COOLEY GODWARD LLP
FORM CO-BRANDING AGREEMENT
(PROVIDER-FAVORABLE)

This form agreement is designed to be used when representing a website who will be building a co-branded version of its service for another website. This form is very provider-favorable and contains many terms that are objectionable to branders. This form was developed in conjunction with a service provider who offers web-based email functionality, so some of the provisions are specific to this type of service implementation (e.g., the last sentence of Section 2.2, Section 2.4 and the reference to in-box promotions in Exhibit A, Section 1.1).

Among the issues to consider when using this form:

• Generally, this agreement contemplates that the parties will exchange banner ads. In practice, this occurs only occasionally, and thus the provisions regarding banners may not apply.
• Section 2.1 is very glib from a brander’s standpoint. It never really describes the service either today or in the future. Branders may want more specificity and certainty.
• In Section 2.3, the parties should carefully consider how the user agreement will actually work. For example, if the provider were obligated to transfer the users’ accounts to a new service provider post-termination, the provider’s standard form user agreement would probably be inadequate. The brander may want to control the user agreement to manage its legal risk better or because stiff or onerous terms will deter users from using the service. In any respect, because custom terms may be necessary, in many cases the provider develops and uses a custom user agreement solely for users of the co-branded service.
• Section 3.2’s provisions regarding each party submitting a list of competitors who may not advertise on the co-branded site is not industry standard, although it is one workable way to address the problem.
• Section 4.2 is interesting because the Internet Tax Freedom Act should bar most taxes that might be applicable to the relationship. However, a few states have ambiguous statutes on the books that may subject Internet advertising to sales taxes, and thus this provision allocates those possible tax consequences. It also allocates any future taxes if the prohibition on sales taxes is not permanent.
• Exhibit A, Section 1.1 contemplates that 3 different types of inventory can be sold and contemplates that different parties might handle each type. Often, there is only one category of advertising inventory to address.
• Exhibit A requires significant attention by the parties to properly reflect the business terms of their deal.

This form was last updated on October 3, 1999 by Eric Goldman.

CO-BRANDING AGREEMENT

This Co-Branding Agreement is made as of _________, 1999 (the "Effective Date") by and between ___________, with a principal place of business at _________ ("Provider"), and _______________, with its principal place of business at ___________________ ("Brander").

1.    Definitions.

a. "Account" means a registered User’s Service account.

b.    "Banners" mean, collectively or as applicable, Provider Banners and Brander Banners.

c.    "Brander Banners" means any banner, button, text or similar ads Brander provides to Provider in connection with this Agreement.

d.    "Brander Content" means all content or information (including without limitation any text, music, sound, photographs, video, graphics, data or software), in any medium, provided by Brander to Provider in connection with this Agreement (other than Brander Banners).

e.    "Domain Name" means the domain name described in Exhibit A.

f.    "Inventory" means the inventory of promotions (banner ads, buttons, text links and others) available for sale in connection with the Service.

g.    "Launch Date" means the first day on which the Service goes live.

h.    "Provider Banners" means any banner, button, text or similar ads Provider provides to Brander in connection with this Agreement.

i.    "Service" means Provider’s standard XYZ service co-branded with Brander’s branding.

j.    "User" means an individual who accesses the Service.

2. The Service.

2.1    Implementation. Within 5 days following the Effective Date, Brander shall provide to Provider the Brander Content necessary to implement the Service. Such content shall be delivered in a format reasonably specified by Provider. The Service will be built using Provider’s page templates and will include Brander elements in those spaces Provider designates for branding by its co-branding partners. The Service shall incorporate the standard XYZ service as Provider modifies it from time to time in its sole discretion. The service levels for the Service shall not be materially less than the associated service levels Provider would obtain for the standard XYZ service at similar volumes.

2.2    Domain Name. The Service shall operate at the Domain Name. If the Domain Name includes a Brander trademark, Brander shall provide technical assistance (as reasonably requested by Provider) necessary to implement the Domain Name on Provider’s servers. Emails sent in connection with the Service will contain Provider branding in accordance with Provider’s standards.

2.3    User Relations. Brander acknowledges that, to obtain Accounts, all Users are required to agree to Provider’s then current standard form of user agreement (as amended from time to time in Provider’s sole discretion). Accounts are not available to minors. Provider shall have first line responsibility for dealing with User support inquiries, which Provider may handle in any manner it deems commercially reasonable.

2.4    Communications with Users. Provider may restrict the number of emails Brander may send to Accounts, and Provider may require Brander to use a system utility to deliver email to Accounts. All direct email sent by Brander to Users shall be for Brander’s benefit only and not for any third parties’ benefit (nor shall it promote in any way any third party goods or services). Brander shall not authorize a third party to send direct email to Users.

2.5    Data Exchange. The parties shall exchange data regarding Users in accordance with Exhibit A, and each party shall make any disclosures, or obtain any consent, necessary to make such disclosures. If applicable, the parties shall cooperate to synchronize their databases so that particular pieces of information about Users stored in each party’s database are the same.

2.6    User Data. Each party may freely use and disclose any information (both individual and aggregated) about Users ("User Data") so long as they follow their privacy policy under which they collect such data, except that neither party shall sort its database of users to extract User Data about just Users from its overall database and then use such User Data to target Users, nor shall a party disclose User Data in such sorted fashion (or in a way that would allow third parties to do such a sort themselves). However, Provider may target administrative messages regarding the Services to Users as appropriate.

3.    Advertisements and Promotion.

3.1    Promotion of Service. The parties shall promote the Service in accordance with Exhibit A. In connection with promoting the other party (or, in Brander’s case, the Service), a party shall not use any interstitials, pop-up windows, other intermediate steps or any other technology or content which acts as a barrier to a user’s transition from the promoting party’s site to the promoted party’s site, nor shall a party frame the other party’s site or use any other technology which interferes with or affects the page layout of such pages.

3.2    Inventory. Inventory control and serving shall be as described on Exhibit A. To the extent that Brander is serving ads to the Inventory, Brander shall provide Provider with ad serving code, and Brander hereby grants to Provider a nonexclusive license to use such code for ad serving purposes. Each party may provide to the other party a list of up to 10 companies who are directly competitive with such party’s core business and thus whose promotions may not be run in the Inventory. Such list may be updated no more than once per quarter, and if the party receiving the list has (at the time of receiving the list) a promotion agreement regarding the Inventory with a company added to the list, the restrictions on such newly added company shall not be effective until the agreement with such company expires or terminates.

3.3    Banners. A party running the other party’s Banners may approve or reject such Banners in its sole discretion. Banners shall comply with the recipient’s then-current technical standards. The terms of any insertion order or similar document regarding Banners are expressly rejected, except to the extent that they specify the location, timing or duration of the display of the Banners and such terms are accepted by the receiving party.

4.    Payment.

4.1    Payments. The parties shall make the payments described in Exhibit A. Unless otherwise stated, payments shall be made within 30 days following the end of each monthly anniversary of the Launch Date. Overdue payments shall accrue interest, at the lesser of 1½% per month or the maximum allowable interest under applicable law, from due date until paid, and the owing party shall pay the owed party’s costs of collection (including reasonable attorneys’ fees).

4.2    Taxes. All fees and payments stated herein exclude, and the party making payment 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 the receiving party’s net income.

4.3    Audit Rights. A party obligated to make payments hereunder shall keep for 3 years proper records and books of account relating to the computation of such payments. Once every 12 months, the party receiving payment or its designee may inspect such records to verify reports. Any such inspection will be conducted in a manner that does not unreasonably interfere with the inspected party’s business activities. The inspected party shall immediately make any overdue payments disclosed by the audit plus applicable interest. Such inspection shall be at the inspecting party’s expense; however, if the audit reveals overdue payments in excess of 5% of the payments owed to date, the inspected party shall immediately pay the cost of such audit, and the inspecting party may conduct another audit during the same 12 month period.

5.    Reports.

5.1    Revenue Share. A party obligated to pay a revenue share to the other party shall, in conjunction with each payment, deliver a report showing the revenue share computation.

5.2    Promotions. If a party is running Banners for the other party or doing other promotions, then such party shall provide its standard monthly reports about such promotions that it provides at no additional cost to other comparable advertisers.

5.3    Service Operation. Provider shall provide to Brander its standard monthly reports about the Service that it provides at no additional cost to other comparable co-branding partners.

5.4    Limits on Reporting. Each party shall use reliable tools to generate reports, but neither party ensures that such reports are accurate in all respects.

6.    Licenses and Standards.

6.1    Content License. Brander hereby grants to Provider a worldwide, nonexclusive, royalty-free license to use, reproduce, distribute, create derivative works of (only to the extent that the Service interface is a derivative work), perform and display Brander Content in connection with the Service.

6.2    Banner License. Each party hereby grants to the other party a worldwide, nonexclusive, royalty-free license to use, reproduce, distribute, create derivative works of (only to the extent that page layouts are a derivative work), perform and display the other party’s Banners in connection with the promotions contemplated by this Agreement.

6.3    Trademark License. Each party hereby grants to the other party a non-exclusive, nonsublicenseable, worldwide license to use the party’s trademarks and logos only as necessary to perform in accordance with the Agreement.

6.4    Trademark Restrictions. The trademark licensor 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 trademark 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 licensor may specify that certain licensee uses may not contain such trademarks. Title to and ownership of the licensor’s trademarks shall remain with the licensor. The licensee shall use the licensor’s trademarks exactly in the form provided and in conformance with any trademark usage policies. The licensee shall not take any action inconsistent with the licensor’s ownership of its trademarks, and any benefits accruing from use of such trademarks shall automatically vest in the licensor. The licensee shall not form any combination marks with the other party’s trademarks other than the Domain Name (if applicable). If the Domain Name is deemed a combination mark, neither party shall use the Domain Name for any purpose except as expressly provided herein or attempt to register the Domain Name with any government office, and the parties will jointly cooperate on any enforcement action of infringement of the Domain Name.

6.5    Content Ownership. As between the parties: (a) Provider and its suppliers retain all rights, title and interest in and to all intellectual property rights embodied in or associated with the Provider Banners, and (b) Brander and its suppliers retain all rights, title and interest in and to all intellectual property rights embodied in or associated with the Brander Content and Brander Banners. There are no implied licenses under this Agreement, and any rights not expressly granted are reserved. Neither party shall exceed the scope of the licenses granted hereunder.

6.6    Content Standards. Brander shall not provide to Provider any Brander Content or Brander Banners, and Provider shall not provide to Brander any Provider Banners, that: (a) infringes on any third party’s intellectual property or publicity/privacy rights; (b) violates any law or regulation; (c) is defamatory, obscene, harmful to minors or child pornographic; (d) contains 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. In addition, with respect to the Inventory, the selling party shall require the advertiser to agree not to submit advertisements that would violate the terms of (a)-(e).

7.    No Warranty. PROVIDER PROVIDES THE SERVICE "AS IS." EACH PARTY DISCLAIMS ALL WARRANTIES AND CONDITIONS OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF TITLE, NONINFRINGEMENT, 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 _____ years following the Launch Date.

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.

8.3    Effects of Termination. During any make good period, all obligations of this Agreement shall survive except the obligations to pay placement fees and conduct promotions (other than those promotions which are being made good). Upon the later of the end of the foregoing period or expiration or termination of this Agreement, all licenses granted hereunder shall terminate unless such licenses are expressly stated as surviving, and each party shall promptly remove the other party’s content and marks (as used in accordance with this Agreement) from its servers. Sections 1, 2.6, 4.2, 4.3, 6.5, 7, 8.3, 9, 10 and 11, and any obligation to pay any accrued but unpaid amounts, 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 OR FAILURE TO PAY UNDER SECTION 4, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY IN AN AMOUNT GREATER THAN THE AMOUNT BRANDER ACTUALLY PAYS TO PROVIDER UNDER SECTION 4.1.

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: (x) the Indemnifying Party’s acts, omissions or misrepresentations to the extent that the Indemnifying Party is deemed an agent of the Indemnified Party, or (y) the Indemnifying Party’s Banners or trademarks. In addition, Brander shall indemnify Provider against any and all claims, losses, costs and expenses, including reasonable attorneys’ fees, which Provider may incur as a result of claims in any form by third parties arising from the Brander Content. In addition, Provider shall indemnify Brander against any and all claims, losses, costs and expenses, including reasonable attorneys’ fees, which Brander may incur as a result of claims in any form by third parties arising from the Service (excluding claims based on user content or activities and any claims based on materials or information provided by Brander). 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 shall be governed in all respects by California law as such laws are applied to agreements entered into and to be performed entirely within California between California residents. Both parties submit to personal jurisdiction in California and further agree that any cause of action arising under this Agreement shall be brought exclusively in a court in Santa Clara County, California.

11.2    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.

11.3    Force Majeure. If performance hereunder is interfered with by any condition beyond a party’s reasonable control, the affected party shall be excused from performance to the extent of such condition. The operation of Provider’s servers and the provision of the Service may be interfered with by numerous factors outside of Provider’s control. Provider does not guarantee continuous, uninterrupted or secure Service or Accounts, and Brander acknowledges that the Service may be unavailable for sustained periods of time.

11.4    Independent Contractors. The parties are independent contractors, and no agency, partnership, joint venture, employee-employer or franchisor-franchisee relationship is intended or created by this Agreement. Neither party shall make any warranties or representations on behalf of the other party.

11.5    Notice. Any notices hereunder shall be given to the appropriate party at the address specified above or at such other address as the party shall specify in writing. Notice shall be deemed given: upon personal delivery; if sent by fax, upon confirmation of receipt; or if sent by certified mail, postage prepaid, 3 days after the date of mailing.

11.6    Assignment. Either party may freely assign its rights and delegate its duties, in total but not in part, under this Agreement to a third party. However, the rights and duties herein shall bind and inure to the benefit of such assignees.

11.7    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 this Agreement. It 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.

Provider:                 Brander:

By:                           By:
Name:                      Name:
Title:                         Title:

Exhibit A
Business Terms

1.    Payments.

1.1    Advertisements.

	Banners/Buttons	Interstitials	Direct In-box Promotions
Who Initially Controls Inventory?	____% Provider ____% Brander	____% Provider ____% Brander	____% Provider ____% Brander
How Is Unsold Inventory Addressed?
Who Serves Ads?
Percent of Net Revenues	____% Provider ____% Brander	____% Provider ____% Brander	____% Provider ____% Brander
Minimum CPM paid to the other party?

"Net Revenue" means all monetary consideration actually received by a party for sales of Inventory less a ___% sales and administration fee.

1.2    Other Fees.

Placement fee paid by Brander to Provider: . Placement fee paid by Provider to Brander: ___. Nonrefundable development fee paid by Brander to Provider: .

Bounty for registered Users: .

Provider shall pay to Brander ___% of monetary consideration actually received by Provider from Users for premium XYZ services less (a) credit card fees, (b) chargebacks and refunds, (c) commissions and fees payable to unrelated third parties, and (d) sales, use and other taxes attributable to such transaction.

2.    Promotions.

2.1    By Provider.

2.2    By Brander.

2.3    Barter. For every ___ Provider banners that Brander runs on its site, Provider shall run ___ Brander banners on the XYZ site.

3.    Domain Name. [brandername.provider.com]

4.    Data Exchange.

5.    Exclusive Dealing.