EXHIBIT 10.2
AFTERMARKET AND DIRECT DISTRIBUTION AGREEMENT
This Software Direct Marketing Agreement ("Agreement") is entered into effective
the 4th day of September, 1997 (the "Effective Date"), by and between PC411,
Inc., a Delaware corporation with its principal place of business at 9800 La
Cienega Blvd., Suite 411, Inglewood, CA 90301 ("Company"), and The Media Farm,
Inc., a Texas corporation with its principal place of business at 8409 Pickwick
Lane, #252, Dallas, TX. 75225 ("TMF").
RECITALS
WHEREAS, Company and TMF wish to enter into an agreement for which Company's
software products will be merchandised or promoted in electronic catalogs for
direct purchase by end users, and fulfillment may occur via physical or
electronic means.
NOW, THEREFORE, in consideration of the mutual promises herein, and other good
and valuable consideration, the adequacy and sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. Definitions.
1.1."Catalog" means a catalog in any medium, including without limitation
paper, CD-ROM or electronic form (including Internet or other on-line
access), to be developed by or for Catalog Developers for purposes of
advertising Company's software and the software products of other
software licensors to potential customers. Catalogs may include (a)
materials provided by Company and selected by each Catalog Distributor,
each Catalog Developer, and TMF, (b) Trial Versions of Company's
Products and of the software of other licensors (together with related
advertising materials), as selected by Catalog Distributors, and/or (C)
advertising and other materials relating to the Catalog Distributor and
other parties' products, including without limitation, computer related
hardware.
1.2."Catalog Content" means Product(s), Trial Versions, and advertising
material related to Products provided by Company for inclusion in
Catalogs (if selected by the Catalog Distributors, the Catalog
Developers, and TMF).
1.3."Catalog Developer" means a third party(ies) selected by TMF or the
Catalog Distributor for participation in the Program that is the
subject of this Agreement, who will develop Catalogs pursuant to
agreements with each Catalog Distributor.
1.4."Catalog Distributor" means a manufacturer of or assembler of computer
related hardware or peripherals, an Internet service provider, a print
publisher, an on-line publisher (or such other entities as TMF and
Company may agree upon). For the purpose of this Agreement, Hayes
Microcomputer Products is approved by Company.
1.5."Catalog Distributor Revenue Payments" means the revenue payments that
are due to Catalog Distributor in conjunction with subscriptions
derived by Company as a consequence of the distribution of its product
pursuant to the terms of this Agreement and are set forth in Exhibit B.
1.6."Deliverables" means the materials set forth on Exhibit A.
1.7."Documentation" means Company's standard End User operating
instructions, in either printed or electronic form, for the Products.
1.8."Electronic Software Distribution" or "ESD" means electronic
distribution of content via downloading from an on-line source, or
de-encrypting of encrypted content (including Trial Versions).
1.9."End User" means a person who obtains a Catalog or a Product for his or
her use and not for redistribution or resale.
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1.10."End User License Agreement" means Company's standard end user license
agreement that accompanies a Product.
1.11."Intellectual Property Rights" means copyrights, trade secrets,
current or future patent rights of any kind, rights of publicity,
know-how and other intellectual property rights of any kind owned by or
licensed to an entity, except Trademarks.
1.12."Products" means Company's freely distributed electronic enrollment
program to activate subscription services, including current versions
and any future updates thereto or new releases thereof (unless
otherwise agreed in writing as to a specific Product), and all
available translations thereof.
1.13."Replication Version" means an object code duplication disk with a
fully functional release of a Product.
1.14."Technical Support" means the standard technical support provided by
Company for Products distributed through standard retail channels
(which may include, as examples only, telephone support for problem
resolution for End Users, and support on how to use Products, and
updates or new releases thereof).
1.15."Trademarks" means Company's or its licensor's trademarks and trade
names listed in Exhibit C ("Trademarks"), and any additional trademarks
or trade names utilized by Company on a Product or Catalog Content.
1.16."Trial Version" means any of the following with regard to the Product
(a) a fully functional version which is either compressed and/or
encrypted in some manner to restrict its use, (b) a limited
edition version, (C) a demonstration version.
2. Marketing Program.
2.1.Description of Marketing Program. TMF and Company hereby agree to
participate in a marketing program pursuant to which TMF will obtain
licenses to the software products and advertising materials of multiple
licensors, and sublicense such rights to one or more Catalog
Distributors who elect to participate in the Program, and Catalog
Developers for the development and distribution of Catalogs. Each
Catalog Distributor may determine in its sole discretion whether to
select any of Company's Products to be featured in any of its Catalogs,
and if so, which Product(s) it wishes to include. TMF will provide
certain consulting services to Catalog Distributors with regard to the
selection and updating of content for Catalogs, including Company
Products and titles of other software licensors participating in the
Program, and shall be entitled to exercise its independent judgment
with regard thereto. TMF has contracted with a Catalog Developer to
provide certain services relating to Catalog development, order
processing services, and the payment of revenues by the Catalog
Developers for Product sales to software licensors participating in the
Program, and may contract with other Catalog Developers in the future.
The Catalog Developers may subcontract their obligations, so long as
they remain fully liable therefor, and are not in breach of this
Agreement or their Agreement with TMF. Catalogs will be developed by
each Catalog Developer in conjunction with each Catalog Distributor
participating in the Program, in accordance with each Catalog
Distributor's specifications. End Users will be entitled to purchase
Products in the Catalog from the Catalog Developers as set forth in
Section 3.
2.2.Threatened Claims. Notwithstanding anything else in this Agreement, if
TMF or any Catalog Developer or Catalog Distributor is threatened with,
or if any of the foregoing parties reasonably believes that it may be
threatened with, a claim or lawsuit based on an allegation that the use
or distribution of a Product (including a Trial Version) or the use of
any related Trademark infringes the rights of any third party, any such
party may withdraw the relevant Product(s) and all related materials
(including Trial Versions) from the Program until such claim or lawsuit
is resolved to its satisfaction.
2.3.Responsibilities. Nothing in this Agreement shall be construed to
obligate TMF, a Catalog Developer or a Catalog Distributor to achieve a
specific level of shipments of Catalogs, to achieve a specific level of
sales of Products, or to achieve a specific level of revenues or
revenue payments to Company. TMF is not responsible or liable (i) for
participation by any Catalog Distributor, (ii) for the performance of
the obligations or responsibilities of any Catalog Distributor or any
Catalog Developer under the Program.
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However, TMF will, on behalf of Company, take appropriate actions under
its agreements with Catalog Developer and Catalog Distributor to
promote compliance with the terms and conditions of those agreements.
Company agrees that each Catalog Developer and each Catalog Distributor
shall be deemed a third party beneficiary of this Agreement.
2.4.Catalog Development. TMF will contractually require each Catalog
Developer to develop or have developed Catalogs at no cost to Company,
except that Company shall be responsible for all costs of developing
and providing Catalog Content. Company will cooperate with each Catalog
Developer and each Catalog Distributor in the development of the
Catalogs. The Catalog Distributors shall have the final decision on all
matters regarding the development of Catalogs; provided, however, that
TMF shall contractually require that Company shall have a final right
of review and approval on all materials utilizing a Trademark,
including the placement and presentation thereof, which approval shall
not be unreasonably withheld and which shall be subject to the approval
procedure set forth in Section 6.
3. Sales. Order processing and End User fulfillment services (through ESD or
physical means) for Sales of Products will be as agreed upon by each
Catalog Distributor and each Catalog Developer in their sole discretion.
Company will consign inventory to the Catalog Developers for fulfillment of
sales orders (other than those fulfilled via ESD), unless Company and
Catalog Developer agree to manufacture Company's Products from a
Replication Version.
4. License Grants and Related Matters.
4.1.Catalog Content License. Company grants TMF a non-exclusive, worldwide,
non-transferable (except as set forth in Section 21.5) right and
license under Company's Intellectual Property Rights, with the right to
sublicense through multiple levels of sublicensees, to use, reproduce,
modify solely for the purposes of formatting, publicly and privately
display, publicly and privately perform and distribute the Catalog
Content as part of any Catalogs and on any web site maintained by a
Catalog Distributor. Distribution rights shall include the right to
electronically distribute, transmit and/or broadcast each Catalog, by
any means now known or later developed. Catalog Distributors may select
all or portions of the Catalog Content to utilize (i) as part of a
Catalog, (ii) on a stand-alone basis, or (iii) in combination with
other materials for posting on Catalog Distributors' web sites.
4.2.License Grants for Encryption and Fulfillment. Company grants TMF a
non-exclusive, worldwide, non-transferable (except as set forth in
Section 21.5) right and license under Company's Intellectual Property
Rights, with the right to sublicense through multiple levels of
sublicensees, to:
4.2.1. reproduce Products, only if Company agrees to provide TMF with a
Replication Version pursuant to Section 8.1.1, and (ii) distribute
Products ordered by End Users, solely for purposes of order
fulfillment as described in Section 3.
4.2.2. (a) compress and encrypt the Products in order to create Trial
Versions to be included in a Catalog, unless Company
provides Trial Versions as set forth in Section 8.1.2.
(b) decrypt and/or provide End Users with a mechanism for
decryption of Products included in the Catalog when a sale
is made.
4.3. Catalog Content License. Company grants TMF a non-exclusive,
worldwide, non-transferable (except as set forth in Section 21.5)
right and license under Company's Intellectual Property Rights, with
the right to sublicense through multiple levels of sublicensees, to
4.3.1. distribute the Catalog Content with Products and Catalogs
distributed in accordance with the license grants set forth in
this Agreement;
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4.3.2. reproduce, have reproduced, modify solely for the purpose of
formatting, distribute and publicly display the Catalog Content in
marketing, advertising and promoting the Products, the Catalog and
the Program.
4.4. Marketing Samples License. Company will deliver two (2) physical
copies of each Product in accordance with Exhibit A. Company grants
TMF a non-exclusive, worldwide, non-transferable (except as set forth
in Section 21.5) right and license under Company's Intellectual
Property Rights to distribute, publicly perform and publicly display
such copies of each Product for purposes of marketing, advertising and
promoting the Catalog, the Program, or any manufacturer's computer
products. In addition, at TMF's request, Company will promptly deliver
to TMF a reasonable number of additional copies of Products which TMF
may use for such purposes.
4.5. Related Matters. TMF will not, and will contractually require that the
Catalog Developers and Catalog Distributors will not copy or otherwise
reproduce, reverse engineer, decompile, disassemble or otherwise
modify the Products in whole or in part, except as provided in this
Agreement. With regard to any matter which TMF has made a
representation in this Agreement that it will impose a contractual
requirement on a Catalog Developer or Catalog Distributor, and the
associated rights may be sublicensed by the Catalog Developer and/or
Catalog Distributor to another party, TMF will require that the
Catalog Developer or Catalog Distributor entitled to sublicense such
rights will contractually impose the same requirements on the
sublicensees.
5. Trademark License and Related Matters.
5.1. Products. Company grants TMF a non-exclusive, worldwide,
non-transferable (except as set forth in Section 21.5) right and
license to use the Trademarks, with the right to sublicense through
multiple levels of sublicensees, in and on the Products, the packaging
(if any) for the Products, the Catalog Content, the Catalogs, Trial
Versions, and on materials for marketing, advertising and promoting
the Catalog and the Program.
1.2. Related Matters. TMF acknowledges that it shall not acquire any
rights in the Trademarks as a result of TMF's use thereof, and that all
use of the Trademarks shall inure to the benefit of Company. All rights
in the Trademarks, other than those specifically granted herein, are
retained by Company for its own use and benefit. TMF agrees to use the
appropriate trademark symbol (either "(TM)" or "(R)" as designated by
Company on Exhibit C) whenever a Trademark is first mentioned in any
advertisement, brochure or in any other manner. TMF shall not remove
trademark notices from any Product or Catalog Content. TMF's agreements
with Catalog Distributors and the Catalog Developers will contain
provisions substantially similar to this Section.
5.3. Marketing Collateral. Any marketing material developed by TMF's
sublicensees (other than marketing material using unmodified Catalog
Content) utilizing Trademarks will require Company's prior approval,
which shall not be unreasonably withheld and which shall be subject to
the approval procedure set forth in Section 6.
6. Approvals. If Company fails to notify a Catalog Developer, Catalog
Distributor or any sublicensee submitting a sample item for approval under
Section 5, in writing of its rejection of any sample submitted for approval
within five (5 ) business days of Company's receipt thereof, Company shall
be deemed to have approved the sample submitted. If Company rejects the
item, Company shall set forth the reasons for such rejection in sufficient
written detail to permit correction. The submitting party may resubmit
corrected samples to Company for approval in accordance with this Section.
Company will not unreasonably withhold its approval of any sample.
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7. Ownership and Assignment. Company retains ownership of (i) all Intellectual
Property Rights in the Products, the Catalog Content, and (ii) the
Trademarks. The Catalog Developers or the Catalog Distributors shall
(i) own all right, title and interest in each Catalog and all Intellectual
Property Rights therein (except the Catalog Content and other rights
licensed from third parties), and (ii) retain ownership of all of their
own trademarks and any subsequent trademarks used as a trademark under
which Catalogs are distributed (except those trademarks that are
licensed from third parties). Company hereby transfers and assigns any
interest it has in any and all Catalogs (other than in Catalog Content)
to the Catalog Developers.
8. Deliverables, Acceptance and Catalog Content.
8.1.Deliverables. Company will deliver the Deliverables to the Catalog
Developers on the dates and in conformity with the specifications set
forth in Exhibit A (or as otherwise agreed in writing between Company
and the applicable Catalog Developer with notice thereof to TMF.).
8.1.1. Replication Versions for Products. Only if Company and a Catalog
Developer mutually agree that the Catalog Developer will reproduce
any Products as set forth in Section 3, Company shall, within ten
(10) business days of such agreement, deliver to such Catalog
Developer a Replication Version in the form of a golden master for
each such Product. TMF will contractually require that, if the
Catalog Developer will reproduce any Product, the Catalog
Developer will provide Company with finished samples of the
applicable Products, for Company's approval as set forth in
Section 2.
8.1.2. Trial Versions. Only if agreed by TMF and Company, Company will
provide when and if available, Trial Versions to the Catalog
Developers, in accordance with the schedule set forth on Exhibit A
for inclusion in Catalogs (if selected by Catalog Distributors).
If Company does not provide a Catalog Developer with a Trial
Version of a Product, Catalog Developer may create or have created
Trial Versions of such Product(s), if agreed by Company. Any such
Trial Version shall be submitted to Company for approval in
accordance with Section 6.
9. Performance Warranties. Company warrants to TMF, the Catalog Developers and
the Catalog Distributors that to the best of its knowledge, the physical
media of the Replication Versions provided to each Catalog Developer shall
be free from defects in workmanship and materials. Company further warrants
to TMF, the Catalog Developers and the Catalog Distributors that the
Replication Versions will not contain any known programming errors that
materially affect the performance of the Products, as represented by
Company. Company further warrants and represents to TMF, the Catalog
Developers and the Catalog Distributors that the Product will perform in
accordance with the Documentation for a period of one (1) year after the
End User purchases the Product; provided, however, that if this warranty is
less than the standard warranty provided by Company to End Users for
Product, such standard warranty shall be deemed to have been granted to
TMF, the Catalog Developers and the Catalog Distributors as to such
Products. Company shall provide Company's standard End User warranty to End
Users of the Products. Company agrees that TMF, the Catalog Developers and
the Catalog Distributors shall be deemed third party beneficiaries of this
Section 9.
10. Revenue Participation Payments and Related Matters.
10.1.Revenue from Sales. Company shall pay Catalog Distributor the Catalog
Distributor Revenue Payments asset forth on Exhibit B.
10.2.Quarterly Payments and Reports. Company will, within thirty (30) days
after the end of each quarter, prepare a quarterly accounting and pay
to each Catalog Distributor the Catalog Distributor Revenue Payments on
paid subscribers pursuant to the distribution of Products during the
preceding quarter in accordance with Section 10.1. Company will include
with such payments a report setting forth the number of subscriptions
sold as a result of the distribution of Products pursuant to this
Agreement during the
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preceding calendar quarter. Company will submit payments and reports
for those calendar quarters following termination of this Agreement in
which paid subscriptions occur.
10.3.Records. Company will, and each Catalog Distributor will, maintain
records relating to the distribution of Products and Catalogs
respectively. Company will: (i) retain such records and (ii) make the
records available for inspection in connection with an audit as
provided in Section 10.5 for a period of one (1) year after the
termination of TMF's relationship with the Catalog Developers or
Catalog Distributor to which such records relate.
10.4.Audit. Company will allow an independent certified public accountant
chosen by TMF or Catalog Distributor and reasonably acceptable to the
Company to audit and analyze appropriate accounting records of the
audited party to ensure compliance with Section 10. Any such audit
shall be limited to no more often than once every twelve (12) months,
within thirty (30) days of the audited party's receipt of TMF or
Catalog Distributor's written request to audit, during normal business
hours, upon reasonable notice and at a mutually agreed upon time. The
independent certified public accountant shall maintain in confidence
all information reviewed during the audit except information directly
related to the amount of payments owed to Catalog Distributor and the
number of Catalogs including Products that have been distributed.
Audits shall not interfere unreasonably with the audited party's
business activities. TMF will contractually require that, in the event
the audit reveals that due to Company's intentional or willful acts,
the Catalog Distributor Revenue Payments were less than ninety percent
(90%) of what should have been paid during the applicable period, the
party being audited shall immediately reimburse TMF or Catalog
Distributor for the reasonable costs of the audit, as well as any
amounts due as result of such audit.
11. Technical Support by Company. Company shall provide Technical Support for
the Products to End Users as part of the agreed pricing at no additional
charge to TMF, the Catalog Developers or the Catalog Distributors, but
reserves the right to charge End Users for such support if that is or
becomes Company's standard practice with regard to a particular Product.
Company represents that it now has, and shall maintain for the term of this
Agreement, the capability to provide Technical Support for its Products.
12. Representations. TMF shall make and TMF will contractually require that the
Catalog Developers and Catalog Distributors shall make no representations
concerning a Product except for those in the Documentation for that
Product, or those that have been previously published by Company or
approved by Company prior to being published by TMF, a Catalog Developer or
a Catalog Distributor, which approval shall not be unreasonably delayed or
withheld. In the event Company fails to respond to a request for such
approval for more than ten (10) business days following Company's receipt
of a request for such approval, Company shall be deemed to have approved
the representations.
13. Customer Data. Any End User data TMF or the Catalog Developers acquires
from the purchase by End Users of Products ("Customer Data") will be owned
by the Catalog Distributor. Any End User information (i) obtained by
Company from End Users who have completed Company's product registration
process, or (ii) obtained by Company from performing Technical Support,
will be the property of Company.
14. Term; Termination; Obligations on Termination.
14.1. Term. The Initial Term of this Agreement is one year from the date
last signed below. This Agreement shall automatically renew at the end
of the Initial Term for an additional one (1) year term unless either
party elects to terminate the relationship by providing written notice
to the other party at least thirty (30) days prior to the end of the
then-current term.
14.2. Termination for Material Breach. In the event of a material breach of
this Agreement, the non-breaching party shall have, upon thirty (30)
days written notice specifying the nature of the breach and provided
that the breaching party has not commenced to sure such alleged breach
within ten (10) business days nor cured such breach within such thirty
(30) day period, the right to terminate this Agreement;
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provided, however, that if the material breach relates to only one
Product, the Agreement may be terminated only as to such Product, and
this Agreement may continue as to any remaining Products.
14.3. Termination for Business Reasons. Company acknowledges and agrees
that the success of the Program depends on the cooperation of each
software licensor participant, and upon the appeal of each software
licensor's products. Should Company fail to reasonably cooperate with
TMF, the Catalog Developers, or the Catalog Distributors in fulfilling
its obligations under this Agreement, or should TMF reasonably
determine that a Product is not sufficiently appealing to potential
customers, TMF may, upon thirty (30) days prior written notice,
terminate this Agreement; provided, however, that if the business
reasons relate to only one Product, the Agreement may be terminated
only as to such Product, and this Agreement may continue as to any
remaining Product.
14.4. Rights and Obligations on Termination. Upon any termination or
expiration of this Agreement, (i) all licenses and sublicenses granted
pursuant to this Agreement shall continue (a) for the purposes of
manufacturing and distributing Products for a period of six (6) months,
(b) for customer support purposes, and (ii) TMF will immediately
discontinue and TMF will contractually require the Catalog Developers
and the Catalog Distributors to immediately discontinue the use of the
Trademarks, except to exercise their rights under subsection (i). End
Users will be permitted continued use of any Product and Catalog
Content so long as they are not in breach of their End User License
Agreement.
15. Confidential Information. During the term of this Agreement, both parties
may be exposed to certain information of the other party concerning the
marketing program that is the subject of this Agreement and other
information which is the confidential and proprietary information of the
disclosing party and not generally known to the public (herein
"Confidential Information"). Both parties will either mark their materials
as Confidential Information or notify the other party, in writing, that
written or oral information is Confidential Information. Both parties agree
that during and after the term of this Agreement, they will not use or
disclose to any third party any of the other party's Confidential
Information for purposes other than set forth in this Agreement without the
prior written consent of the other party. Both parties hereby consent to
the disclosure of their Confidential Information to the employees of the
other party, to the Catalog Developers and to the Catalog Distributor as is
reasonably necessary in order to allow each party to perform under this
Agreement and to obtain the benefits hereof, subject to obtaining written
confidentiality agreements from said employees, Catalog Developer or
Catalog Distributor that are at least as protective as this Agreement This
section shall not apply to Confidential Information which: (a) becomes
generally known to the public by publication or by any means other than a
breach of duty on the party of the recipient hereunder; (b) is information
previously known to the recipient;(C) is information independently
developed by or for the recipient; or (d) is information released by the
owning party without restriction or released pursuant to a judicial or
governmental decree.
16. Representations and Warranties.
16.1. Company Representations and Warranties. Company represents and
warrants that:
16.1.1. Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. .
16.1.2. Company has all requisite corporate power and full legal right
to enter into this Agreement and to perform all of its agreements
and obligations under this Agreement in accordance with its terms.
This Agreement has been, and as of the Effective Date will be,
duly authorized, executed, and delivered by Company and
constitutes the legal, valid, and binding obligation of Company.
16.1.3. Neither the Products, the Catalog Content, nor the Trademarks
infringe any copyrights, trade secrets, trademarks or other
intellectual property or proprietary, privacy or publicity rights
of any third party, or, to the best of Company's knowledge, any
patent, and Company has not received any notice or claim of any
such alleged infringement.
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16.1.4. Company has good and marketable title to, or has the right to
license, all of the copyrights, patents, trade secrets, trademarks
and other intellectual property rights associated with the
Products, the Catalog Content, and the Trademarks, and warrants
that it has the right to grant all of the licenses set forth
herein.
16.1.5. None of the Intellectual Property Rights or Trademarks
associated with the Products, the Catalog Content, or the Catalog
Content are subject to any restrictions or to any liens,
mortgages, pledges, security interests, encumbrances, or any
rights of others of any kind or nature whatsoever that adversely
affect or could affect TMF's rights under this Agreement.
16.2. TMF Representations and Warranties. TMF represents and
warrants that:
16.2.1. TMF is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas.
16.2.2. TMF has all requisite corporate power and full legal right to
enter into this Agreement and to perform all of its agreements and
obligations under this Agreement in accordance with its terms.
This Agreement has been, and as of the Effective Date will be,
duly authorized, executed, and delivered by TMF and, constitutes
the legal, valid, and binding obligation of TMF.
16.2.3. TMF will contractually provide in TMF's agreement with the
Catalog Developers that Company shall be an express third party
beneficiary of the contractual provisions and obligations required
to be included in TMF's agreement with the Catalog Developers in
Sections 2.3, 4,5, 5.2, 8.1.1, 8.1.2, 9, 12, 21 and including
Exhibit B.
17. Limitation of Warranty. THE WARRANTIES SET FORTH IN SECTION 16 ARE
EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS AND FITNESS FOR A PARTICULAR PURPOSE.
18. INDEMNIFICATION. COMPANY SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS
TMF, its officers, directors, employees, agents, and sublicensees, (including
any Catalog Developer and any Catalog Distributor and their officers, directors,
employees, agents, subcontractors and sublicensees of the foregoing
("Indemnified Parties"), against any claims, actions, demands, losses, and
liabilities (including reasonable attorneys' fees) alleging that (i) a Product
has failed to perform in accordance with the warranty provided in Section 9,
(ii) a Product has failed to perform in accordance with Company's standard end
user operating instructions (whether in printed or electronic form), or (ii) the
exercise of any right granted pursuant to this Agreement infringes or otherwise
violates any copyright, trademark, patent, trade secret, or other intellectual
property right or other proprietary right, including rights of privacy or
publicity, of any third party in any jurisdiction.
18.1.Procedure. The Indemnified Party agrees to (i) give prompt written notice
to Company of any such claim, action or demand, (ii) allow Company to
control the defense and related settlement negotiations and (iii) assist in
the defense so long as Company reimburses the Indemnified Party for its
reasonable expenses and employee time. The Indemnified Party will invoice
Company for such expenses and time on a calendar quarter basis and Company
shall pay such reimbursements within thirty (30) days after the invoice
from the Indemnified Party. The law firm used by Company to defend the
Indemnified Party shall be subject to the Indemnified Party's approval
which approval shall not be unreasonably withheld.. If Company does not or
cannot fulfill the indemnity obligation set forth above, TMF may defend
such suit itself with counsel of its choosing and may deduct the cost of
any such defense and any damage or settlement award from amounts due to
Company. Any settlement shall be subject to TMF's prior written approval
unless Company has obtained unconditional or reasonable release of all of
the Indemnified Parties named in the proceeding with respect to such
claims.
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18.2. Additional Remedies. Without limiting Company's other obligations under
this Agreement, Company may, at its expense, but without obligation to do
so, procure for TMF, the Catalog Developers and the Catalog Distributors
the right to continue to market, use, and have others use, in accordance
with the terms of this Agreement, any allegedly infringing Product(s), or
may replace or modify Product(s) to make them non-infringing. If Company
elects to replace or modify the Product(s), such replacement shall be
subject to all provisions, including acceptance provisions, of this
Agreement. Company agrees to reimburse TMF, the Catalog Developers and
the Catalog Distributors for any expenses and reasonable costs incurred
in connection with replacing an infringing version of Product(s) with a
non-infringing version of Product(s).
19. LIMITATION OF LIABILITY.
EXCEPT AS PROVIDED IN SECTION 18, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY FOR ANY EXEMPLARY, INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL,
OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR ITS TERMINATION, WHETHER
LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT PRODUCT
LIABILITY) OR OTHERWISE, AND IRRESPECTIVE OF WHETHER SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE.
20. NO LIABILITY RE: ENCRYPTION. COMPANY ACKNOWLEDGES AND AGREES THAT TMF,
CATALOG DEVELOPERS, AND CATALOG DISTRIBUTORS MAKES NO REPRESENTATION OR WARRANTY
WITH REGARD TO THE ENCRYPTION SOFTWARE THAT MAY BE USED TO CREATE TRIAL VERSIONS
OR TO PROVIDE ESD FULFILLMENT FOR PURCHASED TITLES. Company covenants not to sue
TMF, Catalog Developer or any Catalog Distributor for any matter arising out of
or relating to the encryption software used to create Trial Versions or to
electronically fulfill orders for Products, and does and will release TMF,
Catalog Developer and each Catalog Distributor from any and all claims relating
thereto.
21. General.
21.1.Export Controls. TMF acknowledges that the laws and regulations of the
United States restrict the export and re-export of commodities and
technical data of United States origin, possibly including Products. TMF
agrees that it will not and TMF will contractually require the Catalog
Developers and the Catalog Distributors to agree that it will not export or
re-export any Product in any form, without the appropriate United States
and foreign governmental licenses.
21.2.Severability. If any part of this Agreement is found invalid or
unenforceable, that part will be amended to achieve as nearly as possible
the same economic effect as the original provision and the remainder of
this Agreement will remain in full force.
21.3.No Waiver. No term or provision hereof will be considered waived by either
party, and no breach excused by either party, unless such waiver or consent
is in writing signed on behalf of the party against whom the waiver is
asserted. No consent by either party to, or waiver of, a breach by either
party, whether express or implied, will constitute a consent to, waiver of,
or excuse of any other, different, or subsequent breach by either party.
21.4.Relationship of the Parties. The parties are independent contractors under
this Agreement. No agency, partnership, joint venture or other joint
relationship is created hereby and, except as otherwise expressly provided
in this Agreement, neither party nor such party's agents have any authority
to bind the other party or to incur any obligations on its behalf.
21.5.Assignment. Either party may assign this Agreement to any person or entity
to whom it transfers all or substantially all of its rights (i) in
Company's case, to the Products, or (ii) in TMF's case, to those rights
granted
9
under this Agreement, as part of a corporate reorganization, merger
or sale of all or substantially all of its assets or sale of its
distribution business. Otherwise, neither party may assign, voluntarily, by
operation of law, or otherwise, any rights or delegate any duties under
this Agreement (other than the right to receive payments) without the other
party's prior written consent, which shall not be unreasonably withheld.
This Agreement will bind and inure to the benefit of the parties and their
respective successors and permitted assigns.
21.6.Force Majeure. Neither party shall be responsible for any failure to
perform due to circumstances beyond its reasonable control. In the event of
such delay, any applicable period of time for action by said party shall be
extended for a period equal to amount such delay; provided, however, that
if the delay lasts more than sixty (60) days, either party may terminate
the Agreement upon written notice to the other party.
21.7.Notices. Notices under this Agreement shall be sufficient only if mailed
by certified or registered mail, return receipt requested, sent by
commercial overnight courier with written verification of receipt,
personally delivered to the parties, or by facsimile, the receipt of which
is confirmed by return facsimile or other written notice of receipt, to the
party to be notified at the address set forth below, or at such other place
of which the other party has been notified in accordance with the
provisions of this Section. Notice by mail will be treated as having been
received upon the earlier of actual receipt or five (5) days after posting.
Notices shall be addressed as follows:
For TMF: For Company:
The Media Farm, Inc. PC411, Inc.
ATTN: Steve Patti Attn: Dean Eaker
8409 Pickwick Lane, #252 9800 La Cienega Blvd. Suite 411
Dallas, TX 75225 Los Angeles, CA 90301
With copies to: With copies to:
Michael D. Scott, Esq. Neil P. Ritter, Esq.
Scott Technology Law Offices 400 Park avenue, 15th Floor
4 Arbolado Court New York, New York 10022
Manhattan Beach, CA 90266 (212)223-1700 (o) or (203) 531-4613 (fax)
Either party may change the above address for purposes of this Section by giving
the other party written notice of the new address in the manner set forth above.
21.8.Choice of Law. This Agreement shall be construed and its performance
enforced in accordance with the laws of the United States and the State of
California, excluding its choice of law provisions. The parties agree that
the United Nations Convention on Contracts for the International Sale of
Goods is specifically excluded from application to this Agreement. The
parties consent and waive any objection to the non-exclusive personal
jurisdiction of the courts of California.
21.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
21.10. Survival. In addition to any provisions of this Agreement providing
for the continuation of rights or obligations after the termination of this
Agreement, the following Sections shall survive any termination of this
Agreement: 1, 7, 9, 10, 11, 14.1, 15, 16, 17, 18, 19, 20 and 21.
21.11. Mediation. Prior to either party commencing any litigation against the
other, the parties shall engage in at least one eight-hour day of
non-binding mediation under the auspices of a member or member group of the
National Mediation Association. The parties may, if they wish, select a
neutral mediator to participate in the mediation. One or more management
representatives of each party with knowledge of the claims and defenses and
with authority to dismiss, settle or otherwise resolve the claims shall
participate in the mediation. Such mediation shall take place within
thirty(30) days of a party's request therefor.
10
21.12. Entire Agreement; Modifications. This Agreement, and the Exhibits
attached hereto, constitutes the entire understanding between the parties,
and supersedes all proposals, oral or written, and all prior or
contemporaneous communications between the parties relating to the subject
matter of this Agreement. This
Agreement may only be modified by a writing executed by both parties.
IN WITNESS WHEREOF, the authorized representatives of the parties have
executed this Agreement.
TMF: COMPANY:
THE MEDIA FARM, INC. PC411, INC.
- ------------------------------ -------------------------------------
Authorized Signature Authorized Signature
- ------------------------------- --------------------------------------
Name and Title Name and Title: Dean Eaker, President
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EXHIBIT A
DELIVERABLES, SPECIFICATIONS AND SCHEDULE
Deliverables Delivery Date Delivery Location
* Electronic version of sell Ten (10) days after the Effective Instant Access, International
sheets for Products Date Attn: Greg Rice
The Technology Park
* Electronic file containing Colindeep Lane
Company's logo (e.g., a bitmap London NW9 6U
file) (or as otherwise instructed by TMF.)
Marketing Materials
* Listing of application size for Ten (10) days after the Effective Attn: Steve Patti
each Product (Mb) Date The Media Farm, Inc.
* Listing of key technologies 8409 Pickwick Lane #252
supported by each Product (e.g. Dallas Texas 75225
MMX, DVD, MPEG, 3D)
* Listing of operating system
compatibility for each Product
(e.g. DOS, Win 95 native, Win95
compatible)
2.DELIVERABLES OTHER THAN
CATALOG CONTENT.
Marketing Samples Ten (10 days after the Effective Attn: Steve Patti
Two (2) physical copies of each Date The Media Farm, Inc.
Product 8409 Pickwick Lane #252
Dallas Texas 75225
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EXHIBIT B
REVENUE PARTICIPATION PAYMENTS AND TERRITORIES
Revenue payments Territories Languages
20% NA, LA, EMEA, APAC English
Calculated from the ninetieth (90th) day after a subscriber's initial
enrollment.
KEY
Territories
* NA - North America
* LA - Latin and South America
* EMEA - Europe, Middle East, and Africa
* APAC - Asia, Australia, New Zealand, Japan
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EXHIBIT C
TRADEMARKS
TRADEMARK(S) FEDERALLY REGISTERED? OWNER OF THE TRADEMARK(S)
YES/NO
PC411 YES PC411, INC.
14