Exhibit 10.7
XXXXXXX.XXX CORPORATION
LICENSE AND DISTRIBUTION AGREEMENT
This Agreement ("Agreement") is entered into this 26th day of June,
2000, by and between Xxxxxxx.xxx Corporation, a Washington corporation
("Sunhawk") and Naxos of America, Inc.("Publisher").
RECITALS
WHEREAS, Publisher possesses the right to license to Sunhawk
copyrighted graphical or audio Works; and
WHEREAS, Sunhawk digitalizes, prepares, enhances and distributes
digital sheet music and digital audio products via Sunhawk's digital
distribution system; and
WHEREAS, Publisher intends to convert its graphical and/or audio media
into Sunhawk's digital format to be distributed using Sunhawk's digital
distribution system, and Sunhawk intends to provide Publisher with the means to
do so.
AGREEMENT
Now Therefore, in consideration of the mutual covenants and agreements
set forth below, the parties agree as follows:
1. DEFINITIONS.
For the purposes of this Agreement, the following terms shall have the
following meanings:
a. "Audio Product" means Audio Works converted into the digital Sunhawk
Format.
b. "Bundled Product" means a combination of Audio Product together with
either the Solero Product or the Scanned Product, PROVIDED, HOWEVER,
that Sunhawk owns of 100% of the distribution rights of the Scanned
Product or Solero Product;
c. "Convert" means digitalize, prepare, enhance, save and/or deliver
Works in a Sunhawk Format.
d. "DDS" refers to Sunhawk's Digital Distribution System, which means
Sunhawk's proprietary method of encoding, electronically transmitting,
decoding and maintaining the distribution of digital media.
e. "Net Receipts" means the gross amount of monies actually received by
Sunhawk, or credited to Sunhawk's account from the sale of Audio,
Solero and Scanned Products provided by Publisher, less any returns,
refunds, taxes, discounts, chargebacks, credit card and any other
online payment method fees.
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LICENSE AGREEMENT Page 1
f. "Scanned Product" means graphical Works after being stored in a
digital format.
g. "Solero Product" means graphical Works converted into the digital
Sunhawk Format.
h. "Solero Viewer" means Sunhawk's current digital player/viewer as well
as any improved or modified digital player/viewer(s) that Sunhawk may
distribute during the term of this Agreement, and shall include
co-branded or third party branded viewers distributed under license
from Sunhawk.
i. "Sunhawk Format" means that proprietary Sunhawk data format compatible
with Sunhawk's DDS, and into which the Solero Product or the Audio
Product are converted.
j. "Work(s)" means graphical or audio media supplied by the Publisher
prior to being converted into Audio Product, Solero Product, or
Scanned Product.
2. LICENSE.
Publisher grants to Sunhawk the following rights:
A. CONVERSION AND SCANNING. Sunhawk shall be entitled to convert Works
into the appropriate Solero Product, Audio Product and Scanned
Product.
b. REPRODUCTION AND DISTRIBUTION. Sunhawk shall be entitled to reproduce
and distribute Audio Product, Solero Product and Scanned Product.
Sunhawk shall be entitled to use, and grant end-users the right to
use, purchase, download, view, manipulate, transpose, display,
preview, print, play, and store Audio Product, Solero Product and
Scanned Product.
C. PROMOTIONAL MATERIAL. Sunhawk shall be entitled to copy, manipulate
and display on Sunhawk's website, on the websites of third parties
designated by Sunhawk, and in Sunhawk's promotional material, those
pieces CD covers, text, liner notes, names, likenesses and photographs
of composers and artists included in Publisher's retail packaging of a
particular audio media Work. For example, if Publisher's CD X is
packaged with a cover, liner notes and a photograph of the featured
artist, then this clause shall be deemed to authorize Sunhawk to use
these particular materials for purposes contemplated by this
Agreement. From time to time, Publisher may also provide Sunhawk with
promotional materials such as sales sheets, posters, brochures or
other visual or graphical materials for Sunhawk to copy, manipulate
and display as set forth above.
3. CONVERSION AND SCANNING.
Sunhawk and Publisher agree that the conversion and scanning of all works
subject to this Agreement shall be effected as follows:
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A. MATERIALS. Publisher shall deliver to Sunhawk the Works described on
Exhibit "A" in the format described thereon. Additional Works may be
provided with the mutual consent of Publisher and Sunhawk. Publisher
shall provide Sunhawk with copyright information for all Works, which
Sunhawk shall include with each Audio Product, Solero Product, and/or
Scanned Product. Publisher shall also supply any promotional material,
as described in Section 2(c) above, associated with the Works.
B. CONVERSION AND SCANNING. Upon receipt of the Works, copyright
information, and promotional material, Sunhawk shall Convert the Works
or Scan the Works into the agreed upon Audio Product, Solero Product
and/or Scanned Product and store the Audio Product, Solero Product and
Scanned Product for distribution.
C. COSTS. Sunhawk shall pay for all costs associated with the Conversion
and scanning of the Works into the Audio Product.
D. OWNERSHIP. All title to, and ownership in, any intellectual property
and all other rights in the Audio Product, Solero Product, and/or
Scanned Product, digital files, file format, software, code or other
material or information included in the Solero Product, Audio Product,
and/or Scanned Product shall belong to Sunhawk subject to Publisher's
ownership of the copyrights in the underlying Works.
4. ORDER PROCESSING AND DISTRIBUTION.
Sunhawk and Publisher agree that the order processing and distribution
subject to this Agreement shall be effected as follows:
A. ORDER PROCESSING. Sunhawk shall be responsible for processing orders
placed through its website. Processing includes taking orders,
collecting payment, fulfilling the orders, returns, cancellations, and
providing customer service and technical support to the end-user.
B. POSTING TO WEBSITE. Sunhawk shall place the Converted Works and
Scanned Product on its website, or the websites of third parties
designated by Sunhawk, for distribution to end-users.
C. SAMPLING. Sunhawk shall allow end-users using the Solero Viewer to
view, use, manipulate, transpose, display, preview, play, and store a
portion of the Audio Product, Solero Product, and/or Scanned Product.
D. DISTRIBUTING. When an end-user, using the Solero Viewer, purchases an
Audio Product, Solero Product, or Scanned Product, Sunhawk shall allow
the end-user to view, use, manipulate, transpose, display, preview,
print, play, and store the entire Audio Product, Solero Product, or
Scanned Product.
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LICENSE AGREEMENT Page 3
5. SECURITY.
Sunhawk shall distribute Audio Product, Solero Product, and/or Scanned
Product using its proprietary e-commerce and encryption technology. Sunhawk
shall monitor its e-commerce and encryption technology and upon learning a
material failure of the security mechanism, shall use reasonable efforts to
correct or upgrade its encryption technology. Sunhawk shall use reasonable
efforts to maintain security on its website, including prevention against
unauthorized access to customers' names, addresses, personal and financial
information stored by Sunhawk, whether initially captured by Sunhawk or any
other party. Isolated incidents of decryption, without a compromise of the
overall encryption scheme, will not be deemed a material failure of the security
mechanism. Publisher's sole remedy for the compromise of the security mechanism
shall be Publisher's right to require Sunhawk to suspend distribution of the
Audio Product, Solero Product, and/or Scanned Product until Publisher is
reasonably satisfied that such mechanisms have been repaired or replaced.
6. LICENSING FEES.
Sunhawk shall pay to Publisher licensing fees, as follows:
A. AUDIO PRODUCT. Sunhawk shall pay to Publisher fifty percent (50%) of
Sunhawk's Net Receipts from the sale of each Audio Product.
B. BUNDLED PRODUCT. Sunhawk shall pay to Publisher fifty percent (50%) of
Sunhawk's Net Receipts from the sale of each Bundled Product.
C. PROMOTIONS. No licensing fee shall be payable for a reasonable amount
of promotional Product distributed free of charge.
D. ASSOCIATE'S FEE. Sunhawk shall also pay Publisher a fee equal to ten
percent (10%) of the Net Receipts from the sale of any product sold
through a direct link from the Xxxxxxxx.xxx, the xxx.xxx, or the
Xxxxx.xxx websites (collectively "Xxxxxxxx.xxx"). For example, if User
X visits Xxxxxxxx.xxx, then clicks through to Xxxxxxx.xxx and then
makes a purchase, Naxos will be credited with an associate's fee. If
User X, while at Xxxxxxx.xxx, continues to shop for other product then
Naxos will not be credited for the associate's fee on subsequent
purchases. Likewise, if User X leaves the Xxxxxxx.xxx website and
reenters from any site other than Xxxxxxxx.xxx, Naxos would not be
entitled to any associate's fee for purchases made on that entry.
E. FULL PAYMENT. The licensing fees set forth in this Section shall be
the only amounts payable to Publisher or any other person or entity
for the exercise of the licenses granted in, and the uses contemplated
by, this Agreement. Sunhawk shall not be responsible for payments to
be made to writer(s), publisher(s), arranger(s), (other than
arranger(s) engaged by Sunhawk), or any other person or entity.
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7. STATEMENTS, PAYMENTS, AUDIT.
Sunhawk and Publisher agree that the statements, payments and audit subject
to this Agreement shall be effected as follows:
A. PAYMENT. Within forty-five (45) days following the end of each
calendar quarter, Sunhawk shall deliver to Publisher accounting
statements and remittances for all sums shown to be due thereunder.
B. STATEMENTS. Accounting statements shall be conclusive and binding on
Publisher in all respects and Publisher shall be barred from
maintaining or instituting any action or objection to any accounting
statement unless Publisher shall give Sunhawk a detailed written
objection, stating the basis thereof, within the earlier of (i)
thirty-six (36) months following the end of the accounting period
which is subject to dispute; or (ii) twelve (12) months following
Publisher's audit of such accounting period.
C. AUDITS. Upon thirty (30) days prior written notice, and not more than
twice during each calendar year, Publisher shall have the right, to
cause an independent CPA or other Sunhawk approved accounting
professional to conduct an inspection of Sunhawk's books and records
with respect to Solero Product and Audio Product. Publisher shall bear
the cost and expense of such inspections. Inspections must be
performed at Sunhawk's office during normal business hours.
8. TERM, TERMINATION.
A. TERM. This Agreement shall continue for a term of two (2) years
commencing on the date first written above. Thereafter, this Agreement
shall continue on an annual basis.
B. TERMINATION. This agreement may be terminated either by: 1) the
written consent of Sunhawk and Publisher; or 2) at the expiration of a
term, upon either party's ninety (90) day written notice.
9. WARRANTIES.
Sunhawk and Publisher agree that the warranties subject to this Agreement
shall be effected as follows:
A. PUBLISHER'S REPRESENTATIONS AND WARRANTIES. Publisher warrants and
represents that Publisher has the full and unrestricted right to enter
this Agreement and to grant to Sunhawk all of the rights herein
granted, and that the exercise of such rights by Sunhawk in accordance
with this Agreement will not infringe upon the any right of any third
party.
Publisher further represents and warrants that:
(1) All intellectual property that Publisher uses and provides to
Sunhawk does not infringe any trademark, tradename, copyright or
title.
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(2) Unless otherwise expressly provided in writing prior to delivery
of a Work, Publisher is the sole owner of all Works provided to
Sunhawk, and no rights have been granted, or will be granted in
the Compositions that are inconsistent with the rights granted in
this Agreement.
(3) Publisher grants and assigns to Sunhawk the benefit of all
warranties and representations made for Publisher's benefit by
any third party with respect to the Compositions.
(4) That all costs of recording, musicians' fees, and royalties to
any artists, if any, have been paid in full by Publisher; that
Publisher will be solely responsible for all the royalties and
fees arising from the use and sale of Audio Product, Solero
Product, and/or Scanned Product.
(5) That there are no liens, encumbrances and/or obligations in
connection with the Compositions or with the performances not
specifically set forth herein.
B. SUNHAWK'S REPRESENTATIONS AND WARRANTIES. Sunhawk warrants and
represents that Sunhawk has the full and unrestricted right to enter
this Agreement.
10. INDEMNITY.
Sunhawk and Publisher agree that indemnity subject to this Agreement shall
be effected as follows:
A. PUBLISHER'S INDEMNITY. Upon prompt notice of a claim, Publisher agrees
to defend, indemnify and hold Sunhawk harmless from and against any
and all claims, losses, liabilities, damages, expenses and costs,
including without limitation reasonable attorneys fees and court
costs, which result (i) from a breach of any of the warranties or
representations provided by Publisher herein, and (ii) any claim of
infringement or violation, or alleged infringement or violation, of
any third party's intellectual property or other rights to the extent
the claims arise from the Works, Promotional Materials, and other
materials provided by Publisher
B. SUNHAWK'S INDEMNITY. Upon prompt notice of a claim, Sunhawk agrees to
defend, indemnify and hold Publisher harmless from and against any and
all claims, losses, liabilities, damages, expenses and costs,
including without limitation reasonable attorneys fees and court
costs, which result from (a) the breach of any of the warranties or
representations provided by Sunhawk herein; (b) any claim of
infringement or violation, or alleged infringement or violation, of
any third party's intellectual property or other rights to the extent
the claims arise from materials owned or provided by Sunhawk.
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11. Limitation of Liability.
Except in the case of (i) the willful infringement of copyright, trade
secret, trademark or any other intellectual property rights, or (ii) nonpayment
of licensing and/or associates fees; or except to the extent they may arise from
the Indemnification Section above, neither Publisher nor Sunhawk shall be liable
to the other for any incidental, consequential, special, or punitive damages of
any kind or nature, including, without limitation, the breach of this Agreement
or any termination of this Agreement, whether such liability is asserted on the
basis of contract, tort (including negligence or strict liability), or
otherwise, even if either party has warned or been warned of the possibility of
any such loss or damage.
12. NOTICES.
All notices or other communications required or permitted by this
Agreement (except accountings and licensing fee payments) shall be in writing
and shall be sufficiently given if sent by certified or registered US mail,
postage paid, return receipt requested, addressed as follows:
To: Xxxxxxx.xxx Corporation
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Publisher Contracts
With copy to: The Xxxx Law Group
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
c/o Xxxxx Xxxx
To: Publisher:
Xxx Xxxxxxxx
Naxos of America, Inc.
416 Xxxx Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
With copy to: Xxxxxxx Xxxxx
General Counsel
Naxos of America, Inc.
416 Xxxx Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
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13. Confidentiality.
Publisher agrees that it will not disclose this Agreement or its terms to third
parties other than those parties who are necessary to assist Publisher in
effecting or administering the terms of this Agreement; PROVIDED, HOWEVER, that
the parties shall be entitled to disclose the general nature of their business
relationship for marketing purposes.
14. general provisions.
A. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee.
B. ARBITRATION. If a dispute arises out of, or relates to this Agreement,
or the breach, termination or validity thereof, the parties agree to
submit the dispute to a sole mediator selected by the parties or, at
any time at the option of a party, to mediation by the American
Arbitrations Association ("AAA"). If the dispute is not resolved by
mediation, it shall be referred to a sole arbitrator selected by the
parties within thirty (30) days of the mediation, or in the absence of
such selection, to AAA arbitration which shall be governed by the
Federal Arbitration Act. The mediator or arbitrator shall be
knowledgeable in the legal and technical aspects of this Agreement and
shall determine which issues may be arbitrated, but may not limit,
expand, or otherwise modify the terms of this Agreement.
(i) Unless otherwise agreed, if a demand for mediation or arbitration
is made by Sunhawk, then the proceeding shall be conducted in Seattle,
Washington or, if such a demand is made by Publisher, the proceeding
shall be conducted in Franklin, Tennessee. Any award from mediation or
arbitration shall be limited to a holding for or against a party and
providing such remedy as is deemed fair, just and within the scope of
this Agreement which may include injunctive relief. The award shall be
made within four (4) months of the appointment of the mediator or
arbitrator and may be entered in any court. The requirement for
mediation and arbitration shall not be deemed a waiver of any right of
termination under this Agreement, and the mediator or arbitrator is
not empowered to act or make any award other than based solely on the
rights and obligations of the parties prior to the termination.
(ii) Each party shall bear its own expenses, but those related to the
compensation and expenses of the mediator or arbitrator shall be
divided equally. A request by a party to a court for interim measures
shall not be deemed a waiver of the obligation to mediate and
arbitrate. The mediator or arbitrator shall not have the authority to
award punitive or other damages in excess of compensatory damages, and
each party irrevocably waives any claim thereto. The parties, their
content and resolution of the mediation and arbitration in confidence.
C. ATTORNEYS' FEES AND COSTS. In any dispute arising out of this
Agreement, whether or not a lawsuit is commenced, the non-prevailing
party or parties shall pay the prevailing party's court costs and
reasonable attorneys' fees, including costs of appeal.
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D. WAIVER OF BREACH. The waiver by any party of a breach of any provision
of this Agreement by any other party shall not operate or be construed
as a waiver of any subsequent breach by such party. No waiver shall be
valid unless in writing.
E. ENTIRE AGREEMENT. The parties agree that this Agreement is the
complete and exclusive agreement between them, which supersedes all
proposals or prior agreements, oral or written, and all other
communications between them relating to the subject matter of this
Agreement. The parties further agree that modifications or amendments
to this Agreement shall be effective only if they are in writing and
signed by all parties.
F. SEVERABILITY. If any portion of this Agreement is held to be invalid
or unenforceable for any reason, such holding shall not affect the
validity or enforceability of the remaining portions of this
Agreement.
G. COUNTERPARTS. This Agreement maybe executed in counterparts, and each
executed counterpart shall have the same force and effect as an
original instrument as if all parties to the counterparts had signed
the same instrument.
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first set forth above.
Xxxxxxx.xxx Corporation
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Xxxxxx Xxxxx, Chairman, CEO
Publisher:
Naxos of America, Inc.
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Xxx Xxxxxxxx, President
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EXHIBIT "A"
WORKS
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DESCRIPTION OF WORK FORMAT TO BE PROVIDED
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