Exhibit 10.17
CO-BRANDING AND MEDIA PURCHASE AGREEMENT
This Co-Branding and Media Purchase Agreement (the "Agreement") is made as
of 3/26, 1999 (the "Effective Date") by and between The Music Connection, a
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Delaware corporation with offices at 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX
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20190 ("TMC") and Spinner Networks, Inc. a California corporation with offices
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at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000 ("Xxxxxxx.xxx").
BACKGROUND
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A. Spinner owns and operates a leading Internet radio web site, located
primarily at xxxx://xxx.xxxxxxx.xxx (The "Spinner Site"), and related software
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and services.
B. TMC owns and operates a custom compilation music store through its
Internet web site, located primarily at xxxx://xxx.xxxxxxxxxx.xxx (the
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"MusicMaker Site").
C. Both parties desire for TMC to construct, host and maintain a co-
branded version of the MusicMaker Site which will provide Xxxxxxx.xxx end-users
with access to the products, services and information available through the
MusicMaker Site.
In consideration of the foregoing, the parties hereby agree as follows:
A G R E E M E N T
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1. Definitions. Capitalized terms used herein are defined in Exhibit A and
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throughout the Agreement.
2. TMC Obligations.
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2.1 Site Development and Operation. TMC will construct, operate, and
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maintain a co-branded web site which will, at a minimum, provide Spinner Users
with access to the products, services, content, and support available through
the MusicMaker Site (the Co-Branded Site"). TMC will provide, at its sole
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expense, all web development services, engineering support, technical support,
sales, administrative and management personnel, facilities, equipment and
supplies necessary to construct, operate, and maintain the Co-Branded Site. TMC
will be solely responsible for providing customer support to Spinner Visitors.
The Co-Branded Site shall be constructed and maintained such that its average
web page response times shall be substantially equivalent to the MusicMaker Site
and commercially similar web sites.
2.2 Co-Branding. TMC will incorporate on each page of the Co-Branded
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Site: (a) the Brand Feature of both parties; and (b) Xxxxxxx.xxx's navigation
bar(s) and/or other elements of the Spinner Look & Feel; in a design mutually
agreed to by the parties. Spinner's brand and navigation bar shall appear at
the top of the co-branded page. Spinner and MusicMaker brand/log elements in
the Co-Branded Site will be of equal size. No third party Brand Features shall
appear on the Co-Branded Site.
2.3 Promotions. Each month during the Initial Term (as defined below),
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TMC will implement a promotion on the Co-Branded Site. Such promotion will
include: (a) the creation and/or sale of a Customized CD, (B) related thematic
or promotional content, and (c) at TMC's option, a discounted price for the
purchase of such Customized, CD. Following the launch of the music store area
of the Spinner Site (the "Music Store"), currently estimated to occur in May of
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1999, Xxxxxxx.xxx will create and display one or more persistent navigation
link(s) from the Music Store to the promotion described in this Section 2.3.
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2.4 TMC's Business. TMC will be responsible for : (a) all information and
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transaction processing at the Co-Branded Site, including but not limited to, all
order fulfillment, credit-card processing, and shipping and handling, (b)
establishing and maintaining all legal and other regulatory requirements for
operating the Co-Branded Site, including but not limited to all licensing
obligations, and (c) all taxes, duties, and other charges relating to the
operation of the Co-Branded Site and the transactions conducted there, including
without limitation collecting and paying all sales and other taxes and filing
tax returns.
3. Exclusivity: Option. During the Initial Term, Xxxxxxx.xxx will not
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enter into any agreement with a third party to co-brand a web-site on which
customized CDs are made available for purchase. Notwithstanding anything
contained in this Agreement to the contrary, at any time following three (3)
months after the Effective Date, Spinner may at its option request that TMC
remove Digital Downloads from the Co-Branded Sites, and any access to purchase
Digital Downloads.
4. Revenue Share.
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4.1 Subscription Revenue. TMC will pay Xxxxxxx.xxx a percentage of Net
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Revenue (the "Revenue Share") as follows: (a) for each Spinner Visitor who
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purchases a Digital Download, TMC will pay Xxxxxxx.xxx fifteen percent (15%) of
the Net Revenue derived from such purchase; and (b) for each Spinner Visitor who
purchases a Customized CD, TMC will pay twenty-two percent (22%) of the Net
Revenue derived from such purchase. As used herein, "Net Revenue" means the
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revenue actually received by TMC from Spinner Visitors for purchase of Digital
Downloads and Customized CDs, as applicable, less (a) returns and credits, (b)
applicable sales tax, and (c) shipping and handling costs.
4.2 Payment Terms. Within thirty (30) days following the end of each
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month, TMC will provide Xxxxxxx.xxx with the Revenue Share for such month,
accompanied by a written report showing in sufficient detail the calculation of
the Revenue Share for such month.
4.3 Records: Audit Rights. TMC will maintain complete and accurate
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records of purchases made by Spinner Visitors and Net Revenue during the Term
and for a period of six-months thereafter. During such period, Xxxxxxx.xxx will
have the right, at its own expense, to direct an independent certified public
accounting firm to inspect and audit the accounting and sales books and records,
of TMC that are relevant to verifying the accuracy of the Revenue Share,
provided that: (a) any such inspection and audit will be conducted during
regular business hours in such a manner as not to interfere with normal business
activities, (b) in no event will audits be made more frequently than once in
each six-month period., (c) if any audit should disclose an underpayment, TMC
will pay such amount to Xxxxxxx.xxx within thirty (30) days from notice thereof,
and (d) the reasonable fees and expenses relating to any audit which reveals an
underpayment in excess of five percent (5%) of the amounts owed, will be borne
entirely by TMC.
5. Media Purchase.
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5.1 Minimum Purchase. TMC agrees to purchase a minimum of $37,500 of
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Media Placements (the "Minimum Purchase") at the CPM rates set forth in Exhibit
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B. Xxxxxxx.xxx will determine in its sole discretion the allocation of Media
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Placements, and the placement and allocation of corresponding impressions, in a
manner designed to drive traffic to the Co-Branded Site. Notwithstanding the
foregoing, Spinner agrees that Media Placements shall be planned to distribute
impressions across the entire six month period. All banner ads and other
content supplied by TMC for Media Placements (the "Advertisements") shall
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promote the Co-Branded Site, and will be subject to Spinner's standard insertion
order terms and conditions. Spinner will deliver Media Placements associated
with the Minimum Purchase during the Initial Term (as defined below), provided,
however, that TMC's sole remedy for any under delivery will be delivery of
remaining impressions or Media Placements, as applicable, following the Initial
Term. TMC may purchase additional Media Placements at its discretion, at the
CPM rates set forth in Exhibit B.
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5.2 Payment and Reports. TMC agrees to pay Xxxxxxx.xxx $37,500 on the
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Effective Date (the "Prepayment"). The Prepayment will be creditable against
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amounts due for Media Placements delivered during the Initial Term. Xxxxxxx.xxx
will maintain complete and accurate records of all Media Placements during the
term and for a period of six-months thereafter. Within 30 days following the
end of each quarter, Xxxxxxx.xxx shall provide TMC with a written report which
will include a description of the Media Placements delivered during such
quarter, and the total amount deducted from the Prepayment for such Media
Placements.
6. License.
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6.1 Grant of License by Xxxxxxx.xxx.
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(a) Subject to the terms and conditions of this Agreement, Xxxxxxx.xxx
hereby grants to TMC a non-exclusive, royalty-free, worldwide license to use,
reproduce, publicly display, publicly perform, distribute and transmit
Xxxxxxx.xxx's Brand Features on the Co-Branded Site, provided that any display
of Xxxxxxx.xxx's Brand Features will be subject to compliance with any brand
guidelines communicated by Xxxxxxx.xxx to TMC.
(b) Xxxxxxx.xxx may, at any time, terminate the license granted
pursuant to subsection (a) above if, in its sole and reasonable discretion,
TMC's use of Xxxxxxx.xxx's Brand Features on the Co-Branded Site is diluting or
tarnishing the goodwill of Xxxxxxx.xxx's Brand Features.
6.2 Grant of License by TMC. Subject to the terms and conditions of this
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Agreement, TMC hereby grants to Xxxxxxx.xxx a nonexclusive, royalty-free,
worldwide license to use, modify, reproduce, publicly display, publicly perform,
distribute and transmit TMC's Brand Features in the Spinner Site in connection
with the marketing and promotion of the Co-Branded Site, subject to compliance
with any brand guidelines communicated by TMC to Xxxxxxx.xxx.
6.3 Reserved Rights. Without limitation of the foregoing, each party
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reserves all rights other than those expressly granted in this Agreement, and no
licenses are granted except as expressly set forth herein.
7. Proprietary Information.
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7.1 Confidentiality. TMC and Xxxxxxx.xxx hereby acknowledge that in the
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course of activities under this Agreement each of them may have access to
confidential and proprietary information which relates to the other party's
marketing and business (the "Confidential Information"). Each party agrees to
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preserve and protect the confidential Information of the party to any third
party without the prior written consent of the other party; provided, however,
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that either party may disclose any information which is: (a) already publicly
known; (b) discovered or created by the receiving party without reference to the
Confidential Information of the other party, as shown in records of receiving
party; (c) otherwise known to the receiving party through no wrongful conduct of
the receiving party, or (d) required by law. Moreover, any party hereto may
disclose may Confidential Information hereunder to such party's agents,
attorneys and other representatives or any court of competent jurisdiction or
any other party empowered hereunder as reasonably required to resolve any
dispute between the parties hereto. Each party shall treat the terms of this
Agreement as "Confidential Information."
7.2 User Information and Reports. TMC will own all right, title and
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interest in and to all end-user information that is created or collected in the
operation of the Co-Branded Site. TMC will provide Xxxxxxx.xxx with aggregated
usage data concerning access by Spinner Visitors to the Co-Branded Site. Usage
data reports will be provided quarterly and as reasonably requested. The
reports will be delivered in the format most commonly collected by TMC. All
usage data will be considered Confidential Information of TMC. TMC usage data
shall not include specific Spinner
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Visitor names or traceable addresses, however, TMC will provide Xxxxxxx.xxx, at
a minimum, the following information pertaining to Spinner Visitors: number of
Spinner Visitors, page views per visit, Spinner Visitors who register with TMC,
total transaction, total revenue per transaction, and products/services
purchased per transaction. Xxxxxxx.xxx may use any such information provided by
TMC in any manner so long as it is for internal purposes and complies with
Xxxxxxx.xxx's privacy policy.
7.3 Ownership. As between TMC and Xxxxxxx.xxx: (a) Xxxxxxx.xxx will have
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full and exclusive right, title and ownership interest in and to Xxxxxxx.xxx's
Brand Features, together with any Intellectual Property rights thereto, and (b)
TMC will have full and exclusive right, title and ownership interest in and to:
(I) the TMC Brand Features, (ii) the Co-Branded site except for any Xxxxxxx.xxx
Brand Features contained therein, and (iii) any Intellectual Property Rights to
the foregoing.
8. Termination.
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8.1 Term. This Agreement will become effective as of the Effective Date
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and, unless sooner terminated as provided below, will remain effective for a
period of six (6) months (the "Initial Term"). If during the Initial Term, the
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total Revenue Share received by Spinner is $50,000 or more, the Agreement shall
be automatically extended for an additional term of six (6) months (the
"Extension Term"). As used herein, "Term" shall mean the Initial Term, and if
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applicable, the Extension Term.
8.2 Termination. This Agreement may be terminated at any time by a party,
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effective immediately upon notice, if the other party: (a) becomes insolvent;
(b) files a petition in bankruptcy, (c) makes an assignment for the benefit of
its creditors, or (d) breaches any of its material responsibilities or
obligations under the Agreement which breach is not remedied within thirty (30)
days from receipt of written notice of such breach.
8.3 Effect of Termination. Upon expiration or termination of this
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Agreement: (a) each party shall return or, at the disclosing party's request
destroy, the Confidential Information of the other party, (b) all licenses
granted herein shall terminate; (c) TMC shall cease operation of the Co-Branded
Site and (d) TMC shall, within forty-five (45) days, pay to Xxxxxxx.xxx all sums
duc as of the effective date of expiration or termination, and (c) Sections 4.3,
7, 8.3, 9, 10, 11, and 12 shall survive any termination or expiration of the
Agreement.
9. Representation and Warranties.
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9.1 By Each Party. Each party represents and warrants to the other that:
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(a) such party has the full corporate right, power and authority to enter into
this Agreement and to perform the acts required of it hereunder; (b) the
execution of this Agreement by such party, and the performance by such party of
its obligations and duties hereunder, do not and will not violate any agreement
to which such party is a party or by which it is otherwise bound; and (c) when
executed and delivered by such party, this Agreement will constitute the legal,
valid and binding obligation of such party, enforceable against such party in
accordance with its terms.
9.2 No Additional Warranties. EXCEPT AS EXPRESSLY SET FORTH IN SECTION
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9.1 ABOVE, NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY
DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES EXPRESS OR IMPLIED, REGARDING
THE SERVICE OR THE CO-BRANDED SITE, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT AND
IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.
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10. Indemnification.
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10.1 Indemnification by Xxxxxxx.xxx. Xxxxxxx.xxx agrees, at its own
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expense, to defend or at its option to settle any claim or action brought
against TMC arising out of: (a) a claim that use of Xxxxxxx.xxx's Brand Features
in accordance with the terms of this Agreement infringes a third party copyright
or trademark, and/or (b) a breach by Xxxxxxx.xxx of any representation or
warranty contained in Section 9.1; and Xxxxxxx.xxx will indemnify TMC against
any and all losses, damages, suits, judgments, costs and expenses (including
litigation costs and reasonable attorney's fees) arising under any such claim or
action; provided that TMC provides Xxxxxxx.xxx with: (x) prompt written notice
of such claim or action, (y) sole control and authority over the defense or
settlement of such claim or action (provided that Xxxxxxx.xxx shall not enter
into any settlement which materially affects TMC's rights without TMC's prior
written consent), and (z) proper and full information and reasonable assistance
to defend and/or settle any such claim or action.
10.2 Indemnification by TMC . TMC agrees, at its own expense, to defend or
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at its option to settle any claim or action brought against Xxxxxxx.xxx arising
out of: (a) a claim that use of TMC's Brand Features in accordance with the
terms of this Agreement infringes a third party copyright or trademark, (b) a
claim related to the Co-Branded Site (excluding any infringement claim related
to Xxxxxxx.xxx's Brand Features), and/or (c) a breach by TMC of an
representation or warranty contained in Section 9.1; and TMC will indemnify
Xxxxxxx.xxx against any and all losses, damages, suites, judgments, costs and
expenses, (including litigation costs and reasonable attorneys' fees) arising
under any such claim or action; provided that Xxxxxxx.xxx provides TMC with: (x)
prompt written notice of such claim or action, (y) sole control and authority
over the defense or settlement of such claim or action (provided that TMC shall
not enter into any settlement which materially affects Xxxxxxx.xxx's rights
without Xxxxxxx.xxx's prior written consent) and (z) proper and full information
and reasonable assistance to defend and/or settle any such claim or action.
11. Limitation of Liability. EXCEPT FOR LIABILITY ARISING UNDER SECTION 10,
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UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY
PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR
ANTICIPATED PROFITS OR LOST BUSINESS. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE.
12. Miscellaneous.
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12.1 Press Release. Notwithstanding Section 7.1, the parties will
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cooperate to create appropriate, mutually agreeable, public announcements of the
relationship set forth in this Agreement. No party will make any separate
public announcement without first delivering the announcement to the other party
and obtaining the other party's prior consent, which will not be unreasonably
withheld or delayed.
12.2 Notices. Any notice or other communication to be given hereunder will
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be in writing and given by facsimile, postpaid registered or certified mail
return receipt requested, or electronic mail (with a copy concurrently mailed as
set forth above). The date of receipt shall be deemed the date on which such
notice is given. Notice hereunder will be directed to a party at the address
for such party set forth in the first paragraph of this Agreement. Either party
may change its address for notice purposes hereof on written notice to the other
party in accordance with this Section 12.2.
12.3 Counterparts. This Agreement may be executed in any number of
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counterparts with the same effect as if all parties hereto had all signed the
same document. All counterparts will be construed together and will constitute
one agreement.
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12.4 No Assignment. Neither party will transfer or assign any rights or
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delegate any obligations hereunder, in whole or in part, whether voluntarily or
by operation of law, without the prior written consent of the other party. Any
purported transfer, assignment or delegation by either party without the
appropriate prior written approval will be null and void and of no force or
effect. Notwithstanding the foregoing, each party will have the right to assign
this Agreement to any successor of such party by way of merger or consolidation
or the acquisition of all or substantially all of the business and assets of the
assigning party relating to the Agreement.
12.5 Headings. Sections, titles or captions in no way define, limit,
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extend or describe the scope of this Agreement nor the intent of any of its
provisions.
12.6 Severability. Any provision of this Agreement that is prohibited or
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unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
12.7 Entire Agreement. This Agreement together with its Exhibits contains
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the entire agreement of the parties with respect to the subject matter hereof,
and supersedes all prior and/or contemporaneous agreements or understandings,
written or oral, between the parties with respect to the subject matter hereof.
12.8 Governing Law. This Agreement will be governed by and interpreted
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under the laws of the State of California, without giving effect to applicable
conflicts of law principles.
12.9 Amendment. This Agreement may not be amended or modified by the
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parties in any manner, except by an instrument in writing signed on behalf of
each of the parties to which such amendment or modification applies by a duly
authorized officer or representative.
12.10 Waiver. Any of the provisions of this Agreement may be waived by
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the party entitled to the benefit thereof. Neither party will be deemed., by
any act or omission, to have waived any of its rights or remedies hereunder
unless such waiver is in writing and signed by the waiving party, and then only
to the extent specifically set forth in such writing. A waiver with reference
to one event will not be construed as continuing or as a bar to or waiver of any
right or remedy as to a subsequent event.
12.11 Arbitration. Any dispute, claim or controversy of any kind
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arising in connection with, or relating to, this Agreement, except for a
dispute, claim or controversy arising under Sections 7 and/or 8 shall be
resolved exclusively by binding arbitration in San Francisco, California, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect, by three (3) arbitrators appointed in accordance
with said rules. Judgment on the award rendered by the arbitrators may be
entered into any court of competent jurisdiction.
12.12 Recovery of Costs and Expenses. If either party brings an action
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against the other party to enforce its rights under this Agreement, the
prevailing party will be entitled to recover its costs and expenses, including,
without limitation, attorneys' fees and costs incurred in connection with such
action, including any appeal of such action.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers or representatives as of
the Effective Date.
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THE MUSIC CONNECTION
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: VP/ Sales & Marketing
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Date: 3/28/99
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SPINNER NETWORKS, INC.
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
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Title: CEO
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Date: 3/26/99
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