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EXHIBIT 10.6
AEC ONE STOP GROUP, INC.
DATABASE, ON-LINE INTERNET RETAIL STORE
AND CONSUMER DIRECT FULFILLMENT SERVICES AGREEMENT
Dated as of August 15, 1998
1. SERVICES: AEC One Stop Group, Inc. (hereafter referred to as "AEC") is in the
business of wholesaling and fulfilling orders for pre-recorded audio and video
products, maintaining certain associated databases, and designing and developing
certain technologies that help its retail customers increase sales of products
found in such databases. Company wishes to engage AEC to provide, by itself and
through its affiliated entities, the following services and licenses to The
Ultimate Band List, LLC (hereafter referred to as "Company"):
- To develop, design and create a generic internet music retail storefront
for Company (the "Store") tentatively called "The UBL Store," to be
linked with Company's Internet Web Site called "The Ultimate Band List"
located under the domain name ▇▇▇.▇▇▇.▇▇▇ ("▇▇▇.▇▇▇");
- To operate and maintain the Store on behalf of Company, until such time
as Company and AEC mutually agree to transition the continued operation
and maintenance of the Store from AEC to Company;
- To handle all customer orders placed through the Store, including by
processing all credit card transactions and providing necessary customer
support services in accordance with [Exhibit 1 - Customer Service]
hereto, until such time as Company and AEC mutually agree to transition
the continued customer order handling from AEC to Company;
- To perform as Company's preferred product distributor and fulfillment
service provider with respect to pre-recorded audio-only product in all
formats ("Records) sold through the Store; and
- To receive, warehouse and manage Company's inventory of all such other
products ("Consignment Product") as may be offered for sale on the Store
from time to time (e.g., apparel, concert tickets, posters, tour
memorabilia, collectible items and other merchandise), and fulfill all
orders thereof on Company's behalf.
- To license to Company, for use on the Store as well as on ▇▇▇.▇▇▇, the
electronic database versions of the general interest music and movie
guides published under the trade names "All-Music Guide" and "All-Movie
Guide" (individually and collectively, the "AMG Database"), which
databases are compiled by AEC;
2. EXCLUSIVITY: During the term of this Agreement, Company agrees (subject
to the terms and conditions of this Agreement): (i) to use AEC as the
exclusive distributor and fulfillment service provider for the Store in
the United States and Canada with respect to those Records found in
AEC's product availability file, as well as Records that AEC can secure
on behalf of Company as a special order, but specifically excluding
Commercially Unavailable Product; and (ii) not to use on the Store a
third party database service similar and competitive to the "All-Music
Guide" database.
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3. TERM: Subject to the respective termination rights of the parties set forth
in Annex A hereto, this Agreement shall have a term of five (5) years commencing
on June 1, 1998, and shall automatically renew for additional one (1) year terms
unless either party notifies the other of termination at least 90 days prior to
the expiration of the then current term.
4. GENERAL TERMS AND CONDITIONS: All of the above terms are subject to the
General Terms and Conditions attached hereto as Annex A and incorporated herein
by reference. Additionally, shipping and return policies and procedures,
electronic interfacing protocols, representations and warranties, choice of law
provisions, etc., are all as contained in said Annex A, and such terms and
conditions are an integral part of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
THE ULTIMATE BAND LIST, LLC AEC ONE STOP GROUP, INC.
By: ARTISTdirect New Media, LLC By: [Illegible]
Its: Manager --------------------------------
Its:
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By: ARTISTdirect, LLC
Its: Member
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
Its: Member
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Member
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ANNEX A - GENERAL TERMS AND CONDITIONS
TO AEC ONE STOP GROUP, INC.
DATABASE, ON-LINE INTERNET RETAIL STORE
AND CONSUMER DIRECT FULFILLMENT SERVICES AGREEMENT
In consideration of the mutual agreements and covenants contained herein, the
parties hereto agree as follows:
1. STORE DEVELOPMENT AND OPERATION.
1.1 Store Development:
1.1.1 AEC will, at its sole expense, design, create and develop the Store on
behalf of, and in cooperation with, Company, pursuant to the specifications set
forth in Exhibit 2 attached hereto.
1.1.2 AEC shall provide software repairs to the Store for the development effort
completed by AEC and as defined in said Exhibit 2. It is understood by both
parties that on-going enhancements of the Store shall be regularly required to
keep the Store compelling and competitive in the marketplace. Therefore, Company
and AEC agree that a transition period is required after AEC completes its
initial service role in the development of the Store and to shift the on-going
development effort required on the Store to the Company for its control and
continued improvement.
1.1.3 AEC shall use its best commercially reasonable efforts to make available
to Company the required information to facilitate the Transition (as defined
below) in a manner that minimizes interruptions to each party. AEC shall deliver
to Company the latest version of the source code for the Store as and when it is
updated, but in any event no less frequently than twice per month. Upon
Company's request, but in no event later than upon the commencement of the
Transition, AEC shall deliver to Company complete documentation for the source
code.
1.1.4 Company shall cooperate with AEC to develop the technical linkages between
the Store, ▇▇▇.▇▇▇ and the AMG Database. AEC will not intentionally design or
develop the Store in a manner that would prevent Company from adapting the Store
to accommodate the inventory availability databases used by other fulfillment
providers if AEC is no longer fulfilling Product for the Store.
1.2 Store Hosting:
1.2.1 Prior to the Transition, AEC shall host and maintain the Store. In this
regard, Company shall provide AEC with one or more servers (which shall remain
the property of Company and be returned to Company as part of the Transition) to
be used for workload balancing and redundancy for the Store. AEC shall use its
current, recently upgraded T1 line to support the Store.
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1.2.2 Company agrees to reimburse AEC for the following costs reasonably
incurred by AEC and directly associated with hosting and maintaining the Store:
(i) [***].
1.3 Store Transition:
1.3.1 The parties agree that a transition of the hosting and maintenance of the
Store from AEC to Company (the "Transition") shall be made on or about February
28, 1999 (or such alternative time as the parties hereto may mutually agree).
1.3.2 AEC shall provide technical support for the Store, including timely
maintenance and repair on any of the development completed on the Store features
developed by AEC, for three (3) months following the Transition. In the event
Company continues to require AEC technical support for the Store after such
three (3) month period, Company and AEC shall negotiate a reasonable monthly fee
payable by Company to AEC for such support services.
1.3.3 Company agrees to reimburse AEC for all reasonable ISP costs incurred by
AEC in connection with the Transition.
2. ORDER FULFILLMENT. Subject to the terms of this Section 2, AEC shall supply
to customers all Records and Consignment Product (collectively, "Product")
ordered by the customers of the Store (the "Customers"). In connection
therewith, AEC shall perform the fulfillment, technical and professional
services described below.
2.1 Fulfillment Services:
2.1.1 AEC shall process orders received from Store and arrange to have the
ordered Product shipped to the Customer. All orders will be quality controlled
through advanced sorting and UPC verification methods. However, AEC will have no
obligation to ship "Commercially Unavailable Product," which shall mean any
Record or other item of Product which, at the time the order for such item is
ordered by a Customer or during the process of such order being fulfilled, is
not in the inventory of AEC and, with respect to Records only: (a) is no longer
manufactured; (b) is not reasonably available to AEC from the company that
releases such product; or (c) has been deleted from the catalog of the company
that releases such items.
2.1.2 The Store shall provide advanced on-line connectivity in order to query or
commit Product orders for Customers in real time fulfillment.
2.1.3 AEC shall host a "Remote Order Entry" application that will permit Company
to manually enter Customer orders, cancel or delete orders, query order status
and process authorization for product returns, directly from the AEC fulfillment
computer system. This application will permit Company to access Customer orders.
2.1.4 AEC shall be an invisible fulfillment arm. AEC will produce custom Company
invoices with Company's logo and store policies, shipping labels and packaging
consistent with AEC technologies and capabilities that will accompany an order
to identify the product/order as from
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[***] Confidential treatment has been requested for the bracketed portion. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
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Company. AEC will affix stickers and any other identification labels as Company
may request from time to time in respect of all orders of Product, for no
additional charge to Company so long as there is no more than one label per unit
of Product and it is compatible with AEC's material and handling technology. In
addition, AEC will, at no charge, insert promotional materials (e.g., stickers
bearing Company's logo, coupons, etc.) on behalf of Company with each shipment,
subject to the understanding that all costs reasonably incurred by AEC and
associated with the inserts in excess of the first insert per package, shall be
borne by Company. AEC shall bear the costs of invoices and shipping labels,
provided Company accepts AEC's invoice and shipping label formats (samples of
which are attached hereto as Exhibit 3). Special handling considerations not
otherwise addressed herein shall be reviewed during formal operations meetings
and it is understood that AEC and Company shall negotiate in good faith as to
the cost, if any, which will be charged for such special handling.
2.1.5 AEC will make available account representatives who will be responsible
for using reasonable efforts to meet all Company's customer service, product
sales, and technological needs for Company to manage the Store on an on-going
basis.
2.2 Shipping and Return Procedures:
2.2.1 Other than with respect to Commercially Unavailable Product, AEC
represents that (i) all Product for which a Verified Order has been received by
AEC prior to 3:00 PM Eastern Time shall be shipped on a same-day basis, and (ii)
no less than 95% of all units of Product shall be shipped from an AEC facility
within 24 hours of AEC's receipt of a Verified Order therefor. No Product shall
be shipped or otherwise released by AEC to any third party other than pursuant
to a Verified Order. As used herein, the term "Verified Order" means an order
that provides all of the relevant Customer information, including valid account,
address, credit card information and Product related information and for which
transaction authorization has been received by Company's (or AEC's, if
applicable) credit card contractor or payment from the Customer has otherwise
been received by Company.
2.2.2 Current methods of shipment include: United States Postal Service: and
United Parcel Service. AEC shall offer to Company the full range of shipping
options to Customers of Company at no additional cost above fees charged by the
shipping carriers. [***].
2.2.3 Company shall designate the return policies of the Store (which current
policies are set forth on Exhibit 4 attached hereto and shall not be subject to
significant changes in respect of Records without AEC's consent). AEC shall not
issue a refund or other credit to any Consumer for returned Product without
first verifying that Company has issued an appropriate return authorization for
the Product concerned. Company shall assume and pay for all shipping and other
costs incurred in respect of returned, exchanged, refused and undeliverable
Product, including all shipping and other costs incurred with respect to the
processing of an order if the Customer provides incorrect information to AEC, or
if Company causes incorrect order information (i.e., other than as provided by
the Customer) to be provided to AEC. Notwithstanding the foregoing, AEC shall be
responsible for all Product either incorrectly shipped to a Customer or damaged
while in transit to the Customer, but only if such Product was shipped via an
insured and traceable carrier. In such cases, AEC shall assume and pay for all
shipping and other costs incurred in the return or exchange of Product and will
ensure that Company incurs no product cost for the involved transaction. With
respect to all unopened
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[***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
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Records returned by a Customer in accordance with the return policies of the
Store other than defective, damaged or incorrectly shipped Records, Company
shall receive full credit therefor less a return handling fee of [***] per
Record; provided AEC returns such Record to its inventory for resale or is able
to return it to the distributor for a credit.
2.2.4 Company shall also be able to receive electronic updates on orders
shipped, including shipping methods, tracking numbers, fill, invoice totals, and
all pertinent data reasonably requested by Company.
2.3 Prices; Costs; Fees:
2.3.1 Company shall designate the price of all Product offered for sale on the
Store, as well as all other amounts to be charged to the Customers (e.g.,
shipping and handling charges).
2.3.2 Company shall purchase from AEC each Record fulfilled by AEC hereunder at
competitive prices (currently for a purchase price equal to that set forth on
Exhibit 5 attached hereto). The parties acknowledge that such prices may be
subject to such increases or decreases (e.g., if the manufacturers of Records
adjust their prices to AEC) as mutually agreed by the parties from time to time.
Such prices are inclusive of the Consumer Direct Fulfillment services normally
charged for such activities as pick, pack and handling of individual customer
orders.
2.3.3 Notwithstanding the foregoing, in order effectively to promote and attract
Customers to the Store, the parties acknowledge the value of Company offering
for sale on the Store selected Records at special marked-down prices for limited
periods of time (a "Limited Special"). Company shall advise AEC of the
applicable SKU's and time periods for which Company wishes to conduct a Limited
Special at least thirty (30) days prior to the scheduled commencement thereof,
and AEC agrees to use its best commercially reasonable efforts to offer such
SKU's to Company at a discounted price, provided that AEC shall not be obligated
to so discount more than [***] SKU's as part of any particular Limited Special
or during any particular month.
2.3.4 Company shall pay AEC a fulfillment fee for each item of Consignment
Product fulfilled by AEC hereunder equal to that set forth on Exhibit 6 attached
hereto.
2.3.5 Subject to paragraph 2.2.2 above, Company shall reimburse AEC for its
actual shipping expenses to ship ordered Product to the Customers. The shipping
rates of AEC's shippers and carriers that shall be charged to Company are set
forth on Exhibit 7 attached hereto. Subject to paragraph 2.2.2 above, shipping
rates are subject to changes generally noticed to trade and Company by AEC.
2.3.6 Company shall be responsible for the cost of actual packaging materials
(e.g., shipping boxes) required for secure shipment of Consignment Product (as
opposed to shipment of Records, for which the costs of packaging materials are
included in the prices charged to Company hereunder) to Customers. Such costs
are set forth on Exhibit 8 attached hereto.
2.3.7 Company shall pay AEC a [***] service charge per Customer inquiry handled
by AEC pursuant to Section 3 below, including per manual order processed by AEC
(i.e., orders received by AEC other than via the interactive Store electronic
order processing, such as via fax, phone or email). The parties agree to
negotiate a reasonable increase or decrease of such service charge if the volume
of Customer inquiries and/or AEC's associated costs prove significantly
different than expected by the parties as of the execution hereof.
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[***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
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2.3.8 Except as otherwise expressly provided herein, AEC shall impose no
additional incremental charges to Company for handling Records and Consignment
Product to be shipped to Company's customers hereunder.
2.4 Foreign Fulfillment: It is the intention of the parties that AEC shall
initially fulfill orders of Product hereunder throughout the world. However,
if, during the term of this Agreement, Company desires to fulfill orders of
Records hereunder for distribution in one (1) or more foreign territories
through a fulfillment operation located outside the United States and Canada,
it shall notify AEC of the major terms and conditions upon which Company wishes
to obtain fulfillment in the territory(ies) concerned (the "Offer"). So long as
AEC has, at the time of the Offer, directly or through an affiliate, a
fulfillment operation in place capable of satisfactorily servicing the
applicable territory(ies), the following shall apply: (i) AEC shall have the
right, exercisable within ten (10) business days of the date of the Offer, to
notify Company that it wishes to negotiate with Company in respect of the
fulfillment of Records for the Store in such territory(ies); (ii) if AEC
exercises such right within said ten (10) business day period, Company shall
not enter into an agreement with any third party in respect of the fulfillment
of Records for the Store in such territory(ies) for a period of thirty (30)
days after the date of the Offer; and (iii) after such thirty (30) day period,
Company and AEC have not reached an agreement, Company shall have the right to
enter into an agreement with any third party for the fulfillment of Records in
such territory(ies), but only if the terms of such agreement are not less
favorable to Company than those set forth in AEC's last offer to Company and
provided that such agreement is consummated within one hundred eighty (180)
days after the date of the Offer (failing which, the rights of AEC under this
paragraph 2.4 will be revived).
3. CUSTOMER SERVICE.
3.1 Subject to paragraph 2.3.7 above, AEC shall initially provide, on behalf of
Company, customer support for those orders placed by Customers through the
Store. It is contemplated that AEC shall provide such services during the
initial nine (9) months of the term of this Agreement. The period during which
AEC provides such services is sometimes referred to herein as the "AEC Service
Period." These services shall include retaining and supervising customer support
personnel who will respond to Customer inquiries about products ordered via the
telephone, fax, and on-line. AEC shall also provide office space and equipment
for that personnel. It is further contemplated that, after said nine (9) month
period, Company shall assume this Customer support function, subject to Company
notifying AEC of its intention to do so at least 60 days in advance. The parties
understand that when AEC provides Customer support, it will be provided so the
Customer perceives that such support is being provided by Company. AEC (or
Company, as applicable) shall respond promptly and professionally to Customers'
questions regarding the procedure for ordering Products and any other questions
regarding their orders. In communicating with Customers in connection with
Customers' inquiries, AEC and Company shall use e-mail or other online
connectivity to Customers whenever reasonably possible.
3.2 AEC will provide Company's customers with a toll-free (800 phone number)
call center and AEC will establish and maintain an e-mail customer service
address. AEC will maintain Company's consumer call center at its Florida
headquarters. Consumer Call Center operates Monday through Friday (excluding
holidays), 9:00 AM to 6:00 PM, Eastern Time. Incoming phone calls received after
normal coverage hours are handled via e-mail and AEC will respond to all its
customer email messages the following working day. The services to be provided
by AEC under this Section 3 are further outlined on Exhibit 1 attached hereto.
3.3 The Store will contain a prominently featured hyperlink, with the AMG logo,
to ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇. In the event Company receives corrections, additions,
errors, and other comments about the AMG Database from the Store's users,
Company shall forward those comments to the AEC staff. Additionally, both
Company and AEC will review, use and evaluate statistical information collected
via the Store that indicates Customer preferences, purchasing patterns and
similar buying behaviors.
3.4 During the AEC Service Period, all credit card transactions shall be handled
by AEC, at no additional charge, under Company's credit card merchant clearing
agreement. If AEC should nevertheless receive
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any monies from a Customer in respect of Product sold on the Store, it will
promptly pay over 100% of such monies to Company.
4. DATABASES.
4.1 AMG Database:
4.1.1 AEC hereby irrevocably grants to Company the non-exclusive license
(without the right of sub-license, whether to Company's affiliates or
otherwise), throughout the universe, to use, copy, display and otherwise exploit
the AMG Database, and any portions thereof, and the AMG Marks (as defined in
Section 5 below), solely in and as part of the Store and/or ▇▇▇.▇▇▇.
4.1.2 Subject to paragraph 4.3.7 below, the period of the license granted to
Company pursuant to this paragraph 4.1 shall commence on June 1, 1998 and end on
the date five (5) years after the expiration or termination of the term of this
Agreement (the "AMG License Period").
4.1.3 The rights licensed to Company hereby in respect of the AMG Database shall
include all future revisions, enhancements and updates thereto. In this regard,
AEC shall deliver to Company an updated copy of the most recent version of the
AMG Database no later than upon the fifth day of each month of the AMG License
Period (unless otherwise agreed upon by both parties) in a format to be mutually
agreed upon. Delivery shall be by FTP pickup, at a designated site for Company's
site, unless otherwise agreed by the parties. Any expenses for any other method
of delivery shall be borne by Company.
4.1.4 With respect to musical recordings sold on the Store during the term of
this Agreement via a digital transferring process when the AMG Database is used
to help promote and feature such sales, AEC shall receive [***] of the revenues
derived from such sales and actually received by Company [***].
4.1.5 If Company continues to use the AMG Database on the Store and/or ▇▇▇.▇▇▇
during the portion of the AMG License Period occurring after the expiration or
termination of the term of this Agreement, then, in consideration of the license
granted to Company under this paragraph 4.1, Company agrees to pay AEC a royalty
equal to [***] of the Net Monthly Sales generated after the expiration or
termination of the term of this Agreement, but only for as long as Company
continues to use the AMG Database. As used herein, the term "Net Monthly Sales"
shall mean amount of revenues generated by the Store (and ▇▇▇.▇▇▇, to the
extent the AMG Database is used to help promote and feature the applicable
sales), less any applicable shipping costs, handling charges, returns and
allowances, sales tax and various credit card charges.
4.1.6 For purposes of Section 365(n) of the United States Bankruptcy Code, the
licenses granted to Company under this paragraph 4.1 shall be considered
licenses of rights to "intellectual property" as defined thereunder.
Notwithstanding any provision contained herein to the contrary, if the party
that grants such license is under any proceeding under the United States
Bankruptcy Code and the trustee in bankruptcy of such party, or such party, as a
debtor in possession, rightfully elects to reject this Agreement, Company may,
pursuant to 11 U.S.C.
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[***] Confidential treatment has been requested for the bracketed portion. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
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Section 365(n)(1) and (2), retain any and all rights licensed to Company under
this paragraph 4.1, to the maximum extent permitted by law, subject to Company
making any payments to AEC required under paragraph 4.1.5 above.
4.1.7 If, at any time during the AMG License Period, AEC (or any affiliate of
AEC) is approached by a third party or otherwise commences communications with a
third party with respect to a proposed sale or other transfer of ownership or
control in respect of the AMG Database, AEC (or such affiliate) shall promptly
notify Company to such effect so as to accord Company a reasonable opportunity
to negotiate with AEC (or such affiliate) in order to obtain the rights proposed
to be so sold or transferred.
4.2 AEC Availability File: AEC currently compiles and maintains, and shall
continue at all times during the term of this Agreement to compile and maintain,
a separate inventory database which provides AEC's retail customers with
information regarding the availability and pricing of AEC's available SKU's (the
"AEC Availability File"). Subject to paragraph 4.3.7 below, AEC hereby
irrevocably grants to Company, during the term of this Agreement, the
non-exclusive license (without the right of sub-license, whether to Company's
affiliates or otherwise), throughout the universe, to use, copy, display and
otherwise exploit the AEC Availability File, and any portions thereof, solely in
and as part of the Store and in the manner contemplated hereby.
4.3 Other Terms Concerning Databases:
4.3.1 The AMG Database and the AEC Availability File are sometimes referred to
herein individually as a "Database" or collectively as the "Databases."
4.3.2 Except as set forth in paragraph 4.1.5 above, the rights licensed to
Company hereby in respect of the Databases shall not involve the payment of
royalties or any other consideration whatsoever to AEC, its affiliates, or any
other person or entity.
4.3.3 AEC shall incorporate the Databases into the Store to be used as the
Customers' shopping catalog, and shall provide regular updating and general
editorial and database maintenance service at all times so as to make the
information contained in the Databases current and complete to the same extent
as the versions of the Databases which are current at the time this Agreement is
executed, which versions have been reviewed by Company. AEC represents and
warrants that the AMG Database shall be updated no less frequently than monthly,
and that the AEC Availability File shall be updated no less frequently than
weekly, or at such other intervals as mutually agreed by AEC and Company, but in
no event less frequently than AEC or any of its affiliates provide updates to
any of their other licensees. Both parties recognize the importance of offering
the Customers complete details on the up and coming new album releases.
4.3.4 At Company's request, AEC shall adapt the Databases so as to allow them to
be linked to third party audio sample databases (subject to AEC's reasonable
approval), provided such third party databases contain accurate UPC bar codes
for all applicable audio formats and configurations (e.g., videocassette, laser
discs, etc.) and Company causes such third party databases to be delivered to
AEC. If Company requires additional linking beyond the UPC bar code, this can be
arranged for a fee to be agreed upon by Company and AEC.
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4.3.5 AEC shall provide reasonable maintenance and support for the Databases to
Company personnel at all times during the license period set forth herein
applicable to the Database concerned.
4.3.6 The parties acknowledge that additional product data will have to be
incorporated into the Databases for use in the Store in order to support the
sale of Consignment Product; the parties hereto shall mutually determine the
best means (operationally and from an expense position) to accomplish such task.
4.3.7 [***].
5. AMG TRADEMARKS.
5.1 Company agrees to include the "All Music Guide" trademark, service ▇▇▇▇
and/or associated design or logo (individually and collectively, the "AMG
Marks") with all presentations of AMG Database information on the Store and
▇▇▇.▇▇▇ (e.g., page view, discography listing, biography, album review, album
track listing), so as to inform the viewer that the data viewed has been
provided by the All Music Guide. The placement of the AMG Marks shall be
designated by AEC, subject to Company's approval, not to be unreasonably
withheld or delayed. Placement of the AMG Marks in accordance with the
illustrations attached hereto as Exhibit 9 attached hereto shall be deemed
pre-approved by AEC and Company. Without limiting the generality of the
foregoing, displays of the following AMG Database information will be marked
with the corresponding AMG logo and branding as set forth below: Artist
Biographies, Essays, and Album Reviews will be marked "AMG Biography," "AMG
Essay," and "AMG Review," respectively. After each biography and album review,
the name of the author, and the term "AMG" will be listed. Ratings will be
marked "AMG Ratings," and relational elements such as the following will be
marked as: "AMG Roots & Influences," "AMG Similar/Related Artists," "AMG Music
Maps," "AMG Track Listings" and "AMG Similar Albums."
5.2 During the AMG License Period, Company agrees to cause the AMG Marks to
appear prominently in all promotional materials prepared by Company in respect
of the Store, provided that any inadvertent failure to comply with this
paragraph 5.2 shall not be deemed a breach of this Agreement.
6. CONSIGNMENT PRODUCT.
6.1 With respect to all items of Consignment Product, as between AEC and
Company, Company shall be solely responsible for: (i) shipping the items to AEC
[***], (iii) assisting AEC in insuring that each item has a viable UPC code,
(iv) ensuring that each item is legal for sale and that Company has the legal
rights to request AEC to fill orders thereof.
6.2 The parties hereto anticipate that inventory of Consignment Product held by
AEC in its warehouses will be in such quantities and held for such periods of
time so as to allow an average
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confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
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of no less than [***] turnovers per year of such inventory. In the event, after
the initial three (3) months the Store has been in operation, the parties
determine that the average turnover rate for all such inventory is less than so
anticipated, then AEC shall be entitled to charge Company a warehouse rental fee
equal to [***] per month thereafter during which the turnover rate is lower than
an average of [***] per year for each required warehouse bin/storage location.
6.3 AEC shall receive, unpack, count and add UPC codes (to the extent required)
to all shipments of Consignment Product and promptly incorporate such units into
the AEC Availability File and/or otherwise provide Company with up-to-date
inventory levels in a manner reasonably satisfactory to Company. AEC shall
promptly notify Company if there is a discrepancy between the actual number of
units received in any shipment and the corresponding number reflected on the
packing slip. Company shall advise AEC at least seven (7) days in advance of
forthcoming deliveries.
6.4 As between AEC and Company, all Consignment Product inventory shall remain
the property of Company at all times. AEC agrees that it shall safeguard such
inventory in the same manner that it safeguards items in its own inventory in
its warehouse, and that it shall be responsible for all inventory shrinkage.
6.5 All inventory of Consignment Product shall be held in separate locations in
AEC's warehouse so as to physically segregate all Consignment Product inventory
from AEC's inventory of other products, which locations shall be clearly marked
by posted signs or placards identifying all inventory in the applicable storage
area as belonging to a third party. Company shall have the right to approve all
such signs and placards as to language, size and placement. AEC agrees from time
to time to execute and deliver all further instruments and documents, and take
all further actions, that may be necessary or desirable, or that Company may
reasonably request, in order to protect Company's and the Company Clients'
rights in the Consignment Product inventory. Without limiting the generality of
the foregoing AEC hereby irrevocably grants to each of Company and the Company
Clients a power-of-attorney to sign and file one or more financing or
continuation statements, and amendments thereto, under the Uniform Commercial
Code relative to all or any part of the Consignment Product inventory without
the signature of AEC where permitted by law.
7. PAYMENTS, REPORTS AND AUDIT RIGHTS.
7.1 Payment Terms: Company shall make all payments due AEC hereunder within
[***] days of its receipt of appropriate invoices therefor from AEC.
Notwithstanding the foregoing, invoices for payments due pursuant to paragraphs
1.2.2, 1.3.3 and 2.3.7 hereof shall be payable within fifteen (15) days of
Company's receipt thereof.
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Annex A - Page 9
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7.2 Sales Reports:
7.2.1 During the AEC Service Period, AEC shall electronically transmit to
Company, on a daily basis, data reflecting all sales and returns of Product for
the preceding day. Further, within thirty (30) days after each calendar month of
the AEC Service Period, AEC shall send Company a comprehensive report detailing
all sales and returns of Product during the calendar month concerned.
7.2.2 Within thirty (30) days after each calendar month of the term of this
Agreement subsequent to the AEC Service Period, Company shall send AEC a summary
sales report detailing the Net Monthly Sales during the calendar month
concerned.
7.2.3 To the extent Company uses the AMG Database after the term of this
Agreement, Company shall compute, pursuant to paragraph 4.1.5 above, AEC's share
of the Net Monthly Sales received by Company during each calendar month and send
AEC, within thirty (30) days after the calendar month concerned, a summary sales
report detailing such Net Monthly Sales, along with payment of any amounts due.
7.2.4 In the event Company sells musical recordings on the Store via a digital
transferring process and the AMG Database is used to help promote and feature
such sales, then Company shall send AEC, [***] after each calendar month of the
AMG License Period, a summary sales report detailing all revenues generated
thereby, as well as all associated sales tax and credit card charges, together
with payment to AEC computed in accordance with paragraph 4.1.4 above in respect
of any such revenues earned during the term of this Agreement, it being
understood that any such revenues earned after the term of this Agreement shall
be included as "Net Monthly Sales" under paragraph 4.1.5 above. Company shall
not be obligated to render statements under this paragraph 7.2.4 for months
during which there are no such sales.
7.3 Inventory Reports: Without limiting the generality of paragraph 6.3 above,
within thirty (30) days after each calendar month of the term of this Agreement,
AEC shall send Company detailed inventory reports for all Consignment Product
reflecting shipments received, units sold and returned, and then-current
inventory levels as of the end of the calendar month concerned. Company shall
have reasonable access to AEC's warehouse in order to perform physical inventory
counts from time to time.
7.4 Books and Records: Each party shall have the right, at its sole cost and
expense and upon reasonable notice to the other party, to inspect and audit the
books and records of such other party insofar as said books and records pertain
to the calculation of monies payable hereunder. Such examination shall take
place during normal business hours at the place of business where such books and
records are kept, and not more than once per calendar year. Any such inspection
must be undertaken within two (2) years after the end of the calendar year being
inspected.
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Annex A - Page 10
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8. OWNERSHIP.
8.1 Store: Subject to AEC's rights in the Developed Technology (as defined
below) pursuant to paragraph 8.1 below, AEC recognizes and agrees that Company
is the sole owner of all right, title and interest in all rights associated with
the Store, and that all goodwill associated with the Store shall inure
exclusively to the benefit of Company.
8.2 Developed Technology: All rights (including all intellectual property
rights, whether recognized currently or in the future) in and to the works
developed by AEC for the Store in connection with this Agreement ("Developed
Technology"), including the source and object code, end-user interface,
navigational structure, appearance, commerce technology, HTML formatting code,
scripts, software, text, graphics, audio, video, artwork and designs, [***].
8.3 Independent Technology: Notwithstanding anything to the contrary contained
in this Agreement, Company will acquire no ownership interest in any technology
developed by AEC prior to or independently of this Agreement ("AEC Technology")
and AEC will acquire no ownership interest in any technology developed by
Company prior to or independently of this Agreement (the "Company Technology").
AEC hereby grants to Company a royalty-free, nonexclusive, irrevocable,
perpetual license, throughout the universe, to exploit the AEC Technology (but
specifically excluding the Databases) solely to the extent reasonably required
to facilitate Company's continued use, modification, maintenance and promotion
of the Store and the Developed Technology. For purposes of Section 365(n) of the
United States Bankruptcy Code, said license shall be considered a license of
rights to "intellectual property" as defined thereunder. Notwithstanding any
provision contained herein to the contrary, if AEC is under any proceeding under
the United States Bankruptcy Code and the trustee in bankruptcy of AEC, or AEC,
as a debtor in possession, rightfully elects to reject this Agreement, then
Company may, pursuant to 11 U.S.C. Section 365(n)(1) and (2), retain any and all
of its rights under such license, to the maximum extent permitted by law.
8.4 Databases:
8.4.1 Company acknowledges and agrees that the Databases and all revisions,
modifications and enhancements thereof provided by AEC to Company under this
Agreement are the exclusive and proprietary information of AEC. Title and full
ownership rights thereto, including copyright, trade secret, trademark, trade
name and other intellectual and proprietary rights, are reserved to, and shall
remain with and be the valuable property of, AEC. Company acknowledges the
valuable, proprietary nature of the Databases, including all revisions,
modifications and enhancements thereof, and agrees that irreparable injury will
result from any use, disclosure, reproduction or distribution of the Databases
that is not authorized by this Agreement and agrees not to contest in any way
whatsoever the proprietary status of the Databases or AEC's subsisting
copyrights therein. Company will not remove any proprietary or confidential
legends or markings which AEC has placed upon or within the Databases. Transfer
of certain Store
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Annex A - Page 11
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technology, as provided herein, shall not, under any circumstances, transfer any
right , title or interest in or to the Databases from AEC to Company.
8.4.2 Company acknowledges that AEC may, at any time or times during the license
period set forth herein applicable to the Database concerned, substitute a new
version of the Database for the version of such Database originally provided
hereunder; in which case the license granted to Company by this Agreement shall
cease with respect to the replaced version of such Database, and Company shall
purge all copies of the replaced version from Company's computer system and from
any other computer storage device or medium as to which Company has or should
have control consistent with this license.
8.5 AMG Marks: Company acknowledges that AEC is the sole owner of all right,
title and interest in the AMG Marks. Nothing contained in this Agreement shall
be construed as an assignment or grant to Company of any right, title or
interest in or to the AMG Marks. All rights relating thereto are expressly being
reserved by AEC, except for the limited licenses granted to Company herein, and
all goodwill associated with the AMG Marks inures to the benefit of AEC.
8.6 UBL Properties: AEC acknowledges and agrees that all information obtained by
AEC from ▇▇▇.▇▇▇ (including any information contained in the various databases
published by Company through ▇▇▇.▇▇▇, such as artist information and links to
third party Web Sites) or supplied to AEC, in connection with linking ▇▇▇.▇▇▇
with the Store and the AMG Database or otherwise, as well as all related
copyright, trade secret, trademark, trade name and other intellectual and
proprietary rights (collectively, "UBL Properties") are reserved to, and shall
remain with and be the valuable property of, Company. AEC acknowledges the
valuable, proprietary nature of the UBL Properties, including all revisions,
modifications and enhancements thereof, and agrees that irreparable injury will
result from any use, disclosure, reproduction or distribution of the UBL
Properties that is not authorized by this Agreement and agrees not to contest in
any way whatsoever the proprietary status of the UBL Properties or Company's
subsisting copyrights therein. [***].
9. CONFIDENTIALITY.
9.1 During and following the term hereof, each party to this Agreement expressly
undertakes to retain in confidence, and to require and cause its subsidiaries
and affiliates and its and their respective employees, contractors and agents to
retain in confidence, all information and know how transmitted to such party
(the "Receiving Party") (i) which the disclosing party hereunder (the
"Disclosing Party") has identified in writing as being proprietary and/or
confidential or (ii) which the Receiving Party reasonably should know, based
upon the nature of the information being disclosed, ought to be treated as
confidential (collectively "Confidential Information"). The Receiving Party will
make no use of such Confidential Information except as expressly authorized
under this Agreement. Either party may, however, disclose Confidential
Information if required by law or legal process, provided such party shall
undertake to give the other
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confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
Annex A - Page 12
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reasonable notice prior to such disclosure and shall comply with any applicable
protective order or equivalent. Under no circumstances shall a Disclosing Party
be entitled to terminate this Agreement for an alleged unauthorized use or
disclosure by the Receiving Party of Confidential Information which was not
marked as "confidential" or "proprietary" unless such disclosure was made in bad
faith (in which case the Disclosing Party may terminate this Agreement to the
extent permitted under Section 12 below).
9.2 Without limiting the generality of paragraph 9.1 above, the parties agree
that the following information disclosed by one party to the other shall be
deemed Confidential Information: the capabilities, technical descriptions and
source code relating to either party's released or unreleased software or
hardware products or services; the marketing or promotion plans of any product
or service of either party; either party's business policies or practices; and
information received from others that either party is obligated to treat as
confidential.
9.3 Without limiting the foregoing:
9.3.1 Company agrees that the Databases and all information contained therein
and/or provided by AEC hereunder, including database layouts, schema, algorithms
and linking and other program features, are and shall be treated as Confidential
Information. Company agrees not to copy, disclose or otherwise make available
the Databases, in any form, to any person for any purpose other than as
necessary to permit Company's use of the Databases as authorized herein. Company
shall include in copies or reproductions of the AMG Database the "AMG" logo and
any other patent, copyright, trademark or proprietary notices contained in the
original or as reasonably required by AEC. Company shall take all reasonable
steps to safeguard the Databases against unauthorized disclosure. Company also
agrees not to use the Databases except as authorized under this Agreement and,
in particular, without limiting the foregoing, not to use such information to
develop a product that would be competitive with the Databases.
9.3.2 AEC agrees that the UBL Properties and all information contained therein
and/or provided by Company hereunder, including database layouts, schema,
algorithms and linking and other program features, are and shall be treated as
Confidential Information. AEC agrees not to copy, disclose or otherwise make
available any UBL Properties, in any form, to any person for any purpose. AEC
shall take all reasonable steps to safeguard the UBL Properties against
unauthorized disclosure. AEC also agrees not to use the UBL Properties except
for purposes of performing its services hereunder in connection with the Store
and, in particular, without limiting the foregoing, not to use such information
to develop a product that would be competitive with ▇▇▇.▇▇▇.
9.4 Both parties acknowledge that unauthorized disclosure or use of Confidential
Information could cause irreparable harm and significant injury which may be
difficult to ascertain. Accordingly, both parties agree that the aggrieved party
will have the right to seek and obtain injunctive relief from breaches of this
Section 9, in addition to any other rights and remedies it may have. Both
parties agree that each has and shall retain ownership rights to its own
Confidential Information, and that upon expiration or termination of this
Agreement each party shall return and shall not retain the Confidential
Information of the other party.
9.5 Notwithstanding anything in this Section 9 to the contrary, Confidential
Information shall not be construed to mean any information which the Receiving
Party can show: (i) is, or subsequently becomes, publicly available other than
as a result of the Receiving Party's breach of
Annex A - Page 13
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any obligation owed to the Disclosing Party or a third party; (ii) became known
to the Receiving Party prior to the Disclosing Party's disclosure of such
information to the Receiving Party, (iii) became known to the Receiving Party
from a source other than the Disclosing Party other than as a result of such
source's breach of an obligation of confidentiality owed to the Disclosing
Party, (iv) is independently developed by the Receiving Party, or (v) has been
authorized for disclosure by the Disclosing Party.
9.6 The provisions of this Section 9 shall survive termination or expiration of
the term of this Agreement.
10. WARRANTIES AND REPRESENTATIONS.
10.1 By AEC.
10.1.1 AEC warrants and represents for the benefit of Company as follows: (i)
the services to be performed by AEC hereunder will be rendered in accordance
with all requirements identified in this Agreement, (ii) AEC has all rights,
licenses and authorizations required to enter into and perform this Agreement,
and the performance of AEC's obligations pursuant to this Agreement will not
violate any United States federal, state or municipal laws, rules, regulations
or ordinances or the provisions of any agreement to which AEC is a party or by
which AEC is bound; (iii) no Developed Technology or the exploitation or use
thereof shall violate or infringe upon any common law or statutory rights of any
party, including contractual rights, copyrights, and rights of privacy or
publicity or shall defame any person or entity; and (iv) any invoices, reports
and documentation to be delivered to Company hereunder will be complete and
accurate to the best of AEC's knowledge.
10.1.2 AEC represents and warrants that AEC (and its affiliates) is the rightful
owner and/or licenser of the Databases, including the copyrights, trademarks,
trade names or other property rights contained therein and being licensed herein
by AEC. The foregoing notwithstanding, AEC does not warrant that it owns any
right to the album artwork or artist images or likenesses that have been
electronically scanned and linked to the Databases. The scanning process and
delivery of the images has been done as a service to Company.
10.2 By Company. Company warrants and represents for the benefit of AEC as
follows: (i) Company's responsibilities and promises herein will be rendered in
accordance with all requirements identified in this Agreement; (ii) Company has
all rights, licenses and authorizations required to enter into and perform this
Agreement, and the performance by Company of its obligations pursuant to this
Agreement will not violate any United States federal, state or municipal laws,
rules, regulations or ordinances or the provisions of any agreement to which
Company is a party or by which Company is bound; and (iii) to the best of
Company's knowledge, all orders for Products conveyed to AEC shall be accurately
conveyed to AEC including, as to each order, all information in the form
provided by any Customer. AEC acknowledges that Company is making no
representations and warranties concerning anticipated success of the Store
and/or the amount of consideration payable to AEC hereunder. AEC agrees that it
shall not make any claim and no liability shall be imposed upon Company based
upon any claim that more sales could have been made or better business could
have been done in connection with the Store.
Annex A - Page 14
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10.3 Survival. The representations and warranties contained in this Section 10
are continuous in nature and shall be deemed first given upon the execution of
the Agreement and shall survive termination or expiration of this Agreement.
11. INDEMNIFICATION.
11.1 BY AEC. AEC shall indemnify, hold harmless and defend Company and all of
Company's members, employees, officers, directors and agents from and against
any and all claims, damages, losses, liabilities, suits, actions, demands,
proceedings (whether legal or administrative) and expenses (including reasonable
attorneys' fees incurred, with or without suit, in arbitration or mediation, on
appeal or in a bankruptcy or similar proceeding) (collectively, "Claims")
threatened, asserted or filed by a third party against any of the aforesaid
persons or entities to the extent that such third party Claims arise out of or
relate to (i) the breach of any material warranty, representation or agreement
made by AEC in this Agreement; or (ii) any grossly negligent or tortuous act,
willful misconduct or willful omission by AEC; provided, however, that AEC shall
not be liable for any errors, omissions or inaccuracies in the Databases, or the
updates thereof unless caused by AEC's gross negligence or willful neglect.
Furthermore, AEC shall not be liable for any delays or interruptions in the
delivery, transmission or distribution of the Databases or the updates by reason
of unavoidable equipment failure, communication circuit failure, power failure,
Acts of God, government intervention, fire, flood, or other Acts beyond AEC's
reasonable control. Claims arising from modifications by Company of the
Databases or as a result of a failure by Company to implement any enhancements,
improvements, or updates to the Databases as supplied by AEC, shall be deemed
excluded from the indemnity under this paragraph 11.1.
11.2 By Company. Company shall indemnify, hold harmless and defend AEC and all
employees, officers, directors and agents of AEC from and against any and all
Claims threatened, asserted or filed by a third party against any of the
aforesaid persons or entities to the extent that such third party Claims arise
out of or relate to: (i) the breach of any material warranty, representation or
agreement made by Company in this Agreement; or (ii) any grossly negligent or
tortuous act, willful misconduct or willful omission by Company (iii) the use of
the digitized album and portrait pictures used in the Store.
11.3 Manner of Exercise. Any person or entity that is entitled to be indemnified
pursuant to this Section 11 (the "Indemnified Party") must give prompt notice to
the indemnifying party (the "Indemnifying Party") of the occurrence of the Claim
for which indemnity is requested and, at the option of the Indemnifying Party,
the Indemnifying Party may assume the handling, settlement and defense of such
Claim, in which event the Indemnified Party will cooperate in all reasonable
respects with the Indemnifying Party at the Indemnifying Party's expense. The
failure by the Indemnified Party to give such prompt notice shall not relieve
the Indemnifying Party from any liability under this Section 11 unless, and only
to the extent that, such failure results in prejudice to or forfeiture of,
substantive rights or defenses of the Indemnifying Party. The Indemnifying Party
shall reimburse the Indemnified Party on demand for any payment made by the
Indemnified Party in respect of any Claim to which the foregoing indemnity
relates which either (i) has resulted in an adverse judgment against the
Indemnified Party or (ii) has been settled with the written consent of the
Indemnifying Party, which it may withhold for any reason.
12. DEFAULT AND TERMINATION RIGHTS.
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12.1 Default. In the event of a default (a "Default"), the non defaulting party
shall have the right, without limiting any other right or remedy provided in
this Agreement or that it may have under law or equity (subject, however, to
Section 13 below), to terminate this Agreement by giving notice to the other
party under this Agreement and of its election to terminate this Agreement,
after the non defaulting party becomes aware of such Default. Each of the
following is a Default
12.1.1 The failure of either party to materially perform any of such party's
obligations contained in this Agreement, which failure has not been cured within
[***], in the case of a breach in any payment obligation hereunder, or [***], in
the case of a breach in any other kind of obligation hereunder, after the non
breaching party provides notice to the breaching party describing the breach(es)
in reasonable detail.
12.1.2 The failure by AEC to fulfill on a timely basis, in accordance with the
requirements set forth in paragraph 2.2.1 above, at least [***] of all orders
for units of Product received during any particular [***] period (except with
respect to Commercially Unavailable Product, cutouts and imports); provided,
however, that the preceding [***] figure shall instead be [***] with respect to
any thirty (30) day period, the majority of which occurs during a Surge Month.
As used herein, the term "Surge Month" shall mean any calendar month in which
the average daily order volume (measured by the number of discrete orders
placed, not the total number of Product items ordered) exceeds the average daily
order volumes for the previous two (2) calendar months by at least [***].
12.1.3 The occurrence of any of the following: (a) any party admits in writing
its inability to pay its debts generally or makes a general assignment for the
benefit of creditors; (b) any affirmative act of insolvency by any party filing
by any party of any petition or action under any bankruptcy, reorganization,
insolvency, arrangement, liquidation, dissolution or moratorium law, or any
other similar law or laws for the benefit of, or relating to, debtors; (c) the
filing, by any third party, against any party of any petition or action of the
type described in clause (b) above, which has not been either controverted by
such party within fifteen (15) days after its receipt of the service of process
dating to such filing, or stayed or dismissed within thirty (30) days after the
time of such receipt; (d) the subjection of a material part of any party's
property to any levy, seizure, assignment or sale for or by any creditor, third
party or governmental agency, provided that such levy, seizure, assignment or
sale has not been stayed, discharged or reversed within thirty (30) days after
the date of issuance of the order or decree which authorized the same; or (e)
the issuance of an injunction enjoining either party from performing any of its
material obligations hereunder, which injunction has not been stayed, discharged
or reversed within thirty (30) days after the date of issuance of the order or
decree which authorized the same.
13. LIMITATION OF LIABILITY. NEITHER OF THE PARTIES HERETO SHALL HAVE ANY
LIABILITY TO THE OTHER PARTY HERETO OR TO ANY THIRD PARTY FOR ANY INDIRECT,
SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES ARISING UNDER THE TERMS
OF THIS AGREEMENT, EVEN IF ADVISED IN ADVANCE OF THE POSSIBILITY OF SUCH
DAMAGES. The foregoing shall not be interpreted to limit any party's right to be
fully indemnified to the extent provided under Section
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11 above for damages claimed by a third party. Company acknowledges that nothing
in this Agreement shall be deemed to establish a contractual or other legally
recognizable relationship between AEC and a Customer, it being agreed that the
services provided hereunder are for Company's benefit and as agent for Company.
14. FORCE MAJEURE. Except for obligations under Section 9 above and obligations
of payment, the executory obligations of the parties hereunder shall be excused
to the extent, but only to the extent, delayed or prevented by Acts of God,
including earthquake, storm, flood, fire, explosion, power failure, civil
insurrection, or any other cause beyond the reasonable control of the affected
party hereto and which such party could not by reasonable diligence have avoided
(collectively, "Force Majeure"), provided that notice of such Force Majeure is
given by the affected party to the other within twenty (20) days of such party's
becoming affected by the Force Majeure. Furthermore, in the event such notice is
timely given, no failure or delay by either party in the performance of any of
its obligations (other than under Section 9 above) as a result of a Force
Majeure shall give rise to any liability to the other party for any loss,
injury, delay, or other casualty suffered or incurred by such other party due to
such Force Majeure. The party directly affected by a Force Majeure shall use all
reasonable efforts to minimize the effects of the same. At the election of the
party not directly affected by a Force Majeure, a period of time equal to the
duration of any suspension of performance by the other party as a result of a
Force Majeure shall be added to the end of the then current term of this
Agreement, and such term shall be accordingly extended.
15. GENERAL.
15.1 Entire Agreement/Amendment: All references to "this Agreement," "hereof,"
"herein" and words of similar connotation include the agreement to which this
Annex A is attached, as well as all exhibits attached hereto, unless specified
otherwise. Each party acknowledges that it has read this Agreement, understands
it, and agrees to be bound by its terms. This Agreement represents the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements, negotiations, understandings, representations,
statements and writings among the parties relating thereto with regard to the
subject matter hereof. No modification, alteration, waiver or change in any of
the terms of this Agreement shall be valid or binding upon the parties hereto
unless made in writing and duly executed by both of the parties hereto.
15.2 Governing Law: This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Florida and the United States of
America, without regard to the principles of conflicts of law. The parties
hereby consent to and submit to the sole jurisdiction of a competent court
located in the State of Florida. Such court shall be the sole and exclusive
venue for resolution of any disputes or disagreements between the parties
relating to this Agreement or the transactions contemplated hereby or otherwise
arising hereunder or with respect to any breach of the terms and provisions
hereof.
15.3 Severability: Should any part of this Agreement be held unenforceable or in
conflict with the applicable laws or regulations of any jurisdiction, the
invalid or unenforceable part or provision shall be replaced with a provision
which accomplishes, to the extent possible, the original business purpose of
such part or provision in a valid and enforceable manner, and the remainder of
this Agreement shall remain binding upon the parties.
Annex A - Page 17
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15.4 Successors and Assigns: This Agreement and all obligations and rights
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
15.5 Relationship between the Parties: This Agreement is not intended to create
any relationship other than AEC as an independent contractor performing services
covered by this Agreement, and Company as the party contacting with AEC for
those services. No party is a partner or a legal representative of the other for
any purpose whatsoever. No party is authorized to make any contract, agreement
or warranty on behalf of any other party. Under no circumstance shall one
party's employees be construed to be employees of any other party.
15.6 Notices: All notices given to the parties hereunder and all statements and
payments hereunder shall be addressed to the parties at the address set forth
below or at such other address as shall be designated by the parties in writing
from time to time:
If to Company: with a copy to:
The Ultimate Band List, LLC ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇ 1900 Avenue of the Stars, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇ Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to AEC: with a copy to:
AEC One Stop Group, Inc. Alliance Entertainment Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇▇ Attn.: General Counsel
All notices shall be in writing and shall be personally delivered, or served by
certified mail, return receipt requested, or by overnight mail service such as
Federal Express, all charges prepaid. Except as otherwise provided herein, such
notices shall be deemed given three days after mailing or delivery to an
overnight mail service, all charges prepaid, except that notices of change of
address shall be effective only after actual receipt thereof. The failure of the
recipient to accept or receive notice given by certified mail, return receipt
requested, postage prepaid, does not affect the validity of the notice.
15.7 Survival: The terms and provisions of this Agreement by their sense and
context are intended to survive the performance of such term or provision or of
this Agreement shall so survive the completion of performance and termination of
this Agreement, including the provisions of Sections 9, 10 and 11 hereof.
15.8 Waiver of Default or Breach: Waiver by either party of a default or breach
or a succession of defaults or breaches, or any failure by either party to
enforce any rights hereunder, shall not be deemed to constitute a waiver of any
subsequent default or breach with respect to the same or any other provision
hereof, and shall not deprive such party of any right to terminate this
Agreement arising by reason of any subsequent default or breach.
15.9 Captions; Examples: The captions used in this Agreement are for convenience
of reference only and are not to affect the construction hereof or be taken into
consideration in the
Annex A - Page 18
21
interpretation hereof. Whenever examples are used in this Agreement with the
words "including," "for example," "e.g.," "such as," "etc." or any derivation
thereof, such examples are intended to be illustrative and not in limitation
thereof.
15.10 Drafting Party: Notwithstanding that this Agreement may have been drafted
by one or another of the parties hereto, neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against either
party, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties hereto and shall be construed
and interpreted according to the fair meaning of the words used so as to
accomplish the purposes and intentions of the parties hereto.
15.11 Counterparts: This Agreement may be executed in one or more counterparts
each of which shall be deemed an original but all of which taken together shall
be deemed one and the same instrument.
End of General Terms & Conditions
Annex A - Page 19
22
EXHIBIT 1
CUSTOMER SERVICE
AEC shall provide on behalf of Company customer support for those
orders placed by Customers through the Store. This Exhibit shall define the
service level and performance requirements mandated to govern such activities.
DEFINITION OF SERVICE LEVEL
1. Contact Numbers. AEC Customer Support Service Department will provide
Company with an (800) phone number, Voice-Mail Messaging system, a (800) fax
phone number, and an e-mail address. The contact numbers will be presented
to the Customers from within the Store and on the printed hardcopy invoice.
The contact numbers will be provided to Company prior to Store launch.
Company shall designate and provide to AEC a contact person (including their
phone number, fax number and email address) to resolve out of policy store
issues that may arise from Store Customers.
2. Customer Support Hours. AEC Customer Support Service Department will operate
Monday through Friday (excluding holidays), between the hours of 9:00 AM and
6:00 PM Eastern Time.
3. Customer Support Activities. AEC Customer Support Services Department will
assist customers with all customer inquiries concerning orders and product
information as defined below:
a) Order Status Information. Customer Service will provide research
and/or updates on orders, as required by the consumer (i.e., is the
order shipping today, did my order ship, when should I expect the
order, etc.)
b) Back Orders & Special Orders. Customer Service will provide support,
answer, update information from the consumer on items placed on back
order or on special order. (e.g., Has the product been received? Do
you know when product will become available? How long does this
usually take?) Additionally, Customer Service will update the
consumer on discontinued items, release product as these become
available, and cancel back orders.
c) Shipping Status. Customer Service will answer questions on items
already shipped or currently in AEC's warehouse ready to ship. This
may also involve tracking the shipment through UPS and providing an
estimate on date of arrival to consumer.
d) Tracking and Locating Product. Customer Service will initiate tracers
with UPS on shipments that have not arrived as promised, and file
claims for service failures.
e) Order Changes, Cancellations, and/or Deletions. Customer Service will
make changes for orders that have not been processed or already
billed. Once orders are processed, changes cannot be made. (e.g.,
adding or deleting product, cancel orders, change shipping address,
etc.)
f) Refused/Undeliverable Shipment. Customer Service will contact
customer when product has been refused on delivery. This will involve
determining if the item(s) should be reshipped, address may need
correction or simply issuing credit to the consumer. If product is
returned "undeliverable" Customer Service will contact the customer
to validate address and arrange for re-shipment of product.
g) Claims Research. Customer Service will research all claims for
product that has already been billed and shipped. (e.g., billing
information, overcharges, credits, product ordered, total amount
billed to credit card, tracking number, ship via method, invoice
itemization, returns etc.)
h) Defective-Product received defective. Customer Service will validate
the defect, issue a return authorization number, retrieve the
defective product and generate a replacement order.
Alliance Entertainment Corp.
Exhibit 1 - Page 1
23
i) Damaged-Product arrived damaged. Customer Service will validate the
damage, file a claim for the loss with UPS issue a return
authorization number, retrieve the damaged product and generate a
replacement order.
j) Lost-Product lost in transit. Customer Service will validate the
damage, file a claim for the loss with shipping agent, issue a return
authorization, retrieve the damaged product and generate a
replacement order.
k) Incorrect Product. Customer Service will validate the claim for
incorrect item received and will issue a return authorization number,
retrieve product and generate a replacement order.
l) Billing Inquiries. Customer Service will answer and support general
billing questions from consumer, as well as provide detailed
itemization of billing charges.
m) Copy of Invoices. Upon request, Customer Service will generate an
additional copy of the invoice and mail a copy to the consumer.
n) Credit Card Reconciliation. Customer Service will research charges
and credits on behalf of the consumer. (i.e. product returned and
credit has not yet been applied to the credit card, researching
overcharges and credits )
o) Product Inquiries. Customer Service will provide information on
product availability, song titles and artist information to the
consumer. (i.e., Is this available ?, Who is this artist)
4. Non-Store Sales Orders. AEC Customer Service shall provide sales support for
those orders not placed directly through the Store. The following are two
order entry methods available to the Customer.
Phone Sales (order Entry). Customer Service will support orders
submitted via the telephone. All telephone orders will be answered in
the order these are received in Customer Service. If the call is not
answered by a Customer Service Representative, the consumer may leave a
voice mail message and have their call returned.
Fax Sales (order entry). Customer Service will enter orders received via
fax on behalf of the consumer. All fax orders will be answered in the
order these are received in Customer Service.
5. Product Returns. AEC Customer Service will process Customer returns and
conduct the authorization and processing required based on Company's
predetermined returns policy.
Returns. Customers may return product for received damaged, incorrect
item(s) or defective. Customer Service will validate the customer's
claim and issue a return authorization number. Customer Service will
perform this function in accordance with the Store's procedures and
policy.
CUSTOMER SERVICE PERFORMANCE REQUIREMENTS
6. Performance Requirements. The following are AEC's Customer Service
performance representations.
Daily Phone Call Volume. In order to meet the level of Customer Service
as defined herein, a daily incoming Customer Service call volume of (30)
thirty Customer Service related calls (excluding order placement calls)
shall be processed while meeting the below performance standards. Should
demand exceed Daily Call Volume by 15% or more in any month, AEC will
notify Company of the increased Call
Alliance Entertainment Corp.
Exhibit 1 - Page 2
24
Volume (as provided in Customer Service Regular Customer Service
Reports), and the parties shall negotiate a reasonable monthly fee
payable by Company to AEC by virtue of such increase.
Voice Mail Support. The goal of customer service is to be able to answer
each inbound call immediately by anyone of our several Customer Service
Representatives. However, in the event that the customer's call cannot
be answered in the order it is received, the customer may leave a voice
mail message. Voice mail inquiries received Monday through Friday before
12:00 noon Eastern Time will be acknowledged on the same day. Voice mail
inquiries received after 12:00 noon Eastern Time will be answered the
next day. Voice mail inquiries received over the weekend or on
non-working holidays will be answered on the next regularly scheduled
working day.
Faxed Sales Orders. Orders faxed for manual order entry received by
12:00 noon (Monday-Friday) Eastern Time will be processed and prepared
for shipment the same day. Fax orders received after 12:00 noon Eastern
Time will be processed the following working day and shipped that same
day. Fax orders received over the weekend or on non-working holidays
will be answered on the next regularly scheduled working day.
Phone Sales Orders. All telephone sales orders received for manual order
entry and processing before 12:00 noon (Monday-Friday) Eastern Time will
be processed and prepared for shipment the same day. Voice mail messages
received after 12:00 noon (Monday-Friday) Eastern Time will be
acknowledged, processed and prepared for shipment the next regularly
scheduled working day.
E-mail Inquiries. Email inquiries received before 12:00 noon Eastern
Time (Monday through Friday) will be acknowledged on the same day. Email
received after 12:00 noon Eastern Time (Monday through Friday) will be
answered the next day. Email received over the weekend or on non-working
holidays will be responded to on the next regularly scheduled working
day.
Customer Service Claims Report. A Customer Service Claims Report,
provided by AEC to Company will be generated and distributed to Company
on a BI-weekly basis. The report will display Company with information
pertaining to all open, pending and resolved inquiries received by the
AEC Customer Service Department. This report is primarily used by
Customer Service to monitor service issues. Customer Service will
provide via an Excel file an electronic e-mail copy of this report to
Company. This report will provide detail of customer inquiries by date,
inquiry reason and resolution. This report is currently used to measure
the performance and responsiveness of Customer Service.
Alliance Entertainment Corp.
Exhibit 1 - Page 3
25
EXHIBIT 2
STORE DEFINITION SUMMARY
AEC as service to the Company, shall design, develop and host the Store as
defined below. This Exhibit shall define the general features and functionality
of the Store. Additionally, the attached ("Storyboard") shall display a visual
depiction of the general flow of the user navigation, and the data elements that
will be displayed on the various particular page views.
STORE LOCATION
1. URL Address. The Store will be reached via the Ultimate Band List Internet
Web Page (▇▇▇.▇▇▇). This site is located at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇. The actual
Store itself will be hosted on AEC'S web servers located in Coral Springs,
Florida.
DATABASE SEARCHES
1. Searches. The Store will allow for the following database search and
retrieval capabilities.
a) The artist search and alpha-key board type search by artist will be
performed by UBL.
b) The album and song title search will be performed by AEC.
c) AEC searches may accept one or more full or partial keywords.
d) A direct match for an artist search will result in the corresponding
artist card being displayed.
e) A direct match for an album or song title search will result in the
corresponding album page being displayed.
f) If a direct match is not found for the artist search, the artist
search results list will be displayed
g) If a direct match is not found for the album or song title search,
the album search results list will be displayed
ALBUM FEATURES - SPOTLIGHTS
1. Features. The Store will provided browsers with several different (i.e.,
genre specific) featured albums depending on area in the Store the browser
is in. Albums selected for featuring will normally contain complete
descriptive details (e.g., artist name, album title, tracks, cover art,
sound bytes (if available), fulfillment status, etc,.). The feature album
list(s) will be updated automatically by AEC and AMG on a weekly basis. AEC
and AMG staff will determine the albums that will be featured on a weekly
basis. The feature album list will be uploaded into the Store database via
an automated application process.
a) Up to three (3) albums will be featured upon entering each main
section of the Store. These album features could be of any musical
genre.
Alliance Entertainment Corp.
Exhibit 2 - Page 1
26
b) Up to three (3) genre specific features will be displayed in
corresponding genre areas of the Store (e.g., search performed on New
Release by Genre will produce (3) featured albums from the specific
genre searched upon) to the type of genre being displayed.
c) All features will normally contain complete details and/or
descriptive album content (i.e., covers, track listings, sound
bytes.)
NEW RELEASE LISTS
1. New Releases. The program will allow for the easy display of all new
releases contain in the AEC Availability File. Release information is
updated in the Store on weekly basis.
a) Upon selecting the New Release option, user will be displayed (3)
non-genre specific featured albums and will then need to select from
a the list of genres available and/or a date range (e.g., last two
weeks, etc.).
b) New releases will be displayed alphabetically by artist.
c) A release is considered new for the prior 30 days of release or the
following 7 days of the date selected.
d) The album images (if available at the time of release) will be
displayed along with artist name, album title, price and any
suggestive sales data such as sound bytes, etc.
TOP SELLERS
1. Top Sellers. This list will provide the browser with an update-to-date
(weekly) listing of those albums that captured the lions-share of individual
total units sold both to traditional retail and/internet sales on product
sold and filled by AEC. The top sellers are AEC'S top sellers.
a) Up to the top 25 sellers will be displayed by genre.
b) Top sellers are determined weekly based on AEC sales.
c) Top sellers will be AMG content rich.
d) Featured Albums will be presented within each list.
UPCOMING RELEASES
1. Upcoming Releases. These releases are albums that are targeted for release
to general public but are not available for immediate shipment. Accuracy of
releases dates will always be suspect for review. The Store will allow for
and process the pre-booking of upcoming releases. These orders if not in AEC
inventory upon order and/or availability will be treated as a back-order or
a special order.
a) A release is defined as upcoming if it is to be released in the next
7 or more days.
b) Upcoming releases will be displayed by genre and/or release date.
Alliance Entertainment Corp.
Exhibit 2 - Page 2
27
c) New releases will be featured in this section.
SHOP BY GENRE
1. Shop by Genre. This area of the Store will help the music consumer better
explore areas of music they may not be familiar with. The view is provided
with detailed information about a particular genre of their choice and is
presented with a convenient and quick list of artists and/or albums of
recognized acclaim within this specific genre.
a) A genre is chosen upon entering this section.
b) A style or decade may then be entered.
c) If style is chosen, a description of the style is displayed along
with a listing of the most notable artists of this style.
d) If decade is chosen, the best artists and the best albums for the
decade will be displayed.
e) New releases will be featured in this section.
RECOMMENDATIONS
1. Album and Artist Recommendations. This section of the Store will provide a
quick and specific list of either a list of artists or albums that the music
consumer may want to explore based on their entry of a "liked" artist or
"album". It is not based on "case-based reasoning" or the likes of other
music consumers.
a) User enters their favorite Artist or Album title.
b) The Store returns a list of similar recommendations.
c) While viewing recommendations list, the suggested sell and the most
recent release will be featured automatically.
SHOPPING CART
1. Shopping Cart Features.
a) Cybercash will be used to process credit cards.
b) Gift wrapping options and selection of the gift wrap style (e.g.,
Xmas, birth-day, etc.) will be available to the viewer via images. If
one or more items are ordered, each item in that order will be gift
wrapped individually.
c) Inventory will be checked real time and reserved after placing the
entire order.
Alliance Entertainment Corp.
Exhibit 2 - Page 3
28
d) A confirmation number will be assigned after the order is completed.
HELP
1. The Help Section. The help section of the Store will contain the following
topics. Many items will need continual updating to keep the information
presented up-to-date and accurate. Both AEC and Company will work closely
together on defining and maintaining this section of the Store.
a) Customer service
b) Database Search
c) Store Policies
d) Returns Processing
e) Back Orders
f) Special Orders
g) Shipping Rates
h) Frequently Asked Questions
Alliance Entertainment Corp.
Exhibit 2 - Page 4
29
EXHIBIT 3
SAMPLE INVOICES
Alliance Entertainment Corp.
Exhibit 3
30
EXHIBIT 4
RETURNS POLICY
Your satisfaction guaranteed!
If you have received damaged, defective, or incorrectly shipped merchandise
please notify Customer Service within 30 days and follow the instructions below.
We will gladly replace the merchandise without additional charge, or provide you
with a full refund.
If you are unsatisfied with your UBL purchase and the merchandise is unopened we
will be happy to exchange it for you. Original shipping and handling charges
cannot be refunded, and you will be responsible for all costs associated with
return shipment. No COD returns will be accepted.
A return must be approved by Customer Service. Once validated a Return
Authorization Number (RA#) is issued. At that time, Customer Service will
generate a new order and replace the item(s). All returns must display the
Return Authorization number on the outside of each box, along with the
customer's return address. Returns received at our facility without an
authorization will be refused on delivery.
Important Information
- Special order and open product are non-returnable.
- Prior to returning product, contents must be well packaged to
assure safe arrival. Product must be unopened, and in re-salable
condition. We recommend using the original packaging for
shipment.
- Shipments must be received pre-paid at our returns facility. Any
COD shipments will not be accepted.
RETURNS PROCEDURE
Please follow these simple steps to ensure your fast returns and appropriate new
shipment or credit.
1. CONTACT CUSTOMER SERVICE
You must contact Customer Service to obtain a RETURN AUTHORIZATION NUMBER (RA#).
Returns cannot be accepted without this number. You may contact Customer Service
in any of the following three ways:
- E-mail: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
- Phone: ▇-▇▇▇-▇▇▇-▇▇▇▇, Monday to Friday, 9am to 6pm, Eastern
Standard Time
Alliance Entertainment Corp.
Exhibit 4
31
- Fax: (▇▇▇) ▇▇▇-▇▇▇▇
2. INFORMATION NEEDED
Please have the following information ready before you call or as part of your
e-mail or fax.
1. Order confirmation number
2. Your name
3. Your e-mail address
4. Your phone number
5. Product #
6. Product Name
7. Reason for return
3. PACK AND SEND
1. Fill out the return label (provided on the back of your invoice),
including your RA#. RETURNS CANNOT BE ACCEPTED WITHOUT AN RA#.
2. Enclose merchandise and this completed form in a sturdy package (the
original package is preferred).
3. Enclose the original packing slip/invoice in the package.
4. Affix the return label to the outside of the package and send to the
following address:
Ultimate Band List Store
Attn: Returns Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Alliance Entertainment Corp.
Exhibit 4
32
EXHIBIT 5
INTERNET FULFILLMENT PRICE LIST
a. I. Major Label and Independent Price List
(i) Compact Disc
(ii) Suggested List UBL Price
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
I = INDEPENDENT LABEL PRICE M = MAJOR LABEL PRICE
Cassette
(III) Suggested List UBL Price
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
II. MONTHLY DISCOUNTS
Within thirty (30) days before the beginning of each calendar month,
Company and AEC shall use good faith efforts to agree upon [***].
--------------------------
[***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
Alliance Entertainment Corp.
Exhibit 5
33
EXHIBIT 6
CONSIGNMENT PRODUCT FULFILLMENT FEES
-----------------------------------------------------------
Product Item Retail Price Fulfillment Fee
-----------------------------------------------------------
[***] [***]
[***] [***]
[***] [***]
[***] [***]
-----------------------------------------------------------
--------------------------
[***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
Alliance Entertainment Corp.
Exhibit 6
34
EXHIBIT 7
SHIPPING RATES
[***]
--------------------------
[***] Confidential treatment has been requested for the bracketed portion. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
Alliance Entertainment Corp.
Exhibit 7
35
EXHIBIT 8
PACKAGING MATERIAL COSTS
-----------------------------------------------------------
Box Size Packaging Cost
-----------------------------------------------------------
[***] [***]
[***] [***]
[***] [***]
-----------------------------------------------------------
--------------------------
[***] Confidential treatment has been requested for the bracketed portion. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
Alliance Entertainment Corp.
Exhibit 8
36
EXHIBIT 9
AMG ▇▇▇▇ PLACEMENT
Alliance Entertainment Corp.