Exhibit 10.14
ADVERTISING REPRESENTATIVE AGREEMENT
This Advertising Representative Agreement ("Agreement") is made
effective as of the 30/th/ day of September 1999 between xxxx.xxx, Inc.
("xxxx.xxx") and Bergen Xxxxxxxx Drug Company ("BBDC").
WHEREAS, xxxx.xxx owns and operates an online drugstore ("xxxx.xxx
Site");
WHEREAS, BBDC is a leading distributor of health and beauty aids,
prescription and non-prescription medicines; and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, xxxx.xxx wishes to appoint BBDC as its exclusive sales representative
for the marketing and sales of certain advertising for placement on the xxxx.xxx
Site during the Term.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Sales Representation.
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a. xxxx.xxx hereby appoints BBDC as its sole and exclusive
(subject to Sections 1.d and 9.b below) agent for the purpose of marketing and
selling of any and all product specific advertising and manufacturer promotional
advertising ("Covered Advertising") on the xxxx.xxx Site during the term of this
Agreement (as defined in Section 9.a below, the "Term"). BBDC hereby accepts
such appointment, and will use its best efforts to market and sell Covered
Advertising during the Term. Covered Advertising will include, but not be
limited to, banner ads, text links, graphics links, branded buttons,
infomercials, manufacturer sponsored surveys, manufacturer sponsored trials,
promotions, or other manufacturer advertising activities promoted in conjunction
with xxxx.xxx for products that are stocked and inventoried by BBDC.
b. xxxx.xxx will identify BBDC on rate cards and applicable
promotional literature as xxxx.xxx's advertising representative for the sale of
Covered Advertising.
c. xxxx.xxx and BBDC will jointly create and mutually agree to a
manufacturer advertising plan ("Advertising Plan") for Covered Advertising,
including the amount of advertising space available for Covered Advertising and
its price, duration and rotation schedules. The Parties will use commercially
reasonable efforts to have the Advertising Plan completed and approved by both
Parties prior to actual sales of Covered Advertising. The Advertising Plan will
include a planned promotional calendar, including manufacturers, products,
product categories, and special events. The Advertising Plan and promotional
calendar will reflect the parties' agreed-upon strategic approach and will be
revised and updated no less than annually. xxxx.xxx and BBDC agree to identify
individuals within their respective companies who will be responsible for
implementation and maintenance of the Advertising Plan.
d. For products not stocked and inventoried by BBDC that xxxx.xxx
would like to sell via the xxxx.xxx Site, and potentially obtain advertising
revenues for, BBDC
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will have 30 days after receipt of a request from xxxx.xxx that BBDC supply it
such product, to begin to stock and inventory such product. In the event that
BBDC refuses or is otherwise unable to stock and inventory any such products
within the foregoing 30 day period, xxxx.xxx will have the right to purchase and
seek manufacturer advertising revenue for those products on its own with no
obligation to BBDC.
2. Duties of BBDC -- General. At its expense, BBDC will:
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a. conduct all marketing and sales activities relating to the
Covered Advertising;
b. be responsible for the design, layout, and production of the
advertisements (subject to joint approval by both xxxx.xxx and BBDC);
c. jointly with xxxx.xxx manage the relationship with purchasers
of Covered Advertising;
d. for purchasers of Covered Advertising whose credit limits are
exceeded, require prepayment to xxxx.xxx of amounts due for Covered Advertising;
and
3. Sales Price of Media Units.
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a. xxxx.xxx and BBDC will mutually agree upon rates ("Published
Rates") at which Covered Advertising will be sold. xxxx.xxx will publish such
rates in its rate card. The first such rate card will be published within ten
(10) days after execution of this Agreement. The Published Rates will be
inclusive of advertising agency commissions (that is, the Published Rates will
be "gross" rates). xxxx.xxx and BBDC may from time to time, mutually agree upon
adjustments to the Published Rates.
b. [**]
c. No less than monthly, xxxx.xxx will provide BBDC current
advertisement performance measurements as reasonably required to demonstrate
value to advertisers, including, as reasonably available, measures for use
volume and loyalty (hit rates, unique visitors, repeat visitors, average length
of stay, average sales per buyer, etc.), user demographics (visitors and
buyers), usage levels by day/time segment (e.g. busy and off-peak hours) and
affiliations and connectivity (including cooperative ventures and links to and
from third party sites).
d. Upon request, xxxx.xxx will provide BBDC with marketing and
promotional material ("Marketing Package") suitable for presentation to
manufacturers and other potential advertisers. The Marketing Package will
include a letter of agency and general information about xxxx.xxx and the
xxxx.xxx Site, including types of available advertising, information about the
Advertising Plan and promotional calendar, and general demographic information,
usage levels and affiliations and connectivity information suitable for
disclosure to potential advertisers on a non-confidential basis.
**Confidential treatment has been
requested with respect to the
information contained within the
"[**]" markings. Such marked
portions have been omitted from
this filing and have been filed
separately with the Securities and
Exchange Commission.
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4. Acceptance of Orders.
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a. For each new advertiser, BBDC will obtain and promptly forward
to xxxx.xxx a completed, signed "New Customer Information" form.
b. xxxx.xxx and BBDC will jointly evaluate each advertiser's
creditworthiness.
c. xxxx.xxx reserves the right to determine, in the exercise of
its reasonable discretion, not to accept a potential advertiser or
advertisement.
d. BBDC will sell Covered Advertising only pursuant to written
Insertion Orders in the form approved by xxxx.xxx, and only to advertisers
jointly approved by xxxx.xxx and BBDC. BBDC will not accept any advertiser's
Insertion Order if such order is inconsistent with the Parties' credit
determination for such advertiser, unless such advertiser prepays in full.
xxxx.xxx reserves the right, in its reasonable discretion, to reject any
Insertion Order.
e. BBDC will accept Insertion Orders only from advertisers whom
BBDC believes in good faith to be legitimate businesses operating in compliance
with applicable laws.
f. BBDC will submit to xxxx.xxx a monthly sales report on or
before the fifth business day of the following month. BBDC will furnish to
xxxx.xxx copies of all signed Insertion Orders within 24 hours of BBDC's receipt
thereof.
g. BBDC will not, without xxxx.xxx's prior approval, accept
payments or other valuable consideration related to Covered Advertising from
advertisers other than the payments to xxxx.xxx specified in xxxx.xxx's rate
card or the applicable Insertion Order. BBDC will report to xxxx.xxx all
payments and other valuable consideration related to Covered Advertising
received from advertisers, specifying the value of any such payments and
consideration. In the event that such consideration (or the agreed upon value
thereof) is not remitted to xxxx.xxx, xxxx.xxx will deduct from commissions
otherwise owed BBDC hereunder [**] the value of any Covered Advertising provided
in exchange for such consideration as xxxx.xxx's Net Revenue (as defined below)
in connection therewith.
h. xxxx.xxx will use its best efforts to make available
sufficient advertising space to permit BBDC to perform its obligations under
this Agreement, and to provide the technical capability for links from Covered
Advertising to the applicable manufacturer's web site.
5. Production.
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a. BBDC will be responsible for the layout, design, and
production of all advertising sold by BBDC or, at its election may delegate such
responsibility to xxxx.xxx, provided that BBDC will remain responsible for any
out-of-pocket costs incurred by xxxx.xxx in connection therewith. BBDC will use
best efforts to comply with such schedules and guidelines as xxxx.xxx may adopt
from time to time with respect thereto.
**Confidential treatment has been
requested with respect to the
information contained within the
"[**]" markings. Such marked
portions have been omitted from
this filing and have been filed
separately with the Securities and
Exchange Commission.
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b. BBDC will submit each advertisement to xxxx.xxx for approval.
Consistent with legal requirements for pharmaceuticals, foods and dietary
supplements and other similar products, neither party will modify manufacturer-
approved and provided text and layout in any manner so as to affect its
compliance with legal and regulatory requirements without subsequent re-approval
by the manufacturer.
c. xxxx.xxx and BBDC will jointly agree to guidelines for
advertising content and content quality for Covered Advertising, such guidelines
to be set forth in the Advertising Plan, and will jointly approve or disapprove
the content and quality of all Covered Advertising before insertion in the
xxxx.xxx Site.
d. xxxx.xxx will provide to BBDC advertising schedules for each
Insertion Order as soon as practicable after each such schedule is prepared.
Within ten (10) days following completion of an Insertion Order and at the end
of each month for advertising running more than one month, xxxx.xxx will provide
to the advertiser(with a copy to BBDC) an appropriate certificate of insertion
(proof of performance) in a form mutually agreed upon by the Parties
6. Invoicing, Collections and Remittances; Records.
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a. xxxx.xxx will be responsible for promptly invoicing
advertisers with respect to the sale of Covered Advertising.
b. BBDC will cooperate with xxxx.xxx to facilitate the collection
for xxxx.xxx of payments for Covered Advertising. [**}
c. The Parties will use diligent and reasonable commercial
efforts to ensure that all payments resulting from sale of Covered Advertising
are made to xxxx.xxx on a timely basis. xxxx.xxx reserves the right to take
whatever collection activity it deems appropriate including the institution of
suit to effect payment.
d. The Parties will consult from time to time regarding aging of
receivables and collection problems. BBDC will cooperate, at xxxx.xxx's
expense, in all respects with xxxx.xxx in the collection of receivables. BBDC's
commission, if any, will be paid from any such amounts collected by xxxx.xxx and
any such amounts, less out-of-pocket collection expenses, will be credited to
any applicable Guaranteed Minimum (as set forth on EXHIBIT A attached hereto)
owed by BBDC to xxxx.xxx.
e. Within 15 days after the last day of each calendar month
during the Term, xxxx.xxx will provide BBDC with information on an advertiser-
by-advertiser, Insertion Order-by-Insertion Order basis, Net Revenue during the
prior calendar month ("Monthly Report") and on each Wednesday will provide a
similar report with respect to the prior week. In the event that the sum of (i)
all Make-Up Payments (as defined below) previously paid by BBDC and (ii)
aggregate Net Revenue from the date hereof, for any period set forth on Exhibit
A attached hereto ("Prior Payments") is less than the Guaranteed Minimum set
forth for such period on Exhibit A, the applicable Monthly Report will include
an invoice for the difference
**Confidential treatment has been
requested with respect to the
information contained within the
"[**]" markings. Such marked
portions have been omitted from
this filing and have been filed
separately with the Securities and
Exchange Commission.
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between the applicable Guaranteed Minimum and the Prior Payments ("Make-Up
Payment"). BBDC will be entitled to use advertising on the xxxx.xxx Site in an
amount equal to any Make-Up Payments paid hereunder for its own benefit or the
benefit of any of its affiliates or the benefit of its Good Neighbor Pharmacy
network of independent stores. Make-Up Payments will be reduced to the extent
payment for any Covered Advertising is uncollectable due to xxxx.xxx's failure
to comply with a valid Insertion Order.
f. BBDC will remit any Make-Up Payments within [**] days after
receipt of the applicable invoice.
7. Audit. Each party will have the right, upon reasonable notice and
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during business hours, to audit the other party's books and records relating to
the other party's duties and amounts due and payable hereunder.
8. Commissions. To the extent that the sum of aggregate Net Revenue
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and Make-Up Payments through July 31, 2000 [**] and with respect to the sale of
all Covered Advertising after such date (excluding in each case sales of Covered
Advertising by xxxx.xxx pursuant to Section 1.d above), [**] of the sum or such
Net Revenue and Make-Up Payments. Following the expiration or earlier
termination of this Agreement, BBDC will be entitled to such commissions for any
Covered Advertising sold during the Term as would have been payable had this
Agreement not expired or been terminated.
9. Term and Termination.
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a. Subject to Sections 1.d and 9.b hereof, BBDC will remain the
exclusive sales representative for Covered Advertising for a period of ten years
from the date hereof, at which time this Agreement will terminate unless prior
to that time the parties have agreed in writing to extend the term of the
Agreement. Notwithstanding the foregoing, the parties at any time during the
Term may mutually agree to terminate BBDC's exclusivity hereunder.
b. BBDC may elect, by written notice anytime prior to August 1,
2000, to terminate its exclusivity hereunder. In the event that BBDC elects at
such time to not terminate its exclusivity, it shall within thirty (30) days
after the end of the second year of this Agreement ("Year Two"), [**]. In the
event that during any one year period after Year Two the aggregate Net Revenue
for such year [**] Notwithstanding the foregoing, on or about February 1, 2001,
the Parties shall meet to discuss in good faith the feasibility of retaining
BBDC's exclusivity for the Term of this Agreement.
c. Either party may terminate this Agreement upon written notice
if the other party fails to cure a material breach of any obligation hereunder
within 30 days after written notice specifying such breach. If, because of the
nature of such breach, the breaching
**Confidential treatment has been
requested with respect to the
information contained within the
"[**]" markings. Such marked
portions have been omitted from
this filing and have been filed
separately with the Securities and
Exchange Commission.
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party cannot effect a cure thereof within such 30 day period, it may have such
additional time as will be reasonably necessary to do so, provided it
immediately commences diligently to cure such breach upon notice thereof from
the noticing party and continues thereafter to use its best efforts to do so.
d. Upon the termination of this Agreement for any reason, each
party will discontinue the use of any trademarks of the other party and any item
containing such trademarks, such as signs, logos, stationery, or business cards,
and shall return to its owner all materials otherwise identifying or relating to
its business; cease representing itself in any fashion as a representative of
the other party; and return all documents, records or other materials
(including, without limitation, all copies thereof regardless of the storage
media) which were provided in connection herewith. Upon request, each party
will promptly provide the other with documentation relating to any agreements
with advertisers or sales orders submitted by advertisers.
e. Obligations that have accrued prior to the effective date of
termination will survive termination.
10. Indemnity; Insurance.
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a. xxxx.xxx will defend, indemnify, and hold BBDC and its
directors, officers, shareholders, employees, agents, and affiliates ("BBDC
Indemnitees") harmless from and against any claims by third parties (including
governmental authorities) and any losses, damages, settlements, fines,
penalties, liabilities or expenses resulting therefrom (collectively, "Claims"),
to the extent such Claims arise out of, relate to, or are based on the content
of the xxxx.xxx Site, or actions undertaken by BBDC pursuant to xxxx.xxx's
express instructions.
b. BBDC will defend, indemnify, and hold xxxx.xxx and its
directors, officers, shareholders, employees, agents, and affiliates ("xxxx.xxx
Indemnitees") harmless from and against any Claims, to the extent such Claims
arise out of, relate to, or are based on actions or omissions of BBDC taken in
connection with or pursuant to this Agreement, except to the extent that such
actions or omissions are based on express instructions given by xxxx.xxx.
c. xxxx.xxx will obtain and maintain during the Term the
insurance coverage described on EXHIBIT B attached hereto with carriers
reasonably acceptable to BBDC and upon BBDC's request will provide BBDC evidence
of such insurance in the form of certified copies of the applicable policies or
an appropriate certificate of insurance in form reasonably acceptable to the
parties. Each such policy will name BBDC as an additional insured and provide
that BBDC is to be notified at least 30 days prior to any cancellation thereof.
d. Under no circumstances will either party be liable to the
other or to any third party for loss of profits, or incidental or consequential
damages, sustained or incurred in any manner in connection with this Agreement,
even if such party has been advised of the possibility of such damages.
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11. Arbitration.
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a. For any dispute or controversy between the parties which
arises out of or relates to this Agreement or the grounds for its termination,
the parties agree to meet to try to resolve the dispute. Such meeting will be
attended by individuals with decision-making authority to attempt in good faith,
to negotiate a resolution of the dispute prior to pursuing other available
remedies. If, within thirty days after the date set for such meeting, the
parties have not succeeded in negotiating a resolution of the dispute, either
party may request that such dispute be resolved through final and binding
arbitration. Such arbitration will be conducted in English by three arbitrators
familiar with the health care industry, in accordance with the then-current
Rules of Conciliation and Arbitration of the American Arbitration Association.
Such arbitrators will be selected by mutual agreement of the parties, or failing
such agreement, each party will select one arbitrator and the two selected
arbitrators will mutually agree upon the selection of a third arbitrator. This
Agreement will be governed by and construed according to the laws of the State
of California. The arbitrators will be bound to apply such California law, and
where applicable, federal statutory law. The parties will be afforded a
reasonable period of time to conduct discovery prior to the arbitration. A court
reporter will be present at all arbitration proceedings in order to transcribe
them and such transcription will be the official record of such proceedings for
purposes of any judicial enforcement or review proceeding. The arbitrators'
decision will specify the basis for any award and the types of damages awarded.
The parties will bear the cost of such arbitration equally and the prevailing
party in any such arbitration will be entitled to reasonable attorney's fees, in
addition to any other award ordered by the arbitrators. The prevailing party in
any judicial enforcement or review proceeding will also be entitled to
reasonable attorney's fees and costs, in addition to any other award ordered by
the court. If judicial enforcement or review is sought by either party, judgment
may be entered in any court of competent jurisdiction. This Section will survive
any expiration or termination of this Agreement and will continue to be
enforceable in the event of the bankruptcy of a party.
b. Notwithstanding the foregoing, a request by either party for
preliminary or permanent injunctive relief, whether prohibitive or mandatory, or
provisional relief such as writs of attachments or possession, shall not be
subject to arbitration and may be adjudicated only before a court of competent
jurisdiction.
12. Confidentiality. As used in this Section, "Confidential
---------------
Information" means trade secrets, operating manuals, customer or client lists,
business information, marketing programs, plans and strategies, financial
information, memoranda, work papers, notes, reports and any sales information
which either party ("disclosing party") makes available, or has previously made
available, to the other ("receiving party") in connection with this Agreement,
as well as this Agreement itself. Unless otherwise set forth in this Agreement,
the receiving party: (i) will not disclose Confidential Information to any third
party without first obtaining the express written permission of the disclosing
party, (ii) will use Confidential Information only as is necessary to fulfill
its obligations pursuant to this Agreement, and (iii) will limit such disclosure
to any of its officers, employees or agents on a need-to-know basis for purposes
of fulfilling its obligations under this Agreement. Notwithstanding anything to
the contrary in this Section, Confidential Information will not include: (a)
information that is approved for public release by the written authorization of
the disclosing party; (b) information that was disclosed to the receiving party
by a third party having legal right to make such disclosure; (c) information
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that is or becomes in the public domain; (d) information that the receiving
party can establish was independently developed without breaching this
Agreement; (e) information that the receiving party is required to disclose
pursuant to law, regulation, rule, act, or court order of any governmental
authority or agency.
13. General.
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a. Attorney's Fees. The prevailing party in any dispute over the
---------------
performance or construction of this Agreement will be entitled to recover its
reasonable attorney's fees and costs.
b. Compliance with Laws. Each party shall comply with all laws,
--------------------
rules and regulations, whether local, state, or federal, applicable to its
activities hereunder, but only to the extent such laws, rules and regulations
are applicable to such party.
c. Relationship of the Parties. Except as expressly set forth in
---------------------------
this Agreement, nothing contained in this Agreement will be construed to create
an agency relationship or a joint venture or partnership between the Parties and
neither party will have any right, power or authority to act on behalf of or
bind the other party.
d. Choice of Law. This Agreement will be construed under the
-------------
laws of the State of California, as applied to contracts entered into and
performed completely within California.
e. Non-Solicitation. For the Term and for one year after the
----------------
termination of this Agreement, each party agrees not to directly or indirectly
solicit employees of the other party.
f. Waivers. The rights of the parties under this Agreement are
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cumulative. The waiver by any party of any term, condition or breach hereof
shall not constitute a waiver of any other such matter.
g. Force Majeure. Neither party shall be liable for loss or
-------------
damage or be deemed to be in breach of this Agreement if its failure to perform
its obligations results from: (1) compliance with any law, ruling, order,
regulation, requirement or instruction of any federal, state or municipal
government or any department or agency thereof or any court of competent
jurisdiction; (2) acts or omissions of the other party in violation of this
Agreement; or (3) acts of God, fires, strikes, embargoes, war, insurrection,
riot, and other causes beyond the reasonable control of the party. Any delay
resulting from any said causes shall extend performance accordingly or excuse
performance, in whole or in part, as may be reasonable.
h. Assignability. Either party may assign this Agreement,
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without consent, upon 30 days' written notice to the other party, to a parent,
or to a subsidiary. Either party may assign the Agreement to an affiliated
company, or to an entity in connection with any merger, consolidation or
reorganization with, or the sale of all of the party's assets to, such entity,
so long as the assignee is financially secure. Except to the extent set forth
above, neither party may assign this Agreement or any of its obligations
hereunder without the other party's prior written
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consent, which consent may not be unreasonably withheld, and any assignment
without such consent shall be null and void.
i. Survivability. All representations, warranties, covenants and
-------------
obligations of either party set forth herein shall survive the expiration or
termination of this Agreement and the performance by either party hereunder and
shall continue in full force and effect notwithstanding such expiration or
termination or performance until they are satisfied in full or by their nature
expire.
j. Captions, Interpretation. Section headings are for
------------------------
convenience of reference only, do not form a part of this Agreement and will not
affect the meaning of this Agreement. Words used, regardless of the number and
gender specifically used, will be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires. Any reference to a "person" will include an
individual, firm, corporation, partnership, trust, governmental authority or
body, association, unincorporated organization or any other entity. The word
"and" includes the word "or." The word "or" is disjunctive but not necessarily
exclusive.
k. Notices. All notices, requests, demands and other
-------
communications hereunder shall be in writing and shall be deemed given upon
receipt or three days after mailing, whichever is sooner, if personally
delivered or mailed, certified mail return receipt requested, or sent by
overnight carrier to the following addresses:
If to xxxx.xxx:
xxxx.xxx, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to
Howard, Rice, et al
0 Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx XX 00000
Attn: Xxxxxx Star, Esq.
If to BBDC:
Bergen Xxxxxxxx Drug Company
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Bergen Xxxxxxxx Corporation
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: E.V.P., Chief Legal Officer & Secretary
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
l. Entire Agreement. This Agreement represents the entire
----------------
agreement of the parties and expressly supersedes and replaces in full any prior
agreements between the parties relating to the subject matter hereof. This
Agreement may only be amended or superseded by written agreement executed by
both parties.
IN WITNESS WHEREOF, intending to be legally bound, the parties
have executed this Agreement by their duly authorized representatives as of the
date first above written.
XXXX.XXX, INC. BERGEN XXXXXXXX DRUG COMPANY
By: /s/ Xxxxxxx Xx Xxxxx By: /s/ Xxxxx Xxxxxxx
Its: CFO Its: President
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