MULTIMEDIA PRODUCT DISTRIBUTION AGREEMENTS CHECKLIST (For Distribution of a Multimedia Product on CD-ROM)

1.

Subject matter of the contract (a)

2.

Identify the multimedia product to be provided. (i)

Which version?

(ii)

Are subsequent versions included?

(b)

Identify the documentation to be provided.

(c)

Identify any other relevant deliverables.

Scope of rights granted to distributor (a)

(b)

(c)

What is the form of the license? (i)

Exclusive or non-exclusive?

(ii)

Transferable or non-transferable?

(iii)

Worldwide or restricted to a specific territory or market?

What rights do you grant to the distributor? (i)

Right to purchase and distribute pre-packaged copies of the multimedia product?

(ii)

Right to copy, package, and distribute the multimedia product?

(iii)

Right to use your trademarks?

What is the scope of Distributor's right to purchase and distribute prepackaged copies of the multimedia product? (i)

What is the procedure for ordering copies of multimedia product (for example, special form, and so forth)?

(ii)

Is Distributor required to order any minimum quantities?

(iii)

Is there a maximum quantity Distributor can order?

(iv)

Is Distributor required to commit in advance to specific quantities?

© Simpsons Solicitors Suite 1202 135 Macquarie Street Sydney NSW 2000 Australia

Telephone: (61 2) 9247 3473 Facsimile: (61 2) 9247 3442

2. (v) (d)

(e)

Does the Distributor have the right to change or cancel orders, and if so, under what terms and conditions?

What is the scope of Distributor's right to copy the multimedia product? (i)

Can the Distributor use third parties to replicate the multimedia product and documentation, and if so, must such third parties be pre-authorised by you?

(ii)

Are there any restrictions imposed on the replication process?

(iii)

Can the Distributor modify or enhance the multimedia product?

(iv)

How is the multimedia product to be labelled?

What is the scope of Distributor's right to distribute the multimedia product? (i)

(ii)

How is the multimedia product to be marketed? (i.i)

As a stand-alone product?

(i.ii)

Bundled with other hardware or multimedia products?

What other restrictions are imposed on the Distributor's marketing activities? (ii.i)

Restricted to a specific territory?

(ii.ii)

Restricted to a particular market (for example, the medical services market)?

(ii.iii) Restricted to a particular class of customers (for example, government agencies)? 3.

Delivery And Returns (a)

(b)

What deliverables have you agreed to provide to the Distributor? (i)

Master copy of multimedia product and documentation?

(ii)

Pre-packaged copies of the multimedia product and documentation?

(iii)

Subsequent updates and enhancements?

What services do you provide to the Distributor? (i)

© Simpsons Solicitors Suite 1202 135 Macquarie Street Sydney NSW 2000 Australia

Training? Telephone: (61 2) 9247 3473 Facsimile: (61 2) 9247 3442

3. (ii) (c)

4.

(b)

6.

If Distributor orders pre-packaged copies from you, then: (i)

How soon after the Distributor places an order will you deliver the multimedia product to the Distributor?

(ii)

Who pays freight?

(iii)

What about insurance?

(iv)

When does risk of loss pass to Distributor?

(v)

Does Distributor have right to cancel orders? On what terms?

(vi)

Does Distributor have the right to return copies of product purchased, and if so, under what terms and conditions?

(vii)

What are Distributor's rights to return defective products, outdated versions, and so forth?

Distributor's Marketing Obligations (a)

5.

Support?

What are the Distributor's obligations to market the multimedia product? (i)

Is the Distributor required to make any specified marketing efforts (for example, devote a set dollar amount to advertising, employ a specified number of salespersons devoted full time to marketing the multimedia product, and so forth)?

(ii)

Is the Distributor required to use its "best efforts" to market the multimedia product?

(iii)

Is the Distributor required to meet any sales quotas?

What marketing assistance will you provide to Distributor?

MULTIMEDIA PRODUCT SUPPORT (a)

What support, if any, do you provide for the Distributor?

(b)

Who provides support for the Distributor's customers (you or Distributor)?

(c)

What is the scope of the Distributor's obligations to provide support to its customers?

Price And Payment [where you provide copies] (a)

What is the price for each multimedia product ordered by Distributor?

© Simpsons Solicitors Suite 1202 135 Macquarie Street Sydney NSW 2000 Australia

Telephone: (61 2) 9247 3473 Facsimile: (61 2) 9247 3442

4.

7.

(b)

When is each payment due?

(c)

Are any discounts allowed for volume?

(d)

Do you have the right to change the price during the term of the agreement? If so, does the Distributor get any price protection for outstanding orders?

(e)

Does the Distributor get a credit for returns?

Licence Fees And Royalties [where distributor makes copies] (a)

Payments by Distributor to you (i)

What type of payment will be required? (i.i)

Lump sum (paid-up license)?

(i.ii)

Percentage royalty per copy?

(i.iii)

Set dollar royalty per copy?

(i.iv) Other (for example, yearly fee plus per copy fee)? (ii)

What is the basis of payment calculations?

(iii)

What is the amount of the payment?

(iv)

Do you get an advance payment?

(v)

Are there any guaranteed or minimum payment amounts?

(vi)

When is each payment due?

(vii)

Are any discounts allowed for volume?

(viii) Do you have the right to change the price during the term of the agreement? If so, does the Distributor get any price protection? (ix) (b)

Does the Distributor get a credit for returns from end users?

Distributor bookkeeping requirements (i)

What record-keeping requirements are imposed on the Distributor in order to keep track of all sales or licenses of the multimedia product to ensure that you are paid all sums owed?

(ii)

What information must the Distributor record with respect to each sale or license?

© Simpsons Solicitors Suite 1202 135 Macquarie Street Sydney NSW 2000 Australia

Telephone: (61 2) 9247 3473 Facsimile: (61 2) 9247 3442

5.

8.

10.

How often must the Distributor send you reports, and what information must be contained in each report?

(iv)

What rights do you have to audit the Distributor's books?

Taxes (a)

9.

(iii)

Who pays for any federal, state, or local taxes imposed on the sale or license of the multimedia product by the Distributor?

Confidentiality (a)

Is either party obligated to keep confidential any information relating to the other party's products or business?

(b)

Does this confidentiality obligation continue after the license agreement ends?

Warranties (a)

Is your multimedia product licensed "AS IS" or do you make any warranties?

(b)

What express warranties (if any) do you make to the distributor? (i)

Warranty that you have the right to enter into the agreement?

(ii)

Warranty of performance of the multimedia product?

(iii)

Warranty of non-infringement of patents, copyrights, and trade secrets?

(iv)

Warranty as to minimum equipment required to support the multimedia product?

(v)

Warranty as to the operating system and any other multimedia product required to support the multimedia product?

(c)

Do you make any of these warranties direct to the end user, or is the Distributor authorised to pass on any warranties to the end user customer?

(d)

How long does the warranty last?

(e)

Have you disclaimed all express warranties not specifically included in the contract?

(f)

Have you disclaimed the warranties of merchantability and fitness for particular purpose implied by law?

© Simpsons Solicitors Suite 1202 135 Macquarie Street Sydney NSW 2000 Australia

Telephone: (61 2) 9247 3473 Facsimile: (61 2) 9247 3442

6.

11.

12.

(g)

If the multimedia product fails to work as warranted, have you limited the Distributor's remedy to repair or some other specified remedy (for example, refund)?

(h)

If the multimedia product fails to work as warranted, have you limited the end user's remedy to repair or some other specified remedy (for example, refund)?

(i)

Are there any conditions that will void the warranty?

Limitations of liability (a)

Is there a limit on the dollar amount of damages to which you are exposed in the event the multimedia product fails to work properly?

(b)

Is there a limit on the type of damages to which you are exposed in the event the multimedia product fails to work properly (for example, have you excluded liability for consequential damages, such as lost profits, or claims by customers and other third parties)?

Indemnification (a)

Will you agree to pay any damages or expenses suffered by the Distributor and/or its customers if your ownership rights to the multimedia product are challenged by anyone? If so, under what terms and conditions?

(b)

Will the Distributor pay all damages suffered by you if the Distributor makes any misrepresentations to its customers?

(c)

Does the indemnifying party have the right to control or participate in the defence?

(d)

What are the conditions for indemnification?

(e) 13.

(i)

Timely notice of claims?

(ii)

Cooperation in defence?

(iii)

Exception for claims caused by misconduct or gross negligence

Are there any limits on indemnification liability?

Default (a)

What are each party's rights in the event of a breach of the agreement by the other party? (i)

Suspend performance?

(ii)

Terminate contract?

© Simpsons Solicitors Suite 1202 135 Macquarie Street Sydney NSW 2000 Australia

Telephone: (61 2) 9247 3473 Facsimile: (61 2) 9247 3442

7.

14.

(iii)

Liquidated damages?

(iv)

Injunction?

(v)

Other?

(b)

Is the non-breaching party required to give notice of the breach to the other party?

(c)

Does the breaching party have an opportunity to cure its breach before the other party can terminate the agreement?

Term And Termination (a)

What is the term of the distributor's right to distribute your multimedia product?

(b)

Does the Distributor have the right to renew the agreement when it expires?

(c)

Is the right to renew conditioned upon the Distributor's performance or some other criteria?

(d)

Does either party have the right to terminate the agreement before it would otherwise end? If so, under what circumstances?

(e)

What happens on termination? (i)

Distributor must discontinue marketing and distribution of multimedia product

(ii)

Distributor must destroy or return all copies of multimedia product and documentation

(iii)

Distributor must certify destruction and/or return of all materials.

(f)

If the Distributor was supporting the multimedia product for its customers, who will provide such support after the license ends?

(g)

Do any obligations survive termination?

(h)

(i)

Confidentiality?

(ii)

Indemnification?

(iii)

Payments due and owing (fees, taxes, royalties, and so forth)?

Does Distributor have the right to return inventory for refund upon termination of the Agreement?

© Simpsons Solicitors Suite 1202 135 Macquarie Street Sydney NSW 2000 Australia

Telephone: (61 2) 9247 3473 Facsimile: (61 2) 9247 3442

8. 15.

16.

17.

Assignment Rights (a)

Do you have the right to assign the distribution agreement?

(b)

Does the Distributor have the right to assign the distribution agreement?

Export regulations (a)

Does the Distributor have the right to export the multimedia product to other countries?

(b)

If so, has the Distributor agreed to comply with federal export regulations?

Miscellaneous (a)

Governing Law. What state's law will govern any disputes?

(b)

Notices. Is there a provision outlining how notices are to be given and when they are effective?

(c)

Waiver. Is there a provision that a waiver of rights on one occasion shall not be deemed a waiver on future occasions?

(d)

Severability. Is there a provision that permits the contract to continue in force even if certain provisions are deemed unenforceable (severability clause)?

(e)

Entire Agreement. Is this contract the entire agreement of the parties?

© Simpsons Solicitors Suite 1202 135 Macquarie Street Sydney NSW 2000 Australia

Telephone: (61 2) 9247 3473 Facsimile: (61 2) 9247 3442