AngelAudio com / xXXXX CONFIDENTIAL
Order Fulfillment Agreement 12/10/99
ORDER FULFILLMENT AGREEMENT
This Order Fulfillment Agreement ("Agreement") is entered into effective as of
the 15th day of December 1999, by and between XxxxxXxxxx.xxx, Inc. ("Retailer)
and i.FILL, a division of Valley Media, Inc. ("Valley").
BACKGROUND
A. Valley is in the business of distributing entertainment products to
various retail customers and consumers. i.FILL provides to certain
retailers "direct-to-consumer" order fulfillment services, pursuant to
which i.FILL picks, packs and ships entertainment products to such
retailers' customers.
B. Valley has developed proprietary databases known as "audiofile" and
"audiotrax" which it licenses to certain customers, audiofile and
audiotrax contain information regarding pre-recorded entertainment
musical products (other than pre-recorded music distributed
electronically in digital format) ("Audio Product"), pro-recorded
entertainment audio-visual product in video-cassette format ("Video
Product"), pre-recorded entertainment audio-visual product in digital
video disk ("DVD") format ("DVD Product") and video game products in
various formats ("Game Product"). Such Audio, Video, DVD and Game
Product may be collectively referred to herein as "Product".
C. Retailer intends to operate on the World Wide Web an "on-line retail
store" (the "Site") through which it intends to sell Product to
consumers.
D. Retailer wishes to purchase Product offered on the Site from Valley and
wishes to purchase "direct-to-consumer" order fulfillment services from
i.FILL.
AGREEMENT
Subject to the terms and conditions set forth below, the parties agree as
follows:
1. BASIC AGREEMENT. Retailer and i.FILL agree to develop a computer and
customer service interface for the purposes of conducting small order
Product transactions via an on-line entertainment product store and
other direct response marketing efforts. Retailer will build and
maintain a web site. Retailer will also conduct all marketing and
merchandising efforts, collect all orders and send such orders to
i.FILL via Electronic Data Interchange ("EDI"). i.FILL will be
responsible for picking, packing and shipping the orders directly to
Retailer's customers.
2. EXCLUSIVE SUPPLIER. i.FILL will be the exclusive supplier of Product
and related order fulfillment services for Retailer. For purposes of
this Agreement, i.FILL as "exclusive supplier" means that all orders
for Product will be sent to Valley first for fulfillment; provided,
however, that Retailer may utilize third parties as sources for Product
not available through audiofile or otherwise through Valley if Retailer
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has given i.FILL a twenty-five (25) business day written notice of its
intention to so utilize third party sources for that specified Product
and i.FILL fails to make said Product available by the end of such
period.
3. TECHNICAL ASSISTANCE. i.FILL shall provide technical assistance to
Retailer for the testing of their EDI transmission of orders to
Valley's Bulletin Board System or FTP server, Valley will be
responsible for maintaining its EDI connection to Retailer and Retailer
will be responsible for maintaining its EDI connection to Valley.
4. ANCILLARY AGREEMENTS. At the same time the parties enter into this
Agreement, Valley and Retailer will enter into:
(a) an audiofile License Agreement substantially in the form
attached hereto as Exhibit A (the "Audiofile License"),
pursuant to which Valley will license its audiofile database
to Retailer.
5. AUDIO PRODUCT PRICING. i.FILL agrees to sell and Retailer agrees to
purchase Audio Product at four percent (4%) below Valley's wholesale
prices. Retailer's price for Audio Product is set forth under the
"Invoice Cost" column of the 4% Discount Schedule attached hereto as
Exhibit B which is incorporated herein by this reference. Wholesale
prices (and therefore, the "Invoice Cost") may be revised by Valley
from time to time, effective upon written notice to Retailer of such
changes.
6. VIDEO PRODUCT PRICING. i.FILL agrees to sell and Retailer agrees to
purchase Video Product at thirty-six percent (36%) below Manufacturer's
Suggested List Price ("MSLP"). MSLP changes will be included in the
daily audiofile Updates and will be effective immediately upon Update
transmission of such revision(s).
7. DVD PRODUCT PRICING i.FILL agrees to sell and Retailer agrees to
purchase DVD Product at studio-specific percentage discounts below MSLP
as set forth on the DVD Pricing Schedule attached hereto as Exhibit C
which is incorporated herein by this reference. MSLP changes will be
included in the audiofile Updates and will be effective immediately
upon the posting of such revision(s) in the audiofile Updates.
8. GAME PRODUCT PRICING, i.FILL agrees to sell and Retailer agrees to
purchase Game Product at the prices set forth in the audiofile
database. Game Product prices may be revised from time to time and such
changes are effective immediately upon the posting of such revision(s)
in the audiofile Updates.
9. AUDIO VOLUME REBATES. Audio Volume Rebates are applied to Audio Product
purchases only, not shipping and fulfillment charges. For purposes of
this Agreement, "Net Product Purchases" means Retailer's gross Product
purchases from Valley, less Product discounts and returns. In the event
that Retailer's Net Product Purchases exceed $5,000,000 per year during
the term of this Agreement, Retailer shall receive Audio Volume Rebates
based on the incremental annual Net Product Purchases as follows:
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Annual Net Product Purchases Incremental Rebate Cumulative Rebate
---------------------------- ------------------ -----------------
$ 5,000,001 - $ 7,500,000 1% 1%
$ 7,500,000 - $10,000,000 1% 2%
$10,000,000 + 1% 3%
9.1. Exception. Sales of Video, DVD and Game Product shall accrue
toward the annual Net Product Purchase volume needed to
receive Rebates, however Rebate discounts will be taken on
Audio Product only. These rebate discounts will not be taken
on Video, DVD or Game Product.
9.2. Calculation. Rebates are calculated on a yearly basis
beginning on January 1, 2000. At year-end the Rebate will be
calculated on Net Product Purchase for the calendar year (on a
pro rata basis) and shall appear as a credit on Retailer's
invoice.
10. CUSTOM INVOICE. i.FILL will create a custom invoice with Retailer's
logo, product return and customer service information printed on same
for a fee of $500, which fee is due and payable upon execution of this
Agreement. Subsequent changes to the invoice can will be made for a fee
to be negotiated by the parties.
11. ORDER PLACEMENT. Retailer will collect all orders and should send such
orders to i.FILL via EDI. Retailer is responsible for providing
accurate consumer and SKU information to Valley. Failure by Valley to
perform any of its obligations under the terms herein, caused by
Retailer providing erroneous or incomplete ordering information, shall
not be considered a breach under the terms and conditions of this
Agreement.
11.1. Manual Processing Surcharge. In the event i.FILL receives an order by
any other means than EDI transmission (i.e., by mail, facsimile, etc.)
a surcharge of $1.50 per order shall be assessed.
12. ORDER FULFILLMENT. The following sets forth i.FILL's fulfillment
practices:
12.1. Priority. Priority orders are defined as orders shipped
domestically for overnight or second-day air freight delivery.
Priority orders received by i.FILL on any business day by 9:00
a.m. Pacific Time ("PT") will be shipped on the same day
provided that the Product ordered is in stock at that time.
Orders received after 9:00 a.m. PT will be shipped the
following business day provided that the Product ordered is in
stock at that time.
12.2. Standard. Standard orders are defined as all orders shipped
domestically or internationally for other than overnight or
second-day air freight delivery. Standard orders received by
1:00 p.m. PT will be shipped the following business day
provided that the Product ordered is in stock at that time.
Standard orders received after 1:00 p.m. PT will be deemed
received the next business day and i.FILL will ship these
orders the business day after the day
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they are deemed to be received provided that the Product
ordered is in stock at that time.
12.3. Peak Periods. The first day of a business week and any day on
which Valley's order volume is greater than 20% above average
(calculated on a floating 30-day-basis) is defined as a Peak
Period. i.FILL shall use best efforts to adhere to the
fulfillment policies set forth above during Peak Periods, but
its failure to so adhere during Peak Periods shall not be
considered a default under the turn and conditions of this
Agreement.
13. FULFILLMENT FEES. Retailer agrees to pay i.FILL the following fees for
each order fulfilled by i.FILL.
13.1. Packing and Handling Fees. i.FILL will pick, pack and prepare
Product for shipment to Retailer's customers according to the
following schedule:
Annual Net Product Purchases 1st Unit per Order Add'l Units per Order
---------------------------- ------------------ ---------------------
$ 0 - $ 5,000,000 $1.40 $0.50 each
$ 5,000,001 - $ 7,500,000 $1.30 $0.50 each
$ 7,500,001 - $ 10,000,000 $1.20 $0.50 each
$10,000,001 + $1.10 $0.45 each
13.2. Surcharges. Retailer agrees to pay to i.FILL the following
surcharge as applicable:
13.2.1 International Shipment Surcharge. Surcharge of $0.50
per order shipped internationally via integrated
carrier.
13.2.2 USPS Priority Mail Insured Surcharge. Surcharge of
$0.50 per order shipped USPS Priority Mail Insured.
14. SHIPPING.
14.1. Risk of Loss. All shipments made under this Agreement shall be
F.O.B. Valley's shipping facility. Title and risk of loss with
respect to all orders and products shipped by i.FILL or Valley
under this Agreement shall pass to Retailer or its customers
upon delivery of the products to the carrier at the point of
shipment. In the event of shipping damage or orders lost in
shipment, i.FILL will assist in filing a claim on behalf of
Retailer and will credit Retailer any amounts received or
credited to i.FILL or Valley in connection with each claim.
14.2. Choice of Carrier. i.FILL will ship Product orders with the
i.FILL supported carrier requested by Retailer or its
customer. i.FILL supported carriers are listed in the shipping
tables attached hereto as Exhibit D which is incorporated
herein by this reference. i.FILL will cancel any order for
which the delivery address is not serviced by the requested
carrier, and will notify Retailer of the
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same. Retailer may retransmit the order to be shipped via an
alternate i.FILL supported carrier.
14.3. Shipping Costs. Retailer will pay i.FILL shipping costs per
the shipping tables attached hereto as Exhibit D (as amended
from time to time by i.FILL). i.FILL will provide Retailer
written notice of shipping rate changes and the effective date
of such changes. i.FILL represents that the shipping costs
charged to Retailer are its actual shipping costs (not
considering rebates.)
15. PRODUCT RETURNS.
15.1. Definitions. For purposes of this Agreement, the terms set
forth below shall be defined as follows.
15.1.1 "Defective Product" means any Eligible Return Product
returned to i.FILL or Valley that is identified by
the customer as defective when returned and which is
actually defective as determined by i.FILL or Valley.
15.1.2 Eligible Return Product" means any Product other than
Ineligible Return Product.
15.1.3 "Ineligible Return Product" means any of the
following: (a) Opened CDs from any of the following
companies: (i) Platinum, (ii) RYKO, (iii) Sony Music
Entertainment, (iv) Universal Music and Video
Distributor ("UMVD"), (v) Warner, (vi) Elektra or
(vii) Atlantic; (b) Opened audio cassettes from UMVD;
(c) Opened Video Product; (d) Opened DVD Product; (e)
Game Product; (f) accessories; (g) blank tape; (h)
imports; (i) promos; (j) limited editions; (k)
Product Identified in audiofile as nonreturnable; (l)
Product not purchased from Valley; (m) Product sold
on a one-way basis; (n) Product with a last customer
return date (as defined in the audiofile Updates)
prior to the date the returned Product is received by
i.FILL or Valley; (o) Product without the original
artwork or liner notes; (p) Schwann Guides; (q)
defaced Product; (r) Product with damaged artwork or
a foreign substance on the media; and (s) vinyl
Product (including, without limitation, LPs and 12"
singles).
15.1.4 "Opened" means, with respect to any Product, that the
top spine label or original manufacturer's shrink
wrap or "dog bone" holographic sticker has been
removed or cut in any way.
15.2. Standard Return Policy. Retailer will receive a return credit
for Eligible Return Product returned to i.FILL or Valley but
will not receive a return credit for Ineligible Return
Product.
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15.3. Return Fees.
15.3.1 Processing Fees. Any Ineligible Return Product
returned to i.FILL or Valley will be forwarded to
Retailer at Retailer's expense, and Retailer will be
charged a $1.00 processing fee for each such unit of
Ineligible Return Product; provided, however, that
Retailer may elect to have i.FILL keep such
Ineligible Return Product and avoid the processing
fee.
15.3.2 Restocking Fees. Retailer will be charged a fifteen
percent (15%) restocking fee for processing all
Eligible Return Product returned to i.FILL or Valley;
provided, however that no such fee will be charged
for (a) Defective Product or (b) Product that was
shipped to one of Retailer's customers but (i) was
not listed on the customer's invoice or (ii) was
incorrectly listed on the invoice.
15.3.3 Refurbishing Fees. Retailer will be charged a $0.35
per unit refurbishing fee on all Eligible Product
returned to i.FILL or Valley that has been Opened;
provided, however, that no such fee shall be charged
for Defective Product.
15.3.4 Reshipping Fees. i.FILL will ship or reship to
Retailer's customers at additional charge (a)
replacement Product for any Defective Product
provided, however, that it is also Eligible Return
Product and (b) Product reported as missing by one of
Retailer's customers that was listed as fulfilled on
the customer's invoice.
15.4. Return Processing Information. Return processing information
will be posted weekly via EDI.
15.5. Modifications. i.FILL reserves the right to modify its return
policies from time to time. Such modifications shall be
effective upon receipt by Retailer of written notice thereof.
16. OPTIONAL SERVICES.
16.1. Paper Inserts. For purposes of this Agreement, Paper Inserts are
defined as lightweight, paper-based, promotional items the same size or
smaller than a standard single CD, or pre-folded to such size. At
Retailers request, i.FILL will pack Paper Inserts into Retailer's
orders for a fee of $0.10 per Paper Insert Retailer shall supply the
Paper Inserts at no cost to i.FILL.
16.2. Merchandise Inserts. For purposes of this Agreement, Merchandise
Inserts are defined as promotional merchandise sold by Retailer,
sometimes referred to as "segregated merchandise", other than the Paper
Inserts described above in section 16.1. At Retailers request, i.FILL
will pack Merchandise Inserts into
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Retailers orders at a charge to be negotiated by the parties
after a sample has been received and reviewed for packing and
shipping requirements. Retailer shall supply Merchandise
Inserts at no cost to i.FILL.
16.3. Merchandise Management Fee. Upon request by Retailer, i.FILL
will receive and warehouse Merchandise Inserts (described
above in section 16.2) for a Merchandise Management Fee to be
negotiated by the parties after a sample has been received and
reviewed for warehousing requirements; provided however, that
the following items have pre-determined Product Management'
Fees:
o Standard Product. A Product Management Fee of $0.50 per unit
will be charged to Retailer for "Standard Product" (defined as
a single CD, cassette VHS, or DVD).
16.3.1 Three Month Supply. The Product Management Fee
covers, the Management of Product in Valley's
warehouse for a maximum of three (3) months. Retailer
will use its best estimate to provide i.FILL with no
more than a three (3) month supply of Product with a
certain SKU at an given time. In the event any units
of such Product remain in Valleys warehouse for over
three months. Retailer will be charged another
Product Management Fee for each unit of such Product
to cover another three months' management. Prior to
the end of the three (3) month period, Retailer may
request that the remaining units of such Product be
returned to Retailer at Retailers expense to avoid
incurring additional Product Management Fees for such
Product.
16.3.2 Shrink. Retailer accepts responsibility for product
loss of up to, but not in excess of, two percent (2%)
of the aggregate wholesale value of the Retailer's
segregated merchandise shipped to i.FILL, as
calculated annually on or around January 1 of each
year during the term of this Agreement.
16.4. Insert Bar Codes. A unique UPC bar-code is required for each
Paper or Merchandise Insert. Retailer should purchase and
apply a proprietary bar-code; on all inserts. At Retailer's
request or if the bar-code does not meet Valley's standards,
i.FILL will create and apply a bar-code for a fee of $0.30 per
applied bar-code.
16.5. Gift Wrapping. Upon Request by Retailer, i.FILL will provide
gift wrap services for a fee to be negotiated by the parties
after a sample of the item to be wrapped has been reviewed for
wrapping requirements. Standard Product will be wrapped for a
fee of $1.50 per unit.
16.6. audiotrax. Upon Retailer's request, i.FILL will license the
audiotrax database for an annual licensing fee to be
negotiated by the parties.
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17. BILLING AND PAYMENT. Pending i.FILL's review and approval of Retailer's
credit application, i.FILL will extend credit to Retailer under the
following terms and conditions:
17.1. Invoices and Account Reconciliation. Invoices are due and
payable thirty (30) days after the invoice date, i.FILL will
provide Retailer with an account reconciliation on a monthly
basis.
17.2. Past Due Amounts. i.FILL includes in its Product pricing an
embedded two percent (2%) discount for timely payment on all
Product. This discount shall be revoked in the event of a late
payment by Retailer. A two percent (2%.) revoked discount fee
will be charged on any amounts not paid within thirty (30)
days after the invoice date. Furthermore all overdue balances
not paid within thirty (30).days after the invoice date, will
be assessed interest at the lesser of one and one-half percent
(1.5%) or the maximum interest rate allowable by law,
beginning on the due date. i.FILL in its sole discretion, may
refer collection of any past due amount to any agency or
attorney, and Retailer will be liable for the payment of all
costs and expenses, including reasonable attorneys' fees;
associated therewith.
18. PROPRIETARY RIGHTS.
18.1. Confidential Information. The term "Confidential Information"
refers to this Agreement and the subject matter of this
Agreement and to all information which one party furnishes or
makes available to the other party and all information related
to one party's business which the other party acquires in the
course of performing its obligations under this Agreement.
Disclosure of Confidential Information by a party is forbidden
except in the following circumstances: (i) to employees and
outside parties, but only to the extent necessary to fulfill
its obligations under the Agreement; (ii) if the Confidential
Information disclosed is already publicly known or becomes
publicly known through no fault of the disclosing party; and
(iii) if the Confidential Information is required to be
disclosed by law or legal process, provided that the party,
from whom disclosure is required, gives the other party notice
and agrees to cooperate with the non-disclosing party as that
party may reasonably request to oppose disclosure. Under no
circumstances may i.FILL (including its principles or
affiliates) use Retailer's customers' data for any commercial
or improper purposes.
18.2. Transaction Information. Both parties shall use best efforts
to ensure maximum security of transaction information
maintained on each party's computer system including, but not
limited to, the names, addresses and products ordered by
Retailer's customers.
18.3. No Rights to Marks. Each party is hereby granted no rights in
or to the other party's Marks. "Marks" means the trademarks,
service marks, trade names or other marks, registered or
otherwise, used by either i.FILL or Retailer, as applicable.
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19. TERM.
19.1. Initial Term. The term of this Agreement begins on the date of
this Agreement and ends two (2) years thereafter (the "Initial
Term").
19.2. Renewal Term. Unless and until i.FILL or Retailer provide at
least ninety (90) day prior written notice of its intention
not to extend the term of this Agreement, this Agreement shall
automatically renew for additional one (1) year terms (each a
"Renewal Term"); the Initial Term and all Renewal Terms to be
collectively referred to as the "Term".
19.3. Early Termination. This Agreement shall terminate at any time
upon the mutual consent of the parties. This Agreement shall
also terminate according to its terms under the following
conditions;
19.3.1 Upon termination of the Audiofile License or the
Audiotrax License.
19.3.2 i.FILL or Retailer delivers to the other party a
thirty (30) day written notice of termination, absent
a material breach, if i.FILL discontinues fulfillment
services to on-line customers or Retailer
discontinues the on-line sale of Product.
19.3.3 i.FILL or Retailer delivers to the other party a
thirty (30) day written notice of termination for a
material breach of this Agreement, and the other
party fails to cure such breach within the thirty
(30) days.
19.3.4 Either party is adjudicated a bankrupt, files a
voluntary petition in bankruptcy or makes a general
assignment for the benefit of creditors.
20. LIMITATION OF REMEDIES AND EXCLUSION OF WARRANTIES. IN NO EVENT SHALL
i.FILL OR VALLEY BE LIABLE TO RETAILER FOR INDIRECT OR CONSEQUENTIAL
DAMAGES, WHETHER OR NOT I.FILL OR VALLEY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF THE FORM OF ACTION.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ALL PRODUCT SOLD
HEREUNDER IS SOLD "AS IS" AND i.FILL AND VALLEY EXPRESSLY DISCLAIM ANY
EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO PRODUCT SOLD UNDER THIS
AGREEMENT, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY AND
FITNESS FOR PURPOSE.
21. REPRESENTATIONS AND WARRANTIES.
21.1. i.FILL's Representations and Warranties.
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21.1.1 i.FILL has the right and authority to enter into this
Agreement
21.1.2 i.FILL will use reasonable efforts to deliver Product
to Retailer's customers in substantially the same
condition as it was in when it was received by Valley
in Valley's distribution facility.
21.2. Retailers Representations and Warranties.
21.2.1 Retailer has the right and authority to enter into
this Agreement.
22. INDEMNIFICATION. Both parties will, at all times, indemnify, defend and
hold the other party harmless from any and all third-party claims,
damages, liabilities, costs and expenses (including reasonable
attorney's fees) arising out of any breach or alleged breach by such
party of any warranty or representation made by such party in this
Agreement. Retailer will further indemnify, defend and hold i.FILL and
Valley harmless for any and all third party claims, damages,
liabilities, costs and expenses (including reasonable attorney's fees)
arising out of any infringement or alleged infringement of intellectual
property rights resulting from the sale of Product outside the United
States.
23. FORCE MAJEURE. Neither party will be liable for failure to perform, or
the delay in performance of, any of its obligations under this
Agreement if, and to the extent, that such failure or delay is caused
by events substantially beyond its control, including but not limited
to, acts of God, acts of a public enemy or governmental body in its
soverign or contractual capacity, war, fire, floods, strikes,
epidemics, quarantine restrictions, civil unrest or riots, freight
embargoes and/or unusually severe weather. Lack of funds by either
party shall not excuse timely performance. The party so affected shall
use commercially reasonable efforts to avoid or remove such causes of
non-performance of delay, and shall continue performance hereunder with
reasonable dispatch whenever such causes are removed. If any such
non-performance or delay continues for more than sixty (60) days, the
unaffected party may elect to terminate this Agreement without
liability or any liquidated or other damages upon written notice to the
other party.
24. GENERAL
24.1. Notice. All notices, including those related to product
pricing, ordering and fulfillment policies that will have a
material impact on the other party's business, shall be in
writing and delivered by certified mail, postage prepaid and
return receipt requested, or transmitted either by facsimile
or electronic mail if confirmed contemporaneously by such
mailing, to the addresses provided below.
If to Retailer: XxxxxXxxxx.xxx, Inc.
Address
Attn:
Fax:
Email:
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If to i.FILL: i.FILL, a division of Valley Media, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, General Counsel
Fax: 000.000.0000
Email: XXX@xxxxxx-xxxxx.xxx
24.2. Entire Agreement; Amendments. This Agreement constitutes the
entire agreement of the parties concerning the subject matter
hereof, superseding all prior proposals, negotiations and
agreements concerning the subject matter of this Agreement. No
representation or promise relating to and no amendment of this
Agreement will be binding unless it is in writing and signed
by authorized representatives of both parties.
24.3. Assignment. This Agreement may not be assigned by either party
without first obtaining the other party's written consent,
except that either party may, without the other party's prior
written consent, assign this Agreement to a purchase of all or
substantially all of its assets or a majority or controlling
interest in its voting stock, or to a subsidiary or affiliate
of such party, provided that such purchaser's net worth at the
time of purchase is equal to or greater than that of the
assigning party's net worth. This Agreement will be binding
upon and inure to the benefit of successors and permitted
assigns of the parties hereto.
24.4. Relationship of Parties. It is agreed that both parties will
retain individual legal status and that their relationship is
that of an independent consultant or contractor and not that
of an employee, agent, partner or affiliate. Neither party is
an agent of the other party and neither party has the
authority to bind the other party, nor will either party hold
itself out to third parties as having the authority to bind
the other party.
24.5. Captions; Waiver; Severability. The captions appearing in this
Agreement are inserted only as a matter of convenience and in
no way define, limit, construe or describe the scope or
interpretation of this Agreement. No waiver by a party of any
breach of any provision of this Agreement will constitute a
waiver of any other provision of this Agreement. If any
provision of this Agreement shall be held invalid, void or
unenforceable, the remaining provisions hereof shall in no way
be affected or impaired, and such remaining provisions shall
remain in full force and effect.
24.6. Governing Law and Arbitration. This Agreement shall be
construed and enforced pursuant to the laws of the State of
California. If the parties are
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unable to settle any disagreements regarding this Agreement or
the project contemplated by this Agreement, such disagreements
shall be submitted to binding arbitration within the State of
California under the rules of the American Arbitration
Association as then in effect.
24.7. Counterparts. This Agreement may be executed in one or
more counterparts, all of which will be considered one and the
same agreement, and will become a binding agreement when one
or more counterparts have been signed by each party and
delivered to the other party. Facsimile signatures shall be
considered original in all respects.
In witness whereof, the parties hereto have executed this Agreement effective as
of the date first above written.
i.FILL, a division of XXXXXXXXXX.XXX, INC.
VALLEY MEDIA, INC.
By: /s/ Nais Xxxxx Xxxxxxx By: /s/ Xxxx Xxxxxxx
------------------------------ -------------------------------
Its: Director News Media Its: President/Director
----------------------------- ------------------------------
Address: Address:
1280 Santa Xxxxx Court 1451 X. Xxxxx St.
---------------------------------- ----------------------------------
Xxxxxxxx, XX 00000 Xxxxxxx, X.X. X0X 0X0
---------------------------------- ----------------------------------
Telephone: Telephone:
----------------------- -----------------------
Facsimile: 530.406.5231 Facsimile:
----------------------- -----------------------
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EXHIBIT LIST
Exhibit A Audiofile License
Exhibit B Audio Price Schedule
Exhibit C DVD Price Schedule
Exhibit D Shipping Tables
SCHEDULE A
AUDIOFILE LICENSE AGREEMENT
--------------------------------------------------------------------------------
This agreement ("Agreement') is entered into by and between Valley Media, Inc.
(the "Licensor"); and the party identified in Exhibit A as the "Licensee" (not
including any subsidiaries, affiliates, or franchisees). This Agreement is the
complete and exclusive statement of the agreement between the parties with
respect to the subject matter hereof (superseding all proposals, communications
of prior agreements, oral or written with respect to such subject matter); and
may be amended only in a writing signed by both parties. As used herein,
"Database" means the proprietary audio and video item database created and
developed by Licensor, and includes "Database Updates," periodic updates of
information contained in the Database.
1. License Grant
(a) Licensor hereby grants to Licensee during the term of this Agreement, a
non-exclusive, non-transferable, non-sublicenseable license to:
(i) Lead, transmit, execute, store or display the Database for
Licensee's internal use at the location(s) specified in
Exhibit A attached hereto;
(ii) Modify the Database for internal use by Licensee; or
(iii) Incorporate the Database or portions thereof into its own
database for use by Licensee, provided, however, that the
Database portion of the resulting conjoined work may be used
only in accordance with the license granted in Section 1(a)
above.
(b) Licensee may not, without prior written consent from Licensor,
sublicense, sell, lend, rent the Database or any portion thereof, or
assign any of its rights or obligations under this Agreement to any
party; provided, however, that Licensee may make copies of the Database
sufficient for back-up, development and production purposes.
2. Fees
(a) As consideration for the License granted herein, upon execution of this
Agreement, Licensee shall pay to Licenser the TOTAL FEES DUE set forth
on Fees--Line 4 of Exhibit A, which includes:
(i) The LICENSE FEE (Fees--Line 1 of Exhibit A) to operate a
single copy of the Database at the location(s) listed in
Exhibit A;
(ii) The PRO-RATED UPDATE FEE (Fees--Line 2 of Exhibit A) for the
Database Updates for the specified period; and
(iii) MISCELLANEOUS FEES (Fees--Line 3 of Exhibit A) to reimburse
Licenser for any fees owed by Licenser to other vendors
connection with the Database, and any fees assessed by
Licenser other than License or Database Update fees.
(b) Licensee shall also pay the UPDATE FEE (Fees--Line 5 of Exhibit A) to
Licenser as consideration for Licenser providing the Database Updates.
The subscription is to be paid quarterly in advance on the first day of
each calendar quarter (January 1, April 1, July 1 and October 1). The
UPDATE FEE entitles the Licensee to receive Database Updates for the
succeeding three (3) month period.
(c) Licenser shall provide Licensee with reasonable telephone support for
the Database and Database Updates at no additional charge.
3. Rights in Tangible and Intellectual Property
Licensor shall be the sole owner of the Database, Database Updates and all
supporting materials as between Licensor and Licensee, including any and all
copies thereof, and including all patent, trademark, copyright, trade secret and
ether intellectual property rights associated therewith. Licensee agrees to
treat the Database, Database updates and supporting materials as confidential
trade secrets of the Licensor.
4. Term: Termination
The term of the Agreement and the licenses granted hereunder shall commence on
the Agreement Date specified in Exhibit A and continue until terminated as set
forth herein:
(a) This Agreement may be terminated for the Database Update subscription
only (Licensee may continue to use the Database in accordance with the
terms of the Agreement):
(i) Unilaterally by the Licensor (other than for breach of this
Agreement by Licensee) upon ten (10) days advance written
notice Licensor shall refund to Licensee a prorated portion of
any UPDATE FEES paid in advance by Licensee;
(ii) Unilaterally by the Licensor in the event that any material
breach by Licensee remains uncured for fifteen (15) days after
written notice, via certified mail, thereof. Licensee shall
not be entitled to the return of any prepaid UPDATE FEES; or
(iii) Unilaterally by the Licensee for any reason upon ten (10) days
advance written notice (Licensee must receive written
confirmation back from Licensor stating the effective date of
cancellation). Licensee shall not be entitled to the return of
any prepaid UPDATE FEES.
(b) This Agreement may be terminated for the Database (which will also
cancel the Database Update subscription):
(i) With the mutual written consent of both parties;
(ii) Unilaterally by the Licensee for any reason upon ten (10) days
advance written notice; or
(iii) Unilaterally by the Licenser in the event that any material
breach by Licensee remains uncured for fifteen (15) days after
written notice, via certified mail, thereof.
5. Warranty
(a) Licensor warranties that the media on which or transmission by which
the Database or Database Update are delivered will be free from
defects. Licensor's sole obligations under the foregoing warranty are
limited to:
(i) Replacement of any defective media;
(ii) Retransmission of the Database or Database Update; or
(iii) Termination of this Agreement and refunding a pro-rated
portion of any FEES paid in advance by Licensee.
(b) EXCEPT AS SET FORTH IN SECTION 5(a) ABOVE:
(i) THE DATABASE AND DATABASE UPDATES ARE PROVIDED "AS IS" AND
LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT
TO THE CONTENT, SUFFICIENCY, ACCURACY, COMPLETENESS OR
CURRENTNESS THEREOF; OR
(ii) LICENSOR EXPRESSLY DISCLAIMS ANY EXPRESS, IMPLIED OR STATUTORY
WARRANTY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6. Limitations of Liabilities
(a) IN NO EVENT WILL LICENSOR BE LIABLE TO LICENSEE FOR THE RESULTS OF
LICENSEE'S USE OF THE DATABASE, FOR ANY IMPAIRMENT OF LICENSEE'S
ABILITY TO CONDUCT ITS BUSINESS AS A RESULT OF ITS USE OR INABILITY TO
USE THE DATABASE. NEITHER PARTY SHALL BE LIABLE FOR ANY LOSSES OR
DAMAGES, WHETHER DIRECT OR INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL, ARISING FROM THIS AGREEMENT; THE DESIGN, CONTENT,
OPERATION OR USE OF THE DATABASE; OR FOR ANY ERRORS OR OMISSIONS
CONTAINED THEREIN, REGARDLESS OF THE CAUSE, THE CIRCUMSTANCES, OR THE
FORM OF THE ACTION.
(b) IN NO EVENT WILL LICENSOR'S LIABILITY TO LICENSEE FOR ANY CLAIMS,
LOSSES OR DAMAGES ARISING UNDER THIS AGREEMENT, WHETHER IN CONTRACT,
TORT OR OTHER FORM OF ACTION, EXCEED THE LICENSE FEE SPECIFIED IN
FEES--LINE 1 OF EXHIBIT A.
(c) THE PROVISIONS OF THIS SECTION 6 SHALL NOT APPLY TO ANY BREACH BY
LICENSEE OF THE TERMS Of THE LICENSE GRANTED IN SECTION 1 OF THIS
AGREEMENT OR TO LICENSOR'S INDEMNITY OBLIGATIONS UNDER SECTION 8 BELOW.
7. Amendment
Licensor may increase the UPDATE FEE upon written notice to Licensee provided at
least thirty (30) days prior to the end of the calendar quarter preceding the
calendar quarter in which the increase is to be effective.
8. Indemnification
Licensee will at all times indemnify and hold harmless Licensor from any and all
claims, damages, liabilities, costs and expenses. including reasonable legal
expenses and attorneys fees, arising out of any claims involving Licensee's use
of the Database.
9. Assignment
This Agreement may not be assigned by either party without the express written
consent of the other party; provided, however, that without Licensee's consent,
Licensor may assign its right to receive funds hereunder and may assign this
Agreement to an affiliate or subsidiary of Licensor.
10. Survival
Sections 6 and 7 of this Agreement will survive the expiration or termination of
the term of this Agreement.
11. Tax Payer Identification Number
Licenser represents and warrants that its Tax Payer Identification Number is
000000000.
LICENSOR: LICENSEE:
Valley Media, Inc. Name Xxxxxxxxxx.xxx Entertainment inc.
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1280 Santa Xxxxx Court Addr1: 000 Xxxxxx Xxxxxx Xxxx., 0xx Xxxxx
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Xxxxxxxx, Xxxxxxxxxx 00000 Addr2: 0000 X Xxxxx Xx. Xxxxxxx, X.X.,
Xxxxxx X0X0X0
------------------------------------
City/ST/Zip: Xxx Xxxxx, XX 00000-0000
---------------------------------
By: /s/ Nais Xxxxx Xxxxxxx By: /s/ Xxxx Xxxxxxx
----------------------------- -------------------------------------------
Its: Director News Media Its: President/Director
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