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Exhibit 10.10
CONFORMED COPY
MUTUAL SERVICES AGREEMENT
MUTUAL SERVICES AGREEMENT (this "Agreement"), dated as of July 15,
1999, between Viacom International Inc., a Delaware corporation ("VII"), and
MTVN Online L.P., a Delaware limited partnership (as such entity may exist in
partnership form or in a reorganized, corporate or other form, the
"Partnership"). Capitalized terms used herein but not defined herein shall have
the respective meanings assigned to such terms in the Partnership Agreement (as
defined below).
WHEREAS, on the date hereof, Liberty Media Corporation, a Delaware
corporation ("Liberty"), TCI Music, Inc., a Delaware corporation ("TCI Music"),
MTV Networks, a division of VII ("MTVN"), MTVN Online Partner I LLC, a Delaware
limited liability company ("VLLC"), MTVN Online Inc., a Delaware corporation,
Imagine Radio, Inc., a California corporation ("Imagine"), SonicNet, Inc., a
Delaware corporation ("SonicNet"), The Box Worldwide Inc., a Florida corporation
("Box"), VJN LPTV Inc., a Delaware corporation and the Partnership, entered into
an Organization Agreement (the "Organization Agreement"); and
WHEREAS, contemporaneously therewith VLLC, Imagine (together with VLLC,
"MTVNS"), SonicNet and Box (together with SonicNet, "Tune") entered into an
Agreement of Limited Partnership, of even date herewith (the "Partnership
Agreement") whereby Tune and MTVNS formed the Partnership to conduct the
Business as defined in the Partnership Agreement as of the date hereof (the
"Business"); and
WHEREAS, in connection with the formation of the Partnership, VII has
agreed to provide directly or through MTVN, InfoWorks, a division of VII, MTVN
Online Inc., MTV Europe and MTVN Latin America Inc. (collectively "Viacom")
certain administrative, technical, support and other services (the
"Administrative Services") necessary to the operation of the Partnership; and
WHEREAS, Viacom desires that the Partnership provide certain services
described on Schedule II (the "Partnership Services") to certain business units
or divisions of VII listed on Schedule III (the "MTVN Businesses"), and the
Partnership has agreed to provide such services.
WHEREAS, Viacom and the Partnership desire to enter into this Agreement
which sets forth the general terms upon which (i) Viacom shall provide to the
Partnership the Administrative Services requested by the Partnership and (ii)
the Partnership shall provide to the MTVN Businesses the Partnership Services
requested by MTVN (the Partnership Services, the Administrative Services and
Additional Services (as defined below) may be referred to collectively as the
"Services").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereto agree as follows:
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1. Provision of Services.
(a) Viacom, at the request of the Partnership, shall provide
the Administrative Services to the Partnership necessary to support the Business
in substantially the same manner and to substantially the same extent that such
services were provided to the businesses included in the MTVN Contribution (the
"Contributed Businesses") prior to the date hereof as adjusted proportionately
to reflect the increased size of the business of the Partnership as a result of
the Tune Contribution. The Administrative Services may include the items set
forth on Schedule I. Viacom shall not be obligated to acquire additional
personnel or resources to provide Administrative Services.
(b) The Partnership shall provide the Partnership Services to
the MTVN Businesses, as such Partnership Services may from time to time be
requested by the applicable MTVN Business; provided, however, that the
Partnership shall not be obligated to acquire additional personnel or resources
to provide Partnership Services.
2. Standard of Performance.
(a) Viacom shall provide the Administrative Services and any
Additional Services in a commercially reasonable manner and with the same level
of care that Viacom performs such services on its own behalf and for other
similarly situated non wholly-owned Controlled Affiliates of Viacom. The
Partnership shall provide the Partnership Services in a commercially reasonable
manner and with the same level of care that the Partnership provides such
services on its own behalf. All Administrative Services and any Additional
Services provided by Viacom and the Partnership shall be in accordance with, and
shall not violate, any laws, rules or regulations of any Governmental Entity,
and the provision of such Administrative Services shall not violate the rights
of any third party.
(b) If the Partnership desires to have Viacom provide any
additional services (collectively, the "Additional Services") arising out of or
relating to the Services, it shall give Viacom prior written notice thereof,
which shall include reasonable details relating to the request. Viacom and the
Partnership shall negotiate in good faith whether such Additional Services shall
be provided (if at all). It is agreed and understood that (i) Viacom shall not
in any event be required to upgrade or expand its infrastructure, facilities or
systems to provide the Additional Services, and (ii) any Additional Services
shall be provided, if at all, on the same terms as Administrative Services are
provided hereunder.
3. Force Majeure; Emergency Situations. In the event that war, fire,
explosion, flood, accident, strike, riot, act or omission of any governmental
authority, act of God, or other contingency beyond the reasonable control of a
party causes cessation or interruption of such party's performance hereunder,
performance by such party, other than an obligation to pay money, shall be
temporarily excused for the period of the disability, without liability,
provided that such party shall have, promptly after it has actual knowledge of
the beginning of any excusable delay, notified the other party of such delay,
the reason therefor, and the probable duration and consequence thereof. The
party so excused shall use commercially reasonable efforts to resume performance
of its obligations hereunder with the least possible delay.
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4. Charges and Payment for Administrative Services.
(a) Fees. The Partnership shall reimburse Viacom for: (i) all
direct costs and expenses without markup incurred in good faith associated with
or related to the provision by Viacom of the Administrative Services and any
Additional Services and (ii) the Partnership's pro rata share of Viacom's
indirect overhead costs common to the Partnership and other businesses of Viacom
related to a particular Administrative Service or Additional Service, each
allocation to be based on the actual usage by the Partnership of such Service.
To the extent any Administrative Services or Additional Service requires the
purchase of equipment such equipment shall be leased to the Partnership under
either a capital or operating lease, whichever is applicable. The Partnership
shall make lease rental payments in accordance with the schedule set forth with
the purchase of said equipment, such schedule to be based on cost and usage of
the equipment. Viacom shall keep true, complete and accurate books of account
containing such particulars as may be necessary for the purpose of calculating
the above costs and shall make such books and records available for inspection
by representatives of the Partnership during normal business hours on reasonable
advance notice.
(b) Each calendar month, Viacom will promptly invoice the
Partnership for the amounts payable pursuant to this Agreement. Payment will be
made by the Partnership promptly after receipt of such invoice, but in no event
more than 30 days after receipt.
5. Charges and Payment for Partnership Services.
(a) Fees. Viacom shall reimburse the Partnership for: (i) all
direct costs and expenses without markup incurred in good faith associated with
or related to the provision by the Partnership of the Partnership Services and
(ii) Viacom's pro rata share of the Partnership's indirect overhead costs common
to Viacom and the Contributed Businesses related to a particular Partnership
Service, each allocation to be based on the actual usage by the applicable MTVN
Business. The Partnership shall keep true, complete and accurate books of
account containing such particulars as may be necessary for the purpose of
calculating the above costs and shall make such books and records available for
inspection by representatives of Viacom during normal business hours on
reasonable advance notice.
(b) Each calendar month, the Partnership will promptly invoice
Viacom for the amounts payable pursuant to this Agreement. Payment will be made
by Viacom promptly after receipt of such invoice, but in no event more than 30
days after receipt.
6. Indemnity.
(a) Each party shall at all times indemnify, defend and hold
the other party, its Affiliates, officers, directors, partners, members or
agents, harmless from and against any and all third party claims, losses, costs,
liabilities, damages and expenses (including reasonable attorneys' fees) of
every kind, nature and description, arising out of either party's gross
negligence or wilful misconduct in the performance of its obligations hereunder.
Each party agrees to promptly notify the other party in writing of any
indemnifiable claim, but the failure to so notify shall not relieve an
indemnifying party of any liability which it may have to an
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indemnified party except to the extent the indemnifying party is materially
prejudiced by the failure to give such prompt notice.
(b) An indemnifying party shall have the right to participate
in and assume the defense of any such third party claim for which
indemnification is sought. The party claiming indemnification shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such separate counsel shall not be
at the expense of the party against whom indemnification is sought unless (i)
the indemnified party shall have been advised by its counsel that use of the
same counsel to represent both the indemnifying party and the indemnified party
would present a conflict of interest (which shall be deemed to include any case
where there may be a legal defense or claim available to the indemnified party
which is different from or additional to those available to the indemnifying
party), or (ii) the indemnifying party shall fail vigorously to defend or
prosecute such claim or demand within a reasonable time, in which case the
indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party and the indemnifying party shall pay the
costs and expenses of the indemnified party's counsel. Except to the extent
otherwise provided above in this Section 6, the indemnifying party shall
reimburse each party entitled to indemnification hereunder the costs of
investigating and defending any claim, loss, damage, liability, cost or expense
giving rise to such indemnification obligation.
(c) An indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with such consent, or if
there be a final judgment for the plaintiff, the indemnifying party shall
indemnify and hold harmless the indemnified parties from and against any loss or
liability (to the extent stated above) by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability arising out of such proceeding.
7. Limitation of the Parties' Liability.
NO PARTY HERETO MAKES ANY WARRANTY REGARDING THE SERVICES IT
PROVIDES, AND EACH PARTY DISCLAIMS ALL WARRANTIES, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, WITH
RESPECT TO THE SERVICES.
8. Term and Termination. The term of this Agreement shall begin on the
date hereof and shall remain in full force and effect for five years from the
date hereof unless earlier terminated as follows:
(a) By the Chief Executive Officer of the Partnership in whole
or in part with respect to any Administrative Services or Additional Services,
upon thirty (30) days prior written notice to Viacom (the "Administrative
Services Termination Date").
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(b) By MTVN in whole or in part with respect to any
Partnership Services, upon thirty (30) days prior written notice to the
Partnership (the "Termination Date").
(c) By either party in the event of a material breach by the
other party, provided that such party has given the breaching party thirty (30)
days written notice of such breach, identified the nature of the breach, and
within such thirty-day cure period the breaching party has failed to cure the
asserted breach. The parties agree that for so long as the MTVN Stockholder
Group (i) owns at least 50.1% of the outstanding equity interests of the
Partnership or (ii) at the time of such breach is entitled to designate pursuant
to the Partnership Agreement a majority of the Management Committee of the
Partnership or, following the Reorganization a majority of the Board of
Directors of the corporate successor to the Partnership. MTVN shall not have any
right to terminate this Agreement under this Section 7(c) as a result of or
based upon any breach by the Partnership of this Agreement unless the
Partnership fails to make any payment due to VII hereunder.
(d) By either party upon written notice to the other party if
such other party shall file a petition in bankruptcy or insolvency, or a
petition for reorganization or adjustment of debts or for the appointment of a
receiver or trustee of all or a substantial portion of its property, or shall
make an assignment for the benefit of creditors, or if a petition in bankruptcy
or other petition described in this paragraph is filed against such other party
and shall not be discharged within 60 days thereafter.
9. Notices. Except as expressly provided herein, notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed (certified or registered mail, postage
prepaid, return receipt requested) or sent by facsimile copies of the sending
party:
(a) VII: Viacom International Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attn: General Counsel
(b) the Partnership: MTVN Online L.P.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attn: Xx. Xxxx Xxxxxxx
or to such other party or address as a party furnishes to the other in writing.
All notices and other communications given to a party in accordance with the
provisions of this Agreement shall be deemed to have been given (i) three
Business Days after the same are sent by certified or registered mail, postage
prepaid, return receipt requested, (ii) when delivered by hand or transmitted by
facsimile (confirmation received) unless delivered on a day which is not a
Business Day or after 5:00 p.m., local time, at the place or receipt, in which
case such notice
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shall be deemed to have been given on the next succeeding Business Day or (iii)
one Business Day after the same are sent by a reliable overnight courier
service, with acknowledgment of receipt.
10. Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party hereto. In connection with the Reorganization the
Partnership shall assign all of its rights and obligations hereunder to the
corporate successor to all or substantially all of the Partnership's assets
pursuant to an assignment and assumption agreement in form and substance
reasonably satisfactory to VII and such corporate successor shall accept and
assume the same. Upon such assignment and assumption, the Partnership shall be
released from all of the obligations hereunder.
11. Waiver of Default. No consent or waiver, express or implied, by
either party with respect to any breach or default by the other party hereunder
shall be deemed or construed to be a consent or waiver with respect to any other
breach or default by any party of the same provision or any other provision of
this Agreement. No waiver of any provision of this Agreement shall be effective
unless in writing and signed by the party against which enforcement thereof is
to be sought. Failure on the part of a party to complain of any act or failure
to act of the other party or to declare such party in default shall not be
deemed or constitute a waiver of any rights hereunder.
12. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
giving effect to any of its conflicts of law provisions.
13. Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14. Headings. The headings of the sections of this Agreement are
inserted for convenience only and shall not modify, define or limit and the
terms or provisions of this Agreement.
15. Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
16. No Presumption. This Agreement shall be construed without regard to
any presumption or rule requiring construction or interpretation against the
party drafting or cause any instrument to be drafted.
17. Entire Agreement. This Agreement, including the Schedules hereto
sets forth the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein, and supersedes all prior
agreements, promises, covenants, arrangements,
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communications, representations and warranties, whether oral or written, by an
officer, employee or representative of any party hereto, including the letter
agreement dated May 19, 1999 among VII, Liberty and TCI Music.
18. Third Party Beneficiary. For so long as the Tune Stockholder Group
is entitled to designate a Representative to the Management Committee of the
Partnership pursuant to the Partnership Agreement, TCI Music shall be a third
party beneficiary of VII's obligations to the Partnership hereunder insofar as
and only to the extent it relates to the right to enforce on behalf of the
Partnership the Partnership's rights hereunder in a separate cause of action for
the benefit of the Partnership. The Partnership shall indemnify and hold
harmless TCI Music from and against any costs and expenses (including reasonable
attorneys' fees) incurred by it in pursuing such a cause of action if such cause
of action is resolved in favor of the Partnership and TCI Music. Except as set
forth in the first sentence to this Section 17, this Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
VIACOM INTERNATIONAL INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Sr. Vice President and
General Counsel
MTVN ONLINE L.P.
By: MTVN ONLINE PARTNER I LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Sr. Vice President, General
Counsel and Assistant Secretary
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SCHEDULE I
DESCRIPTION OF ADMINISTRATIVE SERVICES AND CHARGES
A. SERVICES.
1. Accounts Payable/Purchasing Services. Accounting services with
respect to the following: (A) general accounting
(billing/invoicing, accounts payable services, accounts
receivables management, tracking and payment of rights and
clearances, billing and collection services and maintenance of
general ledgers, monthly close, chart of account and balance
sheet maintenance), (B) cash management and banking services,
including without limitation wire transactions, (C) budget
preparation (including without limitation remote budgets); and
(D) maintenance and operation of purchase order system.
2. Financial and Currency Trading Services. Financial, payroll,
accounting and risk management services required with respect
to the Partnership's operations, including the services of
financial personnel to enable the Partnership to maintain
financial books of account and records, maintain suitable
books and records of control and accounting procedures,
maintain production accounting records.
3. Auditing Services. Auditing services, including internal and
external audits, quality assurance, security, etc.
4. Tax Services. Tax services required with respect to the
Partnership's operations including (i) the preparation and
filing of federal, state and local returns which include the
Partnership and (ii) the payment of taxes shown to be due on
such tax returns.
5. Legal Services. Legal services from internal legal staff for
requested legal matters, including material transactions,
contract negotiation and review, financing arrangements,
intellectual property matters (including domain name
registrations, other filings, prosecutions), labor matters,
real estate matters, ERISA matters, tax matters, regulatory
compliance, governmental relations and lobbying, litigation
(including strategy and oversight) and such other legal
matters as are customarily handled by Viacom's internal legal
staff.
6. Information Services. Information services including (i)
design, construction and installation services for high-end
production graphic and animation workstations, (ii) online
development networks and networking; (iii) hosting and
collocation services including services relating to production
and publishing, encoding, streaming, personalization, site
performance, scheduling, and monitoring (using Viacom's and
third party network hardware, software and related
facilities), (iv) backend development (e.g. HTML, graphics),
(v) maintenance and support services for the Partnership's
computer hardware, software and related facilities, including
messaging, (vi) training and research services for the
Partnership's
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employees, (vii) consultation services concerning the
Partnership's information service needs, including preparation
of RFPs, the design and architecture of computer systems and
networks, internet hosting services, the purchase of computer
hardware and software and preparation of documentation and
plans, and (viii) technical quality assurance services.
7. Employee Benefits. To the extent the Partnership and Viacom
Inc. agree, coverage of Partnership employees under one or
more employee benefit plans sponsored or maintained by Viacom
Inc. or an affiliate of Viacom Inc.
8. Human Resource Services. Human resource services including
assistance with (i) recruiting, screening, hiring, review,
evaluation, training, development, orientation, promotion and
termination of Partnership employees including without
limitation production personnel; (ii) the development,
implementation and administration of employment policies and
manuals, the coordination of personnel allocation and
utilization; (iii) the development, implementation and
operation of benefit plans and programs; (iv) compensation
planning and administration, including compensation analysis
and preparation and implementation of merit, incentive and
bonus plans; (iv) monitoring and tracking of employee records.
The Human Resource services relating to benefit plans and
programs may include assistance with benefits planning and
administration, 401K plans, disability programs, enrollment
and re-enrollment. Notwithstanding the foregoing, the
Partnership shall make all decisions regarding (a) the hiring,
promotion, demotion, sanctioning or termination of all
Partnership personnel, (b) compensation, (c) employment
policies, and (d) all other decisions concerning its
personnel.
9. Insurance Services. Provision of usual and necessary business
insurance including property and casualty (including general
liability and workers compensation), and Officers and
Directors Liability Insurance.
10. Facilities Management/Operations Services. Assistance in real
estate services including the negotiation of lease
arrangements (for current and new space), facilities
maintenance and building services, facility renovations and
build-outs, purchasing and installation of furniture,
fixtures, telecommunications services and systems, production
and other equipment; purchase of supplies, provision of
duplication services, mail room and shipping services, courier
services, reprographics, security services and general
oversight of facilities as well as the management and
organization of remote site logistics; provision of office
space.
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11. Creative Services. Creative Services as follows:
Contract management services
Rights and Clearances services
Talent negotiation and union analysis
Access to edit rooms and editing support services (charged
pursuant to the internal rate card)
Access to audio and video processing technologies
Technical/production consulting
Production related, technology demonstrations
12. Other Services. Services related to corporate development,
public relations, including contacts with various news,
consumer and trade publication media and securities analysts;
access to market research and music entertainment news
(including news developed internally and acquired from third
party sources to the extent permitted by such third party
sources), travel and event management, subscription ordering,
etc.
13. International Management Services. Services related to the
management of the international online businesses, including
the management of international Partnership employees.
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SCHEDULE II
DESCRIPTION OF PARTNERSHIP SERVICES AND CHARGES
A. SERVICES.
1) Provide the various programming services owned by Viacom and
operated by MTVN with access to the Partnership's market
research and music entertainment news (including internal and
third party sources, to the extent permitted by such third
party sources) in a manner consistent with the past practices
of the Contributed Businesses.
2) Provide the various programming services owned by Viacom and
operated by MTVN with online production and hosting services
relating to the operation and maintenance of "trade sites"
which provide certain information (provided by the programming
services to the Partnership) to customers and suppliers of
such programming services in a manner consistent with the past
practices of the Contributed Businesses.
3) Provide such services to the MTV Asia online business as
contemplated to be performed as of the date hereof pursuant to
the joint venture agreement of MTVN or an affiliate of MTVN
and Tricast (or its successor) to operate an "MTV" branded
interactive consumer service based on the MTV Asia television
services; provided that MTVN shall not materially expand the
scope of rights that have been granted to such joint venture
as of the date hereof.
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SCHEDULE III
SERVICED BUSINESSES
1. MTVN
2. MTV Asia
3. Tricast/Asia
4. MTV Brazil
5. MTV Latin America
6. MTV/VH1 Europe
7. MTV Russia
8. MTV Europe
