on continual development of the marketing
and business plans for Ad Placement and to sell Ad Placement.
5. VYVX'S RESPONSIBILITIES
5.1 Vyvx shall guarantee network availability for Ad Placement between
its Television Switching Centers ("TSC(s)") for one hour per day between
1:00 a.m. and 6 a.m. Eastern Standard Time.
5.2 Vyvx shall make available one-half (1/2) hour per day between
1:00 p.m. and 3:00 p.m. Eastern Standard Time for a secondary feed of any Ad
Placement, if necessary in the event that the initial transmission fails to
be received fit for broadcast.
5.3 Upon request by a Broadcast Station and upon receipt of an
appropriate letter of agency, Vyvx shall act as agent for such
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Broadcast Stations with full authority to arrange, administer and receive
billing from the local access service providers on behalf of such Broadcast
Stations. Such Broadcast Stations shall be billed for such local access
service by Vyvx (including, but not limited to, installation, recurring
charges, and/or cancellation charges); such charge shall include a
fifteen percent (15%) administrative charge. Such fifteen percent (15%)
administrative charge shall be for the benefit of Vyvx in order to offset
Vyvx's costs with respect to providing such service, and the
fifteen percent (15%) administrative charge shall not be considered revenue to
be divided between VDI and Vyvx pursuant to Section 8.1.
5.4 If feasible, Vyvx shall make any future improvements to its
transmission system available for the provision of Ad Placement.
5.5 The Vyvx video transmission specifications (from TSC to TSC) with
respect to Ad Placement shall comply with the ANSI T1.502-1988 Medium Haul
Parameters, as it may be limited by the published technical specifications of
the digital codecs used by Vyvx. Vyvx shall monitor and test the quality of
the video signal transmitted along its network with its centrally-located
Video Control Center in Tulsa, Oklahoma. The Vyvx backbone network shall be
linked to a central Network Control Center ("NCC") which shall automatically
monitor the activity along the entire Vyvx network. The NCC shall be manned
24 hours per day, 365 days per year.
5.6 Vyvx shall provide non-monetary support with respect to VDI's
selection of and negotiations with a vendor of the Remote Video Confirmation
System.
5.7 Vyvx shall provide one (1) full time employee, who will spend
twenty-five percent (25%) of his/her time on continual development of the
marketing and business plans for Ad Placement and to sell Ad Placement.
Further, Vyvx's regional sales managers shall sell Ad Placement (in addition
to their other Vyvx duties). Such regional sales managers are listed in
Exhibit F, attached hereto and made a part hereof. The regional sales
managers so designated in Exhibit F may be changed from time to time, as
necessary, by submitting to VDI a revised Exhibit F. Such revised Exhibit F
shall be sent to the address for VDI set forth in Section 12 to the attention
of Sandra C. Mays.
6. MARKETING
6.1 Ad Placement shall be marketed by both VDI and Vyvx under a common
trade name which shall be "Broadcast I."
6.2 All expenses related to trade marking and all other market material
costs shall be shared equally by Vyvx and VDI provided that such expenses are
presented in writing and the other party approves of such expenses prior to
their occurrence. Each party shall invoice the other for one-half (1/2) of
such actual costs. Accompanying such invoices shall be sufficient
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documentation to show the invoicing party's actual costs with respect to
trade marking and market materials. Provided that such documentation is
provided, such invoices shall be paid within thirty (30) days of invoice date.
6.3 VDI and Vyvx agree to cooperate and work jointly to prepare the
succeeding year's market plan by November 1 of each year of the Term or any
extension thereof.
6.4 VDI and Vyvx agree to jointly sell and/or market to the potential
customer's listed in Exhibit G, attached hereto and made a part hereof ("Key
Customers").
7. EMPLOYEES
7.1 Each party shall be responsible for its own taxes and for its own
employees' compensation and benefits (including but not limited to worker's
compensation) and all expenses including travel and entertainment.
8. PROFITS
8.1 VDI shall collect the total charges due from Ad Placement customers.
VDI shall adjust customer's invoices to allow for billing credits and
allowances. Vyvx and VDI shall share equally in the total revenues actually
collected for Ad Placement after allowing for aforesaid credits and
allowances. However, VDI must obtain written approval from Vyvx's Manager of
Finance before issuing any credits and/or allowances to an Ad Placement
customer which aggregate to be more than $1,000 per month; Vyvx's share of
total revenues shall not be reduced by any credit or allowance for which VDI
has failed to obtain such approval. VDI shall remit to Vyvx one half (1/2) of
the total revenues collected (i.e. all collected revenues excluding
transaction taxes) for Ad Placement along with a summary of the accounts
billed by VDI within ten (10) days after receipt from customer. VDI shall
provide Vyvx with monthly gross revenue numbers by noon Central Standard Time
on the second to the last working day of each month. Vyvx shall record one
half (1/2) of this total as Vyvx's share of that month's revenue.
8.2 For a period of one year following the sale of any Ad Placement,
Vyvx shall have the right to review the relevant books and records of VDI to
the extent necessary to confirm the: (i) billing of Ad Placement and
(ii) revenues received with respect to any such sale of Ad Placement. VDI
shall retain the relevant records during such one year period.
8.3 For a period of one year following the provision of Ad Placement,
VDI shall have the right to review Vyvx's rated feed records to the extent
necessary to confirm the transmission of such service. Vyvx shall retain the
rated feed records during such one year period.
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9. TAXES
9.1 Each party shall be responsible for its own income tax, ad valorem
taxes, property taxes and other similar taxes with respect to its portion of
assets involved with and its profits from Ad Placement.
10. INSURANCE
10.1 Each party shall (a) obtain pay for, and maintain insurance with
insurance companies reasonably acceptable to the other party, for the
coverage and amounts of coverage not less than those set forth below, and
(b) provide the other party with corresponding certificates of insurance:
a. Worker's Compensation insurance complying with the law of the state
or states of operation, whether or not such coverage is required by
law, and Employer's Liability insurance with the limits of $100,000
each accident, including occupational disease coverage with a limit
of $100,000 each employee and $100,000 disease policy limit;
b. Commercial General Liability insurance with a combined single limit
for bodily injury and property damage of $500,000 each occurrence and
general and products liability aggregates of $1,000,000 each,
covering all insurable obligations or operations of the insured
party; and
c. Business Automobile Liability insurance with a combined single limit
for bodily injury and property damage of $500,000 each occurrence to
include coverage for all owned, non-owned, and hired vehicles.
Neither the insurance required herein or the amount and type of insurance
maintained by the insured party shall limit or affect the extent of the
insured party's liability under this Agreement for injury, death, loss or
damage.
Neither party shall insure or be responsible for any loss or damage to
property of any kind owned or leased by the other party or its employees,
servants, and agents, except for loss or damage caused by the negligence or
intentional acts or omissions of the insured party (including its employees,
servants and agents).
Each party agrees to cause the other party to be listed as a Certificate
Holder in connection with the above listed insurance policies as follows:
In the case of VDI:
VDI
6920 Sunset Blvd.
Hollywood, CA 90028
Attention: Chief Financial Officer
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In the case of Vyvx:
Vyvx, Inc.
Attn: Contract Administration
P.O. Box 21348
Tulsa, OK 74121
10.2 Certificates of insurance shall provide thirty (30) days prior
written notice of any cancellation, non-renewal or material change. In the
event of any failure by one party to comply with the provisions of this
Section 10, the other party, at its option, may purchase the required
insurance coverage and invoice such non-complying party for the amount of
such insurance.
11. DEFAULT
11.1 Failure of a party to comply with any of the terms and conditions of
this Agreement shall constitute a default hereunder. Such party shall have
ten (10) days to cure such default after receiving written notice from the
non-defaulting party. If such default is not cured within such ten (10) days
period, the non-defaulting party shall have the right to pursue any remedy it
may have in law or equity.
12. NOTICES
12.1 All notices, consents, and other communications required or
permitted hereunder ("Communications") shall be in writing and shall be
mailed or delivered as follows (or to other persons, at such other address or
addresses as may be designated by notice of the appropriate party.)
To VDI: VDI
6920 Sunset Blvd.
Hollywood, CA 90028
Attention: Chief Financial Officer
To VYVX: Vyvx, Inc.
111 East First Street
Tulsa, Oklahoma 74103-2807, or
P.O. Box 21348
Tulsa, Oklahoma 74121
Attention: President
Such Communications will be sent by U.S. certified or registered mail,
postage prepaid, or by a generally recognized overnight delivery system such
as Federal Express. Such communications shall be deemed effective upon
delivery to VDI or Vyvx, as the case may be, at their respective addresses
stated above.
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13. LIMITATION OF LIABILITY; INDEMNITY
13.1 Neither Vyvx nor VDI shall be liable to the other for any
incidental, indirect, special, consequential, punitive or reliance damages of
any nature whatsoever regardless of the foreseeability thereof arising under
or in connection with this Agreement, or the performance hereunder, or
arising out of any act or omission by either VDI or Vyvx, their respective
employees, servants or agents whether based on breach of contract, breach of
warranty, negligence or any other theory of liability.
13.2 VDI and Vyvx shall indemnify and hold harmless the other for any
physical property damage or physical injury or death to any person to the
extent arising from any negligent act of the indemnifying party with respect
to its performance under this Agreement.
13.3 VDI and Vyvx shall indemnify and hold harmless the other for claims
from third parties (including Ad Placement customers) to the extent arising
as a result of the indemnifying party's negligent acts or omissions in the
performance of its responsibilities hereunder or breach of this Agreement.
13.4 VDI and Vyvx shall indemnify the other against any claims for damages
arising or resulting from any defect in or failure to provide Ad Placement,
by customers to whom such indemnifying party has sold Ad Placement without
procuring an agreement as warranted in Section 2.4 hereof.
13.5 The indemnifying party agrees to defend the other against the claims
as set forth in this Section 13 and to pay all reasonable litigation costs,
attorneys' fees, court costs, settlements payments, and any damages awarded
or resulting from any such claims. The indemnified party shall promptly
notify the indemnifying party in writing of any such claims.
14. WARRANTY
14.1 No warranty shall be provided by either party to the other party.
14.2 EACH PARTY DISCLAIMS ANY WARRANTIES, WHETHER EXPRESS, IMPLIED OR
STATUTORY, INCLUDING WITHOUT LIMITATION, IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY
EQUIPMENT AND SERVICES PROVIDED HEREUNDER.
15. CONFIDENTIALITY
15.1 This Agreement creates a relationship of confidence between Vyvx and
VDI with respect to certain Confidential Information of each party. The
parties may exchange information relating to customers, technology and
services and other compilation of information that relate to this Agreement
(collectively the "Confidential Information").
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15.2 All Confidential Information shall be designated as such in writing
by the disclosing party, whether by letter or by the use of an appropriate
proprietary stamp or legend, prior to or at the time any such Confidential
Information is disclosed to the other party. In the event Confidential
Information is orally disclosed by one party to the other, it shall also be
covered by this Agreement if the disclosing party notifies the other party of
its confidential nature and within ten (10) days after such disclosure,
delivers to the other party a written document or documents identifying such
Confidential information and referencing the place and date of such oral
disclosure and the names of the employees or officers of the other party to
whom such disclosure was made. In addition to the above, the following shall
be considered Confidential Information: (i) names, addresses, and telephone
numbers of Ad Placement customers, and (ii) the terms and conditions of this
Agreement.
15.3 The party providing Confidential Information in each case is called
the "PROVIDER"; the party receiving the Confidential Information is called
the "RECIPIENT". The RECIPIENT shall not disclose Confidential Information
received from the PROVIDER and shall not use that Confidential Information
except in performance of this Agreement. Except as may be otherwise provided
herein, upon the request of PROVIDER, RECIPIENT shall return any materials
received from PROVIDER containing Confidential Information of the PROVIDER,
and all copies thereof. The RECIPIENT shall use the same care to prevent
disclosure of Confidential Information of the PROVIDER which it uses to
safeguard its own valuable confidential information and/or trade secrets, but
in no event less than a reasonable degree of care for such information.
15.4 VDI and Vyvx acknowledge that in the event of an unauthorized
disclosure, the damages incurred by a PROVIDER may be difficult if not
impossible to ascertain, and that PROVIDER may seek injunctive relief as well
as monetary damages against RECIPIENT in case of a breach of this Section 15.
Vyvx and VDI shall render reasonable assistance to the other in connection
with the enforcement by the other party of its rights in and to Confidential
Information. Notwithstanding anything to the contrary contained herein,
however, the RECIPIENT shall not be liable for any inadvertent or
unauthorized disclosure of Confidential Information occurring, provided that
is exercises reasonable care to prevent disclosure and takes reasonable steps
to mitigate any damage and prevent further disclosure.
15.5 The obligations of a RECIPIENT hereunder shall not apply to any
Confidential Information which: (a) was in the public domain at the time it
was disclosed; (b) enters the public domain other than by breach of this
Agreement by RECIPIENT; (c) is known to RECIPIENT at the time of its
disclosure to RECIPIENT by the PROVIDER; (d) is disclosed to RECIPIENT by a
third party who to the RECIPIENT's knowledge has the right to do so; (e) is
developed by RECIPIENT independently of any disclosure by PROVIDER hereunder,
or (f) is
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required to be disclosed by law or by any governmental agency having
jurisdiction.
15.6 The obligations with respect to the Confidential Information under
this Agreement shall survive for three (3) years after the termination date
of this Agreement.
16. TERMINATION FOR CAUSE
16.1 This Agreement may be terminated by VDI or Vyvx immediately upon
the filing of any bankruptcy, arrangement for the benefit of creditors,
insolvency, liquidation or receivership proceedings by or against the other
party.
16.2 Either party may terminate this Agreement on not less than
ten (10) days' written notice if (a) the non-terminating party is in breach
of any material provision of this Agreement, and (b) the non-terminating
party does not cure said breach within such ten (10) day period.
16.3 Upon termination of this Agreement (a) VDI shall immediately remit
and pay to Vyvx any and all amounts due to Vyvx pursuant to Subsection 8.1
for Ad Placement provided prior to termination, and (b) both parties shall
upon request of the other party return all Confidential Information to the
other (or if directed by the other party, destroy such Confidential
Information) and shall certify to each other that, to the best of their
knowledge, information and belief, such information has been returned or
destroyed and both parties shall be bound by the provisions in this Agreement
relating to the nondisclosure of Confidential Information.
17. INFRINGEMENT INDEMNITY
17.1 Provided such infringement is not due to VDI's compliance with
Vyvx's instructions or specifications, VDI agrees to defend and indemnify
Vyvx against any and all actions based on a claim that VDI's performance of
its responsibilities hereunder infringe any U.S. patent, copyright, license
or other intellectual property right. If notified promptly in writing of any
such action brought against Vyvx, VDI will defend such action at its expense
and will pay the costs and damages awarded in any such action or the cost of
settling such action, provided VDI shall have the right to control the
defense of any such action and all negotiations for its settlement or
compromise.
17.2 Provided such infringement is not due to Vyvx's compliance with
VDI's instructions or specifications, Vyvx agrees to defend and indemnify VDI
against any and all actions based on a claim that Vyvx's performance of its
responsibilities hereunder infringe any U.S. patent, copyright, license or
other intellectual property right. If notified promptly in writing of any
such action brought against VDI, Vyvx will defend such action at its expense
and will pay the costs and damages awarded in any such action or
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the cost of settling such action, provided Vyvx shall have the right to
control the defense of any such action and all negotiations for its
settlement or compromise.
18. DISPUTE RESOLUTION
18.1 The parties agree to use good faith efforts to resolve any disputes
through normal business discussions. In the event a dispute cannot be
resolved within thirty (30) days of written notice to the other party of such
dispute, prior to the instigation of any legal proceedings, the parties agree
to submit the dispute to their respective corporate officers (at the vice
presidential level or higher) to use their good faith efforts to resolve the
problem within thirty (30) additional days.
19. PUBLICITY
19.1 Use of a party's name by the other party in any announcements
concerning Ad Placement or for promotional or advertising purposes shall
require the other party's prior written approval, which approval shall not be
unreasonably withheld.
20. FORCE MAJEURE
20.1 Neither party shall be liable for any failure or delay in
performance of its obligations (except for VDI's payment to Vyvx pursuant to
Subsection 8.1) hereunder if such failure or delay is the result of fires,
casualties, accident, acts of God, transportation difficulties, manufacturing
difficulties, inability to obtain equipment, materials or qualified labor,
governmental regulations or other causes beyond such party's control and such
party takes reasonable and diligent action to cure any such failures or
delays and mitigate any associated damages. Notwithstanding the foregoing, if
such delay continues for fifteen (15) days, the non-affected party shall
have the right to terminate this Agreement.
21. GENERAL TERMS
21.1 Any amounts, pursuant to specific provisions of this Agreement, for
which one party pays for which the other party is equally liable or for which
one party is to be reimbursed shall be due and payable within
thirty (30) days of invoice by such party.
21.2 This Agreement consists of all the terms and conditions contained
herein and in documents incorporated herein specifically by reference. This
Agreement constitutes the complete and exclusive statement of the
understanding between the parties and supersedes all proposals and prior
agreements (oral or written) between the parties relating to the subject
matter hereof. Any addition, deletion or modification to the terms and
conditions contained in this Agreement shall not be binding on either party
except by written agreement executed by an authorized representative of both
parties.
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21.3 The failure of either party to enforce any provision hereof shall
not constitute the permanent waiver of such provision.
21.4 In the event any provision of this Agreement is subsequently held to
be void, the remainder of this Agreement shall remain effective.
21.5 Neither party shall assign or transfer its rights or obligations
under this Agreement without the prior written consent of the other. Any such
assignment or transfer of rights or obligations hereunder without such consent
shall be void. Sale of all or substantially all of the assets of a party
hereunder or a change in control of a party shall also be considered an
assignment or transfer of this Agreement. "Change in control" means that a
person, corporation, entity or affiliated group acquires, directly or
indirectly, the beneficial ownership of 50% or more of a party hereunder in a
single or series of transactions including, but not limited to, a merger or
consolidation. The foregoing notwithstanding, Vyvx's ownership may be
transferred to The Williams Companies or any of its subsidiaries without
being considered a change of control.
21.6 Each party shall comply with all applicable laws and regulations
relating to any performance hereunder and the provision of Ad Placement.
21.7 This Agreement shall be governed by the laws of the State of
California without regard to choice of law principles. Any legal action or
proceeding with respect to the collection of monies hereunder may be brought
in the state or federal courts in and for the State of California and
Oklahoma. By execution of this Agreement, both Vyvx and VDI shall be deemed
to have submitted to such jurisdictions, thereby expressly waiving whatever
rights may correspond to either of them by reason of their present or future
domicile.
21.8 No rule of construction requiring interpretation against the
draftsman hereof shall apply in the interpretation of this Agreement.
21.9 The headings used in this Agreement are for convenience only and
shall not affect the interpretation of any of the terms and conditions hereof.
21.10 The terms and conditions contained in this Agreement that by their
sense and context are intended to survive the performance thereof by either
or both parties hereunder shall so survive the completion of performance,
cancellation or termination of this Agreement.
21.11 Except as set forth to the contrary herein, any right or remedy
shall be cumulative and without prejudice to any other right or remedy,
whether contained herein or not.
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21.12 In the event suit is brought by either party to enforce the terms
of this Agreement or to collect any monies due hereunder or to collect money
damages for breach hereof, the prevailing party as determined by the
judiciary of the forum in which suit is brought, shall be entitled to
recover, in addition to any other remedy, reimbursement for reasonable
attorneys' fees and court costs incurred in connection therewith.
21.13 Neither party shall be deemed a partner of, or agent for, the other
or have the right to bind or obligate the other party except as specifically
set forth herein with respect to Ad Placement.
21.14 Neither this Agreement nor the actions taken by the parties
hereunder shall create any ownership rights to and interest in the other
party's equipment or assets used in the provision of Ad Placement. Each party
shall bear the risk of loss and damage to the portion of the equipment and
assets that it owns and shall be responsible for the maintenance thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
VDI
By: /s/ Sandra C. Mays
-----------------------------
(Signature)
Sandra C. Mays
-----------------------------
(Print Name)
Chief Financial Officer
-----------------------------
(Title)
Vyvx, Inc.
By: /s/ Delwin L. Bothof [Seal]
-----------------------------
(Signature)
Delwin L. Bothof
-----------------------------
(Print Name)
President
-----------------------------
(Title)
14
EXHIBIT A
MASTER AD PLACEMENT SERVICE AGREEMENT #_____________________
THIS AGREEMENT (the "Agreement") is entered into on the _____ day of
__________________, 199____, by and between Vyvx, Inc., a Delaware
corporation ("Vyvx"), VDI ("VDI"), a California corporation, and
_____________________________________________, a ______________________
corporation ("Customer") for the transmission of advertisements ("Ad
Placement Service"), subject to the provisions set forth in this Agreement.
Vyvx and VDI shall collectively be referred to herein as "Vendor," and each
individual advertisement shall hereinafter be referred to as a "Spot."
1.0 AD PLACEMENT SERVICE DESCRIPTION
1.1 Subject to the provisions of this Agreement, Vendor shall provide
Customer with Ad Placement Service utilizing the Vyvx network provided that
Vyvx's transmission circuits are available and Customer's selected
destination points are connected to Vyvx's network. Procurement of such
connectivity shall not be the responsibility of Vendor. Ad Placement Service
shall be available between 1:00 a.m. and 6 a.m. Eastern Standard Time (the
"Transmission Window"); the exact time during the Transmission Window shall
be at the sole discretion of Vendor. The length of any one Spot shall not
exceed __________ minutes. At the request of Customer and at the charge set
forth below, Vendor shall retransmit a Spot to all or any of the original
destination points set forth in the relevant Reservation Confirmation between
1:00 p.m. and 3:00 p.m. Eastern Standard Time ("Retransmit Window"); the
exact time during the Retransmit Window shall be at the sole discretion of
Vendor.
2.0 VENDOR RESPONSIBILITIES
2.1 Vendor shall promptly respond to any request for Ad Placement Service
("Reservation Request") placed by Customer which states the date of
transmission and destination points submitted at the number or address set
forth in Paragraph 5.1, Vendor shall notify Customer as to the availability
of Ad Placement Service as requested in the Customer Reservation Request by
return correspondence which may be faxed or delivered to Customer at the
number or address set forth in Paragraph 5.1. An affirmative response by
Vendor shall be a confirmed reservation ("Reservation Confirmation"). Vendor
reserves the right to decline to accept any Reservation Request without
incurring any liability.
2.2 The Ad Placement Service specifications (on the Vyvx network) shall
comply with the ANSI TI.502-1988 Medium Haul Parameters, as it may be limited
by the published technical specifications of the digital Codecs used
("Technical Parameters").
3.0 CUSTOMER RESPONSIBILITIES
3.1 Customer must submit to Vendor each Spot which shall be transmitted via
the Ad Placement Service in the following format: __________________________
____________________________________________________________________________.
Such Spot shall be submitted to VDI at the address set forth below
____________ hours prior to the intended transmission time.
3.2 Customer has sole responsibility for installation, procurement, testing
and operation of facilities, services and equipment other than those
specifically provided by Vendor pursuant to this Agreement ("Other
Facilities"). In no event shall the untimely installation or non-operation of
Other Facilities (including tape play-back equipment, if any) or failure of
Customer to timely transmit any Spot relieve Customer of its obligation to
pay for Ad Placement Service or cancellation charges as of the requested
transmission date.
4.0 CHARGES; CREDIT
4.1 Customer shall be charged per destination point and per Spot as follows:
DURING THE TRANSMISSION WINDOW, PER SPOT, PER DESTINATION POINT $____________
DURING THE RETRANSMIT WINDOW, PER SPOT, PER DESTINATION POINT $____________
The above pricing is subject to change by Vendor, at its sole discretion,
upon sixty (60) days prior notice to customer. If Customer does not dispute
the information in any Reservation Confirmation within the earlier of (i)
forty-eight (48) hours from the time Vendor sends the Reservation
Confirmation or (ii) 12:01 a.m. on the scheduled transmission date, the
Reservation Confirmation shall be deemed accurate, and Customer shall be
liable for all applicable charges under this Agreement. Customer agrees that
the time of transmissions shall be determined according to WWV Time as
established by the WWV ratio station located in Fort Collins, CO.
4.2 Failure of equipment, network or facilities of Vendor, including failure
due to force majeure events as set forth in Paragraph 6.5, or failure of
Vendor to provide Ad Placement Service for any reason to any or all
destination points ("Outage") shall result in a pro rata reduction of the
charges for the Ad Placement Service involved ("Credit"). The applicable
Credit shall be determined by ____________________________________________.
The foregoing remedy is exclusive and no other remedy is provided to Customer
pursuant to this Agreement. Notwithstanding the foregoing, Customer shall be
liable for all charges and shall not receive any Credit if failure to receive
the Ad Placement Service is due in whole or in part to Customer's or its
customer's equipment, facilities, employees or agents. In the event of an
occurrence causing transmission failure on the Vyvx network which is beyond
the control of Vendor, Ad Placement Service (not otherwise affected) may be
subject to interruption as Vyvx deems necessary in order to mitigate the
effect of such occurrence with respect to the Vyvx network; Vendor shall not
be liable for such interruption except in the form of a Credit.
5.0 NOTICES
5.1 Notices under this Agreement shall be in writing and delivered to the
person and address specified below:
Vendor: Customer:
______________________________________ ______________________________________
______________________________________ ______________________________________
______________________________________ ______________________________________
Attention: ___________________________ Attention: ___________________________
Telephone: 1-800-_____________________ Telephone 1-800-______________________
Fax: _________________________________ Fax: _________________________________
THIS AGREEMENT INCLUDES THE ADDITIONAL PROVISIONS STATED ON THE REVERSE SIDE.
IN WITNESS hereof, the parties have executed this Agreement on the date first
written above.
VYVX, INC. VDI _______________________
(CUSTOMER)
By: ___________________ By: ___________________ By: ___________________
(SIGNATURE) (SIGNATURE) (SIGNATURE)
_______________________ _______________________ _______________________
(PRINT) (PRINT) (PRINT)
_______________________ _______________________ _______________________
(TITLE) (TITLE) (TITLE)
6.0 GENERAL TERMS AND CONDITIONS
6.1 PAYMENT: Customer agrees to remit payment to Vendor at the remittance
address and on the due date ("Due Date") indicated on Vendor's invoices to
Customer. In the event Customer fails to make full payment to the proper
address within thirty (30) days after the Due Date, Customer shall also pay a
late fee in the amount of the lesser of one and one-half percent (1-1/2%) of
the unpaid balance per month or the maximum lawful rate under applicable
state law. Customer acknowledges and understands that all charges are
computed exclusive of any applicable federal, state or local use, excise,
gross receipts, sales and privilege taxes, duties, fees or similar
liabilities (other than general income or property taxes), whether charged to
or against Vendor, its suppliers or affiliates, Customer or its customers for
the Ad Placement Service provided to Customer ("Additional Charges"). Such
Additional Charges shall be paid by Customer in addition to all other charges
provided for herein. Vendor shall invoice Customer monthly for Ad Placement
Service for the period between the first of the prior month to the end of
such prior month ("Billing Period"). The Billing Period shall be subject to
change at the sole option of Vendor.
6.2 SUSPENSION OF AD PLACEMENT SERVICE: In the event payment in full is not
received from Customer on or before thirty (30) days following the due date
of invoice, Vendor shall have the right to refuse to provide Ad Placement
Service to Customer and upon forty-eight (48) hours prior written notice to
suspend all or any portion of Ad Placement Service for which Customer has a
Reservation Confirmation. Vendor may continue suspension until such time as
Customer has paid in full all charges then due, including any late fees as
specified herein. If Customer fails to make such payment by a date determined
by and acceptable to Vendor, Customer shall be deemed to have canceled the Ad
Placement Service for which Customer received a Reservation Confirmation
effective on such date and shall remain liable for all cancellation charges
as set forth in Paragraph 6.4.
6.3 TERM AND APPLICATION: This Agreement shall be effective between the
parties as of the date first written above and shall extend through
______________________, 199___. The terms and conditions of this Agreement
shall apply to any Reservation Confirmation accepted by Vendor; any other
terms and conditions given verbally or contained in any purchase order or
similar document submitted as a request for Ad Placement Service shall be
void unless agreed to in writing and subscribed to by an authorized
representative of Vendor and Customer. Vendor reserves the right to refuse
any Reservation Request submitted pursuant to this Agreement.
6.4 CANCELLATION: Customer may cancel the Ad Placement Service without
incurring any cancellation liability, provided that the Ad Placement Service
in question is canceled at least seventy-two (72) hours prior to 1:00 a.m.
Eastern Standard Time on the date of the scheduled transmission. If Customer
cancels Ad Placement Service less than seventy-two (72) hours, but
twenty-four (24) hours or more prior to 1:00 a.m. Eastern Standard Time on
the date of the scheduled transmission, Customer shall pay a cancellation
charge of fifty percent (50%) of the amount that Customer would have
otherwise paid if such Ad Placement Service had not been canceled. If
Customer cancels less than twenty-four (24) hours prior to 1:00 a.m. Eastern
Standard Time on the date of the scheduled transmission, Customer shall pay
one hundred percent (100%) of the amount that Customer would have otherwise
paid is such canceled Ad Placement Service had not been canceled. It is
agreed that damages in the event Customer cancels Ad Placement Service would
be difficult or impossible to ascertain. The provision for a cancellation
charge in this Paragraph 6.4 is intended, therefore, to establish liquidated
damages in the event of a cancellation and is not intended as a penalty.
6.5 FORCE MAJEURE: If Vendor's performance of this Agreement or any
obligation hereunder is prevented, restricted or interfered with by causes
beyond its reasonable control including, but not limited to, acts of God,
fire, explosion, vandalism, cable cut, storm or other similar occurrence, any
law, order, regulation, direction, action or request of the United States
Government or state or local governments, or of any department, agency,
commission, court, bureau, corporation or other instrumentality of any one or
more said governments, or of any civil or military authority, or by national
emergencies, insurrections, riots, wars, strikes, lock-outs or work
stoppages, or other labor difficulties, supplier failures, shortages,
breaches or delays, then Vendor shall be excused from such performance on a
day to day basis to the extent of such prevention, restriction or
interference. Vendor shall use reasonable efforts under the circumstances to
avoid and remove such causes of non-performance and shall proceed to perform
with reasonable dispatch whenever such causes cease.
6.6 TRANSMISSION CONTENT; INDEMNITY: Customer shall make all arrangements
with copyright holders, music licensing organizations, performers'
representatives, or other parties for necessary authorizations, clearances or
consents with respect to the transmission contents ("Consents"). Customer
shall indemnify and hold harmless Vendor and any third party provider or
operator of facilities employed in the provision of the Ad Placement Service
(all of which shall be referred to as "Providers") against and from any
court, administrative or agency action, suit or similar proceeding brought
against Providers arising out of or related to the contents transmitted
hereunder including, but not limited to, claims, actual or alleged, relating
to any violation of copyright law, except control laws, failure to procure
Consents, failure to meet governmental or other technical broadcast
standards, or that such transmission contents are libelous, slanderous, an
invasion of privacy, pornographic, or otherwise unauthorized or illegal.
Vendor may terminate or restrict any programming transmitted over the Vyvx's
network if, in its judgment, (1) such actions are reasonably appropriate to
avoid violation of applicable law or (2) there is a reasonable risk that
criminal, civil or administrative proceedings or investigations based upon
the transmission contents shall be instituted against Providers. Customer and
Vendor shall indemnify and hold harmless the other against and from any and
all claims for physical property damage, physical personal injury or wrongful
death to the extent that such arises out of the negligence or willful
misconduct of the respective indemnifying party, its employees, agents, or
contractors in connection with the provision of services or other performance
pursuant to this Agreement. In the event third parties should use the Ad
Placement Service through Customer, Customer shall indemnify Providers
against any claims by any such third parties for damages arising or resulting
from any defect in or failure to provide the Ad Placement Service. The
indemnifying party agrees to defend the other against the claims as set forth
above and to pay all reasonable litigation costs, attorneys' fees, court
costs, settlement payments, and any damages awarded or resulting from any
such claims. The indemnified party shall promptly notify the indemnifying
party in writing of any such claims.
6.7 WARRANTY; LIMITATION: Vendor warrants that the Ad Placement Service
provided over the Vyvx network shall be provided to Customer in accordance
with the Technical Parameters and (except to the extent such standards
conflict with the Technical Parameters) prevailing television industry
standards for digital transmission of television in a DS-3 format. Vendor
shall use reasonable efforts under the circumstances to remedy any delays,
interruptions, omissions, mistakes, accidents or errors in the Ad Placement
Service and restore such Service to comply with the terms hereof. THE
FOREGOING WARRANTY AND THE REMEDY PROVIDED TO CUSTOMER WITH RESPECT TO OUTAGE
CREDITS ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES OR REMEDIES,
WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION, IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN THE
EVENT OF ANY BREACH OF THIS AGREEMENT OR ANY FAILURE OF THE AD PLACEMENT
SERVICE, WHATSOEVER, PROVIDERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT,
CONSEQUENTIAL, SPECIAL, ACTUAL, INCIDENTAL, PUNITIVE OR ANY OTHER DAMAGES, OR
FOR ANY LOST PROFITS OF ANY KIND OR NATURE WHATSOEVER, AND IN THE EVENT
PARTIES OTHER THAN CUSTOMER SHALL HAVE USE OF THE AD PLACEMENT SERVICE
THROUGH CUSTOMER, CUSTOMER SHALL INDEMNIFY PROVIDERS AGAINST ANY CLAIMS FOR
SUCH DAMAGES BROUGHT AGAINST THEM BY THIRD PARTIES.
6.8 GENERAL PROVISIONS: This Agreement consists of all the terms and
conditions contained herein and in documents incorporated herein specifically
by reference. This Agreement constitutes the complete and exclusive statement
of the understanding between the parties and supersedes all proposals and
prior agreements (oral or written) between the parties relating to Ad
Placement Service provided hereunder. Customer agrees that any addition,
deletion or modification to the terms and conditions contained in this
Agreement shall not be binding on Vendor except by written agreement executed
by an authorized headquarters representative of Vendor. The provision of the
Ad Placement Service shall not create a partnership or joint venture between
the parties. The failure of either party to enforce any provision hereof
shall not constitute the permanent waiver of such provision. In the event any
provision of this Agreement conflicts with any statute, rule or order of any
governmental unit or regulatory body, or tariff then, if required by law,
such statute, rule, order or tariff shall control. Customer shall not assign
or transfer its rights or obligations under this Agreement without the prior
written consent of Vendor. Any such assignment or transfer of Customer's
rights or obligations without such consent shall entitle Vendor to terminate
the Ad Placement Service provided hereunder at its option upon ten (10) days
prior written notice to Customer. This Agreement shall be governed by the
laws of the State of California without regard to choice of law principles.
No rule of construction requiring interpretation against the draftsman hereof
shall apply in the interpretation of this Agreement.
EXHIBIT B
TABLE 1
Broadcast Stations Operating in Vyvx Network markets as of September,
1993:
MARKET (ADI RANKING)
- --------------------
Atlanta (10)
Austin (66)
Baltimore (22)
Baton Rouge (95)
Beaumont (140)
Boston (6)
Buffalo (38)
Charlotte (30)
Chicago (3)
Cleveland (12)
Dallas-Fort Worth (8)
Denver (21)
Detroit (9)
Hartford-New Haven (24)
Houston (11)
Indianapolis (27)
Jacksonville (54)
Kansas City (28)
Las Vegas (77)
Los Angeles (2)
Miami-Ft. Lauderdale (15)
Milwaukee (29)
Minneapolis-St. Paul (13)
Nashville (33)
New Orleans (40)
New York (1)
Oklahoma City (45)
Omaha (73)
Orlando (23)
Philadelphia (4)
Phoenix (20)
Pittsburgh (17)
Portland, OR (26)
Raleigh-Durham (32)
Sacramento-Stockton (19)
Salt Lake City (41)
San Antonio-Victoria (36)
San Diego (25)
San Francisco (5)
Seattle-Tacoma (14)
South Bend-Elkhart (83)
St. Louis (18)
Tampa (16)
Toledo (64)
Tulsa (59)
Washington, D.C. (7)
EXHIBIT B
TABLE 2
MARKET (ADI) RANKING
- --------------------
Albany-Schenectady-Troy (52)
Augusta (111)
Boise (133)
Cincinnati (31)
Columbus, OH (34)
Dayton (53)
Des Moines (70)
Flint-Saginaw-Bay City (57)
Fort Meyers-Naples (88)
Fresno-Visalia (56)
Grand Rapids-Kalamazoo-Battle Creek (37)
Greenville-Spartanburg Asheville (35)
Green Bay-Appleton (65)
Harrisburg-York-Lancaster-Lebannon (44)
Jackson, MS (87)
Knoxville (62)
Little Rock (58)
Louisville (47)
Madison (91)
Memphis (42)
Norfolk-Portsmouth-Newport News (39)
Providence-New Bedford (43)
Richmond (60)
Rochester (69)
Syracuse (68)
Tallahassee-Thomasville (115)
West Palm Beach-Fort Pierce (46)
Wichita-Hutchinson (61)
EXHIBIT B
TABLE 3
Proctor & Gamble Co.
Philip Morris Companies
General Motors Corporation
Sears, Roebuck & Company
PepsiCo
Ford Motor Company
Warner-Lambert Company
Chrysler Corporation
McDonald's Corporation
Nestle SA
Eastman Kodak Company
Grand Metropolitan
Unilever NV
Johnson & Johnson
Toyota Motor Corporation
Time Warner
Kellogg Company
AT&T Company
General Mills
Anheuser - Busch Companies
Kmart Corporation
J.C. Penney Company
American Home Products, Corporation
RJR Nabisco
Ralston Purina Company
Coca Cola Company
Exhibit C
Potential Syndicated Program Distribution Customers:
Buena Vista Domestic Television
Cannel Distribution Company
Carsey-Werner Distribution
Columbia Pictures Domestic Television
Columbia Pictures International Television
King World Productions
MCA Domestic Television
MCA Television International
MGM Domestic Television Distribution
MGM Television International
MG Perrin
MTM Television Distribution
Multimedia Entertainment
Orion Domestic Television
Orion Television International
Paramount Domestic Television Group
Samuel Goldwyn Domestic Television
SFM Entertainment
Twentieth Century TV International
Viacom Enterprises