ALTNET
[GRAPHIC OMITTED]
INTERACTIVE MARKETING
AND CONTENT DISTRIBUTION AGREEMENT
This Interactive
Marketing and Content Distribution Agreement (this "
Agreement "), dated as of October 12, 2004 (" Effective
Date "), is entered into between Altnet, Inc. ("Altnet"), with
a principal place of business at 6355 Topanga Canyon Boulevard,
Suite 120, Woodland Hills, CA 91367, and Karma Media, Inc. ("
Customer "), with a principal place of business at 330
Washington Blvd, Suite 706, Marina del Rey, CA 90292. Altnet
and Customer may be referred to individually as a " Party "
and collectively as the " Parties ."
INTRODUCTION
Altnet operates a
distributed computing platform for the secure transmission of
content which is accessible from, including but not limited to, the
KMD (as defined below), third party web sites, software
applications, software programs, search engines and secured
physical forms of distribution (" Altnet Network ").
Altnet is a party to
that certain Commercial Index Search Results Agreement, by and
between Altnet and Sharman Networks Ltd. (" Sharman Networks
"), pursuant to which, among other things, Altnet has the right to
create browser channels for display to users of the Kazaa Media
Desktop application (the " KMD ") on behalf of
customers.
Altnet wishes to
promote, distribute and sell digital content on behalf of Customer
which will consist of content provided by Customer for inclusion on
the Altnet Network, including photographs, images, graphics,
messages, data, information, text or other materials and
promotional materials, but excluding advertisements which shall be
provided by Altnet (" Collateral Content "). In
addition, Altnet may include customer content on themed channels
inside the KMD (the "Channels"), which will consist, in part, of
Collateral Content provided by Customer for inclusion on the
Channel. For the purposes of this Agreement, the Channel and
other locations from which the Altnet Network is accessible shall
be deemed to be part of the Altnet Network.
The primary purpose for
entering into this Agreement is to promote and sell
Customer’s downloadable digital audio and video files ("
Files ," and together with Collateral Content, the "
Content ") over the Altnet Network.
Altnet intends to
promote the Content as set forth in this Agreement.
The Parties wish to
enter into an agreement on the terms and conditions set forth
herein whereby (a) Customer has the principal responsibility for
producing and providing Content to Altnet and (b) Altnet shall
design, host, and publish the Content on the Altnet Network with
certain assistance from Customer.
TERMS
NOW,
THEREFORE ,
for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as
follows:
1.
ALLOCATION OF
RESPONSIBILITIES REGARDING CONTENT.
1.1.
General
Responsibilities of Customer .
1.1.1.
Customer shall produce
and deliver the Content to Altnet, including, but not limited to
all graphics, images, text and descriptions. Content shall be
delivered by Customer to Altnet within fourteen (14) days of the
Effective Date.
1.1.2.
Customer shall be
responsible for creating and providing value-added offerings for
use/display on the Content, such as contests, newsletters,
merchandising sales promotions and other promotions, to encourage
users to purchase Files and other Content (" Value-Add
Offerings "). For the purposes of this Agreement, Value
Add Offerings shall be deemed Content.
1.1.3.
Prior to delivering any
Content to Altnet, Customer shall acquire all rights in and to the
Content necessary to carry out the terms of this Agreement
(including, but not limited to, securing licenses to all 3
rd party content for sales and distribution
thereof).
1.1.4.
Customer is solely
responsible, at its cost, for obtaining all licenses for the
"performance" and other use of the Content contemplated by this
Agreement. Customer shall, at its cost, be responsible for
obtaining any and all other third party rights, consents and
licenses with respect to the Content, including, without
limitation, any master recording or mechanical copyright licenses,
to the extent required. With respect to all mechanical
licenses required to be obtained hereunder (i) Customer shall
provide Altnet with necessary information and otherwise reasonably
assist Altnet with any filings that are Altnet’s
responsibility, and (ii) Customer shall, at its cost, be
responsible for administering such licenses and making payments to
publishers and/or clearing agencies related thereto. With
respect to streaming and downloading, Customer shall, at its cost,
be responsible for obtaining any mechanical licenses for any
country in which such access is provided to users of the KMD.
If requested by Altnet, Customer shall provide Altnet with
evidence that Customer has paid all license fees, royalties, and
other amounts due third parties for any Content
1.1.5.
Customer shall, at
Customer’s own cost, be solely responsible for making certain
that any Value-Add Offerings or other Content that it delivers to
Altnet for inclusion on the Customer Channel is compliant with all
federal, state, local or any other laws and/or regulations
(including all laws relating to sweepstakes and contests) regarding
such Value-Add Offering or other Content.
1.2.
General
Responsibilities of Altnet .
1.2.1.
Altnet will, on behalf
of Customer, manage, maintain and operate the Content (including
reviewing, updating and otherwise managing all Content available on
or through the Altnet Network).
1.2.2.
Notwithstanding the
fact that Customer will produce and deliver the Content to Altnet,
all Content on the Altnet Network, including without limitation,
all products, links, buttons, Value-Add Offerings, promotions,
sponsorships or similar Content and all features and transaction
opportunities available from the Content, will be determined and
approved or rejected by Altnet, in its sole discretion.
1.2.3.
Altnet has the
exclusive right to sell and control advertisements on the Channels
and/or elsewhere on the Altnet Network. Altnet will sell all
advertising inventory on the Altnet Network as it deems
appropriate. Altnet will collect and retain all revenues
associated with the advertising.
2.
OWNERSHIP;
BRANDING.
Customer agrees that as
between the Parties, Altnet will be deemed the owner of any
end-user date collected, usage surveys or reports or other
communications with third parties with regard the distribution of
Content.
3.
CONTENT –
PRODUCTION WORK; CONTROL; OPERATIONS.
3.1.
Customer
.
3.1.1.
Customer will provide
all design, graphic, text and production work in connection with
the Content.
3.1.2.
Customer Content shall
include:
3.1.2.1.
Promotional
material and graphics forthcoming.
Unless otherwise agreed
by the parties, all videos shall have a running time of less than
one (1) hour and may be up to 100 Megabytes in file size once
encoded.
3.1.3.
Customer shall ensure
that Content meets Altnet’s requirements for digital format,
file size, and distribution rules, which Altnet may change from
time to time.
3.1.4.
Customer shall
determine the price of Files on the applicable Insertion Order at
rates consistent with other similar content on Altnet.
Customer and Altnet shall mutually agree upon pricing of
Content other than Files (including subscription rates, if
applicable).
3.2.
Altnet
.
3.2.1.
Except as otherwise
provided herein, Altnet will have the exclusive right and
responsibility to manage, maintain and operate the Content on the
Altnet Network on behalf of Customer (including reviewing,
deleting, updating and otherwise managing the Content available on
or through the Altnet Network in accordance with this Agreement).
Altnet, in its sole discretion, will make the determination
as to what Content will be on or available through the Altnet
Network. Altnet may reject any Content prior to posting
and/or remove any Content at any time and in its sole discretion.
3.2.2.
Altnet will be
responsible for the cost of maintenance, operation and hosting of
the Content.
3.2.3.
Altnet shall provide a
secure payment system/gateway for end users to purchase Files,
including a third party payment processing system.
3.2.4.
Altnet shall provide to
Customer periodic reports listing details of the number of times
Files have been downloaded, licensed and/or paid for.
3.2.5.
Altnet shall promote
the Content as set forth in Section 4 hereof.
3.2.6.
Altnet reserves the
right in its sole discretion to redesign or modify the structure,
"look and feel" navigation and other elements of the Altnet
Network.
4.
PROMOTIONS .
4.1.
Guaranteed
Promotions .
In connection with the Content, Customer is guaranteed the
following minimum promotional placements:
4.1.1.
Three (3) key words ("
Key Word ") on TopSearch per File, approced by
Altnet.
4.2.
Discretionary
Promotions .
4.2.1.
In addition to the
promotions set forth in Section 4.1 hereto, Altnet has the right to
promote the Files and/or the Collateral Content in any manner it
deems appropriate to drive sales of the Files or other Content and
subscriptions to the Files or the Channels, including but not
limited to, making the Channel and/or the Content (or portions of
the Content) accessible by end users of the KMD, Channels or other
web sites, software applications, software programs, search
engines, physical products and other methods of distribution that
give users access to the Altnet Network.
4.2.2.
Altnet Points
Manager Program . Altnet, at its sole option,
reserves the right to include Customer Content in the Altnet Points
Manager Program (the "Points Program" ). Through the
Points Program, end users shall be able to redeem points (
"Points" ) to extend the limited free
play period of the Content, in any content that contains a limited
free play period (as indicated on the Customer supplied Insertion
Order). For example, if the Content offers a user a 1 day free
trial, a user may redeem Points to gain a 1 week trial (the number
of Points required for redemption and the actual extended trail
period shall be set by exclusively by Altnet and may vary).
The purpose of the Points Program is to advertise and promote
the Content on the Altnet Network and, as such, Customer shall
receive any financial payment or remuneration when a user acquires
an extended play period by redeeming Points. In addition to
allowing users to redeem Points for extended Content play periods,
Altnet also reserves the right to allow end users to purchase
Content by the redemption of Points instead of or in addition to
other payment methods such as credit card. Customer shall be
entitled to payment for Content purchased with Points as outlined
in Section 6.
5.
TERM;
TERMINATION.
5.1.
Unless earlier
terminated as set forth herein, the initial term of this Agreement
shall be for a period of six (6) months commencing on the Effective
Date (the " Initial Term "). This agreement shall
automatically renew for additional six (6) month periods (each a "
Renewal Term ," and together with the Initial Term, the "
Term "), unless either Party provides written notice to the
other Party thirty (30) days prior to the expiration of the then
current Term.
5.2.
Altnet may suspend or
take down the Content, cease any use, distribution or sales of the
Content and/or terminate this Agreement at any time and without
notice.
6.
REVENUE
SPLIT .
The parties agree that Altnet will handle all sales and
distribution of the Files. Except for the revenue split
(which terms are set forth in this Section 6), all terms and
conditions regarding the sales of any Files, including pricing,
will be governed by Insertion Order Agreements, substantially in
the form attached as Attachment B hereto (as the same shall
be modified by Altnet from time to time, "Insertion Orders") and
the Insertion Order terms of the form of Insertion Order applicable
at the time of initial insertion of an item of Content shall apply
to such content provided by Customer to Altnet for distribution
through the Customer Channel or otherwise, regardless of whether
the Insertion Order is signed or acknowledged in respect of the
applicable item of Content.
6.1.
Revenue
Split .
In connection with the exploitation of the Content as
contemplated under this Agreement, any revenues received for the
sale of Files, individually or through the sale of subscriptions,
will be allocated amongst the parties as follows:
Customer:
Forty Five (45%)
Percent of the Adjusted Gross Revenue ("Customer
Revenue")
Altnet:
Fifty Five (55%)
Percent of the Adjusted Gross Revenue (the "Altnet
Revenue")
6.2.
Adjusted Gross
Revenue .
For the purposes of this Agreement, " Adjusted Gross Revenue
" shall mean on each File sold, distributed or licensed via the
Altnet Network, the actual amount received for such File LESS costs
incurred related to payment processing by Altnet including but not
limited to: 3 rd Party credit card/payment processing
charges, charge backs, disputed charges, reserves and credits
issued (" Payment Processing Costs ");
6.3.
Payment
Schedule .
The Customer Revenue shall be paid by Altnet to Customer on
the following basis: If the Customer Revenue is greater than
$500 (US) for any calendar month, Customer shall be paid within 30
days after end of the calendar month. If the Customer Revenue is
less than $500 (US) for any calendar month, Customer shall be paid
within 90 days after end of each calendar month.
7.
STANDARD TERMS.
The
Standard Legal Terms & Conditions set forth on Exhibit A
attached hereto is hereby made a part of this Agreement and
i
