EXHIBIT 10.32
CO-BRANDING, MARKETING AND DISTRIBUTION AGREEMENT
This Agreement, dated as of January 30, 2000 ("Effective Date"), is made
and entered into by and between ▇▇▇▇▇▇.▇▇▇ Commerce Services, Inc., a Delaware
corporation ("ACSI"), and Audible Inc. a Delaware corporation ("Company"). ACSI
and Company are sometimes referred to collectively herein as the "Parties" and
individually as a "Party." ACSI and Company agree as follows:
Section 1. Definitions
Whenever used in this Agreement with initial letters capitalized, the
following terms shall have the following specified meanings:
"ACSI Competitor" means, collectively, such persons and entities as the
Parties may agree upon from time to time. ACSI may update any agreed-upon list
of ACSI Competitors no more frequently than once per quarter by written notice,
provided that: (a) the number of entities specified on such list shall at no
time [***]; (b) any entities added to such list must be [***]; and (c) no
addition of any ACSI Competitor to such list shall require Company to breach any
contractual or legal obligation to such ACSI Competitor by which Company is
bound as of the date of such addition.
"ACSI Derivative Work" means any Derivative Work (whether created by ACSI,
Company, or the Parties jointly) of any ACSI Existing Intellectual Property or
ACSI Future Intellectual Property.
"ACSI Existing Intellectual Property" means, collectively, all of the
following existing as of the Effective Date: (a) the Trademarks of ACSI and its
Affiliates; and (b) the ACSI Site, including, without limitation, any and all
content, data, URLs, domain names, technology, software, code, user interfaces,
"look and feel", ACSI Site Functionality, Trademarks and other items posted
thereon or used in connection or associated with any of the foregoing.
"ACSI Future Intellectual Property" means, collectively, all of the
following which are invented, created, developed or first reduced to practice by
ACSI or its Affiliates after the Effective Date without the participation of
Company or its Affiliates: (a) any Trademarks; and (b) any content, data, URLs,
domain names, technology, software, code, user interfaces, "look and feel," ACSI
Site Functionality and other items (but excluding any Company Derivative Works).
"ACSI Intellectual Property" means, collectively, any ACSI Existing
Intellectual Property, ACSI Future Intellectual Property and ACSI Derivative
Works, but excluding any Joint Works.
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"ACSI Product Section" means a discrete group of products available on the
ACSI Site which is identified by a tab or other top-level product category
identifier on the ACSI Site Home Page, but excluding: (a) the ACSI Site Home
Page itself; and (b) any mechanisms, areas or services on or through which third
parties may sell products through the ACSI Site in connection with ACSI's and
its Affiliates' programmatic selling initiatives (including, without limitation,
the existing "Auctions", "zShops", "▇▇▇▇▇▇▇▇.▇▇▇▇▇▇.▇▇▇" and "▇▇▇▇▇▇.▇▇▇
Advantage" areas and services of the ACSI Site, and any successors or
replacements to any of them).
"ACSI Product Sub-Section" means a discrete sub-set of products in any ACSI
Product Section which is accessible by following or using a browse tree or
hypertext links on the ACSI Site, and is identified by a permanent product
category description on the ACSI Site (e.g., as opposed to a description
generated in response to a user search query), but is not identified by a tab or
other top-level product category identifier on the ACSI Site Home Page (e.g., as
of the Effective Date, the "business & investing" or "audio books" sub-set of
products included in, and accessible through the browse tree of, the ACSI
Product Section identified by the "Books" tab on the ACSI Home Page (the "Books
Product Section")).
"ACSI Site" means that Web Site, the primary Home Page of which is
identified by the URL ▇▇▇.▇▇▇▇▇▇.▇▇▇ (and any successor or replacement Web
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Site). For the avoidance of doubt, the "ACSI Site" does not include any other
Web Sites maintained by or for ACSI or its Affiliates (including, without
limitation, those Web Sites, the primary Home Pages of which are identified by
the URL's ▇▇▇.▇▇▇▇▇▇.▇▇.▇▇ and ▇▇▇.▇▇▇▇▇▇.▇▇).
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"ACSI Site Functionality" means, collectively: (a) tab, search and browse
functionality available to users of the ACSI Site for navigating through ACSI
Product Sections (including, without limitation, the layout and design thereof);
(b) payment and transaction functionality available to users of the ACSI Site
for purchasing products (including, without limitation, "shopping cart" and
"Payment with 1-Click" functionality), (c) any other functionality available on
the ACSI Site which ACSI may make available to Company from time to time, and
(d) any future equivalents, improvements and enhancements of any of the
foregoing.
"Affiliate" means, with respect to any person or entity (including either
Party), any other person or entity that directly or indirectly controls, is
controlled by or is under common control with that person or entity, or which
that person or entity beneficially owns at least fifty percent (50%) of the
equity interests therein (provided, however, that with respect to the Parties,
no individual or entity as to which the ultimate parent entity of a Party does
not directly or indirectly control the operations or management thereof (e.g.,
in the case of ACSI as of the date of this Agreement, ▇▇▇▇.▇▇▇, Inc.) shall be
deemed to be an Affiliate of such Party for purposes of this Agreement).
"Annual Fee" means the sum of [***], representing the fixed fee payable by
Company to ACSI with respect to each Year.
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"Change of Control" means, with respect to Company, a transaction or series
of related transactions that results in (a) a sale of all or substantially all
of the assets of Company, (b) the transfer of fifty percent (50%) or more of the
outstanding voting power of Company (other than directly or indirectly to a
parent or wholly-owned subsidiary of Company), or (c) the acquisition by a
person or entity, by reason of any contractual arrangement or understanding with
one or more persons or entities, of the right or power to appoint or cause to be
appointed a majority of the directors or officers of Company.
"Claim" means any claim, action or proceeding instituted by a third party
(other than an Affiliate of a Party), including, without limitation, any
governmental authority.
"Closing" means the consummation of the purchase of common stock of Company
pursuant to the Securities Purchase Agreement between ACSI and Company dated on
or about the Effective Date (the "Securities Purchase Agreement").
"Company Derivative Work" means any Derivative Work (whether created by
ACSI, Company, or the Parties jointly) of any Company Existing Intellectual
Property or Company Future Intellectual Property.
"Company Existing Intellectual Property" means, collectively, all of the
following existing as of the Effective Date: (a) the Trademarks of Company and
its Affiliates; (b) the Company Site, including, without limitation, any and all
content, data, URLs, domain names, technology, software, code, user interfaces,
"look and feel," Trademarks and other items posted thereon or used in connection
or associated with any of the foregoing
"Company Future Intellectual Property" means, collectively, all of the
following which are invented, created, developed or first reduced to practice by
Company or its Affiliates after the Effective Date without the participation of
ACSI or its Affiliates: (a) any Trademarks; and (b) any content, data, URLs,
domain names, technology, software, code, user interfaces, "look and feel" or
other items (but excluding any ACSI Derivative Works).
"Company Intellectual Property" means, collectively, any Company Existing
Intellectual Property, Company Future Intellectual Property, and Company
Derivative Works, but excluding any Joint Works.
"Company Site" means, collectively: (a) that Web Site, the primary Home
Page for which is identified by the URL ▇▇▇.▇▇▇▇▇▇▇.▇▇▇ (and any successor or
replacement Web Site); and (b) any other Web Sites operated by or for Company or
its Affiliates from time to time (excluding the Mirror Company Site) through
which Spoken-Word Audio Products are sold or offered for sale.
"Confidential Information" means, with respect to either Party, all
information relating to such Party or its Affiliates that is designated as
confidential or that, given the nature of the information or the circumstances
surrounding its disclosure, reasonably should
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be considered as confidential. Confidential Information includes, without
limitation, (a) all information relating to a Party's or its Affiliates'
technology, customers, business plans, promotional and marketing activities,
finances and other business affairs; (b) all third party information that a
Party or its Affiliates is obligated to keep confidential; and (c) the terms of
this Agreement. Confidential Information may be contained in tangible materials,
such as drawings, data, specifications, reports and computer programs, or may be
in the nature of unwritten knowledge. Confidential Information does not include
any information that (i) has become publicly available without breach of this
Agreement, (ii) can be shown by documentation to have been known to the
Receiving Party at the time of its receipt from the Disclosing Party or its
Affiliates without a breach of confidentiality or other improper means, (iii) is
received from a third party who did not acquire or disclose such information by
a wrongful or tortious act or (iv) can be shown by documentation to have been
independently developed by the Receiving Party without reference to any
Confidential Information.
"Derivative Work" means any adaptation, modification, enhancement,
improvement or derivative work.
"Disclosing Party" means a Party that discloses Confidential Information to
the other Party in connection with this Agreement.
"Exclusive Spoken-Word Audio Products" means: (a) spoken-word audio-only
products, in a format suitable for digital download and/or streaming, [***]
"Existing ACSI Product Section" means any ACSI Product Section identified
on the ACSI Site Home Page as of the Effective Date, as shown in the screen shot
attached as Exhibit A.
"Home Page" means, with respect to a Web Site or section of a Web Site
(e.g., any section of the ACSI Site primarily related to an ACSI Product Section
or ACSI Product Sub-Section), the Web page designated by the operator of the Web
Site as the initial and primary end user interface for such Web Site or section
of a Web Site.
"Internet Radio Service" means a service through which users may receive
interactive or other broadcasts via the Internet or other public or private data
networks.
"Joint Work" means any content, data, URLs, domain names, technology,
software, code, user interfaces, "look and feel" or other items which are
invented, created, developed or first reduced to practice jointly by the Parties
after the Effective Date, are protected or protectable by any Intellectual
Property Rights and either: (a) include or incorporate both ACSI Existing
Intellectual Property, ACSI Future Intellectual Property and/or ACSI Derivative
Works, on the one hand, and/or Company Existing Intellectual Property, Company
Future Intellectual Property and/or Company Derivative Works, on the other hand;
or (b) include or incorporate no ACSI Existing Intellectual Property or ACSI
Derivative Works, on the one hand, or Company Existing Intellectual Property or
Company Derivative Works, on the other hand; provided, however, that
notwithstanding any other provision of this Agreement, to the extent that any
such items incorporate in whole or in part any ACSI
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the Securities and Exchange Commission.
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Site Functionality or technology, software, code, user interfaces or "look and
feel" related thereto or incorporated therein, such items shall be deemed ACSI
Derivative Works in their entirety and not Joint Works or Company Intellectual
Property.
"Incentive Offer" means either (a) a discount in the purchase price of
Spoken-Word Audio Products offered for sale from or through the Spoken-Word
Audio Sub-Section or (b) an equivalent benefit upon purchase of a Spoken-Word
Audio Product from or through the Spoken-Word Audio Sub-Section.
"Intellectual Property Right" means any patent, copyright, trademark, trade
dress, trade name or trade secret right and any other intellectual property or
proprietary right.
"Launch Date" means the date on which the Parties mutually agree to launch
the Spoken-Word Audio Sub-Section, but in any event no later than 90 days after
the Effective Date.
"Law" means any law, ordinance, rule, regulation, order, license, permit
and other requirement, now or hereafter in effect, of any governmental authority
of competent jurisdiction.
"Mirror Company Site" means a "mirrored" version of that Web Site, the
primary Home Page for which is identified by the URL ▇▇▇.▇▇▇▇▇▇▇.▇▇▇ (and any
successor or replacement Web Site). The primary home page of the Mirror Company
Site shall be identified by the URL ▇▇▇.▇▇▇▇▇▇.▇▇▇▇▇▇▇.▇▇▇ (or such other URL as
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the Parties may agree upon).
"Proration Percentage" means, as of any date within the Refund Period, the
following quantity, expressed as a percentage: (a) one (1); minus (b) the sum
of: (i) the number of days of the Refund Period which have elapsed prior to such
date; divided by (ii) the total number of days in the Refund Period.
"Non-Exclusive Spoken-Word Audio Products" means spoken-word audio-only
products, in a format suitable for digital download and/or streaming (excluding
Exclusive Spoken-Word Audio Products and Related Products), [***]
"Receiving Party" means a Party that receives Confidential Information from
the other Party in connection with this Agreement.
"Referral Information" means any information disclosing that a specific
end-user traveled from the ACSI Site to the Mirror Company Site or purchased any
products through the Spoken-Word Audio Sub-Section (however obtained), or other
personally-identifying information regarding users of the ACSI Site (including
the Spoken-Word Audio Sub-Section).
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"Refund Period" means the period of time from the date upon which Company
makes the payment called for by Section 5.2.1 (or is deemed to have made such
payment pursuant to Section 5.3) until the end of Year 2.
"Related Products" means: [***]
"Site" means either the ACSI Site, on the one hand, or the Mirror Company
Site and Company Site collectively, on the other hand, as required by the
context.
"Spoken-Word Audio Products" means, collectively, Exclusive Spoken-Word
Audio Products, Related Products and Non-Exclusive Spoken-Word Audio Products.
"Spoken-Word Audio Sub-Section" means an ACSI Product Sub-Section, to be
created pursuant to this Agreement, featuring Spoken-Word Audio Products (but
subject to Section 9.2 with respect to Related Products) and which shall be
identified on the ACSI Site by such heading as the Parties may agree upon.
"Term" means the term of this Agreement as defined in Section 10.
"Trademark" means any trademark, service ▇▇▇▇, trade name, trade dress,
proprietary logo or insignia or other source or business identifier.
"Web Site" means any point of presence maintained on the Internet or on any
other public or private data network. With respect to any Web Site maintained
on the World Wide Web or any successor public data network, such Web Site
includes all HTML pages (or similar unit of information presented in any
relevant data protocol) that either (a) are identified by the same second-level
domain (such as ▇▇▇▇://▇▇▇.▇▇▇▇▇▇.▇▇▇) or by the same equivalent level
identifier in any relevant address scheme, or (b) contain branding, graphics,
navigation or other characteristics such that a user reasonably would conclude
that the pages are part of an integrated information or service offering.
"Year" means any period of twelve (12) consecutive months commencing on the
Effective Date.
Section 2. Spoken-Word Audio Sub-Section and Mirror Company Site
2.1 Spoken-Word Audio Sub-Section. Pursuant to the implementation
procedures set forth in Section 4, ACSI will establish and, upon and following
the Launch Date, maintain (or cause one of its Affiliates to maintain) on the
ACSI Site during the Term
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the Spoken-Word Audio Sub-Section. In order to provide a harmonious and
consistent user experience, the presentation, format, functionality and
operation of the Spoken-Word Audio Sub-Section shall be generally consistent
with that of other similar ACSI Product Sub-Sections (including, without
limitation, by incorporating category headings and other navigational aids for
specific types of Spoken-Word Audio Products offered by Company), except that
ACSI will include prominent branding for Company where appropriate on pages of
the Spoken-Word Audio Sub-Section. Subject to the foregoing and to Section 6,
ACSI will determine the content, appearance, functionality and all aspects of
the ACSI Site (including the Spoken-Word Audio Sub-Section) [***]
2.2 Certain Company Obligations. As of and following the Launch Date,
Company will (a) maintain the Mirror Company Site, [***], (b) ensure that every
page of the Mirror Company Site displays prominent, above-the-fold, graphical
hypertext links (to be designed by ACSI and subject to Company's prior approval,
which shall not be unreasonably withheld or delayed) which, when clicked, return
the user to the ACSI Site, together with such other branding and Trademarks of
ACSI as ACSI and Company may agree upon to be appropriate (provided, that if the
Parties cannot agree upon such branding and Trademarks, notwithstanding any
other provision of this Agreement, ACSI shall have no obligation to establish or
maintain the Spoken-Word Audio Sub-Section until such time as the Parties have
agreed upon the same; and provided further, that any disagreement shall be
subject to the escalation procedure specified in Section 2.8 below), (c) ensure
that the Mirror Company Site does not contain links to any Web Site other than
the ACSI Site (including, without limitation, to the Company Site), (d) ensure
that substantially all Spoken-Word Audio Products (and any other products
approved by ACSI) available through the Company Site are available through the
Spoken-Word Audio Sub-Section (but subject to Section 9.2 with respect to
Related Products), (e) [***], and (f) [***]. Subject to the foregoing, Company
shall have the right to limit the number of promotional incentives (e.g. free
give-aways, low-cost promotional offers and the like) that are offered through
the Spoken-Word Audio Sub-Section based upon the volume of traffic if such
volume were to place Company in commercially untenable position as solely
determined by Company. Unless otherwise agreed by the Parties in writing,
Company will be solely responsible for all pricing, delivery and fulfillment of
any products, including Spoken-Word Audio Products offered by Company on or
through the Spoken-Word Audio Sub-Section (including the Mirror Company Site).
2.3 [***].
2.4 Technical Standards; Customer Service. Company will at all times
comply with the technical and customer service requirements and Site standards
(including, without limitation, user privacy policies and customer guarantees)
to be agreed upon by the Parties within forty-five (45) days after the Effective
Date and attached hereto as Exhibit B. Any dispute arising related to the
creation of such requirements and standards shall be subject to the escalation
procedure specified in Section 2.8 below. Without limiting the generality of
the foregoing Company will: (a) at all times conduct its dealings with users of
the Spoken-Word Audio Sub-Section in a professional and courteous manner which
reflects favorably upon ACSI and its Affiliates and the ACSI Site; and (b) in
any event ensure that the customer
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service provided to users of the Spoken-Word Audio Sub-Section (including,
without limitation, in regard to product fulfillment and responsiveness to
customer inquiries) is of as high a standard as is commercially reasonably
possible and as good or better than that generally provided by any other online
seller of Spoken-Word Audio Products in a format suitable for digital download.
2.5 Referral Information. Company will not disclose any Referral
Information to any third party (except for third parties acting directly on
behalf of Company in connection with Company's internal business and who have
agreed in writing to maintain the same in confidence), or use or permit any
third party to use any Referral Information to target communications
specifically to users of the ACSI Site, primarily on the basis of such persons'
being users of the ACSI Site, without ACSI's prior written consent (provided,
however, that nothing in the foregoing shall prohibit Company from contacting
its own customers generally (including contacting users of the ACSI Site as part
of any such general contacts) or prohibit Company from using non-personal
statistical information regarding such users in the aggregate for any purpose
without ACSI's consent). [***]
2.6 ACSI Site Re-Design. Notwithstanding any other provision of this
Agreement, nothing in this Agreement shall limit ACSI's and its Affiliates'
ability to re-design or modify the appearance, content and functionality of the
ACSI Site (including any ACSI Product Section, ACSI Product Sub-Section, or any
Home Pages); provided, however, that in the event that ACSI and/or its
Affiliates redesign or revise the ACSI Site or any ACSI Product Section, the
treatment of the Spoken-Word Audio Sub-Section in connection with such re-design
or revision will be substantially similar to and consistent with the treatment
of other ACSI Product Sub-Sections on the ACSI Site.
2.7 Traffic Data. Throughout the Term, on a monthly basis, Company will
provide ACSI all relevant data requested from time to time by ACSI concerning
behavior on the Mirror Company Site, to the extent such behavior reasonably
relates to the online promotion or sale of products sold through the ACSI Site
and/or Mirror Company Site and such data is reasonably available. ACSI and its
Affiliates will hold such data in confidence and will not use it except in
connection with their marketing efforts or as otherwise may be agreed by
Company in writing. Notwithstanding anything contained in this Section 2.7,
Company will not be required to deliver to ACSI any user data in contravention
of any applicable Law or Company's privacy policy (provided, that if Company
modifies its privacy policy, Company shall revise the same in a manner which
provides it the maximum legally permissible flexibility to provide the data
specified in this Section 2.7 to ACSI).
2.8 Escalation of Certain Disputes. If any dispute arises relating to the
matters described in Section 2.2(b), Section 2.4 or Section 4.1.3 of this
Agreement, and the Parties are unable to resolve the dispute in the ordinary
course of business, the Parties will use good-faith efforts to resolve the
matter in accordance with this Section 2.8. Within three (3) days
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following the written request of either Party (which will describe the nature of
the dispute and other relevant information), the Parties' managers who are
responsible for the ACSI/Company relationship will meet to resolve the dispute
at a mutually convenient time and place. If the relationship managers are
unable to resolve the dispute within two (2) days following their initial
meeting, they will refer the matter to the Parties' divisional executives who
are responsible for the administration of this Agreement, along with a written
statement (or statements) describing the nature of the dispute and other
relevant information. Within three (3) days following the referral of the
matter to the Parties' divisional executives, the divisional executives will
meet to resolve the dispute at a mutually convenient time and place. Additional
representatives of the Parties (but not their relationship managers) may be
present at the meeting. If the divisional executives are unable to resolve the
dispute within two (2) days following their initial meeting, they will refer the
matter to the Parties' Presidents, along with a written statement (or
statements) describing the nature of the dispute and other relevant information.
Within three (3) days following the referral of the matter to the Parties'
Presidents (or equivalent officers), the Presidents will meet to resolve the
dispute at a mutually convenient time and place. Additional representatives of
the Parties (but not their relationship managers or divisional executives) may
be present at the meeting. If the Presidents are unable to resolve the dispute
within two (2) days following their initial meeting (or such later date as they
may agree), the Parties will be free to exercise such rights and remedies as may
be available to them at law or in equity. Any resolution of any dispute reached
under this Section 2.8 will be reduced to writing and signed by the Parties.
During any dispute resolution procedure conducted under this Section, the
Parties will diligently perform all obligations hereunder that are not directly
related to the dispute.
Section 3. Promotional Activities
3.1 Press Releases. The Parties will issue a joint press release
promptly upon concluding Advertising. this Agreement, which press release shall
be subject to the Party's mutual approval, which shall in any event state that
Company is the exclusive provider on the ACSI Site of premium spoken-word audio
product for download or streaming over the world wide web. The Parties shall
have the right to issue mutually agreeable additional press releases describing
the nature of their relationship at such times as the Parties shall mutually
agree. Neither Party will issue any other press releases, make any other
disclosures regarding this Agreement or its terms or the relationship between
the Parties, or use the other Party's Trademarks (except as permitted by Section
6), without the other Party's prior written consent, except that, each Party
may, without the other Party's prior consent: (y) distribute or issue public
relations materials or press releases that contain a description of the
relationship between the Parties, provided that such description has been
approved in advance by such other Party (which approval shall not be
unreasonably withheld or delayed); and (z) speak in public regarding disclosures
made pursuant to the first sentence of this Section 3.1. Parties will be able to
include a description of this strategic partnership in the "company descriptor"
section of standard releases, subject to initial mutual approvals.
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3.2 Advertising
3.2.1 ▇▇▇▇▇▇.▇▇▇ Customer Base. During each Year of the Term following
the Launch Date, ACSI (or one of its Affiliates) will deliver Amazon.com-branded
e-mails and Amazon.com-branded in-product advertising materials related to the
Spoken-Word Audio Sub-Section to selected members of the ▇▇▇▇▇▇.▇▇▇ customer
base in at least the following quantities:
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Year Email Product Shipment
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1 [***] [***]
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2 [***] [***]
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3 [***] [***]
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The Parties shall mutually agree on the nature of such advertising; [***].
With respect to all email advertising, ASCI and Company shall pre-test and plan
such advertising in a manner generally consistent with the pre-testing and
planning conducted by ACSI and its Affiliates with respect to advertising for
other ACSI Product Sub-Sections, with the goal of achieving maximum commercial
effectiveness for such advertisements (including, without limitation, by
attempting to spread out such advertising in order to not unnecessarily "bunch"
the same). [***]
3.2.2 Customer Subscription Emails. [***]
3.2.3 Company. [***]
3.3 Certain Covenants. [***]
Section 4. Implementation
4.1 Spoken-Word Audio Sub-Section and Mirror Company Site.
4.1.1 Generally. During the Term, the Parties will cooperate in
good faith and use commercially reasonable efforts to provide a seamless
customer experience of full interactivity between the Spoken-Word Audio Sub-
Section and the Mirror Company Site. The Parties anticipate that the activities
contemplated by this Section 4.1.1 will be performed in two phases, as set forth
in Section 4.1.2 and Section 4.1.3 below.
4.1.2 Phase I. Between the Effective Date and the Launch Date, the
Parties shall perform such work as may be necessary to develop the Spoken-Word
Audio Sub-Section (in the case of ACSI) and the Mirror Company Site (in the case
of Company). Upon the Launch Date, ACSI will establish the Spoken-Word Audio
Sub-Section under the browse tree (or equivalent navigation structure) of the
Books Product Section, and Company will establish the Mirror Site. The Spoken-
Word Audio Sub-Section will contain, among such
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other content as may be contained therein pursuant to Section 2.1, multiple
hypertext links that will allow users to navigate directly to the Mirror Company
Site.
4.1.3 Phase II. [***], the Parties shall have fully integrated the
ACSI Site Functionality into the Mirror Company Site pursuant to specifications
and schedules (the "Phase II Development Plan") that shall be developed by ACSI
in consultation with Company, which specification and schedules shall be
attached hereto as Exhibit C, [***]. Any dispute arising related to the
creation of the Phase II Development Plan shall be subject to the escalation
procedure specified in Section 2.8.Without limiting the generality of the
foregoing, ACSI and Company will cooperate to implement ACSI Site Functionality
for the Spoken-Word Audio Sub-Section (including the Mirror Company Site) in a
manner consistent with the ACSI Site Functionality provided in other ACSI
Product Sub-Sections, and Company and ACSI will use commercially reasonable
efforts to perform, in a timely and professional manner, all technical work
necessary to seamlessly integrate the ACSI Site Functionality into the Mirror
Company Site, in accordance with the Phase II Development Plan.
4.1.4 Tax Matters. [***]
4.2 ACSI Site Links. Upon the Launch Date, ACSI will post permanent
and/or rotating links to the Home Page of the Spoken-Word Audio Sub-Section on
relevant pages of the ACSI Site in a manner substantially similar to and
generally consistent with the posting of links to other similar ACSI Product
Sub-Sections (e.g., as of the Effective Date, the ACSI Product Sub-Section
identified as "Audiobooks"). [***]
The Parties shall consult together in connection with the specific nature,
prominence and positioning of the links posted on the ACSI Site pursuant to this
Section 4.2; [***].
4.3 Account Managers. Each Party will assign an account manager (which
manager shall be subject to change from time to time by the assigning Party) to
oversee the performance of such Party's obligations under this Agreement and to
facilitate coordination of the Parties' performance of their respective
obligations (including, without limitation, the establishment of the Spoken-Word
Audio Sub-Section, the creation of the Co-Branded Pages, the integration of the
ACSI Site Functionality with the Mirror Company Site, and the advertising
activities contemplated in Section 3). The account managers will meet from time
to time during the Term to review the implementation of this Agreement and to
explore methods for improving performance.
4.4 Regulatory Compliance
4.4.1 Company will comply, and will ensure that the Mirror Company
Site, the Spoken-Word Audio Products and all other activities undertaken through
or in connection with the Mirror Company Site and this Agreement (including,
without limitation, the participation of ACSI and its Affiliates as contemplated
by this Agreement) comply with all applicable Laws.
---------------
***Confidential Information has been omitted and has been filed separately with
the Securities and Exchange Commission.
-11-
4.4.2 Company will provide reasonable assistance to ACSI and ACSI's
Affiliates in all regulatory compliance activities required in connection with
the advertising, operation, maintenance and sale of Spoken-Word Audio Products
on and through the Spoken-Word Audio Sub-Section, including, but not necessarily
limited to, assisting ACSI in identifying, obtaining and maintaining in force
any and all licenses and permits necessary for ACSI and its Affiliates in
connection with any of the foregoing. In connection with the foregoing
regulatory compliance activities, Company will reimburse ACSI for any reasonable
costs (including legal costs) incurred by ACSI or its Affiliates in connection
with identifying and obtaining any and all such licenses and permits.
Notwithstanding the foregoing, ACSI acknowledges and agrees that Company shall
have no obligation to assist ACSI in any regulatory compliance activities
related to, or reimburse ACSI for any costs incurred by ACSI or its Affiliates
in connection with identifying or obtaining any licenses or permits required in
connection with, any advertising, operation, maintenance or sale of Spoken-Word
Audio Products or other products sold by ACSI or its Affiliates independently
through the ACSI Site without the participation of Company.
4.5 Staffing. Each Party will dedicate during the Term the appropriate
resources and personnel necessary for establishment of the Spoken-Word Audio
Sub-Section, the integration of the ACSI Site Functionality into the Mirror
Company Site and the performance of its other obligations under this Agreement.
Each Party's designated employees will be subject to change from time to time by
such Party in its sole discretion and promptly upon such change such Party shall
notify the other Party.
Section 5. Compensation
5.1 In consideration of the intangible rights granted and services to be
performed by ACSI during the Term, Company will pay ACSI the consideration
specified in this Section.
5.2 Annual Fees.
5.2.1 Upon the Closing, subject to Section 5.3, Company will pay
ACSI via wire transfer the sum of [***] (the "Company Closing Payment"),
representing payment of the Annual Fee for the first Year of the Term and a pre-
payment of the Annual Fee for the second Year of the Term.
5.2.2 On the first day of Year 3, Company will pay ACSI via wire
transfer the sum of [***], representing the Annual Fee payable with respect to
Year 3; provided, however, that if ACSI so elects by written notice delivered to
Company at least ten (10) days prior to the end of Year 2, Company shall instead
issue at the beginning of Year 3 to ACSI (or such of its Affiliates as it may
designate) shares of common stock of Company (or any publicly-traded Affiliate
thereof) with a then-current fair market value equal to [***] as of the date of
such written notice (the "Year 3 Shares").
5.3 Waiver of Payment Obligations. At the Closing, the Company Closing
Payments due to ACSI pursuant to Section 5.2.1 hereof and the Shares
Consideration (as defined in the Securities Purchase Agreement) due to the
Company pursuant to Section 1.2 of
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***Confidential Information has been omitted and has been filed separately with
the Securities and Exchange Commission.
-12-
the Securities Purchase Agreement, which amounts are identical, shall offset
each other solely for the purpose of determining the actual fund transfers
required at Closing. ASCI acknowledges and agrees that the entire amount of the
Company Closing Payments shall be deemed paid and received upon the issuance of
the Common Stock (as defined in the Securities Purchase Agreement).
5.4 Royalties. In consideration for the intangible rights granted
hereunder, for each Year in which the Spoken-Word Audio Sub-Section (including
the Mirror Company Site) generates revenue of at [***] (the "Revenue
Threshold"), Company will pay ACSI a royalty equal to [***] of all revenues
generated from the Spoken-Word Audio Sub-Section (including, for the avoidance
of doubt, any revenue received by Company from any Company customer who first
links to the Mirror Company Site from the Spoken-Word Audio Sub-Section and who
later accesses the Company Site directly) in excess of Revenue Threshold (the
"Royalties") for each Year of the Term. Company will pay ACSI any Royalties
payable pursuant to this Section 5.4 on an annual basis, in arrears, as follows:
within thirty (30) days after the end of each Year as to which any Royalties are
payable, Company will remit to ACSI the Royalties payable with respect to such
Year, together with a report specifying in reasonable detail: (a) the gross
revenue generated by the Spoken-Word Audio Sub-Section; and (b) Company's
calculation of the Royalties.
5.5 Overdue Payments. Payments called for by this Section 5 which are not
received within five (5) business days after the date upon which payment is due
will bear interest at a rate equal to the lesser of one and one-half percent (1-
1/2%) per month or the maximum legal rate permitted under the controlling Laws.
Payment of such interest shall not cure or excuse any breach of any underlying
payment obligation.
5.6 Allocation of Payments. The Parties acknowledge and agree that the
Annual Fees shall be allocated as consideration for advertising services and
intangible rights granted by ACSI to Company hereunder, including the rights
granted under Section 2.1 and Section 4.2 and the licenses granted to Company
under Section 6, as follows:
Year Advertising Services Intangible Rights
----------------------------------------------------------------------------------------------
1 [***] [***]
----------------------------------------------------------------------------------------------
2 [***] [***]
----------------------------------------------------------------------------------------------
3 [***] [***]
----------------------------------------------------------------------------------------------
---------------
***Confidential Information has been omitted and has been filed separately with
the Securities and Exchange Commission.
-13-
Section 6. Proprietary Rights
6.1 Ownership.
6.1.1 As between the Parties, ACSI reserves all right, title and
interest in and to the ACSI Intellectual Property, along with all Intellectual
Property Rights associated therewith and no title to or ownership of any of the
foregoing is transferred or, except as expressly set forth in Section 6.2,
licensed to Company or any other person or entity pursuant to this Agreement.
6.1.2 As between the Parties, Company reserves all right, title and
interest in and to the Company Intellectual Property, along with all
Intellectual Property Rights associated therewith and no title to or ownership
of any of the foregoing is transferred or, except as expressly set forth in
Section 6.3, licensed to ACSI or any other person or entity pursuant to this
Agreement.
6.1.3 To the maximum extent permitted by applicable Laws, any ACSI
Derivative Works or Company Derivative Works, to the extent created by or for
the other Party, shall be deemed "works made for hire", and all right, title and
interest therein shall vest in ACSI (in the case of ACSI Derivative Works) or
Company (in the case of Company Derivative Works) immediately upon creation
thereof. To the extent that any such ACSI Derivative Works or Company Derivative
Works are not "works made for hire", Company hereby assigns and agrees to assign
to ACSI (or such of its Affiliates as it may designate) all right, title and
interest to all ACSI Derivative Works and all associated Intellectual Property
Rights, and ACSI hereby assigns and agrees to assign to Company (or such of its
Affiliates as it may designate) all right, title and interest in and to all
Company Derivative Works and all associated Intellectual Property Rights. Each
Party shall take, at the other Party's expense, any actions (including, without
limitation, execution and delivery of affidavits and other documents) reasonably
requested by such other Party to effect, perfect or confirm its or its
designee's ownership rights as set forth in this Section 6.1.3.
6.1.4 To the extent that any Joint Works are created in the course
of performance of this Agreement, each Party shall own a joint, equal and
undivided ownership interest in and to such Joint Works and the associated
Intellectual Property Rights, with no duty on the part of either Party to
account to the other with respect to its use and exploitation of the same. Each
Party shall own all right, title and interest in and to any Derivative Works of
any Joint Works created by or for such Party and all Intellectual Property
Rights associated therewith (to the extent not also associated with the Joint
Works). Without limiting the generality of the foregoing, either Party may,
without any duty to account to the other (including, without limitation, any
duty to pay, share or account for any royalties):
(a) make, manufacture, assemble, produce, market, sell, distribute,
transfer, use, license and otherwise commercially and non-commercially
exploit and deal with the Joint Works; provided, that neither Party shall
seek or obtain any
-14-
registration of any Intellectual Property Rights associated with the Joint
Works without the other Party's prior written consent;
(b) make, manufacture, assemble, produce, market, sell, distribute,
transfer, use, license, seek and obtain registrations of Intellectual
Property Rights (subject to paragraph (a) above) and otherwise commercially
and non-commercially exploit and deal with Derivative Works of any Joint
Works created by or for such Party, whether or not competitive with any
items created by or for the other Party; and
(c) authorize any third party to take any action described in (a) or
(b) above.
6.2 ACSI License. ACSI hereby grants to Company, during the Term, a non-
exclusive, non-transferable (except in accordance with Section 11.7) license,
which Company may sublicense only to its Affiliates, to use the ACSI
Intellectual Property supplied by ACSI to Company as is reasonably necessary to
perform its obligations under this Agreement; provided, however, that Company
shall not use ACSI's Trademarks, including in any advertising, without ACSI's
prior written consent, unless such use conforms to a written Trademark use
policy previously furnished by ACSI to Company and not subsequently modified or
revoked. All goodwill arising out of any use of any of ACSI's or its
Affiliates' Trademarks by, through or under Company will inure solely to the
benefit of ACSI and its Affiliates.
6.3 Company License. Company hereby grants to ACSI, during the Term, a
non-exclusive, non-transferable (except in accordance with Section 11.7)
license, which ACSI may sublicense only to its Affiliates, to use the Company
Intellectual Property supplied by Company to ACSI as is reasonably necessary to
perform its obligations under this Agreement; provided, however, that ACSI shall
not use Company's Trademarks, including in any advertising, without Company's
prior written consent, unless such use conforms to a written Trademark use
policy previously furnished by Company to ACSI and not subsequently modified or
revoked. All goodwill arising out of any use of any of Company's Trademarks by,
through or under ACSI will inure solely to the benefit of Company.
6.4 Non-Disparagement. Neither Company nor ACSI will use the other
Party's Trademarks in a manner that disparages the other Party or its products
or services, and/or portrays the other Party or its products or services in a
false, competitively adverse or poor light. Each of Company and ACSI will
comply with the other Party's requests as to the use of the other Party's
Trademarks and will avoid knowingly taking any action that diminishes the value
of such Trademarks.
Section 7. Representations; Indemnity
7.1 Representations. Each Party represents and warrants to the other
that: (a) it has the full corporate right, power and authority to enter into
this Agreement and perform its obligations hereunder; (b) its performance of
this Agreement, and the other Party's exercise of such other Party's rights
under this Agreement, will not conflict with or result in a breach
-15-
or violation of any of the terms or provisions or constitute a default under any
agreement by which it is bound; (c) when executed and delivered, this Agreement
will constitute its legal, valid and binding obligation enforceable against it
in accordance with its terms; and (d) it will comply with all applicable Laws in
its performance of this Agreement.
7.2 Indemnity. Each Party (as applicable, the "Indemnifying Party") will
defend, indemnify and hold harmless the other Party (the "Indemnified Party")
and its Affiliates (and their respective employees, directors and
representatives) from and against any and all claims, costs, losses, damages,
judgments and expenses (including reasonable attorneys' fees) arising out of any
Claim, to the extent it is based on (a) the operation or content of the
Indemnifying Party's Site (other than any items or materials supplied, or
operation or content required, by the Indemnified Party), (b) the offer,
marketing or sale of any products or services through the Indemnifying Party's
Site (other than any products offered, marketed or sold by the Indemnified Party
through such Site, the Parties acknowledging that Company shall be deemed the
Indemnifying Party as to any Claim related to any products offered, marketed or
sold by Company through the Spoken-Word Audio Sub-Section and/or Mirror Company
Site, except to the extent that such Claim relates to any ACSI Site
Functionality or other items or content provided by or for ACSI with respect to
the Spoken-Word Audio Sub-Section and/or Mirror Company Site), (c) any actual or
alleged breach of the Indemnifying Party's representations or warranties set
forth in Section 7.1 above, or, in the case of Company, its obligations under
Section 4.4 above, or (d) any actual or alleged infringement of any
Intellectual Property Rights by any content, items or materials provided by the
Indemnifying Party to the Indemnified Party for its use under this Agreement.
Subject to Section 7.3, the Indemnifying Party will pay any award against the
Indemnified Party and its Affiliates (and their respective employees, directors
or representatives) and any costs and attorneys' fees reasonably incurred by
them resulting from any such Claim.
7.3 Procedure. In connection with any Claim described in this Section 7,
the Indemnified Party will (a) give the Indemnifying Party prompt written notice
of the Claim, (b) cooperate with the Indemnifying Party (at the Indemnifying
Party's expense) in connection with the defense and settlement of the Claim, and
(c) permit the Indemnifying Party to control the defense and settlement of the
Claim, provided that the Indemnifying Party may not settle the Claim without the
Indemnified Party's prior written consent (which will not be unreasonably
withheld). Further, the Indemnified Party (at its cost) may participate in the
defense and settlement of the Claim with counsel of its own choosing. Unless
the Indemnifying Party notifies the Indemnified Party in writing within five (5)
days of its receipt of notice of any Claim that it irrevocably elects not to
assume the defense of such Claim, the Indemnifying Party shall be deemed to have
elected to assume the defense of such Claim. If the Indemnifying Party elects
not to assume the defense of any Claim, or having assumed the defense of any
Claim fails to pursue diligently the defense thereof, the Indemnifying Party
shall be deemed to have irrevocably waived any right to participate in or
control the defense or settlement of such Claim and the Indemnified Party shall
be entitled to sole control of the defense and settlement of such Claim (without
limitation of the Indemnifying Party's indemnity obligations under this Section
7).
-16-
Section 8. Disclaimers, Limitations and Reservations
8.1 DISCLAIMER OF WARRANTIES. EXCEPT AS PROVIDED IN SECTION 7.1 ABOVE,
NEITHER PARTY MAKES, AND EACH PARTY HEREBY WAIVES AND DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES REGARDING THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, INCLUDING (WITHOUT LIMITATION) ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OR IMPLIED
WARRANTIES ARISING OUT OF COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF
TRADE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING (A) THE AMOUNT
OF SALES REVENUES THAT MAY OCCUR DURING THE TERM, AND (B) ANY ECONOMIC OR OTHER
BENEFIT THAT THEY MIGHT OBTAIN THROUGH ITS PARTICIPATION IN THIS AGREEMENT
(OTHER THAN THE SPECIFIC SUMS TO BE PAID PURSUANT TO THIS AGREEMENT).
8.2 No Consequential Damages. EXCEPT TO THE EXTENT AWARDED TO A THIRD
PARTY IN A JUDGMENT AGAINST WHICH A PARTY IS ENTITLED TO INDEMNIFICATION
PURSUANT TO SECTION 7.2, OR TO THE EXTENT ARISING OUT OF ANY BREACH OF SECTION
11.4, NEITHER PARTY WILL BE LIABLE (WHETHER IN CONTRACT, WARRANTY, TORT
(INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE), PRODUCT LIABILITY OR OTHER THEORY),
TO THE OTHER PARTY OR ANY OTHER PERSON OR ENTITY FOR COST OF COVER OR FOR ANY
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT
LIMITATION DAMAGES FOR LOSS OF PROFIT, REVENUE, BUSINESS OR DATA) ARISING OUT OF
THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISEDOF THE POSSIBILITY OF SUCH
COSTS OR DAMAGES. FOR THE AVOIDANCE OF DOUBT, THE PARTIES HEREBY ACKNOWLEDGE
AND AGREE THAT NOTHING IN THIS SECTION 8.2 IS INTENDED TO LIMIT ANY RIGHT OF
ACSI TO RECEIVE LIQUIDATED DAMAGES AS SET FORTH IN SECTION 10.5.2.
8.3 Limitation of Damages. EXCEPT FOR LIABILITIES UNDER SECTION 7.2,
NEITHER PARTY'S AGGREGATE LIABILITY ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER IN CONTRACT, TORT
(INCLUDING NEGLIGENCE), WARRANTY OR OTHERWISE, SHALL EXCEED [***].
8.4 Third Party Infringement Claims. In the event that either Party
receives from a third party a bona fide claim of infringement concerning any
advertising materials or other content supplied by the other Party, such Party
may immediately remove such materials
---------
*** Confidential Information has been omitted and has been filed separately with
the Securities and Exchange Commission.
-17-
or content from its Web Site at its sole discretion, pending receipt of non-
infringing replacement materials or content or satisfactory resolution of such
claim, and any such removal shall not constitute a breach of this Agreement.
Section 9. Exclusivity.
9.1 ACSI
9.1.1 Exclusive Spoken-Word Audio Products. During the Term, [***],
ACSI will not offer or sell through the ACSI Site, or authorize any third party
to sell through the ACSI Site, any Exclusive Spoken-Word Audio Products; [***].
9.1.2 [***]
9.2 [***]
9.3 [***]
9.4 Records; Audit. Each Party will, during the Term and for a period of
one (1) year thereafter, maintain complete and accurate books and records
sufficient to verify its compliance or non-compliance with the provisions of
this Section 9 (and, in the case of Company, Section 5.4). Each Party (the
"Audited Party') will, upon at least thirty (30) days' prior written request by
the other Party (the "Auditing Party"), allow an independent certified public
accounting firm selected by the Auditing Party and reasonably acceptable to the
Audited Party to audit such books and records at the Audited Party's premises to
the extent necessary to verify the Audited Party's compliance or non-compliance
with the provisions of this Section 9 (or, in the case of Company, Section 5.4);
provided, that: (a) any such audit is conducted during normal business hours and
in a manner designed to not unreasonably interfere with the Audited Party's
ordinary business operations; (b) audits may not occur more frequently than once
every twelve (12) months; and (c) each such audit may only cover the period
commencing after the period covered by the last audit conducted pursuant to this
Section, if any. The Auditing Party agrees that any information learned or
disclosed by its auditor in connection with such audit is Confidential
Information of the Audited Party. If any such audit reveals any material non-
compliance with the provisions of this Section 9 by the Audited Party, the
Audited Party shall, within ten (10) days of its receipt of an invoice therefor,
reimburse the Auditing Party for all reasonable out-of-pocket fees and expenses
incurred by the Auditing Party in connection with the applicable audit. If any
such audit reveals any underpayment of any sums payable pursuant to Section 5.4,
Company will promptly remit to ACSI the amount of the underpayment; and, if the
amount of such underpayment is five percent (5%) or more for any audited period,
Company shall, within ten (10) days of its receipt of an invoice therefor,
reimburse ACSI for all reasonable out-of-pocket fees and expenses incurred by
ACSI and its Affiliates in connection with the applicable audit together with
interest on any underpayment as provided in Section 5.5.
---------------
***Confidential Information has been omitted and has been filed separately with
the Securities and Exchange Commission.
-18-
Section 10. Term and Termination
10.1 Term. The term of this Agreement will commence on the Effective
Date, and unless earlier terminated as provided elsewhere in this Agreement,
will end automatically upon the end of Year 3.
10.2 Termination for Breach. Without limiting any other rights or
remedies (including, without limitation, any right to seek damages and other
monetary relief and ACSI's rights under Section 10.3 or Company's rights under
Section 10.4) that either Party may have in law or otherwise, either Party may
terminate this Agreement if the other Party materially breaches its obligations
hereunder, provided that, except as provided in Section 10.3 and 10.4, (a) the
non-breaching Party sends written notice to the breaching Party describing the
breach, and (b) the breaching Party does not cure the breach within thirty (30)
days following its receipt of such notice; provided further, however, that
without limitation of ACSI's rights under Section 10.3 if the conditions set
forth in that Section are satisfied, in the event of any failure by Company to
comply with the customer service requirements specified in Section 2.4 and
Exhibit B, ACSI shall only be entitled to terminate this Agreement by reason of
such failure if it is material, ACSI has notified Company of such non-compliance
and Company has not come into compliance with such requirements within sixty
(60) days from the date of the non-breaching Party's notice.
10.3 ACSI Termination. In the event that: (a) Company at any time
engages in any criminal conduct, fraud, dishonesty or other behavior that is
materially harming the goodwill or reputation of ACSI or its Affiliates or the
ACSI Site; (b) Company has consistently failed to abide by the technical and
customer service requirements described in Section 2.4 or has failed to
integrate the ACSI Site Functionality into the Spoken-Word Audio Sub-Section
and/or Mirror Company Site as required by the Phase II Development Plan (so long
as such failure is not a result of acts or omissions by ACSI); or (c) Company
consistently fails to pay bona fide debts as they legally come due, institutes
or has instituted against it any bankruptcy, reorganization, debt arrangement,
assignment for the benefit of creditors, or other proceeding under any
bankruptcy or insolvency Law or dissolution, receivership, or liquidation
proceeding (and, if such proceeding is instituted against it, such proceeding is
not dismissed within one hundred twenty (120) days), the same shall be deemed a
material breach of this Agreement which is not susceptible to cure, and ACSI
shall be entitled to terminate this Agreement upon written notice to Company.
[***]
10.4 Company Termination. In the event that (a) ACSI has failed to
integrate the ACSI Site Functionality into the Spoken-Word Audio Sub-Section
and/or Mirror Company Site as required by the Phase II Development Plan (so long
as such failure is not a result of acts or omissions by Company); or (b) ACSI
consistently fails to pay its bona fide debts as they legally come due,
institutes or has instituted against it any bankruptcy, reorganization, debt
arrangement, assignment for the benefit of creditors, or other proceeding under
any bankruptcy or insolvency Law or dissolution, receivership, or liquidation
proceeding (and, if such proceeding is instituted against it, such proceeding is
not dismissed within one hundred twenty (120) days), the same shall be deemed a
material breach of this Agreement which is
---------------
***Confidential Information has been omitted and has been filed separately with
the Securities and Exchange Commission.
-19-
not susceptible to cure, and Company shall be entitled to terminate this
Agreement upon written notice to ACSI.
10.5 Effect of Termination.
10.5.1 General. Upon termination of this Agreement, each Party in
receipt, possession or control of the other Party's intellectual or proprietary
property, information and materials (including any Confidential Information)
pursuant to this Agreement must return to the other Party (or at the other
Party's written request, destroy and certify in writing such destruction) such
property, information and materials. In addition, except as provided in Section
10.5.2, Company will promptly upon any termination of this Agreement pay to ACSI
a prorated portion of the Annual Fee due for the Year in which termination is
effective; provided, however, that if Company terminates this Agreement by
reason of ACSI's breach hereof, Company shall have no further payment
obligation, and, if such termination occurs at any time during the Refund
Period, ACSI shall promptly either (a) refund to Company a percentage of the
Annual Fees paid pursuant to Section 5.2.1 equal to the Proration Percentage,
or, at ACSI's option, (b) cause the transfer and assignment to Company of a
percentage of the Shares delivered pursuant to Section 5.3 equal to the
Proration Percentage. Sections 6 through 8, 10 and 11 will survive the
termination or expiration of this Agreement.
10.5.2 [***]
10.5.3 Construction by Court. To the extent that any court of
competent jurisdiction determines that any provision of Section 10.5.2 is for
any reason unlawful, invalid, in violation of public policy or otherwise
unenforceable in whole or in part, such provision shall be narrowed in scope to
the extent necessary to make the same lawful, valid and enforceable while as
nearly as possible reflecting the intent of the Parties as expressed in this
Agreement.
10.5.4 User Transition. Upon any termination or expiration of the
Term the Parties will cooperate in good faith to promote a smooth customer
transition, and in any event, Company will, at ACSI's option, continue to
operate the Mirror Company Site and offer Spoken-Word Audio Products through the
Spoken-Word Audio Sub-Section in accordance with the terms of this Agreement for
a period of up to six (6) months following such termination.
10.5.5 Phase II Development Plan. Notwithstanding any other
provision of this Agreement, the Parties acknowledge and agree that no failure
by the Parties to develop the Phase II Development Plan as contemplated by
Section 4.1.3 shall be deemed, in itself, a breach of this Agreement by either
Party (and therefore that such occurrence shall not, in itself, give rise to any
of the remedies specified in Section 10.5.1 or Section 10.5.2).
---------------
***Confidential Information has been omitted and has been filed separately with
the Securities and Exchange Commission.
-20-
Section 11. Miscellaneous
11.1 Tax Treatment.
11.1.1 The Parties acknowledge and agree that this Agreement and
the transactions contemplated hereby are not intended to create any jurisdiction
or authority for any governmental authority to impose any obligation to collect
any sales tax, use tax or similar tax in connection with any sales of products
by either Party or its Affiliates. Accordingly, each Party agrees to take such
action as the other Party may reasonably request (including, without limitation,
execution of affidavits and other documents) to avoid or curtail the imposition,
by reason of this Agreement or the transactions contemplated hereby, of any such
obligation on such Party or its Affiliates, or the establishment of a nexus for
tax purposes sufficient to grant any jurisdiction the authority to levy any
sales tax, use tax or similar tax on sales of products by such Party or its
Affiliates in connection with this Agreement; provided, however, that nothing in
this Section 11.1.1 shall limit Company's obligations under Section 11.1.2.
11.1.2 Company will collect and pay, and indemnify and hold
harmless ACSI and its Affiliates from, any sales, use, excise, import or export,
value added or similar tax or duty not based on ACSI's or its Affiliates' net
income, including penalties and interest, costs associated with the collection
and withholding thereof and attorneys fees in connection therewith, arising out
of or in connection with this Agreement or Company's advertisement, offer or
sale of any products.
11.2 Insurance. Company will at its expense, prior to the Launch Date
obtain, and thereafter throughout the Term and for a period of six (6) months
thereafter maintain, such policy or policies of insurance as is commercially
reasonable for the transactions and business contemplated by this Agreement.
Without limiting the generality of the foregoing, Company will ensure that such
policies contain a waiver of subrogation against ACSI, name ACSI and its
assignees as additional insureds. Company will not modify or terminate any
coverage without giving at least thirty (30) days' prior written notice to ACSI.
Upon request from ACSI, Company will furnish to ACSI certificates of insurance
and such other documentation relating to such policies as ACSI may reasonably
request.
11.3 Independent Contractors. The Parties are entering this Agreement
as independent contractors, and this Agreement will not be construed to create a
partnership, joint venture or employment relationship between them. Neither
Party will represent itself to be an employee or agent of the other or enter
into any agreement or legally binding commitment or statement on the other's
behalf of or in the other's name.
11.4 Nondisclosure. Each Party will protect the Confidential
Information of the other Party from misappropriation and unauthorized use or
disclosure, and at a minimum, will take precautions at least as great as those
taken to protect its own confidential information of a similar nature, but in no
event with less than reasonable care. Without limiting the foregoing, the
Receiving Party will: (a) use such Confidential Information solely for the
purposes for which it has been disclosed; and (b) disclose such Confidential
-21-
Information only to those of its and its Affiliates' employees, agents, and
consultants who have a need to know the same for the purpose of performing this
Agreement and who are informed of and agree to a duty of nondisclosure. The
Receiving Party may also disclose Confidential Information of the Disclosing
Party to the extent necessary to comply with applicable Law or legal process or
pursuant to a registration report or exhibits thereto filed or to be filed with
the Securities and Exchange Commission, listing agency or any stock securities
commission, or any other associated filings, provided that the Receiving Party
uses gives the Disclosing Party not less than ten (10) days' prior written
notice thereof and complies with all reasonable requests of the Disclosing Party
to minimize the extent or scope of any such disclosure. Upon request of the
other Party, or in any event upon any termination or expiration of the Term,
each Party shall return to the other or destroy (and certify in writing such
destruction) all materials, in any medium, which contain, embody, reflect or
reference all or any part of any Confidential Information of the other Party.
11.5 Costs. Except as expressly provided herein, each Party will be
responsible for all costs and expenses incurred by it in connection with the
negotiation, execution, delivery and performance of this Agreement.
11.6 Notices. Any notice or other communication under this Agreement
given by either Party to the other Party will be in writing and, to be
effective, must be sent to the intended recipient by prepaid registered letter,
receipted commercial courier, or electronically receipted facsimile transmission
(acknowledged in like manner by the intended recipient) at its address specified
below its signature at the end of this Agreement, and in the case of ACSI, with
a copy to ▇▇▇▇▇▇.▇▇▇, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, ▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: General Counsel and in the case of
Company, with a copy to Audible Inc., Facsimile ▇▇▇-▇▇▇-▇▇▇▇, Attn: Vice
President, Business & Legal Affairs; provided, that no notice of termination of
this Agreement shall be deemed properly given unless sent by prepaid registered
mail to such address(es) and to the attention of such officer(s). Either Party
may from time to time change such address or individual by giving the other
Party notice of such change in accordance with this Section 11.6.
11.7 Assignment. Company may not assign or delegate this Agreement or
any of its rights or obligations hereunder, whether voluntarily, involuntarily,
by operation of Law or otherwise, without ACSI's prior written consent, which
consent shall not be unreasonably withheld or delayed, except that Company may
assign this Agreement to any direct or indirect wholly owned subsidiary in
connection with any corporate reorganization undertaken for the purpose of
minimizing the tax liability of Company and its Affiliates or other bona fide
corporate purpose or in connection with any Change of Control [***]. Subject to
the preceding two sentences, this Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their successors and assigns. ACSI may
assign this Agreement to (a) any corporation or other entity resulting from any
merger, consolidation, or other reorganization involving ACSI, (b) any of its
Affiliates, or (c) any person or entity to which it transfers all or
---------------
***Confidential Information has been omitted and has been filed separately with
the Securities and Exchange Commission.
-22-
substantially all of its assets relating to the Spoken-Word Audio Sub-Section;
provided that the assignee agrees in writing to be bound by all the terms and
conditions of this Agreement. Subject to the foregoing, this Agreement will be
binding on and enforceable by the Parties and their respective successors and
permitted assigns.
11.8 Nonwaiver. To be effective, any waiver by a Party of any of its
rights or the other Party's obligations under this Agreement must be made in a
writing signed by the Party to be charged with the waiver. No failure or
forbearance by either Party to insist upon or enforce performance by the other
Party of any of the provisions of this Agreement or to exercise any rights or
remedies under this Agreement or otherwise at law or in equity shall be
construed as a waiver or relinquishment to any extent of such Party's right to
assert or rely upon any such provision, right, or remedy in that or any other
instance; rather the same shall be and remain in full force and effect.
11.9 Counterparts; Transmitted Copies. This Agreement may be executed
in any number of counterparts, each of which will be deemed an original, but all
of which taken together will constitute one and the same instrument. To expedite
the process of entering into this Agreement, the Parties acknowledge that
Transmitted Copies of the Agreement shall be equivalent to original documents
until such time (if any) as original documents are completely executed and
delivered. "Transmitted Copies" shall mean copies which are reproduced or
transmitted via facsimile, or another process of complete and accurate
reproduction and transmission.
11.10 Headings. The headings of sections and subsections of this
Agreement are for convenience of reference only and are not intended to
restrict, affect or otherwise influence the interpretation or construction of
any provision of this Agreement.
11.11 Choice of Law. This Agreement will be interpreted, construed and
enforced in accordance with the Laws of the State of Washington, without
reference to its choice of Laws rules.
11.12 Venue. Company hereby irrevocably consents to non-exclusive
personal jurisdiction and venue in the state and federal courts located in King
County, Washington, with respect to any claim, action or proceeding arising out
of or related to this Agreement and agrees not to commence or prosecute any such
claim, action or proceeding other than in the aforementioned courts.
11.13 Entire Agreement. This Agreement (a) represents the entire
agreement between the Parties with respect to the subject matter hereof and
supersedes any previous or contemporaneous oral or written agreements regarding
such subject matter and (b) may be amended or modified only by a written
instrument signed by a duly authorized agent of each Party. No breach of this
Agreement by either Party shall affect the rights or obligations of either Party
under any other Agreement between the Parties; rather, the same will remain in
full force and effect.
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ACSI Company:
---- --------
▇▇▇▇▇▇.▇▇▇ Commerce Services, Inc. Audible Inc.
/s/ /s/ ▇▇▇ ▇▇▇▇
---------------------------------- --------------------------------------
By (Sign) By (Sign)
Vice President Founder, Chairman, Acting CEO
---------------------------------- --------------------------------------
Title Title
1/30/2000 1/30/2000
---------------------------------- --------------------------------------
Date Date
Notice Address: Notice Address:
[***] [***]
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***Confidential Information has been omitted and has been filed separately with
the Securities and Exchange Commission.
-24-
