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EXHIBIT 10.24
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by [****], have been
separately filed with the Commission.
CONFIDENTIAL
INTERACTIVE MARKETING AGREEMENT
This Agreement, dated as of September 1, 1997 (the "Effective Date"), is made
and entered into by and between America Online, Inc. ("AOL"), a Delaware
corporation, with its principal offices at 00000 XXX Xxx, Xxxxxx, Xxxxxxxx
00000, and N2K Inc. ("N2K"), a New York corporation, with its principal offices
at 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 (each a "Party" and
collectively the "Parties").
INTRODUCTION
AOL and N2K each desire to enter into the interactive marketing relationship
described below, subject to the terms and conditions set forth in this
Agreement. Defined terms used but not defined in the body of the Agreement shall
be as defined on Exhibit C attached hereto.
TERMS
1. PROMOTION, DISTRIBUTION AND MARKETING.
1.1 ONLINE LISTING AND PROMOTION OF N2K.
1.1.1 AOL SERVICE. N2K will receive an integrated package of
placements, promotions and links through the AOL Service
consisting of the following.
1.1.1.1 MUSICSPACE. AOL will continuously and
prominently place an N2K banner (the "MusicSpace
Banner") on the main screen of the "MusicSpace"
channel on the AOL Service ("MusicSpace"). The
MusicSpace Banner will continuously link to the main
page of the Customized MB Site (or such other
locations as may be mutually agreed upon by the
Parties). Branded genre screens within MusicSpace
(which currently include alternative, rock, pop,
country, r&b, jazz, world and classical and which may
be supplemented or modified by AOL in its editorial
discretion) will include (i) branded "Buy Now"
buttons which link to corresponding retailing
categories within the Customized MB Site, which
categories may include certain non-retailing-oriented
content, (or such other locations as may be mutually
agreed upon by the Parties), and (ii) unbranded "Buy
Now" links from Content related to individual
Products (including "New Releases" content) to
sales/fulfillment screens within the Customized MB
Site dedicated to the individual Products in question
or other fulfillment screens mutually agreed upon by
the Parties. The look and feel of
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the MusicSpace Banner and "Buy Now" buttons and links
will be as mutually agreed upon by the Parties and
N2K will provide the graphics for such promotional
icons. In addition, AOL will integrate promotions for
and integration of the Customized MB Site in other
aspects of MusicSpace in AOL's reasonable editorial
discretion. AOL will not provide promotions,
advertising or integration within MusicSpace for any
other Online Music Retailer. Without limiting the
generality of anything else contained herein, AOL
reserves the right to redesign or modify the
organization, structure, "look and feel," navigation
and other elements of MusicSpace. In the event such
modifications materially and adversely affect the
promotional placements for N2K described above and
implemented as part of the "re-launch" of MusicSpace,
AOL will work with N2K in good faith to provide N2K
with a comparable package of promotional placements
in MusicSpace which are reasonably satisfactory to
N2K.
1.1.1.2 SHOPPING CHANNEL. AOL will provide N2K with
an "Anchor Tenant" position in the music retailing
department (the "Music Department") of the "Shopping"
channel of the AOL Service ("Shopping"). Such
positioning shall include the components described on
Exhibit B. AOL will only be entitled to include at
any time either (at AOL's option): (i) [****]
additional Online Music Retaile[****] within the
Music Department in comparable "Anchor Tenant"
position, which Online Music Retailer will not be
featured or promoted more prominently than N2K; or
(ii) [****] additional Online Music Retailers within
the Music Department in positions that will not be
featured or promoted as prominently as N2K. Among
"Anchor Tenant" positions devoted to music, N2K will
have its choice of such positions. The foregoing
placements will link to the Customized MB Site.
1.1.1.3 BANNER ADVERTISING. AOL will provide banner
advertising (the "Banners") which link to the
Customized MB Site in other areas of the AOL Service.
The Banners will have a value of [****], based on
AOL's then-applicable rate card. The Banners will be
rotated through the "Entertainment" channel of the
AOL Service, "Entertainment" chat rooms of the AOL
Service with music themes, select "Greenhouse"
properties on the AOL Service, "E-mail" components of
the AOL Service and such other areas of the AOL
Service as may be mutually agreed upon by the
Parties. AOL will develop the media plan for rotation
of the Banners; provided that: (i) Banners will not
be rotated through areas containing separate N2K
promotions; and (ii) areas for rotation not
specifically described above (e.g., a specific
"Greenhouse" property) will be subject to N2K's prior
written approval, which shall not be unreasonably
withheld or delayed. AOL will run [****]
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worth of Banners each year. N2K understands and
acknowledges that AOL plans to run approximately
thirty three percent (33%) of the Banners allocable
to each year during the period from October 1st
through December 31st. The remaining Banners will be
spread in a relatively even manner through the
remaining Initial Term of the Agreement (except to
the extent otherwise mutually agreed upon by the
Parties).
1.1.1.4 KEYWORDS. N2K will receive keywords for N2K
trademarks associated with: (i) Music Boulevard and
each of the N2K music genre-related brands (including
Jazz Central Station, Rocktropolis and Classical
Insites); and (ii) a reasonable number of names for
sites for or from which N2K has a right or license to
use the site names as keywords on the AOL Service
(for example, sites for Xxxxxxx Xxxxxxxxx, Rolling
Stones and Xxxxx Xxxxx). Keywords for any name not
specifically identified above will be subject to
approval by AOL; provided that: (i) such approval
will not be unreasonably withheld or delayed; and
(ii) AOL reserves the right to eliminate or re-direct
keywords associated with site names in its reasonable
discretion. The keywords will be included in AOL's
"Find" and "Directory of Services" features on the
AOL Service and operate independently through the
"Keyword" functionality on the AOL Service. The
keywords will link to the version of the applicable
N2K site customized for the AOL audience.
1.1.1.5 AOL ENTERTAINMENT. [****]
1.1.1.6 ADDITIONAL PLACEMENT. To the extent that AOL
creates additional, substantial music-specific
Content areas within portions of the AOL Service
separate from the areas of the AOL Service noted
above, AOL will consult in good faith with N2K
regarding the establishment of "Buy Now" or other
appropriate links from such areas to the Customized
MB Site; provided that, to the extent AOL
independently establishes any such specific links,
such links will be subject to the approval of N2K,
which will not be unreasonably withheld or delayed.
1.1.1.7 ARTIST/LABEL PROMOTIONS. To the extent that
AOL includes promotions within MusicSpace for
specific artists, record labels or recordings (but
not solely for Online Music Retailers) ("Artist
Promotions"), AOL will use reasonable efforts to
establish, in coordination with N2K, a "Buy Now" or
other link from the Artist Promotion to the
applicable product offering(s)
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within the Customized MB Site. To the extent that (i)
such a link is not established (because it would
prevent AOL from being able to run the Artist
Promotion or is otherwise deemed inappropriate in
AOL's reasonable editorial judgment) and (ii) the
Artist Promotion links directly to a screen where AOL
Members have the ability to order online and have
fulfilled pre-recorded music products by an entity
other than N2K, then the AOL Sales Royalties paid to
AOL for sales of pre-recorded music products through
the page directly linked to the Artist Promotion will
be [****] and [****]. AOL will not, in bad faith,
attempt to circumvent the intent of the foregoing
arrangement.
1.1.1.8 ONLINE MUSIC RETAILER SPONSORSHIPS. AOL will
be entitled to include promotional references to
Online Music Retailers within MusicSpace in cases
when the Online Music Retailer is acting as a sponsor
with respect to an artist tour or other event or is
otherwise engaged in a capacity other than as a
direct retailer of pre-recorded music products
("Sponsorship References"); provided that: [****].
1.1.2 XXX.XXX. N2K will receive an integrated package of
placements, promotions and links through XXX.xxx consisting of
the following.
1.1.2.1 ENTERTAINMENT CHANNEL/MUSIC AREAS. AOL will
provide N2K with continuous placement within the
"Entertainment" channel on XXX.xxx ("XXX.xxx
Entertainment") (or the XXX.xxx Music Channel, as
defined below, in the event such separate channel is
created), linking to the Customized MB Site. N2K
links and promotions will also be integrated into
other AOL-programmed portions of XXX.xxx which are
dedicated to music, including NetFind Keyword:
"Music" and the music-retailing department of the
principal AOL shopping channel that may be created
for XXX.xxx. In these
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areas, N2K will be promoted through a combination of
banner advertisements and cross-linking "we
recommend" buttons, each linking to the Customized MB
Site. In addition, AOL and N2K will work collectively
to develop special co-branding and promotional
opportunities to appear within these areas of XXX.xxx
(e.g., an N2K sponsored "album release of the week"
promotion).
1.1.2.2 AOL NETFIND SEARCH. N2K will be promoted on
the "results" pages for searches conducted through
the AOL NetFind search engine on XXX.xxx involving
music-specific search terms designated by N2K in
consultation with AOL, subject to reasonable
technical and implementation limitations specified by
AOL, and such non-music specific search terms as may
be mutually agreed upon. These "results" promotions
will link the Customized MB Site in a manner intended
to match the focus of the search with related
pre-recorded music products offered by N2K. The
"results" promotions will be comparable in nature to
similar promotions provided by AOL to any third party
(e.g., Xxxxxx.xxx). There will initially be [****]
search terms giving rise to integrated "results"
promotions; and, by [****], AOL will also provide for
N2K advertising banners to appear in connection with
searches relating to agreed upon music search terms
for up to an additional [****] search terms. As and
to the extent AOL increases the number of search
terms giving rise to integrated "results" promotions,
AOL will decrease the number of search terms giving
rise to N2K advertising banners in a proportion to be
mutually agreed upon by the Parties (with such
proportion to, in any case, provide for greater than
one advertising banner search term to be reduced for
each integrated "results" promotion search term that
is added).
1.1.2.3 OTHER ONLINE MUSIC RETAILERS. Until such time
as AOL may create a separate music channel within
XXX.xxx (an "XXX.xxx Music Channel"), AOL will not
promote other Online Music Retailers [****]. In the
event that AOL creates an XXX.xxx Music Channel, then
AOL will not promote other Online Music Retailers
[****] (for so long as the XXX.xxx Music Channel is
promoted on such first page as a subset of or area
related to XXX.xxx Entertainment) or (iii) [****].
AOL will not provide other Online Music Retailers
with the integrated promotions or advertising related
to [****] AOL will not sell an Online Music Retailer
promotions [****].
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1.1.3 GENERAL. The specific N2K content to be contained within
the promotional vehicles (e.g., Banners, buttons and links)
described above will be as determined by N2K, subject to AOL
technical limitations and AOL's then-standard, generally
applicable policies relating to advertising and promotions.
Except to the extent expressly described above, the specific
form, placement and nature of the promotional vehicles
detailed above will be as determined by AOL in its reasonable
editorial discretion (consistent with the editorial
composition of the applicable screens).
1.1.4 CHANGES TO AOL SERVICE. AOL reserves the right to
redesign or modify the organization, structure, "look and
feel," navigation and other elements of each of the AOL
Service and XXX.xxx. In the event such modifications affect
the promotional placements for N2K described above, AOL will
work with N2K in good faith to provide N2K with a comparable
package of promotional placements which are reasonably
satisfactory to N2K.
1.1.5 THIRD PARTY AREAS. The restrictions undertaken by AOL
with respect to other Online Music Retailers shall not extend
to "Digital Cities," "WorldPlay," "Entertainment Asylum," the
"Hub," any similar "sub-service" which is currently offered
by or through the AOL Network or any programming or content
area on the AOL Network which is provided and operationally
controlled by a third party content provider and not AOL;
provided that AOL shall not in bad faith rely on this
provision in order to avoid its commitments contained herein.
Upon N2K's request, AOL will use all reasonable efforts to
introduce N2K to the entities managing any appropriate
sub-services or third party content areas in order to assist
N2K in any efforts it undertakes to establish separate
relationships with such entities.
1.1.6 OTHERWISE RESTRICTED AGREEMENTS. AOL will not in bad
faith seek to enter into a transaction with a third party that
is substantially comparable to the named Online Music
Retailers, which transaction would otherwise be prohibited
hereunder if such third party had in fact been specifically
named as an Online Music Retailer (an "Otherwise Restricted
Agreement"). If, notwithstanding the foregoing, AOL enters
into an Otherwise Restricted Agreement with a third party that
is subsequently added to the list of Online Music Retailers
pursuant to notice by N2K: (i) AOL shall not be deemed to
have breached this Agreement by virtue of such Otherwise
Restricted Agreement; (ii) AOL will, subject to the terms of
the Otherwise Restricted Agreement, take commercially
reasonable steps to minimize the scope and duration of such
Otherwise Restricted Agreement (e.g., by foregoing renewal or
extension of the Otherwise Restricted Agreement); and (iii)
AOL will [****] under such Otherwise Restricted Agreement
([****] under the Otherwise Restricted Agreement), provided
that all such revenues shall [****].
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1.1.7 PAYMENTS FROM AOL UNDER SECTION 1. AOL will pay N2K the
amounts required pursuant to Sections 1.1.1.7, 1.1.1.8 and
1.1.6 above on a quarterly basis. With each payment, AOL will
supply a report containing information which supports the
applicable payment.
1.2 N2K CROSS-PROMOTION.
1.2.1 GENERAL. Whenever N2K provides promotions for the
availability of the N2K Areas in off-line media, including
television, radio and print advertising, N2K will promote AOL
as the preferred access provider through which a user can
access the N2K Areas (and N2K shall not implement or authorize
any other promotions on behalf of any third parties which are
inconsistent with the foregoing).
1.2.2 SPECIFIC SITE PROMOTION. In any instances when N2K makes
off-line promotional reference to its interactive Sites,
including any promotional listings of the applicable "URL" for
such web site (each a "Site Reference"), N2K shall generally
include a comparable listing of the corresponding AOL
"keyword" for the Interactive Site N2K's N2K Areas, provided
such keyword exists. In addition, within each Interactive
Site, N2K shall include the following promotions during the
Term: (i) a prominent "Try AOL" feature where users can obtain
promotional information about AOL products and services and,
at AOL's option, download or order AOL's then-current version
of the client software for the America Online(R) brand service
and client software for any other AOL products or services
(e.g., AOL's Instant Messenger service); and (ii) links from
the Interactive Sites to XXX.xxx. AOL agrees to pay a bounty
to N2K for each AOL Member so acquired, which bounty shall be
negotiated by the parties in good faith.
1.2.3 OPERATING SYSTEM PROMOTION. With respect to any N2K
Interactive Site accessible or operating through any operating
system (including without limitation any Microsoft system) (an
"Operating System"), N2K shall (a) include in any such
Interactive Site a prominent "Try AOL" feature (and controls
and software relating to such feature) that will cause a user
of such site to link directly to AOL access software located
or present on or within the Operating System, such that the
user who already is an AOL Member will be connected to the AOL
Service and the user who is not an AOL Member will be
connected to an AOL registration screen (instead of the
Internet Referral Server or any similar service or successor
thereto), unless N2K is contractually restricted from doing
so. AOL agrees to pay a bounty to N2K for each AOL Member so
acquired, which bounty shall be negotiated by the parties in
good faith.
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1.2.4 EXCEPTIONS. N2K's will not be obligated to provide the
promotions for AOL described in this Section 1.2 in cases
when: (a) N2K does not control the applicable media vehicle;
and the party or parties controlling the media vehicle object
to inclusion of the AOL promotions; (iii) implementation of
the promotions would prevent N2K from entering into a
relationship with a third party; or (iv) where N2k would, in
order to obtain or implement the promotion, incur an
incremental, material expense which AOL does not agree to bear
following notice from N2K.
1.2.5 AOL PURCHASERS. Beginning no later than November 15,
1997 (the "Implementation Date"), to the extent N2K sends any
form of communications to AOL Purchasers, N2K will promote the
Customized MB Site as the location at which to purchase
Products (as compared to any more general or other site or
location); provided that: (i) such obligation shall not apply
with respect to AOL Members who purchased from N2K prior to
execution of this Agreement; and (ii) such obligation shall
not apply with respect to marketing solely related to the sale
of digitally distributed music products until such time as AOL
provides N2K with the opportunity to promote such sales
hereunder. Prior to the Implementation Date, N2K will not send
communications to AOL Purchasers other than communications
directly related to purchases by such AOL Purchasers.
1.3 MEMBER ACQUISITION PROGRAMS. The Parties will implement direct
marketing acquisition programs in accordance with Exhibit F in the case
of "Enhanced CDs," N2K will present AOL with a written opportunity to
be integrated with such the Enhanced CD and will negotiate in good
faith for a reasonable period of time regarding such opportunity prior
to providing any other Internet or online service provider.
1.4 AOL RESTRICTIONS. The restrictions on AOL's relationships with
third parties contained in this Agreement (and related revenue sharing
provisions enumerated in Section 1.1.7) (collectively, the "AOL
Restrictions") shall only apply with respect to the online marketing
and fulfillment of pre-recorded music products (to the extent provided
herein) and shall not restrict AOL's rights with respect to
distribution of content. The AOL Restrictions shall not apply with
respect to a particular screen until the earlier of (i) such time as
the applicable N2K promotion appears on such screen and (ii) November
17, 1997 (unless delays in the launch of the applicable N2K promotions
are the result of N2K's failure to perform any obligations with respect
to the launch of such promotions or N2K's inability to accommodate user
capacity required with respect to such promotions); provided that (i)
AOL will promptly remove the prominent "@Tower" promotions within the
genre screens of MusicSpace; and (ii) both Parties will use
commercially reasonable good faith efforts to launch the N2K promotions
provided for hereunder as soon as reasonably practicable. The AOL
Restrictions shall not apply to the extent N2K does not offer a
specific Product or category, type or form of Product (consistent with
the terms of this Agreement) (an "Unavailable Product"); provided that,
prior to AOL offering through a third
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party an Unavailable Product in a manner which would otherwise be
restricted by the AOL Restrictions: (i) AOL will provide N2K with
notice of an Unavailable Product that it wishes to offer (the "Product
Notice"); and (ii) AOL may, in its good faith discretion, facilitate
discussions between N2K and the third party or parties offering such
Unavailable Product. In such case, N2K's relationship with the third
party or parties covering promotion and sale of the Unavailable Product
through the AOL Network will be subject to AOL's participation in such
relationship on terms to be agreed upon.
2. PRODUCTION, TECHNOLOGY AND CUSTOMIZATION.
2.1 SITE PRODUCTION. AOL will be responsible for the production
associated with the Rainman Screens. The specific production resources
which AOL allocates to any production work to be performed in
connection with the Rainman Screens will be as determined by AOL in its
reasonable discretion. AOL will track the cost of such production
services, based on AOL's then-applicable production rates, provided
such rates will be competitive with the rates charged for such services
by third parties in the northern Virginia market. The aggregate amount
of such production will be credited toward amounts to be recouped
pursuant to Section 4 below. N2K will be responsible for all production
associated with the Customized MB Site and other N2K Areas.
2.2 COMMUNICATIONS. N2K will utilize a dedicated high speed connection
to maintain quick and reliable transport of information to and from the
N2K data center and AOL's chosen data center. N2K will bear the cost of
such communication line(s).
2.3 CUSTOMIZATION OF N2K AREAS.
2.3.1 WELCOME MAT. N2K will create a customized "welcome mat"
for the AOL audience for each N2K Area linked to from AOL on a
continuous basis. Any third party advertising, promotions,
sponsorships or similar content appearing on such "welcome
mat" pages will be subject to AOL's prior written approval,
which won't be unreasonably withheld or delayed.
2.3.2 COMPETITIVE CONTENT. The N2K Areas will not contain
advertisements, promotions, links, sponsorships or similar
content (i) on behalf of any entity reasonably construed to be
in competition with AOL (of which N2K is provided advance
notice) or (ii) otherwise in conflict with AOL's standard
advertising policies or any contractual AOL exclusivities.
2.3.3 TRAFFIC FLOW. N2K will take reasonable efforts to insure
that AOL traffic is either kept within the N2K Areas or
channeled back into the AOL Network (with the exception of
advertising links sold and implemented pursuant to Section 3
herein). In no event will traffic link to another online or
Internet service provider. The parties will work together
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on mutually acceptable links (including links back to the AOL
Service and XXX.xxx) within the N2K Areas in order to create a
robust and engaging AOL Member experience.
2.3.4 THIRD PARTY CONTENT. N2K will not include third party
content or programming ("Third Party Content") or links to
Third Party Content in the N2K Areas within four "clicks" from
the main page of the applicable N2K Area, with the exception
of: (i) the Third Party Content outlined in Exhibit G; and
(ii) the "MTV News" content currently appearing in the N2K
Areas, provided that N2K will use best efforts to remove any
link from such content to any third party site). Third Party
Content will not include links or pointers from the N2K Areas
out to third party sites (excluding advertising links which
will be governed by Section 3 below). Before obtaining Third
Party Content for incorporation within an N2K Area, N2K will
use reasonable efforts to notify AOL and provide AOL with an
opportunity to provide such Third Party Content on terms to be
determined.
2.3.5 TECHNOLOGY. N2K will not make available "streaming
audio" or any comparable audio delivery technology (other than
"wav" files, mpeg files or other downloadable, non-streamed
audio files) through any pages of N2K Areas linked to N2K
promotions appearing on the AOL Service or XXX.xxx. As soon as
AOL makes a streaming audio delivery technology available
through the AOL Service or a third party uses such streaming
audio delivery technology on the AOL Service, which third
party is (i) authorized by AOL to use such technology, (ii)
actively promoted by AOL or (iii) subject to a contractual
obligation to AOL whereby AOL can implement restrictions on
such third party's use of the technology (a "Use Trigger"),
AOL will promptly notify N2K of such Use Trigger and will
permit N2K to utilize such technology through its linked N2K
pages at the time and to the extent (from a scope and capacity
perspective) of the utilization by AOL or such third parties.
AOL is investigating and will be actively pursuing
implementation of streaming audio technologies, subject to its
network and other operational considerations. More generally,
in the event that AOL reasonably believes that software,
technology or other technical components of the linked N2K
Areas will materially and adversely affect AOL network or
other operations, N2K will work in good faith with AOL to
limit access to such components from the AOL Service and
XXX.xxx as necessary. N2K will, in good faith, work with AOL
to adopt AOL's proprietary streaming audio technology
developed by AOL's Xxxxxxx Xxxxx subsidiary to the extent
commercially and technically feasible for N2K.
2.3.6 PRODUCTS. N2K will make available the comprehensive
offering of pre-recorded music products described on Exhibit
A. In addition, N2K will be permitted to offer other
music-specific merchandise, consisting of music-related
t-shirts, posters, videos, books, apparel and specialty items;
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provided that: (i) AOL will have no promotional obligations
with respect to any such other merchandise; and (ii) AOL will
not be restricted in its rights to enter into relationships
with third parties (including, without limitation, exclusive
relationships) with respect to products in such categories
so long as such relationships do not preclude N2K from
offering such merchandise through the N2K Areas (provided that
N2K will not devote pages of the N2K Areas which are directly
linked to pages of the AOL Service or XXX.xxx wholly or
primarily to the sale of such other merchandise). Without
limiting the generality of the preceding subsection, N2K will
not market or promote to AOL Members through the linked N2K
Areas the sale of Products that are delivered by way of
digital or electronic distribution ("Digitally Distributed
Products") unless and until: (i) AOL, at its option, elects to
have such marketing of Digitally Distributed Products to AOL
Members in such areas governed by the terms of this Agreement;
or (ii) the Parties mutually agree in writing upon other terms
to govern the marketing of Digitally Distributed Products to
AOL Members in such areas. If N2K's use of Digitally
Distributed Products occurs pursuant to the Use Trigger
described in Section 2.3.5, then: (i) N2K's offering and sale
of the Digitally Distributed Products will initially be
pursuant to the term of this Agreement; (ii) if AOL wishes to
modify such terms relative to the sale of Digitally
Distributed Products, both Parties will negotiate in good
faith for a period of sixty (60) days to mutually agree upon
new terms; and (iii) if, following such sixty (60) day period
the parties are unable to agree upon new terms, N2K will cease
marketing the sale of Digitally Distributed Products to AOL
Members until such time as the Parties can reach agreement on
such new terms. The provisions restricting AOL's relationships
with Online Music Retailers shall be deemed to apply equally
to their sale of Digitally Distributed Products for so long as
N2K's offering of Digitally Distributed Products is generally
competitive with the offerings of Digitally Distributed
Products by other Online Music Retailers in terms, taken as
whole, of price, scope and selection, quality, licensing
rights (and associated indemnifications), ease of use and
network bandwidth requirements.
2.3.7 SPECIAL OFFERINGS. To the extent permitted under
applicable law, (i) N2K will make available preferred
offerings of pre-recorded music and other merchandise to AOL
Members; and (ii) N2K will not sell Products at a lower price
through its other channels of distribution, except in the case
of periodic, limited time, special sales or marketing
promotions. To the extent N2K makes special Product offers
exclusively available to AOL Members, N2K will be referenced
within AOL's "Member Exclusives" area on the AOL Service.
3. ADVERTISING.
3.1 ADVERTISING SALES. AOL will have the first right to sell any
advertising or promotional spaces which reside on AOL servers and
appear within (i) the
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Customized MB Site, (ii) the Rainman Screens and (iii) other portions
of the N2K Areas (to the extent applicable) (collectively, the "AOL Ad
Sale Areas"), N2K will have the first right to sell any advertising or
promotional spaces which reside on N2K's servers and appear within (i)
the Customized MB Site, (ii) the Rainman Screens (to the extent
applicable) and (iii) other portions of the N2K Areas (collectively,
the "N2K Ad Sale Areas" and with the AOL Ad Sale Areas, the "Ad Sale
Areas"). The specific advertising inventory within any Ad Sale Areas
shall be as mutually agreed upon by the Parties. The parties will
mutually agree upon and implement a process which provides N2K an
opportunity to sell advertising inventory within the AOL Ad Sale Areas
which AOL has been unable to sell after a reasonable time following the
availability of the advertising inventory. N2K and AOL will cooperate
with one another in promoting and facilitating the sale of the
advertising inventory in the Ad Sales Areas. Subject to applicable
antitrust or other laws and regulations, the Parties will mutually
agree upon the target or minimum rates for advertising inventory within
the Ad Sale Areas. The sale of advertising inventory within the Ad Sale
Areas for barter compensation will be subject to the approval of both
Parties. AOL will be responsible for administering, serving, reporting
and tracking advertising appearing in the AOL Ad Sale Areas and N2K
will be responsible for administering, serving, reporting and tracking
advertising appearing in the N2K Ad Sale Areas. To the extent a Party
sells an advertisement as part of an advertising package including both
an Ad Sale Area and some separate placement location, such Party shall
allocate the payment for such advertising package between or among such
locations in an equitable fashion. For example, in an advertising
package based on guaranteed impressions, the Party would allocate
payments to the Ad Sale Area based on the percentage of guaranteed
impressions to be delivered through the Ad Sale Area. Each Party will
provide the other Party with monthly reports providing detailed
information regarding any advertising sales by such Party and any other
information relevant to the computation and sharing of Advertising
Revenues hereunder.
3.2 ADVERTISING POLICIES. Any Ad Inventory sold by N2K or its
agents within the Ad Sales Areas shall be subject to AOL's
then-standard advertising policies. In the event that AOL notifies N2K
in writing that any advertising or promotional Content associated with
any Ad Sales Area is in violation of AOL's then-standard advertising
policies, then N2K shall take commercially reasonable steps to work
with AOL to block access by AOL Members to such advertising using N2K's
then-available ad server or other technology. In the event that N2K
cannot, through its commercially reasonable efforts, block access by
AOL Members to the advertising in question, then N2K shall provide AOL
prompt written notice of such fact. AOL may then, at its option, either
(i) restrict access from the AOL Network to the advertising in question
using technology available to AOL or (ii) terminate the link from the
AOL Network to the applicable N2K Area until such time as the
advertising in question is no longer displayed. N2K will cooperate with
AOL's reasonable requests to the extent AOL elects to implement any
such access restrictions.
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4. PAYMENTS; REPORTS.
4.1 FIXED PAYMENTS. N2K will pay AOL the following guaranteed
amounts: (i) two million dollars ($2,000,000) due upon execution of
this Agreement; (ii) ten million dollars ($10,000,000) due upon the
earlier of closing of N2K's initial public offering (the "IPO") and
December 1, 1997; (iii) three million ($3,000,000) due November 1,
1998; and (iv) three million ($3,000,000) due November 1, 1999.
4.2 MARGIN SHARING. N2K and AOL will share Site Revenues as
follows:
4.2.1 During each Quarter, AOL will receive (i) [****] of Site
Revenues until such time as N2K has recouped the Quarterly
Minimum Amount, (ii) [****] of Site Revenues until such time
as N2K has recouped the Quarterly Recoupment Amount and (iii)
[****] of Site Revenues during the remainder of the Quarter.
The "Quarterly Minimum Amount" shall be [****]. The "Quarterly
Recoupment Amount" shall be: [****] for the year consisting of
the first four Quarters; [****] for the year consisting of the
second four Quarters; [****] for the year consisting of the
third four Quarters. Once the Aggregate Recoupment Amount (as
defined below) has been recouped by N2K, AOL and N2K shall at
all times thereafter [****].
4.2.2 If, as of the end of the fourth Quarter, N2K has not
earned at least a total of (i) [****] plus (ii) any Site
Revenues paid by N2K to AOL through the prior four Quarters
less (iii) any amounts paid by AOL to N2K through the prior
four Quarters (the "Annual Recoupment Amount"), then,
beginning with the fifth Quarter, AOL's revenue sharing will
be reduced, following achievement of the Quarterly Minimum
Amount, to [****] of Site Revenues until such time as N2K has
earned the Annual Recoupment Amount for the period beginning
on the Effective Date. Once the Annual Recoupment Amount has
been earned, the revenue sharing will revert back to the
procedures set forth in the preceding subjection. If, as of
the end of eighth Quarter, N2K has not earned at least a total
of (i) [****] plus (ii) any Site Revenues paid by N2K to AOL
through the prior eight Quarters less (iii) any amounts paid
by AOL to N2K through the prior eight Quarters (the "Year 2
Recoupment Amount"), then, beginning with the ninth Quarter,
AOL's revenue sharing will be reduced, following achievement
of the Quarterly Minimum Amount, to [****] of Site Revenues
until such time as N2K has earned the Year 2 Recoupment
Amount. If such Year 2 Recoupment Amount has been earned by
the end of the tenth
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Quarter, the revenue sharing will revert back to the
procedures set forth in the preceding subsection.
4.2.3 If, at the end of the Initial Term, N2k has not earned
an aggregate (i) [****] plus (ii) any Site Revenues paid by
N2K to AOL during the Initial Term less (iii) any amounts paid
by AOL to N2K during the Initial Term (the "Aggregate
Recoupment Amount"), then AOL will provide N2K with excess
advertising inventory through the AOL Network with an
aggregate value (based on AOL's then-applicable rate cards)
equal to the difference between the Aggregate Recoupment
Amount and the amounts actually earned by N2K as of the
expiration of the Initial Term.
4.3 LATE PAYMENTS. Time of payment is of the essence under this
Agreement. All amounts owed hereunder not paid within thirty (30) days
of the date when due and payable will bear interest from the date such
amounts are due and payable at the lesser of (i) prime rate and (ii)
the maximum allowable rate of interest in the Commonwealth of Virginia
for transactions between sophisticated commercial parties.
4.4 AUDITING RIGHTS. N2K shall maintain complete, clear and
accurate records of all expenses, revenues and fees in connection with
the performance of this Agreement. For the sole purpose of ensuring
compliance with this Agreement, AOL shall have the right, at its
expense, to direct an independent certified public accounting firm to
conduct a reasonable and necessary inspection of portions of the books
and records of N2K which are relevant to N2K's performance pursuant to
this Agreement. Any such audit may be conducted after twenty (20)
business days prior written notice.
4.5 TAXES. N2K shall collect and pay and indemnify and hold AOL
harmless from, any sales, use, excise, import or export value added or
similar tax or duty not based on AOL's net income, including any
penalties and interest, as well as any costs associated with the
collection or withholding thereof, including attorneys' fees.
4.6 SALES REPORTS. N2K shall provide AOL with the following
categories of information arising from AOL Purchaser activity in the
N2K Areas on a monthly basis: (i) Summary Sales Information by Day
(Date, Number of Items, Number of Orders, Total Transaction Revenues);
and (ii) Detailed Sales Information (Order Date/Timestamp (with
timestamp subject to technical feasibility), User name, SKU or Product
Description) (the "User Information"). AOL will not disclose individual
User Information to any third party. AOL will restrict its use of the
User Information to (i) internal programming and advertising rotation
purposes and (ii) informational disclosures as part of broader
aggregate data regarding AOL Members. [****]
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(provided that the foregoing will not restrict AOL's ability to
market any products or services to its subscribers or any other persons
or entities as part of more general marketing efforts which do not make
use of the screenname lists provided to AOL by N2K hereunder). More
generally, when making a payment to AOL required hereunder, N2K shall
provide to AOL by N2K hereunder, N2K shall provide AOL with a report
containing information which supports the payment, including
information identifying gross sales revenues and all items deducted or
excluded from gross sales revenues to produce Transaction Revenues.
4.7 AOL PURCHASERS. For purposes of this Agreement, "AOL
Purchasers" shall be defined to include any AOL Member or visitor to
XXX.xxx who: (i) enters an N2K Area via any advertisement or
promotional link, placement or reference relating to N2K or the N2K
Areas as contemplated hereunder (collectively, "N2K Promotions"); and
(ii) purchases a Product through such N2K Area; provided that any
subsequent purchases of Products by such person or entity through an
N2K site shall also give rise to Transaction Revenues hereunder (and
shall not be conditioned on the person or entity reaching the N2K site
via an N2K Promotion). AOL Purchasers shall include, without
limitation, persons or entities who arrive at the N2K Areas via a third
party information provider area on the AOL Network (an "IP Area") with
respect to which there is a traceable link, provided that both Parties
shall use commercially reasonable efforts to ensure that any links from
such IP Areas are of a traceable nature (an "IP Area").
4.8 REVENUE SHARING COVERAGE. N2K will provide AOL with quarterly
reports indicating the dollar volume of transactions involving AOL
Members who do not qualify as AOL Purchasers hereunder. In the event
that such volume reaches a level of materiality relative to the dollar
volume of transactions by AOL Purchasers in a comparable period, then
N2K will discuss in good faith with AOL the possibility of adjusting
the definition of AOL Purchasers to include all or some portion of such
AOL Members not currently covered by the definition.
5. TERM, RENEWAL AND TERMINATION.
5.1 TERM; RENEWAL. Unless earlier terminated as set forth herein,
the initial term of this Agreement shall be for a period beginning on
the Effective Date and ending after twelve Quarters ("Initial Term").
AOL will have the right to renew the Agreement for up to five (5)
successive one year terms (each a "Renewal Term") by providing N2K
written notice of AOL's intention to renew no later than thirty days
priors to the commencement of the Renewal Term at issue, under one of
the two following frameworks for any Renewal Term (at AOL's option):
(x) pursuant to the terms contained herein, except that N2K will not be
obligated to make any guaranteed, minimum payments with respect to the
Renewal Term, unless mutually agreed upon by the Parties prior to the
commencement of such Renewal Term; or (y) with a [****]sharing of
Advertising and Transaction Revenues and otherwise pursuant only to
Sections 2.3.1, 2.3.2, 2.3.3, 2.3.4, 3.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8,
5, 6 and such other terms as the Parties may mutually
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agree upon (i.e., excluding, among other things, AOL's promotional,
placement and similar commitments, the AOL Restrictions and N2K's
cross-promotional obligations); provided that with respect to AOL's
rights to renew: (a) AOL shall only be entitled to renewal under
framework (y) above for up to two (2) Renewal Terms; (b) subject to the
preceding clause (a), AOL may select any combination of frameworks (x)
and (y) to apply in successive Renewal Terms (e.g., AOL may choose
framework (x) in the first Renewal Term and framework (y) in the second
Renewal Term), but once AOL has chosen framework (y) to apply for a
Renewal Term, AOL may no longer select framework (x) to apply in any
upcoming Renewal Term; and (c) with respect to renewal under framework
(y), the provisions of Sections 2.3.2, 2.3.3 and 2.3.4 of this
Agreement shall only apply for the first such Renewal Term that is
selected by AOL under such framework (y). AOL's right to renew will
apply in connection with (i) an expiration of the Initial Term or
Renewal Term and (ii) any other termination of the Agreement.
5.2 TERMINATION. Either Party may terminate this Agreement at any
time in the event of a material breach by the other Party which remains
uncured after thirty (30) days written notice thereof; provided that
AOL will not be required to provide a notice to N2K in connection with
any failure by N2K to make payments pursuant to Section 4 (and the cure
period shall therefore begin upon the occurrence of the failure to
pay). In addition, either Party may terminate this Agreement
immediately following with written notice to the other Party if the
other Party ceases to do business in the normal course, becomes or is
declared insolvent or bankrupt, is the subject of any proceeding
related to its liquidation or insolvency which is not dismissed within
ninety (90) calendar days or makes an assignment for the benefit of
creditors.
6. STANDARD TERMS. The standard online commerce terms set forth on Exhibit D
attached hereto and standard legal terms and conditions set forth on Exhibit E
attached hereto are each hereby made a part of this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.
AMERICA ONLINE, INC. N2K INC.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------- -----------------------------
Print Name: Xxxxx X. Xxxxxxx Print Name: Xxxxxxxx X. Xxxxxxx
Title: Sr. Vice President Title: Vice Chairman
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EXHIBIT A
DESCRIPTION OF PRODUCTS TO BE OFFERED THROUGH N2K AREAS
N2K will make available a comprehensive offering of pre-recorded music products
for purchase by AOL Members.
All N2K offerings will be in the top three (3) in industry performance and
quality averages or standards, including, without limitation, the following
specific standards: The (i) pricing of Products, (ii) scope and selection of
Products, (iii) quality of Products, (iv) customer service and fulfillment
associated with the marketing and sale of Products and (v) ease of use of the
N2K Areas shall, with respect to each measure, be competitive with that which is
offered by other Online Music Retailers.
N2K will maintain sufficient servers, software and other technical
infrastructure necessary for N2K to receive and support traffic from the AOL
Service and XXX.xxx on a timely basis, without producing material delays. In the
event N2K fails to satisfy this requirement AOL will have the right (in addition
to any other remedies available to AOL hereunder) to regulate the promotions it
provides to N2K hereunder to the extent necessary to minimize user delays until
such time as N2K corrects its infrastructure deficiencies.
MERCHANT CERTIFICATION PROGRAM. N2K shall participate in any generally
applicable "Certified Merchant" program operated by AOL or its authorized agents
or contractors. Such program may require merchant participants on an ongoing
basis to meet certain reasonable standards relating to provision of electronic
commerce through the AOL Service and may also require the payment of certain
reasonable, administrative certification fees to AOL or its authorized agents or
contractors operating the program.
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EXHIBIT B
ANCHOR PROMOTION
N2k shall become an "Anchor" in the music retailing department of the AOL
shopping channel. As an Xxxxxx, X0x shall be entitled to the following:
- One continuous (24/7) button with corporate brand or logo on the department
front screen
- One continuous (24/7) two-line text field to promote individual product
offerings
- Featured product with text promotion for five days per month minimum on the
relevant department screen
- Rotation through the shopping channel search screen advertising banners along
with all other Anchors and Tenants
- One keyword for trade name or trademark (subject to availability)
- Participation in the following programs at no additional charge:
- Electronic Order Blank Area
- Bargain Basement
- Quick Gifts
- Event and/or theme areas (e.g., Christmas Shop)
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EXHIBIT C
DEFINITIONS
The following definitions shall apply to this Agreement:
1. Advertising Revenues
(a) For the Rainman Screens and any other portions of N2K Areas
exclusively available to AOL Members or AOL Purchasers ("AOL Only Areas"),
aggregate amounts collected (including, without limitation, revenue sharing
royalties) plus the fair market value of any other compensation received (such
as barter advertising) by N2K, AOL or either Party's agents, as the case may be,
arising from the license or sale of promotions, advertisements, links, pointers,
sponsorships or similar services or rights on or through the N2K Areas, less
applicable Advertising Sales Commissions.
(b) For each promotion, advertisement, link, pointer, sponsorship or
similar service or right on any N2K Areas linked to the AOL Service other than
AOL Only Areas (the "Open N2K Areas") (an "Open N2K Area Advertisement"), the
product of: (a) the amount collected (including, without limitation, revenue
sharing royalties) plus the fair market value of any other compensation received
(such as barter advertising) by N2K or its agents arising from the license or
sale of such Open N2K Area Advertisement attributable to a given period of time
and (b) the quotient of (i) impressions on the page containing such
advertisement by AOL Members or other persons or entities reaching such page via
XXX.xxx during such period of time divided by (ii) total impressions on the page
containing such Online N2K Area Advertisement by all users during such period of
time (the "Internet Advertising Quotient") (or such other percentage or formula
as is mutually agreed upon in writing by the Parties).
2. Advertising Sales Commissions. (i) Actual amounts paid as commission to
third party agencies in connection with sale of the AOL Advertisement, up to a
maximum of [****], in the event the Party has sold the AOL Advertisement
directly and will not be deducting any third party agency commissions.
3. Affiliate. Any agent, distributor, or franchise of AOL, or an entity in
which AOL holds at least a thirty percent (30%) equity interest.
4. AOL Look and Feel. The elements of graphics, design, organization,
presentation, layout, user interface, navigation and stylistic convention
(including the digital implementations thereof) which are generally associated
with online areas within the America Online(R) brand service.
5. XXX.xxx. The U.S. XXX.xxx brand web site currently located at
xxx.xxx.xxx.
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6. AOL Member(s). Authorized users of the AOL Network, including any
sub-accounts using the AOL Network under an authorized master account.
7. AOL Network. (i) The U.S. America Online(R) brand service (the "AOL
Service"), (ii) any international versions of the America Online service through
which AOL or its affiliates elect to offer the Licensed Content (collectively,
with the AOL Service, the "AOL Services") and (iii) any other product or service
owned, operated, distributed or authorized to be distributed by or through AOL
or its Affiliates worldwide through which such party elects to offer the
Licensed Content (which may include, without limitation, internet sites
promoting AOL products and services and any "offline" information browsing
products of AOL or its Affiliates).
8. AOL Sales Royalties. Per unit sales royalties paid to AOL for sales of
pre-recorded music products through a page directly linked to an Artist
Promotion.
9. Commercial Launch. The commencement of the general availability of the
N2K Areas to AOL Members (by means other than unadvertised keyword access).
10. Confidential Information. Any information relating to or disclosed in
the course of the Agreement, which is or should be reasonably understood to be
confidential or proprietary to the disclosing Party, including, but not limited
to, the material terms of this Agreement, information about AOL Members,
technical processes and formulas, source codes, product designs, sales, cost and
other unpublished financial information, product and business plans,
projections, and marketing data. "Confidential Information" shall not include
information (a) already lawfully known to or independently developed by the
receiving Party, (b) disclosed in published materials, (c) generally known to
the public, (d) lawfully obtained from any third party, or (e) required or
reasonably advised to be disclosed by law.
11. Content. Information, materials, features, Products, advertisements,
promotions, links, pointers and software.
12. Customized MB Site. A version of N2K's online retail store, branded
"Music Boulevard," customized in technical and editorial attributes to conform
to the terms contained herein.
13. Design Package. Content plans, flow charts and artwork which together
represent the appearance, user interface, content and operation of the N2K
Areas.
14. Licensed Content. All content, services and Products offered through
the N2K Areas pursuant to this Agreement, including any modifications, upgrades,
updates, enhancements and related documentation.
15. N2K Interactive Site. Any interactive site or area which is managed,
maintained or owned by N2K or its agents (excluding N2K encoded music record
company sites), including, by way of example and without limitation, (i) N2K
sites on the World Wide
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Web portion of the Internet or (ii) a channel or area delivered through a "push"
product such as the Pointcast Network or interactive environment such as
Microsoft's proposed "Active Desktop."
16. N2K Areas. The specific N2K Interactive Sites devoted to the promotion
and retail sale of pre-recorded music products which are part of or linked to
from the AOL Service and XXX.xxx (i.e., not linked through an intermediate third
party site) pursuant to the promotional terms set forth within the Agreement
(including, without limitation, the Rainman Screens, Genre Areas, e.g.,
Rocktropolis, and the Customized MB Site).
17. Online Music Retailer. The following third party entities: [****] and
[****]. In addition, [****] and [****] shall be considered "Online Music
Retailers" (but only to the extent such entities are engaged in the online
marketing and sale of pre-recorded music products on a retail basis and provided
that the [****] and other units, organizations and affiliates associated with
such entities shall not be deemed "Online Music Retailers" for purposes of this
Agreement). In the event N2K notifies AOL in writing of any additional third
party entities engaged in the online marketing and sale of pre-recorded music
products substantially comparable to the entities named above, then the parties
shall discuss in good faith the addition of such entities to the foregoing list.
If an entity is also engaged in activities other than the online marketing and
sale of pre-recorded music products (including, without limitation, the sale of
memberships to a music buying club), then the restrictions described in the
Agreement with respect to Online Music Retailers shall only relate to the
portion of such entity which is devoted to the online music retailing
activities. In no event shall "Online Music Retailers" include any artists,
record labels, music buying clubs or general retailers of Products (e.g.,
Walmart) that are not primarily devoted to online music retailing activities (so
long as promotions of such general retailers appearing on the screens subject to
restrictions on Online Music Retailers do not promote the sale of pre-recorded
music products).
18. Overhead Accounts. Accounts of AOL Members for which AOL does not
require payment of standard AOL subscription and usage charges.
19. Products. Any product, good or service which N2K offers, sells or
licenses to AOL Purchasers through the N2K Areas.
20. Quarter. In the case of the first quarter, the period beginning on
September 1, 1997 and ending January 31, 1998; for each subsequent quarter,
three calendar months (e.g., February 1, 1998 through April 30, 1998, May 1,
1998 through July 31, 1998, etc.)
21. Rainman Screens. Certain introductory screens to the Customized MB Site
(up to four total) published in AOL's proprietary Rainman publishing language.
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22. Site Revenues. Site Revenues shall consist of Advertising Revenues, AOL
Sales Royalties, Transaction Revenues and, to the extent provided in Section 1
of the Agreement, Sponsorship Revenues.
23. Term. The Initial Term together with any Renewal Terms.
24. Transaction Revenues. Aggregate amounts collected by N2K and its agents
from the sale of Products to AOL Purchasers, less (a) the actual, direct costs
of Product (as described below), per unit sold content licensing fees, per unit
sold inventory charges, shipping, handling, credit card fees, and applicable
credits and refunds and, in the case of transactions by AOL Purchasers linking
to N2K from an IP Area, (b) actual royalties or commissions paid to the
information provider sponsoring such IP Area; provided that, except for credits
and refunds, any of the above fees which are "netted" out shall reflect (i)
actual fees paid to third parties in arms length transactions or, in the event
N2K provides the service associated with such fee, (ii) fee allocations which
are competitive with the rates charged for the applicable service by third
parties in the applicable market.
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EXHIBIT D - AOL ONLINE COMMERCE TERMS & CONDITIONS
1. AOL Network Distribution. N2K shall not authorize or permit any third
party to distribute or promote the N2K Areas through the AOL Network absent
AOL's prior written approval.
2. Additional Content. In the event that N2K wishes to offer any
categories or types of Content or Products in addition to those items described
on Exhibit A or elsewhere in the Agreement (the "Additional Content"), N2K shall
notify AOL in writing. N2K's right to offer any non-music-related Additional
Content through the Rainman Screens, Customized MB Site or other linked N2K Area
shall be subject to AOL's prior written approval.
3. Contests. N2K shall take all steps necessary to ensure that any
contest, sweepstakes or similar promotion conducted or promoted through an N2K
Areas (a "Contest") complies with all applicable federal, state and local laws
and regulations.
4. Navigational Icons. AOL shall be entitled to establish navigational
icons, links and pointers connecting each N2K Areas (or portions thereof) with
other content areas on or outside of the AOL Network.
5. Web Forms. In the event that all or any portions of the N2K Areas are
contained within HTML-based World Wide Web forms (or any other forms different
from AOL's proprietary publishing forms) ("Web Xxxxx"), X0X shall take all
commercially reasonable steps to ensure that: (i) the functionally and features
within the Web Forms are optimized for the client software then in use by a
majority of AOL Members; and (ii) the Web Forms are designed and populated in a
manner intended to minimize delays when AOL Members attempt to access such Web
Forms.
6. Disclaimers. Upon AOL's request, N2K agrees to include within the
Rainman Screens a product disclaimer (the specific form and substance to be
mutually agreed upon by the Parties) indicating that transactions are solely
between N2K and AOL Members purchasing products from N2K.
7. AOL Look and Feel. N2K acknowledges and agrees that AOL shall own all
right, title and interest in and to the elements of graphics, design,
organization, presentation, layout, user interface, navigation and stylistic
convention (including the digital implementations thereof) which are generally
associated with online areas contained within the AOL Network ("the AOL Look and
Feel"), subject to N2K's ownership rights in any N2K trademarks or copyrighted
material within each N2K Areas.
8. Management of N2K Areas. N2K shall manage, review, delete, edit,
create, update and otherwise manage all Products available on or through each
N2K Areas, in a timely and professional manner and in accordance with the terms
of this Agreement. N2K shall ensure that each N2K Area is current, accurate and
well-organized at all times. N2K warrants that each N2K Areas: (i) shall not
infringe on or violate any copyright,
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trademark, U.S. patent or any other third party right (including, without
limitation, any music performance or other music-related right); (ii) shall not
violate AOL's then-applicable Terms of Service; and (iii) shall not contain any
Product which violates any applicable law or regulation. AOL shall have no
obligations with respect to the Products available on or through any N2K Areas,
including, but not limited to, any duty to review or monitor any such Products.
9. Duty to Inform. N2K shall promptly inform AOL of any information
related to any N2K Areas which could reasonably lead to a claim, demand, or
liability of or against AOL and/or its affiliates by any third party.
10. Customer Service. It is the sole responsibility of N2K to provide
customer service to persons or entities purchasing Products through the AOL
Network ("Customers"). N2K shall bear full responsibility for all customer
service, including without limitation, order processing, billing, fulfillment,
shipment, collection and other customer service associated with any Products
offered, sold or licensed through each N2K Area, and AOL shall have no
obligations whatsoever with respect thereto. N2K shall receive all emails from
Customers via a computer available to N2K's customer service staff and generally
respond to such emails within one business day of receipt. N2K shall receive all
orders electronically and generally process all orders within one business day
of receipt, provided Products ordered are not advance order items. N2K shall
ensure that all orders of Products are received, processed, fulfilled and
delivered undamaged in professional packaging on a timely and professional
basis, with no less than seventy percent (70%) of orders shipped within five
days from the date of order at any given time. N2K shall ship the displayed
Product at the price displayed in the N2K Areas without substituting and offer
AOL Members who purchase Products through such N2K Areas a money back
satisfaction guarantee. As part of N2K's customer service operations, N2K shall
provide the following e-mail correspondence to AOL Members ordering Products
through an N2K Areas: (i) an e-mail within twenty-four hours of receiving an
order confirming receipt of such order and any relevant information regarding
the status of the order (e.g., temporary back-order); and (ii) an e-mail within
twenty-four hours of shipping any Product which has been ordered through such
N2K Areas. Each such e-mail shall include the unique order number for the order,
N2K's toll-free customer service and an approximate delivery date for the
Product in question. N2K shall regularly monitor each N2K Areas to minimize or
eliminate Products which are either out-of-stock or discontinued and N2K shall
have the ability to handle volumes in excess of 25% to 50% of N2K's average
daily volume. N2K shall include a link within each N2K Area to a description of
N2K's shipping, return, warranty and other customer service policies. N2K shall
bear all responsibility for compliance with federal, state and local laws in the
event that Products are out of stock or are no longer available at the time an
order is received. N2K shall also comply with the requirements of any federal,
state or local consumer protection or disclosure law. Payment for Products shall
be collected by N2K directly from customers. As between N2K and AOL, N2K shall
bear the economic risk of shipment and payment for Products. N2K's order
fulfillment operation shall be subject to AOL's reasonable review.
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11. Access Equipment. N2K shall provide all computer, telephone and other
equipment or resources necessary for N2K to access the AOL Network, except for
the AOL proprietary client software necessary to access the AOL Network.
12. Overhead Accounts. To the extent N2K has been granted any Overhead
Accounts, N2K shall be responsible for the actions taken under or through its
Overhead Accounts, which actions are subject to AOL's applicable Terms of
Service and for any surcharges, including, without limitation, all premium
charges, transaction charges, and any applicable communication surcharges
incurred by any Overhead Account issued to N2K, but N2K shall not be liable for
charges incurred by any Overhead Account relating to AOL's standard monthly
usage fees and standard hourly charges, which charges AOL shall bear. Upon the
termination of this Agreement, all Overhead Accounts, related screen names and
any associated usage credits or similar rights, shall automatically terminate.
AOL shall have no liability for loss of any date or content related to the
proper termination of any Overhead Account.
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EXHIBIT E - STANDARD LEGAL TERMS & CONDITIONS
1. Promotional Materials/Press Releases. Each Party will submit to the
other Party, for its prior written approval, which shall not be unreasonably
withheld or delayed, any marketing, advertising, press releases, and all other
promotional materials related to the N2K Areas and/or referencing the other
Party and/or its trade names, trademarks, and service marks, including, without
limitation, any N2K disclosures in connection with its IPO (the "Materials");
provided, however, that either Party's use of screen shots of the N2K Areas for
promotional purposes shall not require the approval of the other Party so long
as the AOL Network is clearly identified as the source of such screen shots.
Each party shall solicit and reasonably consider the views of the other Party in
designing and implementing such Materials. Once approved, the Materials may be
used by a Party and its affiliates for the purpose of promoting the N2K Areas
and the content contained therein and reused for such purpose until such
approval is withdrawn with reasonable prior notice. In the event such approval
is withdrawn, existing inventories of Materials may be depleted. Notwithstanding
the foregoing, either Party may issue press releases and other disclosures as
required by law or as reasonably advised by legal counsel without the consent of
the other Party and in such event, prompt notice thereof shall be provided to
the other Party.
2. License. N2K hereby grants AOL a non-exclusive worldwide license to
market, license, distribute, reproduce, display, perform, transmit and promote
each N2K Area and the Products contained therein (or any portion thereof)
through such areas or features of the AOL Network as AOL deems appropriate. AOL
Members shall have the right to access and use each N2K Area.
3. Trademark License. In designing and implementing the Materials and
subject to the other provisions contained herein, N2K shall be entitled to use
the following trade names, trademarks, and service marks of AOL: the "America
Online(R) brand service, "AOL(TM)" service/software and AOL's triangle logo; and
AOL and its Affiliates shall be entitled to use the trade names, trademarks, and
service marks of N2K (collectively, together with the AOL marks listed above,
the "Marks"); provided that each Party: (i) does not create a unitary composite
xxxx involving a Xxxx of the other Party without the prior written approval of
such other Party; and (ii) displays symbols and notices clearly and sufficiently
indicating the trademark status and ownership of the other Party's Marks in
accordance with applicable trademark law and practice.
(a) Ownership of Trademarks. Each Party acknowledges the ownership of
other Party in the Marks of the other Party and agrees that all use of the other
party's Marks shall inure to the benefit, and be on behalf, of the other party.
Each Party acknowledges that its utilization of other party's Marks will not
create in it, nor will it represent it has, any right, title, or interest in or
to such Marks other than the licenses expressly granted herein. Each Party
agrees not to do anything contesting or impairing the trademark rights of the
other Party.
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(b) Quality Standards. Each Party agrees that the nature and quality of
its products and services supplied in connection with the other Party's Marks
shall conform to qualify standards set by the other Party. Each Party agrees to
supply the other Party, upon request, with a reasonable number of samples of any
Material publicly disseminated by such Party which utilize the other Party's
Marks. Each Party shall comply with all applicable laws, regulations, and
customs and obtain any required government approvals pertaining to use of the
other Party's Marks.
(c) Infringement Proceedings. Each Party agrees to promptly notify the
other Party of any unauthorized use of the other Party's Marks of which it has
actual knowledge. Each Party shall have the sole right and discretion to bring
proceedings alleging infringement of its Marks or unfair competition related
thereto; provided, however, that each Party agrees to provide the other Party
with its reasonable cooperation and assistance with respect to any such
infringement proceedings.
4. Representations and Warranties. Each Party represents and warrants to
the other Party that: (i) such Party has the full corporate right, power and
authority to enter into this Agreement and to perform the acts required of its
hereunder; (ii) 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; (iii) 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; and (iv) such Party
acknowledges that the other Party makes no representations, warranties or
agreements related to the subject matter hereof that are not expressly provided
for in this Agreement.
5. Confidentiality. Each Party acknowledges that Confidential Information
may be disclosed to the other Party during the course of this Agreement. Each
Party agrees that it shall take reasonable steps, at least substantially
equivalent to the steps it takes to protect its own proprietary information,
during the term of this Agreement, and for a period of three years following
expiration or termination of this Agreement, to prevent the duplication or
disclosure of Confidential Information of the other Party, other than by or to
its employees or agents who must have access to such Confidential Information to
perform such Party's obligations hereunder, who shall each agree to comply with
this Section 6 of this Agreement.
6. Limitation of Liability; Disclaimer; Indemnification.
a) LIABILITY. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE
TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY
DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES), ARISING FROM THE USE OR INABILITY TO USE THE AOL NETWORK OR ONLINE
AREA OR ANY OTHER PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS
OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. EXCEPT AS PROVIDED IN
SECTION 6(C) OF
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THIS EXHIBIT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR MORE THAN THE
AGGREGATE AMOUNTS TO BE PAID TO AOL BY INFORMATION PROVIDER UNDER THIS
AGREEMENT.
b) NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE
AOL NETWORK OR THE N2K AREAS, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE
OF DEALING OR COURSE OF PERFORMANCE. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, AOL SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING THE PROFITABILITY
OF THE ONLINE AREA.
c) Indemnity. Either Party will defend, indemnify, save and hold
harmless the other Party and the officers, directors, agents, affiliates,
distributors, franchisees and employees of the other Party from any and all
third party claims, demands, liabilities, costs or expenses, including
reasonable attorneys' fees ("Liabilities"), resulting from the indemnifying
Party's material breach of any duty, representation, or warranty of this
Agreement, except where liabilities result from the gross negligence or knowing
and willful misconduct of the other Party.
d) Claims. Each Party agrees to (i) promptly notify the other
Party in writing of any indemnifiable claim and give the other Party the
opportunity to defend or negotiate a settlement of any such claim at such other
Party's expense, and (ii) cooperate fully with the other Party, at that other
Party's expense, in defending or settling such claim. AOL reserves the right, at
its own expense, to assume the exclusive defense and control of any matter
otherwise subject to indemnification by N2K hereunder, and in such event, N2K
shall have no further obligation to provide indemnification for such matter
hereunder.
e) Acknowledgement. AOL and N2K each acknowledges that the
provisions of this Agreement were negotiated to reflect an informed, voluntary
allocation between them of all risks (both known and unknown) associated with
the transactions contemplated hereunder. The limitations and disclaimers related
to warranties and liability contained in this Agreement are intended to limit
the circumstances and extent of liability. The provisions of this Section 6
shall be enforceable independent of and severable from any other enforceable or
unenforceable provision of this Agreement.
7. Solicitation of Subscribers. During the term of this Agreement, and for
the two-year period following the expiration or termination of this Agreement,
neither N2K nor its agents shall use the AOL Network to (i) solicit, or
participate in the solicitation of AOL Members when that solicitation is for the
benefit of any entity (including N2K) which could reasonably be construed to be
or become in competition with AOL or (ii) promote any services which could
reasonably be construed to be in competition with AOL including, but not limited
to, services available through the Internet. In addition,
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N2K may not send AOL Members e-mail communications promoting N2K's Products
through the AOL Network without a "Prior Business Relationship." For purposes of
this Agreement, a "Prior Business Relationship" shall mean that the AOL Member
has either (i) engaged in a transaction with N2K through the AOL Network or (ii)
voluntarily provided information to N2K through a contest, registration, or
other communication, which included notice to the AOL Member that the
information provided by the AOL Member could result in an e-mail being sent to
that AOL Member by N2K or its agents. A Prior Business Relationship does not
exist by virtue of an AOL Member's visit to an N2K Area (absent the elements
above). More generally N2K will be subject to any standard policies regarding
e-mail distribution through the AOL Network which AOL may implement.
8. Collection of Subscriber Information. N2K is prohibited from collecting
AOL Member screennames from public or private areas of the AOL Network, except
as specifically provided below. N2K shall ensure that any survey, questionnaire
or other means of collecting AOL Member names, screennames, addresses or other
identifying information ("Subscriber Information"), including, without
limitation, requests directed to specific AOL Member screennames and automated
methods of collecting screennames (an "Information Request") complies with (i)
all applicable laws and regulations and (ii) any privacy policies which have
been issued by AOL in writing during the Term (the "AOL Privacy Policies"). Each
Information Request shall clearly and conspicuously specify to the AOL Members
at issue the purpose for which Subscriber Information collected through the
Information Request shall be used (the "Specified Purpose").
9. Use of Subscriber Information. N2K shall restrict use of the Subscriber
Information collected through an Information Request to the Specified Purpose.
In no event shall N2K (i) provide Subscriber Information to any third party
(except to the extent specifically (a) permitted under the AOL Privacy Policies
or (b) authorized by the members in question), (ii) rent, sell or barter
Subscriber Information, (iii) identify, promote or otherwise disclose such
Subscriber Information in a manner that identifies AOL Members as end-users of
the AOL Network or (iv) otherwise use any Subscriber Information in
contravention of Section 14 above. Notwithstanding the foregoing, in the case of
AOL Members who purchase Products from X0X, X0X shall be entitled to use
Subscriber Information from such AOL Members as part of N2K's aggregate list of
Customers; provided that N2K's use does not in any way identify, promote or
otherwise disclose such Subscriber Information in a manner that identifies AOL
Members as end-users of the AOL Network.
10. AOL Terms of Service. In the event that AOL notifies N2K that Content
within the N2K Areas violates AOL's then-standard Terms of Services (as set
forth on the America Online(R) brand service), the terms of this Agreement or
any other standard, generally applicable AOL Content policy, then N2K shall take
commercially reasonable steps to block access by AOL Members to such Content
using N2K's then-available technology. In the event that N2K cannot, through its
commercially reasonable efforts, block access by AOL Members to the Content in
question, then N2K shall provide AOL prompt written notice of such fact. AOL may
then, at its option, either (i) restrict access
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from the AOL Network to the Content in question using technology available to
AOL or (ii) terminate the link from the AOL Network to the applicable N2K Area
until such time as the Content in question is no longer displayed. N2K will
cooperate with AOL's reasonable requests to the extent AOL elects to implement
any such access restrictions.
11. Excuse. Neither Party shall be liable for, or be considered in breach
of or default under this Agreement on account of, any delay or failure to
perform as required by this Agreement as a result of any causes or conditions
which are beyond such Party's reasonable control and which such Party is unable
to overcome by the exercise of reasonable diligence.
12. Independent Contractors. The Parties to this Agreement are independent
contractors. Neither Party is an agent, representative or partner of the other
Party. Neither Party shall have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. This Agreement shall not be interpreted or
construed to create an association, agency, joint venture or partnership between
the Parties or to impose any liability attributable to such a relationship upon
either Party.
13. Notice. Any notice, approval, request, authorization, direction or
other communication under this Agreement shall be given in writing and shall be
deemed to have been delivered and given for all purposes (i) on the delivery
date if delivered by electronic mail on the AOL Network; (ii) on the delivery
date if delivered personally to the Party to whom the same is directed; (iii)
one business day after deposit with a commercial overnight carrier, with written
verification of receipt; or (iv) five business days after the mailing date,
whether or not actually received, if sent by U.S. mail, return receipt
requested, postage and charges prepaid, or any other means of rapid mail
delivery for which a receipt is available, to the person(s) specified below at
the address of the Party set forth in the first paragraph of this Agreement.
14. No Waiver. The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall be
and remain in full force and effect.
15. Return of Information. Upon the expiration or termination of this
Agreement, each Party shall, upon the written request of the other Party, return
or destroy (at the option of the Party receiving the request) all confidential
information, documents, manuals and other materials specified the other Party.
16. Survival. Sections 4, 5, 6 and 9 of this Exhibit E, shall survive the
completion, expiration, termination or cancellation of this Agreement.
17. Entire Agreement. This Agreement sets forth the entire agreement and
supersedes any and all prior agreements of the Parties with respect to the
transactions set forth herein. Neither Party shall be bound by, and each Party
specifically objects to, any term,
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condition or other provision which is different from or in addition to the
provisions of this Agreement (whether or not it would materially alter this
Agreement) and which is proffered by the other Party in any correspondence or
other document, unless the Party to be bound thereby specifically agrees to such
provision in writing.
18. Amendment. No change, amendment or modification of any provision of
this Agreement shall be valid unless set forth in a written instrument signed by
the Party subject to enforcement of such amendment.
19. Further Assurances. Each Party shall take such action (including, but
not limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.
20. Assignment. N2K shall not assign this Agreement or any right, interest
or benefit under this Agreement without the prior written consent of AOL;
provided that such consent shall not be required in the case of assignment to an
affiliate of N2K or a successor by way of merger, consolidation or sale of all
or substantially all of N2K's assets or stock, so long as such assignee (i) has
the assets and resources required to fully and completely perform all of N2K's
obligations under the Agreement and (ii) is not reasonably construed to be a
competitor of AOL [i.e., entities that offer online or internet connectivity (or
any successor form of connectivity) and entities that are broad-based
aggregators and distributors of third party interactive content and/or
services]; provided that, in the event that AOL does not approve assignment to
such a competitor, then AOL will pay to N2K a pro rata portion of the guaranteed
amounts paid as of such time by N2K to AOL pursuant to Section 4.1 (the
"Then-Paid Guaranteed Amount"), determined by subtracting: (a) the product of
the number of months since the Effective Date multiplied by $474,000; and (b)
amounts which have been earned by N2K as of such time in connection with this
Agreement; from (c) the Then-Paid Guaranteed Amount. Such amounts will be paid
by AOL within thirty (30) days of AOL's notification of its election to withhold
approval of such assignment to a competitor. Subject to the foregoing, this
Agreement shall be fully binding upon, inure to the benefit of and be
enforceable by the Parties hereto and their respective successors and assigns.
21. Construction; Severability. In the event that any provision of this
Agreement conflicts with the law under which this Agreement is to be construed
or if any such provision is held invalid by a court with jurisdiction over the
Parties to this Agreement, (i) such provision shall be deemed to be restated to
reflect as nearly as possible the original intentions of the Parties in
accordance with applicable law, and (ii) the remaining terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect.
22. Remedies. Except where otherwise specified, the rights and remedies
granted to a Party under this Agreement are cumulative and in addition to, and
not in lieu of, any other rights or remedies which the Party may possess at law
or in equity.
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23. Applicable Law; Jurisdiction. This Agreement shall be interpreted,
construed and enforced in all respects in accordance with the laws of the
Commonwealth of Virginia except for its conflicts of laws principles. Each Party
irrevocably consents to the exclusive jurisdiction of the courts of the
Commonwealth of Virginia and the federal courts situated in the Commonwealth of
Virginia, in connection with any action to enforce the provisions of this
Agreement, to recover damages or other relief for breach or default under this
Agreement, or otherwise arising under or by reason of this Agreement.
24. Export Controls. Both parties shall adhere to all applicable laws,
regulations and rules relating to the export of technical data and shall not
export or re-export any technical data, any products received from the Other
Party or the direct product of such technical data to any proscribed country
listed in such applicable laws, regulations and rules unless properly
authorized.
25. Heading. The captions and headings used in this Agreement are inserted
for convenience only and shall not affect the meaning or interpretation of this
Agreement.
26. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same document.
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EXHIBIT F - DIRECT MARKETING PROGRAM
MEMBER ACQUISITION PROGRAMS
N2K will test a variety of co-marketing and AOL member acquisition programs for
possible eventual rollout potential.
- N2K will distribute AOL software, at no cost to AOL, in all fulfillment
packages that do not conflict with marketing agreements that N2K has with
other companies. AOL to cover all costs to ship the software to the N2K
distribution location(s). AOL to cover incremental costs for pick and pack
fees, additional shipping and warehousing fees associated with this
promotion. Bounty payments to N2K will be reduced by the direct costs
associated with this promotion.
- N2K will explore distributing the AOL Software in selected retail partner
locations through its distribution arrangement with Red Distribution. Such
distribution possibly may include POP in retail distribution locations and
the placement of the AOL software into customer packages at checkout.
- N2K will consider a test allowing AOL access, at no cost to AOL, to its
customer database for list processing and mailing of the AOL software.
When N2K allows AOL access to its customer database, AOL will discuss
offering a pop-up screen to those new members signing on to AOL through
this promotion. The pop-up screen will allow the new member to click and
go directly to N2K's AOL site or its web site - whichever is available at
the time of the promotion. The screen could reappear to these members
after 30 or 60 days. This screen will appear after the AOL welcome screen.
- AOL will pay N2K a bounty of [****] for each valid* registration acquired
as a result of the marketing programs outlined above.
- N2K will consider bundling the AOL software client with N2K in-house
produced CDs. N2K will receive a [****] for all valid* registrations
received from this program.
*A valid registration is a new member who has completed one AOL billing cycle
after the free trial period.
- AOL will, at a minimum, co-brand disk packages that will be used for all
software distribution programs listed hereunder with stickers.
- AOL's will bear the costs associated with shipment of the AOL client
software to distribution points for the programs described above; AOL will
bear additional incremental distribution costs associated with fulfillment
bundling promotions outlined above. N2K's bounty will be reduced by these
additional incremental distribution costs. N2K will bear all other
distribution costs contemplated hereunder.
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EXHIBIT G
JAZZ CENTRAL STATION
1. Jazz Times: articles, CD reviews, video reviews
2. IAJE/Jazz Educators Journal: articles
3. WBGO-FM: without streaming audio
CLASSICAL INSITES
1. Fanfare: articles, CD reviews (links to MB but is displayed in Cl look)
2. WQXR-FM: station info; without streaming audio
XXXXXXXXX
0. Library of Congress (via the Estate): images, photos, papers
2. Xxxxxxxx: Prelude Fugue and Riffs (newsletter)
ROCKTROPOLIS
1. Album Network: In the Studio pre-packages shows
MUSIC BOULEVARD
1. MTV Online: News headlines
2. VH1 Online: News headlines
3. AMG: Title and artist databased information; reviews and biographies
4. Muze: Title and artist databased information
5. Blues Access: articles, reviews
6. Dirty Linen: articles, reviews
7. Fanfare: articles, reviews
8. Jazz Times: (links to JCS)
9. IAJE Jazz Educator's Journal (links to JCS)
10. Puncture: articles, reviews
11. Relix: articles
12. Spin: articles, reviews
13. Xxxx Publications: Contemporary Musician
14. Billboard Charts
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