EXHIBIT 10.40
LIQUID REMOTE INVENTORY FULFILLMENT SYSTEM(TM)
MERCHANT AFFILIATE AND LICENSE AGREEMENT
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WHEREAS Liquid Audio, Inc., a California corporation, with offices at 000
Xxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000, hereinafter referred to as
"Liquid Audio," owns and operates the Liquid Remote Inventory Fulfillment System
("RIFFS" or "RIFFS program"), pursuant to which Liquid Audio makes available to
online merchants a database of music tracks ("RIFFS Catalog"), which tracks can
be sold and digitally delivered to customers of merchant Web sites that are
licensed as RIFFS affiliates;
WHEREAS MTS, Inc., a California corporation with offices at 0000 Xxx Xxxxx,
Xxxx Xxxxxxxxxx, XX, hereinafter referred to as "Merchant," desires to be
licensed to participate in the RIFFS program as a merchant affiliate in order to
receive the right to use the RIFFS Catalog to make online sales and digital
delivery of music tracks to its customers, upon the terms and conditions set
forth in Schedule "A" to this Agreement; and
NOW THEREFORE THE PARTIES HEREBY AGREE AS OF THIS 14TH DAY OF MAY 1999
("EFFECTIVE DATE") AS FOLLOWS:
RIFFS CATALOG CATEGORIES: All
MERCHANT SITE: xxx.xxxxxxxxxxxx.xxx
AFFILIATION PERIOD: One year from Effective Date
MUSIC LICENSE: Web site linkage to RIFFS Catalog and digital delivery of music
titles to customers of Merchant Site, per Schedule "A".
LOGO/ICON LICENSE: Promotional use of Liquid Audio/RIFFS logo and icon license,
per Schedule "A".
ANNUAL MERCHANT AFFILIATION FEE: Waived.
DIGITAL DELIVERY FEES: Waived.
DIGITAL MUSIC SALES: Merchant accounts and pays Liquid Audio monthly for
wholesale distribution price for digital music sales transactions per Schedule
"A".
BANNER ADVERTISING: As mutually agreed.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as of the
Effective Date first above written.
LIQUID AUDIO, INC.: FOR MERCHANT:
BY: /s/[SIGNATURE ILLEGIBLE]^^ BY: /s/[SIGNATURE ILLEGIBLE]^^
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TITLE: CEO TITLE: PRES.
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BY: /s/[SIGNATURE ILLEGIBLE]^^ BY: /s/[SIGNATURE ILLEGIBLE]^^
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TITLE: VP BUSINESS DEVELOPMENT TITLE: SEC
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SCHEDULE "A"
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LIQUID REMOTE INVENTORY FULFILLMENT SERVICE
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MERCHANT AFFILIATION AND LICENSE STANDARD TERMS AND CONDITIONS
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Annexed to and made part of that certain Liquid RIFFS Merchant Affiliation
and License Agreement ("Agreement") dated as of May 14, 1999, between Liquid
Audio, Inc. ("Liquid Audio") and MTS, Inc. ("Merchant").
I. Definitions.
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"Merchant Site" means the Web site or sites owned or controlled by Merchant as
identified by the URL or URLs listed in the Main Agreement.
"Link(s)" means one or more hyperlinks established from within the Merchant Site
to one or more pages within the RIFFS Catalog, as designated by Liquid Audio, to
enable Merchant to make online sales of music tracks to customers of the
Merchant Site.
"RIFFS Logo and Artwork" means the Liquid Audio logo and any other logo(s) for
RIFFS designated by Liquid Audio from time to time, and all artwork, graphics,
and other content provided by Liquid Audio for use in connection with the Links.
"RIFFS Catalog" means the compilation database owned by Liquid Audio and
marketed as the" Liquid Remote Inventory Fulfillment Service," "RIFFS" or under
such other branding as Liquid Audio may select from time to time, which database
is comprised of sound recordings made available by Liquid Audio in the Catalog
Categories identified in Schedule "B" (including any samples [forty-five (45)
second or less] of such sound recordings that may be made available for preview
purposes), and all other graphics, text, video, and other related content now or
hereafter offered by Liquid Audio in connection with the foregoing.
"RIFFS Server(s)" means the Liquid Audio server software that makes the RIFFS
Catalog available to Merchant for online sales and digital delivery of music
tracks to customers of the Merchant Site.
"Digital Music Sales Transactions" means the purchase by a customer of the
Merchant Site using the RIFFS Catalog of (i) one or more intangible copies of a
sound recording offered via the RIFFS Catalog, with online fulfillment of such
sale by digital delivery and downloading from the RIFFS Server to the end user's
personal computer hard drive, but not to any other tangible or intangible media.
II. License Grant. Subject to the payment by Merchant of the annual affiliation
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fee set forth in Section IX below, Liquid Audio grants and Merchant accepts a
limited, personal, nontransferable, nonexclusive license as a RIFFS merchant
affiliate (i) to use, make available, and sell music tracks from the RIFFS
Catalog to customers of the Merchant Site; and (ii) subject to compliance with
Liquid Audio's branding guidelines and Section VIII below, to use the Logo and
Artwork as an icon to create one or more Links to the RIFFS Server. As a
condition to such license, Merchant shall comply with such channel restrictions
and other requirements relating to sale of the music tracks that are imposed by
Liquid Audio, the record label or other content owners or suppliers and
communicated to Merchant in writing from time to time; provided, however, that
such requirements shall impose no price-related restraints.
III. Reservation of Rights. The license herein granted shall be limited to the
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rights expressly set forth above. All other rights to the RIFFS Catalog are
expressly reserved by Liquid Audio. Without limiting the foregoing, Merchant may
not create or maintain any hyperlinks to the Catalog other than the Links to the
Merchant Site as permitted herein, and Merchant may not sublicense, remarket or
resell the RIFFS Catalog. In addition, Merchant shall impose no requirements of
any kind or character whatsoever (other than customarily required as part of or
incidental to an online sales transaction) for customers or potential customers
to access the RIFFS Catalog or make online purchase of music tracks using the
RIFFS Catalog via the Links, including without limitation, any subscription or
access fee or registration requirement to activate the Links to the RIFFS
Catalog.
IV. Joint Promotional Obligations Liquid Audio and Merchant will each make
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commercially reasonable efforts to promote the other and the relationship
described within this Agreement at any appropriate trade shows. Liquid Audio and
Merchant will jointly release a press release concerning the relationship
described in this Agreement upon execution hereof and upon launch of the RIFFS
program on the Merchant Site. Both parties will agree to the language of the
press release before it is issued.
V. Liquid Audio Promotional and Technical Obligations Liquid Audio will
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include Merchant on the Liquid Audio Web Site in an area in which Liquid Audio
describes the RIFFS program, and Liquid Audio will provide a link from this
portion of its site to Merchant's home page as part of a listing of merchants
participating in the RIFFS program. In connection with the distribution of music
tracks in the RIFFS Catalog via the Merchant Site, Liquid Audio will provide
Merchant with the RIFFS Courier, the Liquid Audio proprietary client software
for participation in the RIFFS program, and Merchant hereby agrees to the terms
of Liquid Audio's end user license agreement for the RIFFS Courier, which is
attached hereto and incorporated herein as Schedule "C". Liquid Audio will be
responsible for enabling the RIFFS program functionality, using Liquid Audio's
technology and any third party technology obtained by Liquid Audio, through
operation of the RIFFS Server, maintenance of the RIFFS Catalog, and digital
delivery of music tracks through the RIFFS Catalog. Notwithstanding the
foregoing, Merchant shall be solely responsible for all other aspects of the
sales transaction and for the operation of the Merchant Site, including without
limitation establishment of the Links, installation and proper use of the RIFFS
Courier software, configuration and operation of the customer "shopping cart"
functionality, customer inquiries, orders, order
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calculation, presentment and collection of sales price and sales tax due, and
credit and debit card processing.
VI. Merchant Affiliate Promotional Obligations. In consideration of the RIFFS
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Catalog made available to Merchant hereunder, the foregoing license requires
that the RIFFS program be featured in a prominent position on the Merchant Site.
Liquid Audio and Merchant shall negotiate this positioning in good faith but
could include such things as (i) placement of the RIFFS Logo as a Link on the
"home page" of the Merchant Site, or if no third-party content appears on the
"home page" then in the first page thereafter that does so (and/or on other
mutually agreed pages of sufficient prominence); (ii) placement of the Liquid
Audio Logo next to each Link to the RIFFS Catalog from the Merchant Site; (iii)
inclusion of an explanation of RIFFS reasonably acceptable to Liquid Audio in
any instruction section of the Merchant Site; (iv) inclusion of a digital
downloadable section as appropriate in a MY Tower page, as mutually agreed based
upon recommendations from either party.
VII. Liquid MusicPlayer. Merchant will provide a download button, in a design
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consistent with Liquid Audio's branding guidelines, on the Merchant Site, that
enables end users to download the Liquid MusicPlayer from the Web site. Liquid
Audio win license the Liquid MusicPlayer directly to the end user. Liquid Audio
will be responsible for all customer support of this product, and win respond to
customer support requests within twenty-four hours of their receipt. Liquid
Audio will provide to Merchant separate Web pages, for inclusion within the
Merchant Site, which explain the relevant aspects of the Liquid Audio system,
and especially the Liquid MusicPlayer.
VIII Advertising. Upon execution of this Agreement, and until launch of the
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RIFFS program on the Merchant Site, Merchant agrees to work with Liquid Audio in
good faith to promote the coming of the RIFFS program, and the existence of the
RIFFS program on Merchant' s site. In addition, Merchant shall make available to
Liquid Audio a mutually agreed amount of banner ads at a mutually agreed price,
which ads shall be for use exclusively in promoting highlighted music selections
available through the RIFFS Catalog. With respect to the page(s) on the Merchant
Site which contain the Link(s) to the RIFFS Catalog, Merchant shall control all
advertising and other content on such page, and shall retain all revenue derived
therefrom.
IX. Payments.
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(a) Merchant shall pay Liquid Audio the annual merchant affiliation fees
for the Catalog Categories selected by Merchant as set forth in Exhibit "B". The
parties agree that timely payment of all amounts due under this Section IX by
Merchant is of the essence of this Agreement. The due date for the annual
merchant affiliation fees shall be the Effective Date hereof and each
anniversary of such date. The due date for all payments in connection with
Digital Music Sales Transactions shall be as set forth in Section X below.
(b) With respect to all Digital Music Sales Transactions on the Merchant
Site, Merchant shall pay to Liquid Audio the Wholesale Price and the Digital
Delivery Fee for each music title sold. With respect to a Digital Music Sales
Transaction involving the sale of a single music track, the sale shall be deemed
to have occurred when the track has been downloaded by the consumer. With
respect to a Digital Music Sales Transaction involving the sale of a music title
comprised of multiple tracks (album sales), the sale shall be deemed to have
occurred when the first track has been downloaded by the consumer provided that
the remaining tracks have been made concurrently available to the consumer for
downloading. These tracks will be made available until the customer has
successfully downloaded all of the tracks. "Wholesale Price" means the wholesale
price set by Liquid Audio or its suppliers for the applicable track(s) sold as
published on the RIFFS Catalog or otherwise communicated to Merchant. "Digital
Delivery Fee" means Liquid Audio's per-transaction digital fulfillment fee, as
set forth in the Main Agreement. The parties acknowledge that Merchant will
determine the list and actual retail selling price to customers in its sole
discretion, and that Liquid Audio, the record labels or other content owners or
suppliers will determine the wholesale price in their sole discretion.
(c) Subject to the foregoing, the parties' sole compensation under this
Agreement shall be the mutual benefit derived from offering the RIFFS Catalog
through the Merchant Site and each party shall retain all revenues derived from
each of their respective activities hereunder.
X. Statements. Liquid Audio shall provide Merchant on a monthly basis with a
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statement of all amounts payable to Liquid Audio arising from Digital Music
Sales Transactions within ten (10) days after the end of each calendar month.
Merchant shall tender the amount due under such statement to Liquid Audio within
thirty (30) days after the end of the calendar month in which the invoice was
received. The statement shall contain information, which shall be mutually
agreed upon by Liquid Audio and Merchant, for Merchant to accurately verify the
amounts due and payable, including (i) the total number of each music track
sold, (ii) appropriate identifying data for each music track sold; (iii) the
wholesale price of each music track sold; (iv) the total wholesale revenues for
each music track sold; (v) the total number and wholesale revenues for all
tracks sold; (vi) the calculation of Liquid Audio digital delivery fee; (vii)
the calculation of the total amount due to Liquid Audio (viii) and/or such other
transaction data as Liquid Audio may elect to provide to Merchant hereunder. No
deductions or reserves from such amounts payable to Liquid Audio will be
permitted except in the event that Merchant disputes in good faith the accuracy
of any statement or statements, Merchant may withhold the disputed amounts until
such dispute is resolved. Each party will keep reasonable records in connection
with its respective performance under this Agreement, and will permit the other
party reasonable access to such records at such other party's expense upon
reasonable notice. Without limiting Liquid Audio's rights or remedies, Liquid
Audio reserves the right to suspend Merchant's access to the RIFFS program and
RIFFS Catalog hereunder in the event of any material breach of Merchant's
payment obligations hereunder.
XI. Warranties. Liquid Audio represents and warrants the following: (i) that it
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is the sole owner of the database compilation copyright in the RIFFS Catalog;
(ii) except with respect to public performance of music works which is provided
for in Section XII below, it has all
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rights necessary to license the RIFFS Catalog, and the individual music tracks
included therein, as provided in this Agreement; (iii) that it has obtained or
will secure on behalf of Merchant all licenses necessary for Merchant's use of
the RIFFS Courier software licensed pursuant to Schedule "C"; (iv) that it will
provide professional and courteous customer service to Merchant's customers in
connection with support of the Liquid Music Player pursuant to Section VI above;
(v) that it will maintain and operate the RIFFS Server in a manner consistent
with Section XVIII below; (vi) that throughout the term of this Agreement, it
will continue to have the capable to carry out its duties herein; and (viii)
that the RIFFS Server, the RIFFS Courier and all Liquid Audio or third party
software or hardware required by Liquid Audio for operation of RIFFS, will (a)
perform in accordance with their respective specifications prior to, during and
after January 1, 2000, and record, store, process, display and receive calendar
dates falling on or after January 1, 2000, in the same manner, and with the same
functionality, as such software or hardware records, processes, displays and
receives calendar dates falling on or before December 31, 1999: and (b) is
capable of correctly processing, providing and/or receiving data and date-
related data within and between the twentieth and twenty-first centuries,
including without limitation date data recognition, recognition of the year 2000
as a leap year, and calculations that accommodate same century and multi-century
formulas and values.
Liquid Audio will indemnify, defend and hold harmless Merchant against any and
all suits, proceedings at law or in equity, and any and all liability, loss,
costs or damages awarded in any final judgment entered against Merchant or
settlement approved by Liquid Audio, to the extent arising out of or in
connection with any third party claim, suit, demand or action relating to a
breach this Agreement or of the foregoing warranties made by Liquid Audio
hereunder or by reason of a claim that the exercise by Merchant of the license
rights granted herein infringes the U.S. intellectual property rights of others,
provided, however, that prompt detailed notice in writing of such claim is
provided to Liquid Audio. Liquid Audio shall have full control over the defense
and/or settlement of any such claim or litigation including the right to select
counsel, and Merchant shall not continue the use of the RIFFS Catalog after
receipt of notice of any such claim without the written consent of Liquid Audio.
Merchant shall cooperate fully with Liquid Audio in the defense or settlement of
any such claim or litigation.
Merchant will indemnify Liquid Audio from all claims or liabilities including
without limitation reasonable attorneys' fees arising from the breach of this
Agreement by Merchant or from the distribution of any material on the Merchant
Site other than material contained in the RIFFS Catalog or advertising as
delivered by Liquid Audio.
EXCEPT AS EXPRESSLY SET FORTH ABOVE, THE RIFFS PROGRAM, THE RIFFS CATALOG AND
ALL SERVICES, SOFTWARE, TECHNOLOGY AND CONTENT RELATING THERETO ARE PROVIDED ON
AN AS-IS BASIS. LIQUID AUDIO HEREBY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Liquid Audio shall provide to Merchant a Broad Form Vendors Endorsement
Certificate of Insurance in an amount of one million dollars ($1,000,000.00)
evidencing Liquid Audio's liability insurance which said Certificate names
Merchant as an additional insured under said policy. Said policy will provide
that Merchant will be given ten (10) days notice of termination of said policy.
XII. Music Rights. Liquid Audio and/or the content owner, and not Merchant,
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shall be responsible for payment of any mechanical w obligations incurred in
connection with the RIFFS Catalog and Digital Music Sales Transactions. Liquid
Audio warrants to the best of its knowledge that the public performance rights
in the musical works contained in the RIFFS Catalog are (i) controlled by ASCAP,
BMI, SESAC or a performing rights society having jurisdiction, (ii) in the
public domain, or (iii) controlled by Liquid Audio or its licensors.
XIII. Withdrawal Rights. Liquid Audio may in its absolute discretion withdraw
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permanently or temporarily any licensed sound recording or other content from
the RIFFS Catalog if Liquid Audio determines in its sole discretion that the
distribution thereof would or might infringe the rights of others, violate any
law or governmental rule or regulation, interfere with actual or contemplated
use of the particular licensed sound recording or other element for any purpose
other than the distribution by Merchant or subject Liquid Audio to any potential
liability or litigation.
XIV. Term and Termination.
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(a) This Agreement will become effective on the Effective Date and shall
continue in effect for the period set forth in the Main Agreement, unless
otherwise terminated or canceled as provided herein. This Agreement shall
automatically renew for one or more renewal terms of one (1) year each at the
end of the initial term of any renewal term unless either party tenders written
notice of its intent to terminate at least thirty (30) days prior to the
scheduled expiration date.
(b) Either party hereto may, at its option, and without notice, terminate
this Agreement, effective immediately, should the other party hereto (i) admit
in writing its inability to pay its debts generally as they become due; (ii)
make a general assignment for the benefit of creditors; (iii) institute
proceedings to be adjudicated a voluntary bankrupt, or consent to the filing of
a petition of bankruptcy against it; (iv) be adjudicated by a court of competent
jurisdiction as being bankrupt or insolvent; (v) seek reorganization under any
bankruptcy act, or consent to the filing of a petition seeking such
reorganization; or (vi) have a decree entered against it by a court of competent
jurisdiction appointing a receiver liquidator, trustee, or assignee in
bankruptcy or in insolvency covering all or substantially all of such party's
property or providing for the liquidation of such party's property or business
affairs.
(c) In the event that either party commits a material breach of its
obligations hereunder, the other party may, at its option, terminate this
Agreement, by thirty (30) days written notice of termination, which notice shall
identify and describe the basis for such termination; provided, however, that
if, prior to expiration of such period, the defaulting party cures such default,
termination shall not take place. Notwithstanding the foregoing, the cure period
for payment obligations is ten (10) days.
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(d) Upon any termination of this Agreement, Sections III, X, the
indemnification provisions under Section XI, XII and XV shall survive the
termination of this Agreement. Merchant shall immediately return to Liquid Audio
all copies of the RIFFS Logo and Artwork and all other Liquid Audio materials in
Merchant's possession or control Merchant shall deactivate all Links to the
RIFFS Catalog and shall not create any links thereto or to any other Liquid
Audio sites without the prior consent of Liquid Audio.
XV. Confidential Information
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(a) Each party acknowledges that by reason of its relationship to the
other party under this Agreement it will have access to certain information and
materials concerning the other party's business, plans, customers, technology
and products that are confidential and of substantial value to such party
(referred to in this Section as "Confidential Information"), which value would
be impaired if such Confidential Information were disclosed to third parties.
Each party agrees to maintain all Confidential Information received from the
other, both orally and in writing, in confidence and agrees not to disclose or
otherwise make available such Confidential Information to any third party
without the prior written consent of the disclosing party except for parties'
attorneys who will be subject to the confidentiality requirements herein. Each
party further agrees to use the Confidential Information only for the purpose of
performing this Agreement. No Confidential Information shall be deemed
confidential unless so marked if given in writing or, if given orally,
identified as confidential orally prior to disclosure and confirmed in writing
within thirty (30) days, or if a party knows or has reason to know of its
confidentiality, provided, however, that Licensor agrees that any Confidential
Information in whatever form relating to the design, functionality, operational
methods or coding of the RIFFS program, RIFFS Catalog, Liquid Audio software,
including but not limited to any complete or partial source or object code
versions of such software, shall be deemed Confidential Information of Liquid
Audio regardless of the presence or absence of any confidential markings or
identification. The terms of this Agreement will be considered Confidential
Information, but may be disclosed to the parties' accountants or auditors on a
need to know basis.
(b) The parties' obligations under this Section XV shall not apply to
Confidential Information which: (i) is or becomes a matter of public knowledge
though no fault of or action by the receiving party; (ii) was rightfully in the
receiving party's possession prior to disclosure by the disclosing (iii)
subsequent to disclosure, is rightfully obtained by the receiving party from a
third party who is lawfully in possession of such Confidential Information
without restriction; (iv) is independently developed by the receiving party
without resort to the disclosing party's Confidential Information; or (v) is
required by law or judicial order, provided that prior written notice of such
required disclosure is furnished to the disclosing party as soon as practicable
in order to afford the disclosing party an opportunity to seek a protective
order and that if such order cannot be obtained disclosure may be made without
liability. Unless otherwise required to maintain by law or judicial order,
whenever requested by a disclosing party, a receiving party shall immediately
return to the disclosing party all manifestations of the Confidential
Information or, at the disclosing party's option, shall destroy all such
Confidential Information as the disclosing party may designate.
XVI. Additional Provisions.
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(a) Merchant acknowledges that each music offering included in the RIFFS
Catalog category or categories was individually licensed and separately priced,
and that Liquid Audio offered each music offering without discrimination and
without conditioning the licensing of any one music offering upon the licensing
of any other music offering.
(b) Neither party shall be liable to the other for any delay or failure to
perform its obligations hereunder due to acts of God, failure of carriers, labor
disputes, war, public disaster or any other cause beyond the reasonable control
of the parties and such performance shall be excused to the extent of such force
majeure event.
(c) Merchant shall account and pay without limitation any tax, levy or
charge whatsoever by any statute, law, rule or regulation now or hereafter in
effect, related to the Digital Music Sales Transactions between Merchant and its
customers and related to the license fees payable under this Agreement, it being
the intent hereof that all amounts stated herein that are due to Liquid Audio
are net amounts, free and clear any such taxes, levy or charges whatsoever,
except for any taxes on Liquid Audio's net income.
(d) Neither the license granted to Merchant hereunder nor this Agreement
may be transferred or assigned by Merchant without the prior written consent of
Liquid Audio, nor shall Merchant sublicense or relicense the RIFFS Catalog
licensed hereunder, in whole or in part, or enter into any third-party linking
arrangements with respect thereto without Liquid Audio's prior written consent.
Any such purported transfer, assignment or other arrangements entered into
without Liquid Audio's consent shall be void. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns. Except, Merchant will have the absolute right to
assign this Agreement without being required to obtain prior consent of Liquid
Audio (a) to any affiliate, or (b) to any corporation into which Merchant may
merge or which result from the consolidation of Merchant with any other
corporation. No pledge, sale transfer, encumbrance, hypothecation, inheritance,
or other transfer of Merchant' s corporate stock will constitute assignment
hereunder.
(e) The headings of paragraphs hereof are inserted only for the purpose of
convenient reference; such headings shall not be deemed to govern, limit,
modify, or in any manner affect the scope, meaning or intent of the provisions
of this Agreement or any part or portion thereof; nor shall they otherwise be
given any legal effect.
(f) Nothing herein contained shall constitute a franchise relationship, or
partnership between, or joint venture by, Merchant and Liquid Audio, or
constitute Merchant or Liquid Audio the agent of the other.
(g) All notices hereunder win be hand delivered or sent by certified or
registered mail or by a reputable overnight delivery service
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to the parties at the addresses set forth above with a copy to the General
Counsel, or to such other addresses as may be designated by the parties in
writing.
(h) This Agreement shall be construed in accordance with the applicable
laws of the State of California with respect to agreements executed and to be
fully performed in that state.
(i) This Agreement represents the entire understanding of the parties
with respect to the subject matter hereof and supersedes any prior or
contemporaneous understandings. This Agreement may not be amended or modified
except in writing signed by both parties hereto; nor may any provision hereof be
waived unless in writing signed by the party to be charged with such waiver.
(j) If there is a conflict between any provision(s) of this Agreement and
any statute, law or regulation, the statute, law or regulation, shall prevail,
provided, however, that in such event the provision(s) of this Agreement so
affected shall be curtailed and limited only to the minimum extent necessary to
permit compliance with the minimum requirement of such statute, law or
regulation, and no other provisions of this Agreement shall be affected thereby
and all such other provisions shall continue in full force and effect unless an
essential purpose of this Agreement will be defeated.
(k) Merchant agrees that any litigation, action or proceeding arising out
of or relating to this Agreement shall be instituted in any state or federal
court sitting in California.
(l) EXCEPT PER LIABILITY UNDER SECTION XI HEREIN, AND INTENTIONAL OR
RECKLESS MISCONDUCT, LIQUID AUDIO'S AGGREGATE LIABILITY ARISING OUT OF OR
RELATING TO THIS AGREEMENT SHALL BE THE TOTAL AMOUNTS PAID BY MERCHANT. IN NO
EVENT SHALL LIQUID AUDIO BE LIABLE TO MERCHANT OR ANY OTHER PARTY PER
CONSEQUENTIAL, INCIDENTAL, SPECIAL, RELIANCE, OR INDIRECT DAMAGES, OR FOR LOST
DATA, LOST PROFITS, LOSS OF GOODWILL OR BUSINESS INTERRUPTION, HOWEVER CAUSED,
ON ANY LEGAL THEORY, WHETHER BREACH OF CONTRACT, TORT, OR OTHERWISE, REGARDLESS
WHETHER LIQUID AUDIO HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
MERCHANT AGREES THAT THE AMOUNTS PAYABLE TO LIQUID AUDIO UNDER THIS AGREEMENT
REFLECT THE FOREGOING ALLOCATION OF RISK.
XVII. Proprietary Rights
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(a) Definitions: (i) "Merchant Pages" means the pages accessible via the
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Merchant Site that incorporate and integrate the Links, Liquid Audio Content and
Merchant Content; (ii) "Liquid Audio Content" means the text, pictures, graphics
sound, video, other data and computer software to be provided by Liquid Audio
hereunder, as such materials may be modified from time to time; (iii) "Marks"
means Domain Name and the Merchant xxxxx and trademarks to be provided to Liquid
Audio in accordance with this Agreement; (iv) "Merchant Content" means the
materials provided by or created by or on behalf of Merchant (such as the Marks,
an HTML template for the "look and feel" of the Merchant Pages, files, data and
formulae) for incorporation in the Merchant Pages.
(b) License Grant By Merchant. Merchant hereby grants to Liquid Audio a
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limited non-exclusive worldwide license to: (a) use the Marks on Liquid Audio's
Web Site. Liquid Audio shall have no right to sublicense the foregoing rights
without Merchant's prior written consent Any rights not expressly granted by
Merchant to Liquid Audio are reserved by Merchant, and all implied licenses
disclaimed. Liquid Audio shall not exceed the scope of the licenses granted
hereunder.
(c) Ownership of Marks, Merchant Content, and Merchant Site. All right,
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title and interest in and to the Marks, Merchant Content and the Merchant Site
(other than Liquid Audio Content) (including without limitation, all rights
therein under copyright trademarks trade secret and similar laws) shall remain
with Merchant or its licensors and/or suppliers. Liquid Audio will not make any
modification to the Marks and/or Merchant' s Content in connection with its
performance hereunder, without Merchant' s prior written consent
(d) Ownership of Liquid Audio Content. All right, title and interest in
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and to the Liquid Audio Content (including without limitation all rights therein
under copyright, trademark, trade secret and similar laws) shall remain with
Liquid Audio or its licensors and/or suppliers.
(e) Quality Control and Use Restrictions. Liquid Audio shall use the
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Marks exactly in conformance with Merchant's trademark useage policies as
communicated to Liquid Audio from time to time. Merchant may immediately
terminate Liquid Audio' s license to use the Marks if Merchant reasonably
believes the such use dilutes, tarnishes or blurs the value of the marks. Liquid
Audio shall place a (R) or (as appropriate) with the Marks as requested by
Merchant. Liquid Audio acknowledges that Liquid Audio's use of the Marks will
not create in it, nor will it represent it has, any right, title or interest in
or to the Marks other than the limited license granted by Merchant above. Liquid
Audio will not challenge the validity of or attempt to register any of the Marks
or its interest therein as a licensee, nor will it adopt any derivative or
confusingly similar names, brands or marks or create any combination marks with
the Marks. Liquid Audio acknowledges Merchant' s and its affiliates' ownership
and exclusive right to use the marks and agrees that all goodwill arising as a
result of the use of the Marks shall inure to the benefit of Merchant and its
affiliates.
(f) Limited Promotional Use. Liquid Audio hereby grants a non-exclusive,
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worldwide license to Merchant to use, reproduce, distribute, create derivative
works of, publicly perform, publicly display and digitally perform Liquid Audio
Content and the RIFFS Logo and Artwork solely in connection with reasonable
promotional activities by Merchant in connection with demonstrating and
promoting Merchant's Site
(g) Non Exclusivity. Nothing in this Agreement shall be deemed or
---
construed to prohibit (a) Liquid Audio from providing the Liquid Audio Content
(or similar material) to any third party, or (2)
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Merchant from procuring material similar in nature to Liquid Audio Content from
any third party.
(h) Execution of Documents. Each party agrees to execute such documents and
-
take such other actions as are reasonably necessary to effectuate the provisions
of this Section-- at the other party's request and sole expense. In the event
either party refuses or is unable to take such action, such party hereby
irrevocably appoints the other party as such party' s agent-in-fact for the
purposes of taking such action, which appointment is coupled with an interest.
XVIII. General Performance Standards
-----------------------------
Liquid Audio and its related operations must comply with the following
performance standards throughout the Term: (i) The RIFFS Server will be
operational and fully functional in all material respects at least 97% of the
time during any 30 day period; (ii) has been designed to provide an optimal
level of service this includes: Sun Unix machines colocated at one of the top
"tier 2" ISP's with an initial bandwidth of 100Mbps that is promptly expandable
to meet fluctuations in demand and is redundant to provide reliable service;
(iii) Merchant will receive prompt notification of all Network upgrades, outages
or any activity that will cause a sufficient deficiency in these general
performance standards; and (iv) Without limiting Merchant's rights or remedies,
if any of the performance standards set forth above are not met by Liquid Audio,
Merchant may immediately remove any or all links to the RIFFS Catalog at
Merchant's sole discretion. In such instance, Merchant will provide immediate
notice and 24 hours from said notice to cure. Further, if the RIFFS Server fails
to operate fully and functionally in any material respect for any period of four
or more consecutive hours, even if otherwise in compliance with the performance
standards, Merchant may immediately remove any or all links to the RIFFS
Catalog, at Merchant's sole discretion, until such time as Liquid Audio notifies
Merchant that the Server has resumed acceptable operation.
XIX. Maintenance
Upgrades and patches to be provided in a timely manner.
XIX. Non-solicitation of Employees
During the Term and for a period of six (6) months from the voluntary or
involuntary termination of this Agreement for any reason whatsoever, neither
party shall (i) solicit, interfere with, or endeavor to cause any employee of
the other party to leave his or her employment; or (ii) induce or attempt to
induce any such employee to breach her or his employment agreement with the
other party.
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SCHEDULE "B"
------------
RIFFS Catalog Categories Annual Affiliation Fees
------------------------ -----------------------
All Categories
Pop/R&B
Country
Rock
Jazz
Classical
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SCHEDULE "C"
------------
RIFFS COURIER END USER LICENSE AGREEMENT
LIQUID AUDIO, INC. ("LIQUID AUDIO") AGREES TO LICENSE TO YOU ("MERCHANT") THE
RIFFS COURIER SOFTWARE ("SOFTWARE") FOR USE IN CONNECTION WITH LIQUID AUDIO'S
REMOTE INVENTORY FULFILLMENT SERVICE ("RIFFS PROGRAM") ONLY ON THE CONDITION
THAT YOU ACCEPT ALL OF THE TERMS CONTAINED IN THIS AGREEMENT.
1. LICENSE GRANT AND RESTRICTIONS. Subject to the terms of this Agreement,
Liquid Audio grants to Merchant a non-exclusive, non-transferable, revocable
license to use during the term of this Agreement the object code copy of the
Software ("Copy") and related documentation as provided by Liquid Audio to
Merchant pursuant to that certain RIFFS Merchant Affiliate and License Agreement
between the parties ("RIFFS Agreement"). The Software may only be used in
connection with the RIFFS Program and on a single CPU, which may be changed from
time to time. Such license shall commence upon the date of delivery of the Copy
to Merchant or the date of complete execution of the RIFFS Agreement, whichever
occurs later, and shall continue until the expiration or termination of the
RIFFS Agreement, unless this Agreement is earlier terminated as provided herein.
Merchant may not (a) modify, disassemble, decompile or reverse engineer the
Software; (b) rent, lease, loan, resell, sublicense, distribute or otherwise
transfer the Software to any third party or use the Software to provide time-
sharing or similar services to any third party, (c) make any copy of the
Software except for a single boot-up copy and a single back-up copy; (d)
circumvent or disable any technological features or measures in the Software for
protection of intellectual property rights, or (e) delete the copyright and
other proprietary rights notices on the Software. This license does not include
any rights to maintenance or updates; provided, however, that if Liquid Audio
provides Merchant with any updates to the Software, Merchant shall promptly
implement such updates, and such updates shall be deemed to be included in the
license granted hereunder.
2. DIGITAL DELIVERY FEES. The continued effectiveness of this Agreement during
the term hereof is conditioned upon the receipt by Liquid Audio of any Digital
Delivery Fees (as such terms is defined in the RIFFS Agreement that are payable
by Merchant to Liquid Audio pursuant to the RIFFS Agreement. Such payments will
be made by Merchant pursuant to the terms and conditions set forth in the RIFFS
Agreement.
3. LIMITED WARRANTY. Liquid Audio represents and warrants during the term of
this Agreement that:
(i) The Software, including upgrades and patches, unless modified by
Merchant, will perform substantially in accordance with the documentation
provided by Liquid Audio. Merchant's sole remedy under this warranty is that
Liquid Audio will endeavor to correct within a reasonable period of time any
"Software Error" (i.e., material failure of the Software to perform
substantially in accordance with the documentation) that is reported during the
warranty period or, if Liquid Audio is unable to correct any Software Error,
terminate this Agreement. Liquid Audio does not warrant that the Software will
meet Merchant's requirements, that operation of the Software will be
uninterrupted, error-free or that all Software Errors will be corrected.
(ii) The media, if any (such as diskette or CD-ROM), provided by
Liquid Audio containing the Software will be free from defects in materials and
workmanship under normal use. Merchant's sole remedy under this warranty is that
Liquid Audio will replace any faulty media at no charge to Merchant if the same
is returned to Liquid Audio.
(iii) The Software, upgrades and patches will not infringe or
misappropriate any copyrights, trademarks, patents, privacy, publicity, and
other proprietary rights of any third party, or otherwise violate this Agreement
or any applicable law.
Indemnification. Liquid Audio agrees to defend, indemnify, and hold
harmless Merchant from and against any and all suits, prigs at law or in equity,
and any and all liability, loss, costs or damages, including reasonable
attorneys fees and expenses arising out of or in connection with any claim,
suit, demand or action relating to any actual or alleged violation of copyright,
trademark, trade name or patent laws with respect to the Software, upgrades or
patches provided to Merchant by Liquid Audio. Liquid Audio agrees
-9-
to retain at the Liquid Audio's expense, legal counsel reasonably satisfactory
to Merchant, for the purpose of defending any said loss, claim, lawsuit,
petition, or other litigation; and to reimburse Merchant for all legal expenses
reasonably incurred by Merchant prior to the retention of said legal counsel by
Liquid Audio provided such expenses are reasonably pre-approved by Liquid Audio.
THE ABOVE WARRANTIES ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, AND LIQUID AUDIO EXPRESSLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT. NO ORAL OR WRITTEN INFORMATION OR ADVICE
GIVEN BY LIQUID AUDIO, ITS EMPLOYEES OR AGENTS SHALL INCREASE THE SCOPE OF THE
ABOVE WARRANTIES OR CREATE ANY NEW WARRANTIES.
4. LIMITATION OF LIABILITY. EXCEPT FOR SECTION 3, INTENTIONAL OR RECKLESS
MISCONDUCT BY LIQUID AUDIO ITS CONTRACTORS, AGENTS, OR EMPLOYEES, IN NO EVENT
WILL LIQUID AUDIO BE LIABLE TO MERCHANT OR ANY OTHER PARTY FOR CONSEQUENTIAL,
INCIDENTAL, INDIRECT, SPECIAL, OR RELIANCE DAMAGES OF ANY KIND OR FOR LOST DATA,
LOST PROFITS OR BUSINESS INTERRUPTION ARISING FROM USE OF THE COPY AND/OR THE
SOFTWARE EMBODIED THEREIN, WHETHER RESULTING FROM TORT (INCLUDING NEGLIGENCE),
BREACH OF CONTRACT OR OTHER FORM OF ACTION, ARISING IN ANY WAY OUT OF THIS
AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. EXCEPT FOR SECTION
3, INTENTIONAL OR RECKLESS MISCONDUCT, LIQUID AUDIO'S TOTAL LIABILITY UNDER THIS
AGREEMENT WILL BE LIMITED TO THE TOTAL AMOUNTS PAID BY MERCHANT. Merchant
expressly acknowledges that the Digital Delivery Fees agreed to by the parties
reflect the foregoing allocation of risk.
5. OWNERSHIP; PERMISSIONS. Merchant agrees that Liquid Audio and/or its
suppliers own all right, title and interest in and to the Software and all
copies thereof, including without limitation any and all copyrights, patents,
trade secrets, trademarks and other intellectual property and proprietary rights
therein. Merchant will not acquire any additional licenses under any copyrights,
patents, trade secrets, trademarks or other intellectual property rights on
account of this Agreement. Merchant acknowledges that the Software embodies
trade secrets of Liquid Audio, the unauthorized use or disclosure of which may
cause substantial harm to Liquid Audio that could not be remedied by the payment
of damages alone. Accordingly, Liquid Audio may be entitled to preliminary and
permanent injunctive relief and other equitable relief for any breach of this
Section 1 or 5.
6. TERMINATION. Liquid Audio will have the right to terminate this Agreement
if Merchant breaches any term or condition of this Agreement (including without
limitation failure to pay any Digital Delivery Fees when due) and, if such
breach is subject to cure, fails to cure such breach within ten (10) days after
written notice from Liquid Audio. Upon termination of this Agreement, the rights
and licenses granted to Merchant under this Agreement shall automatically
terminate. Within five (5) days after termination, Merchant will return or
destroy all copies of the Software and documentation in Merchant's possession.
Upon request, Merchant will certify to Liquid Audio that all copies of the
Software have been returned to Liquid Audio or destroy. The exercise by Liquid
Audio of any remedies under this Agreement will be without prejudice to its
other remedies under this Agreement or otherwise. The rights and obligations of
the parties under Sections 2, 3, 4, 5, 6, 7, and 10 shall survive the expiration
or termination of this Agreement.
7. GOVERNMENT LICENSEE. If the Software is licensed by or for any unit or
agency of the United States Government, then the Software shall be classified as
"commercial computer software," as that term is defined in the applicable
provisions of the Federal Acquisition Regulation ("FAR") and supplements
thereto, including the Department of Defense ("DoD") FAR Supplement ("DFARS").
Liquid Audio represents that the Software was developed entirely at private
expense, and that no part of the Software was first produced in the performance
of a United States Government contract. If the Software is supplied for use by
DoD, the Software is delivered subject to the terms of this Agreement and either
(i) in accordance with DFARS 227.7202-1(a) and 227.7202-3(a), or (ii) with
restricted rights in accordance with DFARS 252.227-7013(c)(1)(ii) (OCT 1988), as
applicable. If the Software is supplied for use by a Federal agency other than
DoD, the Software is restricted computer software delivered subject to the terms
of this Agreement and (i) FAR 12.212(a); (ii) FAR 52.227-19; or (iii) FAR 52.
227-14(ALT III), as applicable.
8. EXPORT CONTROL. Merchant agrees to comply with all export laws and
restrictions and regulations of the United States Department of Commerce or
other United States or other sovereign agency or authority, and not to export,
or allow the export or re-export of any technical data or any Software in
violation of any such restrictions, laws or regulations, or unless and until all
required licenses and authorizations are obtained to the countries specified in
the applicable U.S. Export Administration Regulations (or any successor
supplement or regulations).
-10-
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, excluding its conflicts of
law principles. The parties agree that the United Nations Convention on
Contracts for the International Sale of Goods will not apply to this Agreement.
Except for disputes as to the ownership of intellectual property rights in the
Software, all disputes arising out of or relating to this Agreement or its
interpretation shall be finally settled by binding arbitration in Redwood City,
California pursuant to the Commercial Arbitration rules of the American
Arbitration Association by one arbitrator. All arbitrators will have knowledge
of and experience regarding the computer industry. The arbitration award may be
enforced in any court of competent jurisdiction. Merchant hereby consents to the
personal and exclusive jurisdiction and venue of the state and federal courts
located in California.
10. MISCELLANEOUS. This Agreement constitutes the entire agreement between the
parties with respect to its subject matter, and supersedes any and all written
or oral agreements previously existing between the parties with respect to such
subject matter. Any modifications of this Agreement must be in writing and
specifically reference amendment to this agreement. This Agreement will bind and
inure to the benefit of each party's successors and assigns, provided that
Merchant may not assign or transfer this Agreement, in whole or in pan, or any
rights, duties or obligations hereunder, whether by operation of law or
otherwise, without Liquid Audio's prior written consent, and any purported
transfer or assignment without such consent shall be void. Except, Merchant will
have the absolute right to assign this Agreement without being required to
obtain prior consent of Liquid Audio (a) to any affiliate or (b) to any
corporation into which Merchant may merge or which may result from the
consolidation of Merchant with any other corporation. No pledge, sale, transfer,
encumbrance, hypothecation, inheritance, or other transfer of Merchant's stock
will constitute assignment hereunder. If any provision of this Agreement is
found illegal or unenforceable, it will be enforced to the maximum extent
permissible, and the legality and enforceability of the other provisions of this
Agreement will not be affected. No failure of either party to exercise or
enforce any of its rights under this Agreement will act as a waiver of such
rights. No purchase order, invoice or similar document will by its terms amend
or supplement the terms and conditions of this Agreement, even if accepted or
signed by the receiving party. Performance of this Agreement may be suspended
due to any force majeure event.
MERCHANT ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT, UNDERSTANDS IT AND AGREES
TO BE BOUND BY ITS TERMS AND CONDITIONS.
THE SOFTWARE AND THE ACCOMPANYING DOCUMENTATION ARE PROTECTED BY UNITED STATES
COPYRIGHT LAW AND INTERNATIONAL TREATY. UNAUTHORIZED REPRODUCTION OR
DISTRIBUTION IS SUBJECT TO CIVIL AND CRIMINAL PENALTIES.
-11-
