EXHIBIT 10.5
THEGLOBE.COM
MERCHANDISING AGREEMENT
PREMIER PARTNER
THIS PREMIER PARTNER MERCHANDISING AGREEMENT (the "Agreement") is made
as of September 30, 1999 (the "Effective Date") by and between THEGLOBE.COM,
INC., with its principal place of business at 120 Broadway, New York, NY 10271
("theglobe"), and D.G. JEWELLERY OF CANADA, LTD., with its principal place of
business at 1001 Petrolia Road, Toronto, ON M3J 2X7 ("Merchant").
1. DEFINITIONS.
(A) "AFFILIATE PROGRAM" means theglobe's standard affiliate program for
merchants in shop.theglobe.com (when available and to the extent that Merchant
is technically and legally eligible to participate).
(B) "CLICKS" shall mean click through of any promotion described in Exhibit
A.
(C) "LAUNCH DATE" means the first day on which theglobe performs any of the
promotions described on Exhibit A.
(D) "MARKS" means the Merchant Marks or theglobe Marks, as applicable.
(E) "MERCHANT BANNERS" means any banner, button, text or similar ads
Merchant provides to theglobe or that theglobe develops for Merchant in
connection with this Agreement.
(F) "MERCHANT CONTENT" means any content or information (including without
limitation any text, music, sound, photographs, video, graphics, data or
software), in any medium, provided by Merchant to theglobe for use on theglobe
Site (other than Merchant Banners).
(G) "MERCHANT MARKS" means all Merchant domain names, trademarks and logos
reasonably necessary or desirable for theglobe to perform under this Agreement.
(H) "MERCHANT PAGES" means the subset of the Merchant Website co-branded in
accordance with this Agreement.
(I) "MERCHANT PRODUCTS" means the goods and services offered on Merchant
Pages and those goods or services being sold by or through Merchant from the
Storefront.
(J) "MERCHANT WEBSITE" means the pages under the NetJewels.com domain.
(K) "REFERRAL" means a person who accesses the Merchant Website.
(L) "STOREFRONT" means the Jewelry category pages of shop.theglobe.com.
(M) "THEGLOBE MARKS" means all theglobe domain names, trademarks and logos
reasonably necessary or desirable for Merchant to perform under this Agreement.
(N) "THEGLOBE MATERIALS" means theglobe's navigation bars, logos and other
co-branding elements provided to Merchant for incorporation on the Merchant
Pages.
(O) "THEGLOBE SITE" means all pages under theglobe.com domain or otherwise
operated by theglobe or any company it controls, is controlled by or that is
under common control.
2. IMPLEMENTATION.
2.1 PRE-LAUNCH DELIVERABLES. Promptly following the Effective Date,
theglobe shall deliver to Merchant the following: theglobe Materials, a media
and promotional prototype, and a plan for doing the production/design services
related to integrating Merchant's promotions into theglobe Site.
2.2 CO-BRANDING. Merchant shall co-brand the Merchant Pages with theglobe
Materials. The parties shall mutually agree upon the look and feel of any
co-branded Merchant Pages, specifying the location of all theglobe Materials and
other branding. Merchant may not publicly display the Merchant Pages until such
agreement has been reached and theglobe has approved Merchant's implementation.
Thereafter, without theglobe's consent, Merchant shall not change any Merchant
Pages (a) in a way that would degrade, detract from or interfere with
theglobe's branding, or (b) to introduce any new third party branding on such
Merchant Pages. Merchant shall not provide any hypertext links from the Merchant
Pages to a page outside of the Merchant Pages (other than to theglobe Site). If
requested by theglobe, Merchant shall create additional branded versions of the
Merchant Pages branded with the branding of theglobe's distribution partners,
which branded versions shall be implemented within 30 days of theglobe's
request and subject to approval in accordance with this Section 2.
2.3 CONTENT DELIVERY. All deliveries of theglobe Materials or Merchant
Content, as applicable, shall comply with technical standards of the recipient,
as reasonably specified by the recipient.
2.4 REFERRAL RELATIONS. Merchant shall be responsible for providing all
customer support regarding the Merchant Pages and the Merchant Products, and
the globe may redirect to Merchant any associated customer support inquiries.
To the extent that Merchant is delivering back to theglobe any information
about Referrals, Merchant's privacy policy shall make any disclosures, or
obtain any Referral consent, necessary to make the disclosures about
Referrals back to theglobe required by this Agreement.
2.5 STOREFRONT. theglobe shall develop, serve and manage the Storefront.
theglobe shall use commercially reasonable efforts to make the Storefront
publicly available a minimum of 90% of the time during any 24 hour period, 95%
of the time during any 7 day period, and 98% of the time during any 30 day
period. theglobe shall develop, serve and manage the Storefront. theglobe shall
have complete editorial discretion over the contents, layout and look and feel
of the Storefront, provided that the "Jewelry" category will always contain at
least one full page on shop.theglobe.com. Merchant shall provide to theglobe
product shots and product-related
content (on a regular rotating basis) for incorporation into the Storefront. In
addition, Merchant shall provide to theglobe the code necessary to allow
Storefront users to search the Merchant Pages.
3. MARKETING.
3.1 PROMOTIONS. On and following the Launch Date, theglobe shall provide
the promotions described in Exhibit A. In the event that theglobe redesigns the
globe Site in a way that impacts such promotions, theglobe shall provide
substantially similar promotions on the redesigned site.
3.2 FRAMING. theglobe may frame the Merchant Pages in a mutually acceptable
manner, and any consideration theglobe derives from such frames shall be solely
theglobe's.
3.3 MERCHANT BANNERS. Merchant shall deliver to theglobe Merchant Banners
that are to be run in accordance with this Agreement. Such banners shall comply
with theglobe's then-current technical standards. The terms of any insertion
order or similar document regarding the Merchant Banners are expressly rejected,
except to the extent that they specify the location, timing or duration of the
display of the Merchant Banners and such terms are accepted by theglobe.
theglobe may request that Merchant Banners be co-branded with theglobe Marks, in
which case the parties shall work together to develop a mutually acceptable
implementation. theglobe may approve or reject any Merchant Banner in its sole
discretion.
3.4 MERCHANT DELIVERABLES. Merchant will produce product shots which rotate
regularly, content and search functionality so that theglobe can fulfill its
promotional obligations described in Exhibit A.
4. PAYMENT. Merchant shall make the payments described in Exhibit A. Merchant
shall pay theglobe's costs of collection (including reasonable attorneys' fees)
for any overdue payments. All fees and payments stated herein exclude, and
Merchant shall pay, any sales, use or other tax related to the parties'
performance of their obligations or exercise of their rights under this
Agreement, exclusive of taxes based on theglobe's net income.
5. LICENSES AND STANDARDS.
5.1 CONTENT. Merchant hereby grants to theglobe a non-exclusive, worldwide
license to use, reproduce, create derivative works of (only as necessary to
build pages in a manner consistent with this Agreement), publicly display,
publicly perform and digitally perform Merchant Banners and Merchant Content on
theglobe Site or otherwise as reasonably appropriate to advertise and promote
the Merchant Products, the Storefront or the Merchant Pages. theglobe hereby
grants to Merchant a non-exclusive, worldwide license to use, reproduce, create
derivative works of (only as necessary to build Merchant Pages), publicly
display, publicly perform and digitally perform theglobe Materials on Merchant
Pages.
5.2 TRADEMARKS. Merchant hereby grants to theglobe a non-exclusive license
to use the Merchant Marks to advertise and promote the Storefront, the Merchant
Pages and the Merchant Products. theglobe hereby grants to Merchant a
non-exclusive license to use theglobe Marks on the Merchant Pages and, if
requested by theglobe, in the Merchant Banners.
5.3 TRADEMARK RESTRICTIONS. The Mark owner may terminate the foregoing
trademark license if, in its reasonable discretion, the licensee's use of the
Marks tarnishes, blurs or dilutes the quality associated with the Marks or the
associated goodwill and such problem is not cured within 10 days of notice of
breach; alternatively, instead of terminating the license in total, the owner
may specify that certain licensee uses may not contain the Marks. Title to and
ownership of the owner's Marks shall remain with the owner. The licensee shall
use the Marks exactly in the form provided and in conformance with any trademark
usage policies. The licensee shall not take any action inconsistent with the
owner's ownership of the Marks, and any benefits accruing from use of such Marks
shall automatically vest in the owner. The licensee shall not form any
combination marks with the other party's Marks.
5.4 OWNERSHIP. As between theglobe and Merchant: (a) theglobe and its
suppliers retain all rights, title and interest in and to all intellectual
property rights embodied in or associated with theglobe Materials, and (b)
Merchant and its suppliers retain all rights, title and interest in and to all
intellectual property rights embodied in or associated with the Merchant
Content. Merchant Banners (other than any theglobe Marks incorporated therein),
and the Merchant Pages (other than any theglobe Materials incorporated therein).
There are no implied licenses under this Agreement, and any rights not expressly
granted to a licensee hereunder are reserved by the licensor or its suppliers.
Neither party shall exceed the scope of the licenses granted hereunder.
5.5 STANDARDS. Merchant shall not intentionally or in a negligent manner
provide Merchant Banners (excluding any theglobe Marks incorporated therein at
theglobe's request) or Merchant Content, and theglobe shall not provide to
Merchant any theglobe Materials, that: (a) infringe any third party's
intellectual property or publicity/privacy right; (b) violate any law or
regulation; (c) are defamatory, obscene, harmful to minors or child
pornographic; (d) contain any viruses, Trojan horses, worms, time bombs,
cancelbots or other computer programming routines that are intended to damage,
detrimentally interfere with, surreptitiously intercept or expropriate any
system, data or personal information; or (e) are materially false, inaccurate or
misleading.
5.6 QUALITY STANDARDS. Merchant shall provide the Merchant Products, and
any related customer and technical support, on a quality level substantially
equivalent to the quality offered by Merchant's online competitors. The category
of Merchant Products as of the Effective Date shall be the same or substantially
similar throughout the term of the Agreement. Merchant shall clearly state, and
shall follow the stated, warranty and refund policies. All Referrals shall be
treated at least as favorably in all respects (including without limitation with
respect to pricing, quality of service, and customer support responsiveness) as
Merchant treats users of the Merchant Website.
6. INFORMATION ABOUT REFERRALS. Merchant shall not disclose to any third
parties any information or data collected from or about Referrals (including
information provided by theglobe, voluntarily-disclosed information, and any
information Merchant gleans from Referrals' access or use of the Merchant
Pages), nor may Merchant use such information for any purpose other than as
necessary to deliver purchased Merchant Products to Referrals. Merchant shall
use at least industry-standard methods to protect the security of such
Referral-related information.
7. NO WARRANTIES. EACH PARTY PROVIDES ALL MATERIALS AND SERVICES TO THE OTHER
PARTY "AS IS." EACH PARTY DISCLAIMS ALL WARRANTIES AND CONDITIONS, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
TITLE, NON-INFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE.
Each party acknowledges that it has not entered into this Agreement in reliance
upon any warranty or representation except those specifically set forth herein.
Unless an approval process is specified herein, all deliverables provided by one
party to the other shall be deemed accepted (for purposes of the UCC) when
delivered.
8. TERM AND TERMINATION.
8.1 TERM. This Agreement will become effective on the Effective Date and
will continue in effect for two (2) years following the Launch Date. The parties
shall, during the 60 days immediately prior to expiration, negotiate in good
faith to extend the term of this Agreement. However, no extension shall apply
unless mutually agreed upon in writing by both parties.
8.2 TERMINATION FOR FAILURE TO PERFORM. By providing written notice, a party
may immediately terminate this Agreement if the other party materially breaches
this Agreement and fails to cure that breach within 15 days after receiving
written notice of the breach. theglobe will deliver: a) 36,000 Clicks within six
months following the Launch Date, b) 72,000 Clicks within twelve months
following the Launch Date, c) 115,200 Clicks within eighteen months following
the Launch Date, or d) 158,400 Clicks within twenty-four months following the
Launch Date. Merchant's sole and exclusive remedy and theglobe's sole and
exclusive liability for theglobe's failure to deliver such Clicks shall be, at
Merchant's option, either (i) to terminate this Agreement or (ii) to suspend
subsequent payments until theglobe has provided the applicable number of Clicks.
The number of Clicks for the purpose of this section shall include only Clicks
made via banners, buttons, text links, email, or html email promotions.
8.3 TERMINATION FOR CONVENIENCE. Either party may terminate this Agreement for
any or no reason (a) effective as of the six-month anniversary of the Effective
Date by providing written notice to the other party at least fifteen (15) days
prior to the six-month anniversary of the Effective Date; or (b) by providing
sixty (60) days written notice to the other party at any time between the
ten-month and twelve-month anniversary of the Effective Date. For one (1) month
after termination for convenience by theglobe, in the event that theglobe
receives an offer to establish an exclusive third-party retailer under the
"Jewelry" department of shop.theglobe.com, then theglobe shall notify Merchant
of the terms and conditions contained in the offer, and theglobe shall offer
Merchant the right to engage in the same transaction on the exact terms of such
offer. Merchant shall have five (5) days from notification to accept the exact
terms of theglobe's offer. If Merchant accepts such offer, then this Agreement
shall be re-instituted as amended by the terms in theglobe's notice. If the
parties do not re-institute such agreement within ten (10) days from Merchant's
acceptance, or if Merchant declines theglobe's offer, then theglobe shall have
no further obligation to Merchant.
8.4 TERMINATION BECAUSE OF ACQUISITION. By providing at least 15 days prior
written notice, theglobe may terminate this Agreement in its sole discretion if
theglobe acquires a
controlling interest in a company or becomes controlled by a company that offers
or sells jewelry, with theglobe paying a refund on a pro-rata basis to Merchant
of (i) the then current month's Placement Fee and (ii) the Development Fee (as
calculated on a 24-month basis).
8.5 EFFECTS OF TERMINATION. Upon expiration or termination of the
Agreement, all licenses granted hereunder shall terminate unless such licenses
are expressly stated as surviving. Merchant shall promptly remove all theglobe
Marks and theglobe Materials from its servers, and theglobe shall promptly
remove all Merchant Marks, Merchant Banners and Merchant Content or other
materials provided by Merchant from its servers. Sections 5.4, 6, 7, 8.3, 8.5,
9, 10 and 11, and any obligation to pay any accrued but unpaid amounts and audit
rights, shall survive any expiration or termination.
9. LIABILITY LIMITS. NEITHER PARTY SHALL BE LIABLE FOR LOST PROFITS OR SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT (HOWEVER ARISING, INCLUDING NEGLIGENCE), EVEN IF THE PARTIES ARE AWARE
OF THE POSSIBILITY OF SUCH DAMAGES.
EXCEPT IN THE EVENT OF A CLAIM UNDER SECTION 10, IN NO EVENT SHALL EITHER PARTY
BE LIABLE TO THE OTHER PARTY IN AN AMOUNT GREATER THAN THE AMOUNT MERCHANT
ACTUALLY PAYS TO THEGLOBE HEREUNDER.
10. INDEMNITY. Each party (the "Indemnifying Party") shall indemnify the other
party (the "Indemnified Party") against any and all claims, losses, costs and
expenses, including reasonable attorneys' fees, which the Indemnified Party may
incur as a result of claims in any form by third parties arising from: (a) the
Indemnifying Party's acts, omissions or misrepresentations to the extent that
the Indemnifying Party is deemed an agent of the Indemnified Party, (b) the
Indemnifying Party's breach of its privacy policy, or (c) the Indemnifying
Party's noncompliance with all applicable laws and regulations regarding its
performance in connection with this Agreement. In addition, theglobe shall
indemnify Merchant against any and all claims, losses, costs and expenses,
including reasonable attorneys' fees, which Merchant may incur as a result of
claims in any form by third parties arising from theglobe Materials or theglobe
Marks. In addition, Merchant shall indemnify theglobe against any and all
claims, losses, costs and expenses, including reasonable attorneys' fees, which
theglobe may incur as a result of claims in any form by third parties arising
from Merchant Banners (excluding theglobe Marks if applicable), Merchant
Content, Merchant Marks, or Merchant Products. The foregoing obligations are
conditioned on the Indemnified Party: (i) giving the Indemnifying Party notice
of the relevant claim, (ii) cooperating with the Indemnifying Party, at the
Indemnifying Party's expense, in the defense of such claim, and (iii) giving the
Indemnifying Party the right to control the defense and settlement of any such
claim, except that the Indemnifying Party shall not enter into any settlement
that affects the Indemnified Party's rights or interest without the Indemnified
Party's prior written approval. The Indemnified Party shall have the right to
participate in the defense at its expense.
11. GENERAL.
11.1 GOVERNING LAW. This Agreement will be governed and construed in
accordance with the laws of the State of New York without giving effect to
conflict of laws principles. Both parties submit to personal jurisdiction in New
York and further agree that any cause of action arising under this Agreement
shall be brought in a court in New York City, NY.
11.2 PUBLICITY. Neither party shall issue any press release or similar
publicity statement regarding this Agreement without the prior approval of
both parties (not to be unreasonably withheld) or as required by law.
11.3 INDEPENDENT CONTRACTORS. The parties are independent contractors, and
no agency, partnership, franchise, joint venture or employment relationship is
intended or created by this Agreement. Neither party shall make any warranties
or representations on behalf of the other party.
11.4 ASSIGNMENT. Neither party may assign its rights or delegate its duties
hereunder (except to an affiliated company, or to a successor in interest in the
event of a merger, amalgamation, reorganization sale of assets of the business
to which this Agreement is related, or consolidation) without the other party's
prior written consent, and any purported attempt to do so is null and void.
11.5 SEVERABILITY; HEADINGS. If any provision herein is held to be invalid
or unenforceable for any reason, the remaining provisions will continue in full
force without being impaired or invalidated in any way. The parties agree to
replace any invalid provision with a valid provision that most closely
approximates the intent and economic effect of the invalid provision. Headings
are for reference purposes only and in no way define, limit, construe or
describe the scope or extent of such section.
11.6 FORCE MAJEURE. Except as otherwise provided, if performance hereunder
(other than payment) is interfered with by any condition beyond a party's
reasonable control, the affected party shall be excused from such performance to
the extent of such condition. Each party acknowledges that website operations
may be affected by numerous factors outside of a party's control.
11.7 NOTICE. Any notice under this Agreement will be in writing and
delivered by personal delivery, overnight courier, confirmed facsimile,
confirmed email, or certified or registered mail, return receipt requested, and
will be deemed given upon personal delivery, 1 day after deposit with an
overnight courier, 5 days after deposit in the mail, or upon confirmation of
receipt of facsimile or email. Notices will be sent to a party at its address
set forth in the preamble above or such other address as that party may specify
in writing pursuant to this subsection.
11.8 ENTIRE AGREEMENT; WAIVER. This Agreement sets forth the entire
understanding and agreement of the parties, and supersedes any and all oral or
written agreements or understandings between the parties, as to the subject
matter of the Agreement. This Agreement may be changed only by a writing signed
by both parties. The waiver of a breach of any provision of this Agreement will
not operate or be interpreted as a waiver of any other or subsequent breach.
THEGLOBE.COM, INC.: MERCHANT: DG Jewellery
By: /s/ Bryan Wiener By: /s/ Jack Berkovits
------------------------------ -----------------------------------
Name: Bryan Wiener Name: Jack Berkovits
---------------------------- -----------------------------------
Title: General Manager Title: CEO
---------------------------- -----------------------------------
EXHIBIT A
BUSINESS TERMS
THEGLOBE'S PROMOTIONS:
Merchant and theglobe shall mutually agree upon a list of ten (10) keywords that
will display advertisements for Merchant on theglobe Site. theglobe may remove
one or more of such keywords if it has a legitimate reason, in which case the
parties will mutually agree an equal number of replacement keywords. theglobe
shall produce creative (including banners, buttons, text links, emails and html
emails) for Merchant for use in promotions described herein. theglobe will
manage the performance of this promotional campaign to maximize conversion
rates.
YEAR ONE
theglobe will:
- - host a Jewelry Storefront within shop.theglobe.com
- - facilitate Affiliate Program integration, if applicable
- - serve 6,900,000 banners promoting the Storefront, Merchant Pages, or
item sold on the Merchant Pages
- - serve 1,200,000 buttons promoting the Storefront, Merchant Pages, or item
sold on the Merchant Pages
- - serve 1,200,000 text links promoting the Storefront, Merchant Pages, or
item sold on the Merchant Pages
- - serve 3,100,000 emails promoting the Storefront, Merchant Pages, or item
sold on the Merchant Pages
- - serve 2,000,000 html emails promoting the Storefront, Merchant Pages, or
item sold on the Merchant Pages
- - provide sponsorship within shop.theglobe.com promotions for Halloween,
Thanksgiving, Holiday 99, New Years 2000, Valentine's Day, Graduation,
Mothers' Day, Fathers' Day.
- - provide 4 Celebrity Event Sponsorships
YEAR TWO
theglobe will:
- - host a Jewelry Storefront within shop.theglobe.com
- - facilitate Affiliate Program integration, if applicable
- - serve 8,280,000 banners promoting the Storefront, Merchant Pages, or item
sold on the Merchant Pages
- - serve 1,440,000 buttons promoting the Storefront, Merchant Pages, or item
sold on the Merchant Pages
- - serve 1,440,000 text links promoting the Storefront, Merchant Pages, or
item sold on the Merchant Pages
- - serve 3,720,000 emails promoting the Storefront, Merchant Pages, or item
sold on the Merchant Pages
- - serve 2,400,000 html emails promoting the Storefront, Merchant Pages, or
item sold on the Merchant Pages
- - provide sponsorship within shop.theglobe.com promotions for Halloween,
Thanksgiving, Holiday 99, New Years 2001, Valentine's Day, Graduation,
Mothers' Day, Fathers' Day.
- - provide 4 Celebrity Event Sponsorships
Except as specified in Section 8.2, if theglobe promises to deliver a minimum
number of impressions during a specified time period and fails to do so,
theglobe's sole and exclusive obligation in such circumstance shall be to
continue performing the promotion until it delivers the total number of required
impressions. If, at the end of the Agreement, theglobe fails to deliver all
impressions and Clicks promised hereunder, theglobe shall have an additional 90
days to deliver the total number of required impressions or Clicks, or continue
running until the required number of impressions and Clicks have been delivered.
If theglobe does not do so, theglobe shall thereafter promptly refund a prorated
amount of the placement fees set forth below (prorated based on the number of
impressions or Clicks actually delivered, as applicable).
theglobe may redesign or modify the organization, structure or "look and feel"
of theglobe Site at any time without notice, provided that the "Jewelry"
category will always contain at least one full page on shop.theglobe.com. In the
event such modifications affect the placement of such promotions, theglobe shall
notify Provider and shall work with Provider to display such promotions in
comparable places on theglobe Site.
EXCLUSIVITY.
1. Within the "Jewelry" department of shop.theglobe.com, Merchant will be the
only third party jewelry-retailer whose products are promoted on the Storefront.
2. The "Jewelry" department of shop.theglobe.com will remain titled "Jewelry",
or another mutually agreeable title.
3. In other departments of shop.theglobe.com, theglobe will not create a
sub-department labeled "Jewelry".
4. Merchant acknowledges that theglobe is not prevented from accepting
advertising or otherwise promoting jewelry on theglobe Site.
5. During the term of this Agreement, theglobe will not allow third party
retailers in shop.theglobe.com to promote fine jewelry on their storefronts,
provided that theglobe may permit retailers to promote watches under $500 retail
throughout shop.theglobe.com. In the event that theglobe breaches this Section
5, theglobe's sole and exclusive liability and Merchant's sole
and exclusive remedy will be for theglobe to remove the fine jewelry or
watches over $500 retail from the storefront within 15 days notice from
Merchant.
6. Notwithstanding anything to the contrary herein, theglobe may promote in the
"partner links" area of the left hand navigation bar on the Storefront third
parties whose goods or services include the sales of jewelry, so long as any
such party's sale of jewelry is not expressly promoted in that "partner links"
area or anywhere else in the Storefront.
TOTAL PAYMENTS.
DEVELOPMENT FEE. Merchant shall pay to theglobe a nonrefundable one-time
development fee of $27,000 for theglobe's preparation and delivery of the
pre-launch deliverables.
EXCLUSIVITY FEE. For year 1 of the Agreement, Merchant shall pay to theglobe a
nonrefundable exclusivity fee of $147,000. For year 2 of the Agreement, Merchant
shall pay to theglobe a nonrefundable exclusivity fee of $180,000.
PLACEMENT FEE. For year 1 of the Agreement, Merchant shall pay to theglobe a
nonrefundable placement fee of $96,000. For year 2 of the Agreement, Merchant
shall pay to theglobe a nonrefundable placement fee of $144,000.
PAYMENT SCHEDULE.
YEAR 1
Effective Date: $27,000
Launch Date, and each of the following 11 monthly
anniversary dates of the Launch Date: $20,250
Total Year 1 (excluding Affiliate Program Royalties) $270,000
YEAR 2
Each monthly anniversary of the Launch Date: $27,000
Total Year 2 (excluding Affiliate Program Royalties) $324,000
Merchant will pay theglobe a percentage of revenue for sales referred via
Affiliate Program on a monthly basis throughout the term. This percentage will
be calculated by adding the same commission percentage made available via the
Merchant's affiliate program to the general public on the Merchant Website and
adding three (3) percent.
RECORD KEEPING.
Merchant shall keep for 3 years proper records and books of account relating to
the foregoing computation of royalties. Once every 12 months, theglobe or its
designee may inspect such records to verify Merchant's reports. Any such
inspection shall be conducted in a manner that does not unreasonably interfere
with Merchant's business activities. Merchant shall immediately make any overdue
payments disclosed by the audit plus applicable interest. If such audit
discloses an overpayment by Merchant, theglobe will promptly refund such
overpayment to Merchant. Such inspection shall be at theglobe's expense;
however, if the audit reveals overdue payments in excess of 5% of the payments
owed to date, Merchant shall immediately pay the cost of such audit, and
theglobe may conduct another audit during the same 12 month period.