LICENSE AND OPTION AGREEMENT
This License and Option Agreement (the "Agreement") is entered
into as of January 1, 1999, by and between ValueClick, LLC, a California limited
liability company (the "Licensor") and ValueClick Japan Inc., a Japanese joint
stock corporation ("Licensee") with reference to the following facts:
A. Web-Ignite Corporation, a California Corporation, and
Trans-Pacific, Ltd. executed a Trademark License, Software License, and
Copyright Agreement dated March 26, 1998 (the "Prior Agreement"). Web-Ignite
Corporation assigned all of its rights under the Prior Agreement to Licensor.
Trans-Pacific, Ltd. assigned all of its rights in the Prior Agreement to
Licensee. Licensor and Licensee desire to enter into this Agreement to confirm
the business relationship established under the Prior Agreement and to set forth
in full the terms and conditions between the parties.
B. Licensor is operating an internet-based advertising and
marketing tracking Service throughout the world which uses proprietary Software
to monitor and report to advertisers and to website hosts the number of times
that computer users access particular advertisements on host websites. The
Software and related materials permit the user to post banner advertisements on
the website and to collect, analyze and report data regarding advertising on the
websites. Licensor markets the Services and the proprietary Software under the
▇▇▇▇ VALUECLICK.
C. Pursuant to the Prior Agreement, Licensee is using the
Software to provide and market the ValueClick Services on an exclusive basis to
customers for the Japanese language and desires to continue as the exclusive
licensee for the ValueClick System for the Japanese language.
D. In addition, Licensor desires that Licensee grant Licensor
an option to acquire Licensee in a stock-for-stock exchange on the terms and
subject to the conditions described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and covenants herein, Licensor and Licensee agree as
follows:
1. DEFINITIONS. Certain capitalized terms used in this Agreement
shall have the meaning ascribed to such terms in the Glossary attached as
Exhibit A and incorporated herein by this reference.
2. PRIOR AGREEMENT. Upon execution of this Agreement by Licensor and
Licensee, the Prior Agreement shall automatically be terminated, and shall be
superseded and replaced by this Agreement which shall govern the rights and
obligations of Licensor and Licensee from October1, 1998 (the "Effective Date")
with respect to the matters covered by this Agreement.
1
3. GRANT OF LICENSE. Subject to the terms and conditions in this
Agreement, Licensor hereby grants to Licensee the following rights and licenses
with respect to the exclusive use by Licensee of the System in the Territory
during the term of this Agreement:
3.1 EXCLUSIVE USE OF SYSTEM IN TERRITORY. Licensor grants
Licensee the exclusive right and license to use, operate, and administer the
System to market and offer the Services, but only to customers within the
Territory. The fees and other amounts charged to its customers by Licensee
shall be determined solely by Licensee.
3.2 SOFTWARE LICENSE. Licensor grants Licensee a
non-transferable object-code only license to install and use the Software
only on Licensee's Server and only for the purpose of operating the System
and providing the Services pursuant to this Agreement. Licensee may not
sell, sublicense, distribute or otherwise transfer the Software to any other
person and may not allow any other person to copy or otherwise reproduce or
recreate the Software. Licensee has the right to make an archival copy of the
Software solely for backup purposes, but may not install the Software on any
other sever or network without Licensor's prior written consent, which shall
not be unreasonably withheld.
3.3 LICENSED MARKS. Licensor grants Licensee the exclusive,
non-transferable right to use and publicize the Licensed Marks within the
Territory in connection with the marketing, operation and administration of the
Services and the use of the System. Licensee agrees to use the Licensed Marks
at all times in connection with the marketing and sale of the Services, and
agrees not to offer the Services or any similar services under any other marks
or names during the term of this Agreement.
3.4 COPYRIGHT LICENSE. Licensor grants Licensee the
exclusive, non-transferable right to use, reproduce, publish, distribute,
translate and adapt the Licensed Copyrights in connection with the marketing,
operation and administration of the Services and the use of the System within
the Territory. Except as necessary to create the Localized Versions of the
Software and the Documentation, Licensee shall not alter or modify the
Licensed Copyrights, or create derivative works based on the Licensed
Copyrights, without Licensor's prior written consent.
4. TERRITORY. Licensee agrees that it will not offer the Services to
any customer outside the Territory and shall not enter into any agreement with
any customer within the Territory if Licensee is aware that such customer
intends or is likely to use the Services substantially outside the Territory.
Licensee agrees that it will not use, or assist others to use, or knowingly
allow or assist others to use the System to develop any product or service that
is similar to or competes with the Software or the Services within the
Territory.
5. TERM. The term of this Agreement shall commence on the effective
date and shall remain in effect for a period of ten (10) years unless earlier
terminated in
2
accordance with the provisions of this Agreement. The termination rights in
this Agreement are in addition to and not in lieu of any other available
rights and remedies.
6. LICENSE FEE. In consideration of the execution of this Agreement
and the grant of the license rights by Licensor. Licensee shall pay Licensor a
license fee (the "License Fee") which shall be calculated and paid as follows:
6.1 CALCULATION OF LICENSE FEE. Licensee agrees to pay
Licensor a monthly license fee equal to the greater of: (i) ten percent (10%) of
the Net Revenue of Licensee for that month (the "License Fee"), or (ii) $3,500
(the "Minimum License Fee").
6.2 TAXES AND WITHHOLDING. Licensee shall be responsible for
and shall pay all taxes, (including sales, use, VAT, excise or similar taxes),
all customs fees and duties, and any non-U.S. withholdings and other
governmental taxes or assessments by Japan or any other country related to the
License Fees, the payment thereof to Licensor, and any other amounts payable
hereunder.
6.3 PAYMENT. The License Fee shall be payable monthly on the
fifteenth (15th) day of each month (the "Payment Date") with respect to the Net
Revenues received by Licensee during the previous month. All License Fees
payable to Licensor shall be paid within the United States and in United States
dollars, and shall be paid via wire transfer by Licensee directly to the bank
account designated by Licensor. The License Fee (including the Minimum License
Fee described in Section 6.1) shall be non-refundable and shall not be subject
to deduction, offset or withholding of any kind. Failure to pay the License Fee
when required by this Agreement shall constitute a material breach of this
Agreement. All late payments will be assessed a late fee charge equal to the
greater of one and one-half percent (1-1/2%) per month.
6.4 MINIMUM GROSS REVENUE. For each three-month period during
the term hereof (on a rolling three-month basis), Licensee must generate at
least 2,500,000 Japanese Yen in gross revenue (the "Minimum Gross Revenue") from
operation of the System.
6.5 MONTHLY STATEMENTS. Licensee shall deliver to Licensor
on each Payment Date (a) a monthly statement in form and content acceptable
to Licensor showing the amount of gross revenue and Net Revenues for the
applicable month (with supporting computations), (b) the License Fee (or
Minimum License Fee as applicable) due for the month and (c) any other
information about the Licensee's business reasonable requested by Licensor.
Licensee shall maintain true and accurate books of account and records during
the term of this Agreement and shall keep such books and records for a period
of four (4) years thereafter. Licensor shall have the right, upon reasonably
advance notice, to have its representative examine and audit the books and
records of Licensee to determine the accuracy of Licensee's monthly
statements. If any audit reveals that Licensee has underpaid License Fees or
any other amount due under this Agreement by five percent (5%) or more,
Licensee shall be required to pay for the cost of the audit.
3
7. OWNERSHIP RIGHTS. All right, title and interest in and to the
System, and each element thereof (including all intellectual property rights
relating thereto), and all related materials created or furnished by Licensor
and licensed under this Agreement shall be and remain the sole and exclusive
property of Licensor, subject only to the license rights expressly granted in
this Agreement. Licensee acknowledges that Licensor shall have the unrestricted
right to use the System and to offer and operate the Services in any manner and
for any purpose and to appoint or license any other person to do so outside the
Territory at any time and, within the Territory, at any time after termination
of this Agreement for any reason. Any enhancement, modifications, new features
or other improvements to the System ("Improvements") made by Licensor or any
other person (including Licensee) shall be the sole and exclusive property of
Licensor. Licensee hereby agrees to assign to Licensor any and all rights
Licensee may have in any Improvements.
7.1 NOTICES. Licensee may not remove or change any copyright
notices, service ▇▇▇▇ or trademark designations, or other proprietary notices
included on any element of the System or on any screen displays, documents or
materials produced by the Software. Licensee shall submit any material,
including any advertising or promotional materials containing the Licensed Marks
or the Licensed Copyrights to Licensor for Licensor' review and approval. Such
approval shall not be un reasonably withheld, and shall be deemed given unless
Licensor notifies Licensee of disapproval within seven (7) days after receipt of
Licensee's request for approval. Licensee shall not include or attach any
additional service marks, trademarks or logos to any screen displays, printouts
or other material produced by the System.
7.2 NO CONTEST. Licensee acknowledges that the Licensed Marks,
the Licensed Copyrights and the Software are owned exclusively by Licensor and
Licensee agrees not to challenge the validity of or otherwise contest Licensor's
ownership of such items. Licensee agrees that all use of the Licensed Marks and
the Licensed Copyrights by Licensee shall inure to the benefit of Licensor.
Licensee agrees not to register any of the Licensed Marks or any similar ▇▇▇▇ in
any jurisdiction, and Licensee further agrees to change its name and cease all
use of the Licensed Marks upon termination of this Agreement.
7.3 COOPERATION. Licensee shall cooperate with Licensor and
use its best efforts at Licensor's request to protect the Licensed Marks,
Licensed Copyrights and other elements of the System, and the intellectual
property rights related thereto, from infringement by other parties. Licensee
shall promptly notify Licensor if Licensee becomes aware of any act by any third
party that may constitute an infringement of any element of the System or that
may constitute unfair competition or other unfair business practices against
Licensor or Licensee. Licensee shall also promptly notify Licensor if Licensee
becomes aware of any claims or allegations that the System, or any element
thereof, or the marketing, operation or sale of the Services by Licensee, may or
will infringe the intellectual property or other rights of any other person.
Licensee agrees to cooperate with Licensor to obtain, register and enforce for
Licensor's benefit all intellectual property rights associated with the System.
4
7.4 CONFIDENTIAL INFORMATION.
(a) Licensee agrees that the Software and the other
non-public elements of the System shall be considered confidential and
proprietary information of Licensor (the "Confidential Information").
Licensee agrees to maintain the Confidential Information as confidential and
not to disclose or publish, or authorize or assist any other person to
disclose or publish, any of such Confidential Information to any other party
except as expressly allowed by this Agreement. Licensee agrees to keep the
Software and other Confidential Information under access and use restrictions
designed to prevent disclosure of such items to unauthorized persons and to
use its best efforts to protect Licensor's rights with respect to the
Software and the Confidential Information. Licensee acknowledges that any
unauthorized disclosure of the Confidential Information or any other breach
by Licensee of its obligation under this Section 7 will cause irrevocable
injury to Licensor which cannot be compensated by monetary damages and that
Licensor shall be entitled to obtain injunctive or other equitable relief.
(b) Licensor agrees to maintain the Confidential
Information of Licensee that is disclosed by Licensee to Licensor as
confidential and not to disclose, publish or authorize or assist any other
person to disclose or publish any such confidential information of Licensee to
any other party except as expressly allowed by this Agreement, and further
agrees to be bound by the last two sentences of Section 7.4(a) with respect to
License's Confidential Information.
(c) Each party agrees to use reasonable care (i.e.,
efforts no less than the standard of care each party reasonably exercises in
protecting its own Confidential Information) to fulfill its obligations to
maintain the confidentiality of the Confidential Information of the other party.
7.5 WEBSITE ADDRESS. Any website address, URL or other
identifying information adopted or obtained by Licensee for any website used in
connection with the marketing or offering of the Services shall be registered by
Licensee in the name of Licensor, provided that Licensee shall have the right to
use such website address or URL during the term of this agreement.
8. QUALITY CONTROL AND SUPPORT.
8.1 QUALITY CONTROL. Licensee shall use the System in
accordance with the quality control standards and operating specifications
set forth on Exhibit B attached hereto, and as Licensor may from time to time
prescribe with respect to the Services and the System, and shall use its best
efforts to protect and enhance the goodwill associated with the Licensed
Marks. Licensee agrees to comply with all applicable laws, statutes,
treaties, regulations, and ordinances in performing its duties hereunder, and
in marketing the Services, and in any of its dealings with respect to the
System.
8.2 TECHNICAL SUPPORT. Licensor will provide reasonable
support and maintenance of the Software to Licensee, provided that Licensor
shall not have any
5
obligation to provide support or maintenance for Licensee's network, Server,
computer system, equipment or any other items not provided by Licensor.
Licensor shall determine the appropriate manner, timing and amount of support
and maintenance services in its reasonable discretion. Licensor shall
provide software Upgrades to Licensee free of charge if Licensor has
generally adopted such upgrade as part of the basic Software used by Licensor
to offer its Services. Nothing herein shall obligate Licensor to provide
Licensee with any new versions, releases or significant enhancements and new
features available to Licensee on the same terms offered to other licensees.
9. OBLIGATIONS OF LICENSEE.
9.1 BUSINESS RISKS/NATURE OF RELATIONSHIP. Licensee shall
conduct its business as a Licensee and offer and provide the Services at its own
expense and risk and for its own account. Licensee is an independent contractor
and not an employee or agent of Licensor and nothing in this Agreement shall be
interpreted or construed to create any employment, partnership, joint venture or
other relationship between Licensor and Licensee. Licensee shall not have any
right to bind or make any representation on behalf of Licensor. Licensee is
responsible for the selection, acquisition, design and maintenance of its
computer system and equipment and for determining that Licensee's operating
environment for the Software satisfies the technical requirements for the
Software and the System. Licensee shall furnish, at its own expense, all
personnel, computer equipment and other resources necessary to run the software
and operate the System and to offer the Services during the term of this
Agreement. Licensee shall be responsible for the operation of the System within
the Territory, and all related obligations and liabilities, during the term of
this Agreement.
9.2 COMMITMENT. Licensee shall use its best efforts to promote
and market the Services and generate Net Revenues within the Territory.
Licensee shall maintain such staff, equipment and facilities as are required to
adequately serve the reasonably anticipated demands of existing and potential
customers with respect to the Services.
9.3 NO UNAUTHORIZED REPRESENTATIONS. Licensee shall not make
any claims or representations regarding the performance, adequacy, capabilities
or other aspects of the System or the Services to any customer except as are
expressly permitted by Licensor in writing.
9.4 POST-TERMINATION. On termination of this Agreement,
Licensee agrees to immediately cease marketing the Services and cease any
further use of the Licensed Marks and Licensed Copyrights and to follow all
reasonable directions of Licensor for disconnection, removal and return of all
Software and other elements of the System to Licensor. At its option, Licensor
may elect to allow Licensee to continue operating the System to fulfill any
contractual obligations Licensee has to its customers, subject to continuation
of Licensee's obligation to pay License Fees to Licensor, or Licensor may
require that Licensee assign all existing agreements with customers for Services
to Licensor. Licensee further agrees to provide Licensor with a list of all of
6
Licensee's customers and, upon request by Licensor, to notify those customers
identified by Licensor that the agreement with that customer will be terminated
in thirty (30) days.
9.5 NO REVERSE ENGINEERING. Licensee agrees not to reverse
engineer, decompile, or otherwise attempt to derive or reproduce the source code
for the Software (or any underlying concepts, ideas, algorithms, structure or
organization of the Software.
9.6 NO SUBLICENSE. Licensee shall have no right to sublicense
or otherwise transfer any of the rights granted in this Agreement without the
prior written consent of Licensor.
9.7 FORM OF CUSTOMER AGREEMENT. Licensee agrees that the
agreement used by the Licensee with its customers in the Territory will include
a clause expressly permitting the termination of the agreement by Licensee
without cause on 30 days written notice, and that the form of agreement will be
in form and substance reasonably acceptable to Licensor as to all ownership,
intellectual property, warranty and other matters related to the System and the
Services.
10. REPRESENTATIONS AND WARRANTIES.
10.1 REPRESENTATIONS AND WARRANTIES OF LICENSEE.
(a) Licensee represents and warrants that Licensee is a
Japanese joint stock corporation (Kabushiki Kaisha) duly organized, validly
existing and in good standing under the laws of Japan, that the execution and
performance of this Agreement have been duly authorized and that this Agreement
will constitute a valid and binding obligation of Licensee. Licensee further
represents and warrants that the execution and performance of this Agreement by
Licensee will not violate the terms of any other contract or arrangement to
which Licensee is a party or by which it is bound, and will not violate any
applicable law, statute, treaty or regulation.
(b) Licensee represents and warrants that it understands
that Licensor has not made any representations or promises to Licensee
concerning the operating capabilities of the System other than the written
Documentation delivered to Licensee with the Software, and that Licensor has not
guaranteed or promised that the marketing of the Services in the Territory will
generate any particular level of revenues for Licensee or that Licensee will
make any profit from using the System or entering into this Agreement.
10.2 REPRESENTATIONS AND WARRANTIES OF LICENSOR.
(a) Licensor represents and warrants that Licensee is
a limited liability company duly organized and validly existing and in good
standing under the laws of California, that the execution and performance of
the Agreement have been duly authorized and that this Agreement will
constitute a valid and binding obligation of Licensor. Licensor further
represents and warrants that the execution and performance of
7
this Agreement by Licensor will not violate the terms of any other contract
or arrangement to which Licensor is a party or by which it is bound, and will
not violate any applicable law, statute, treaty or regulation.
(b) Licensor represents and warrants to Licensee that
Licensor has the right to grant the licenses and rights granted herein and
that, to Licensor's best knowledge, the System does not infringe any
copyright, service ▇▇▇▇, trademark, patent, trade secret or other proprietary
right of any third party and that no claim has been made or is pending
against Licensor relative to the System alleging infringement or
misappropriation of any intellectual property right.
(c) THE WARRANTIES OF LICENSOR CONTAINED IN THIS
PARAGRAPH 10.2 ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
AND NON-INFRINGEMENT. LICENSOR DOES NOT GUARANTY THE COMPLETENESS OR ACCURACY
OF THE SYSTEM OR ANY INFORMATION OR OTHER RESULTS GENERATED BY THE SYSTEM.
(d) Licensor shall defend any action brought against
Licensee to the extent such action is based on a claim that the use of the
System directly infringes any service ▇▇▇▇, trademark, copyright or patent of
a third party (an "Infringement Action"), and Licensor shall pay any and all
costs, expenses and damages awarded against Licensee in any Infringement
Action provided that (i) Licensor's obligation hereunder are expressly
conditioned on prompt notification from Licensee of any threat or claim of
any Infringement Action (and all claims relating thereto); (ii) Licensor
shall have sole control of the defense and all negotiations, settlement or
compromise of any Infringement Action, and Licensee shall compensate with
Licensor in such defense, and (iii) Licensor shall not be obligated hereunder
to the extent that any such Infringement Action is based on any modification
or alteration made by Licensee to the System or any element or part thereof.
THE FOREGOING STATES THE SOLE AND EXCLUSIVE LIABILITY OF LICENSOR AND THE
EXCLUSIVE REMEDY OF LICENSEE FOR ANY INFRINGEMENT ACTION.
10.3 LIMITED LIABILITY. LICENSEE AGREES THAT ITS EXCLUSIVE
REMEDIES AND LICENSOR'S ENTIRE LIABILITY WITH RESPECT TO THE SYSTEM AND THE
SOFTWARE SHALL BE AS SET FORTH IN THIS SECTION 10. NOTWITHSTANDING ANYTHING
ELSE IN THIS AGREEMENT OR OTHERWISE, LICENSOR WILL NOT BE ABLE LIABLE TO
LICENSEE OR ANY OF ITS CUSTOMERS WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER THE CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY (I) FOR ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF THE LICENSE
FEES PAID BY THE LICENSEE TO LICENSOR DURING THE TWELVE- (12-) MONTH PERIOD
PRIOR TO THE DATE THE CAUSE OF ACTION AROSE, OR (II) FOR ANY INCIDENTAL OR
CONSEQUENTAL
8
DAMAGES, LOST PROFITS OR BUSINESS, LOST OR CORRUPTED DATA OR FOR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.
11. INDEMNIFICATION BY LICENSEE. Licensee agrees to indemnify,
defend and hold Licensor and its officers, directors, shareholders, agents
and employees harmless from and against any and all claims, liabilities,
losses, damages and expenses (including without limitation all attorneys'
fees, legal and expert witness fees and expenses and all costs of
investigation) incurred by any such person related to or arising out of or in
connection with the operation of Licensee's business, including but not
limited to the use of the System and the marketing and performance of the
Services (except to the extent that any such claim or liability results from
a breach by Licensor of its warranties under Section 10.2), or the breach by
Licensee of any term or provision of this Agreement, as they are incurred.
Licensor's rights to indemnification under this Section 11 shall be in
addition to any other rights that Licensor may have at common law or
otherwise and shall remain in full force and effect following any termination
of this Agreement.
12. NON-ASSIGNABILITY. This Agreement and the license rights and
obligations hereunder are not transferable or assignable by Licensee without the
prior written consent of Licensor. Licensor may assign this Agreement in its
sole discretion and, without limiting the foregoing, Licensee expressly
acknowledges that Licensor may assign this Agreement to any new entity (e.g. a
corporation) that may be organized by Licensor or its affiliates.
13. TERMINATION.
13.1 BASIS FOR TERMINATION. This Agreement may be terminated by
either party for cause immediately upon the occurrence of any of the following
events: (a) if the other party ceases to do business or otherwise terminates
its business operations, (b) if the other party breaches any term or condition
of this Agreement and fails to cure such breach within thirty (30) days (or ten
(10) days in the case of a failure to pay) after written notice is delivered to
such party describing the breach, (c) if the other party shall commence or
become subject to any bankruptcy, receivership or similar proceeding and such
proceeding is not dismissed within ninety (90) days), or (d) if any
representation or warranty made in this Agreement is materially inaccurate or
false. Notwithstanding the foregoing, Licensor may terminate this Agreement
immediately upon any breach by Licensee of any of its obligations under Section
6.1, Section 6.3 or Section 6.4 (including a failure to achieve the Minimum
Gross Revenue, or a failure to pay the Minimum License Fee in a timely manner),
Section 7.1, Section 7.4, Section 7.5, Section 8.1, Section 9.5 or Section 9.6,
or in the event of any fraudulent conduct or illegal activity by Licensee with
respect to the System, this Agreement or business of License operated under the
Licensed Marks.
13.2 EFFECT OF TERMINATION. In addition to Licensee's
obligations under Section 9.4, upon termination of this Agreement for any
reason, all unpaid License Fees shall become immediately due and payable. On
any termination, Licensee shall surrender
9
to Licensor possession of all tangible items in the System, including any
Improvements to the System.
14. OPTION TO ACQUIRE LICENSEE.
14.1 GRANT OF OPTION. In consideration for the execution of
this Agreement by Licensor and for other good and valuable consideration from
Licensor, the sufficiency and receipt of which is hereby acknowledged by
Licensee, Licensee grants Licensor an exclusive option (the "Option"), which may
be exercised by Licensor at any time during the term of this Agreement or during
any extension or renewal thereof, to acquire all, but not less than all, of the
outstanding shares of capital stock of Licensee (the "Licensee Stock") in
exchange for shares of the common stock of Licensor (the "Licensor Stock"), the
number of which shares of Licensor Stock shall be determined in accordance with
the provisions of Section 14.4. It is an express condition of this Option that
it may only be exercised by Licensor in the event that Licensor engages in or is
a party to one of the following transactions and exercises the Option in
connection with such transaction: (i) a sale of all or substantially all of the
assets of Licensor, (ii) a merger, combination, pooling or other reorganization
involving Licensor, or (iii) a public offering of a class of securities issued
by Licensor pursuant to a registration statement filed with the United States
Securities and Exchange Commission (each, a "Transaction"). In the event that
Licensor engages in or notifies Licensee of its intention to engage in any such
Transaction, Licensor may elect, in its sole and absolute discretion, to
exercise the Option and acquire all of the Licensee's stock in a stock-for-stock
exchange (the "Stock Swap").
14.2 PROCEDURE FOR EXERCISE. If Licensor elects to exercise the
Option, Licensor shall notify Licensee in writing of its election and in such
notice shall also identify the nature of the Transaction and the anticipated
timing of the Transaction. Upon receipt of such notice, Licensee shall
thereafter not issue, exchange, dividend, redeem, transfer or otherwise engage
in any transaction involving the Licensee Stock. Licensor and Licensee shall
each promptly take all actions necessary or advisable to effect the Stock Swap,
including but not limited to the calculation of the Exchange Ration in
accordance with Section 14.4, and to cause the Stock Swap to occur prior to the
scheduled closing date for the Transaction. Licensor and Licensee shall agree
on a closing date for a Stock Swap and, at such Closing, the shareholders of
Licensee shall execute and deliver to Licensor stock certificates representing
all the issued and outstanding shares of Licensee Stock, and Licensor shall
issue to shareholders of Licensee the respective number of shares of Licensor
Stock to be issued to each shareholder of Licensee pursuant to the Exchange
Ratio determined according to Section 14.4.
14.3 CONSENT OF LICENSEE'S SHAREHOLDERS. Licensee represents
that, as of the Effective Date and as of the date this Agreement is executed,
the only shareholder of Licensee is ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇. By executing this
Agreement on the signature line
10
set forth below, ▇▇. ▇▇▇▇▇▇▇▇▇▇ hereby consents to the grant of the Option on
the terms set forth herein, and agree to take all actions and execute and
deliver all documents necessary or desirable to effect the Stock Swap upon
exercise of the Option by Licensor, and ▇▇. ▇▇▇▇▇▇▇▇▇▇ agrees that the
valuation formula in Section 14.4 is fair, just and reasonable for purposes
of determining the Exchange Ratio for the Stock Swap. Licensor and ▇▇.
▇▇▇▇▇▇▇▇▇▇ agree that any person who becomes a shareholder of Licensee shall
be required, as a condition of such admission, to approve in writing the
Option and the other matters described in this section 14.3.
14.4 DETERMINATION OF EXCHANGE RATIO. To determine the Exchange
Ratio to be used to calculate the number of shares of Licensor Stock to be
issued to the shareholders of Licensee in connection with the Stock Swap upon
exercise by Licensor of the Option (the "Exchange Ratio"), Licensor and Licensee
agree that the valuation of Licensee for such purposes shall be determined in
the same manner and according to the same formula and assumptions (including but
not limited to valuation of intangible assets, marketability discounts, the
effect of external considerations, etc.) as are used and applied to determine
the value of Licensor for purposes of the Transaction. For example, if the
valuation of Licensor for the Transaction is based on a multiple of annual gross
revenues, the same approach and calculation shall be used to determine the
valuation of Licensee; provided, that the valuation of Licensee resulting from
such determination shall be subject to a discount of twenty-five percent (25%)
for purposes of calculating the Exchange Ratio (e.g. if the initial valuation of
Licensee determined in accordance with this Section 14.4 is $1,000,000, the
actual valuation of Licensee used for purposes of calculating and determining
the Exchange Ratio shall be $750,000). In any event, the minimum valuation of
Licensee for determining the Exchange Ratio shall be (i) two (2) times the
annual revenue of Licensee, plus (minus) (ii) ten (10) times the net profit (net
loss) of Licensee for that year.
15. MISCELLANEOUS.
15.1 GOVERNING LAW AND JURISDICTION. Licensor and Licensee
expressly acknowledge that this Agreement was prepared, negotiated and delivered
in California and further agree that the validity, interpretation and
performance of the Agreement shall be controlled by and construed under the laws
of the State of California, United States of America, as if performed wholly
within that State and without giving effect to its conflict of laws principles.
Licensee expressly acknowledges that it understands the provisions of California
law may be different from the law of Japan and Licensee represents that it has
been advised by legal counsel regarding the impact of such differing laws on
this transaction. Subject to the provisions of Section 15.9, any action arising
out of any dispute between the parties to this Agreement or otherwise relating
to this Agreement shall be brought either in the Superior Court of the State of
California for the County of Santa ▇▇▇▇▇▇▇ or in the United States District
Court for the Southern District of California and each of the parties hereto (a)
submits itself to the exclusive jurisdiction and venue of such courts for
purposes of any such action, (b) agrees that service on it in any such action or
proceeding may be made in the same manner as noticed hereunder, and (c)
11
consents to uncontested enforcement of a final judgment from such court (or
any other mutually approved arbitrator) in any other jurisdiction where
Licensee or any of its assets are or may be present.
15.2 ENTIRE AGREEMENT. This Agreement and its exhibits and
schedules constitute the entire agreement and understanding between Licensor and
Licensee relating to the subject matter hereof, and terminates, supersedes and
cancels any and all prior or contemporaneous written and oral understandings,
agreements, proposals, representations or promises of the parties relating to
the subject matter hereof. Any modification or amendment of any provision of
this Agreement shall be effective only if in writing and signed by Licensor and
Licensee.
15.3 SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any person or circumstance is held by a court
of competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement or the application of such provision to persons or circumstances other
than those to which it is held to be invalid or unenforceable shall not be
effective thereby.
15.4 NOTICES. All notices and other communications that are
required or that may be given under the provisions of this Agreement shall be in
writing and the same shall be deemed to have been given on the same day if
delivered in person or by overnight courier to the address set forth below, or
by facsimile to the facsimile number listed below for the party to whom the
notice is given or on the third day thereafter if placed in registered or
certified mail with postage prepaid and addressed to the party at the address
specified. The addresses and facsimile number for Licensor and Licensee for all
purposes under this Agreement and for all notices shall be:
To Licensor:
ValueClick, LLC
c/o ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Licensee:
ValueClick - Japan Inc.
4F Unimat Hongo Building
▇-▇-▇ ▇▇▇▇▇, ▇▇▇▇▇▇-▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇
Telephone: ▇▇-▇-▇▇▇▇-▇▇▇▇
Facsimile: ▇▇-▇-▇▇▇▇-▇▇▇▇
12
From time to time, either party may designate another address, telephone
or facsimile number for all purposes of this Agreement by notifying the other
party of such change in writing.
15.5 COUNTERPARTS. This Agreement may be executed by Licensor
and Licensee in separate counterparts, each of which shall be an original and
all of which together shall constitute one and the same instrument.
15.6 BINDING ON SUCCESSORS. This Agreement shall be binding
upon and inure to the benefits of the successors and assigns of the parties
hereto.
15.7 WAIVER. The failure of any party to enforce any of the
provisions of this Agreement shall not be construed to be a waiver of the right
of such party to enforce such provisions thereafter.
15.8 ATTORNEY'S FEES. In the event any dispute, lawsuit,
arbitration or other action or proceeding is commenced to enforce or interpret
any provision of this Agreement or otherwise relating to this Agreement or the
subject matter hereof, the prevailing party will be entitled to recover all
costs and expenses, including reasonable attorney's fees and costs, costs of
investigation, evaluation and collection whether or not a suit is filed, and all
expert witness fees, court costs and related expenses incurred by the prevailing
party.
15.9 ARBITRATION. Any dispute with respect to or arising out
of or in connection with, or otherwise related to the execution or
performance of, this Agreement shall be determined exclusively by binding
expedited arbitration in Santa Barbara, California, and shall be governed by
the Federal Arbitration Act, 9 U.S.C. 1-16, subject to the modifications set
forth herein. In the event of any such dispute, any party thereto may
commence arbitration hereunder by delivering notice to the other party or
parties thereto. Within ten (10) business days of delivery of such notice,
such parties shall attempt to agree on one arbitrator; provided that if such
parties cannot agree on one arbitrator within such time period, each party to
the dispute shall within five (5) business days thereafter appoint one (1)
arbitrator. In that event, the arbitrators so appointed shall within five
(5) business days of their appointment mutually agree upon and appoint one
additional arbitrator; provided further that the persons eligible to be
selected as arbitrator(s) shall be limited to attorneys at law who (i) have
practiced law for at least 15 years as an attorney specializing in either
general commercial litigation or general corporate and commercial matters and
(ii) are experienced in the software or internet industry. The arbitration
hearing shall commence no later than ten (10) business days after the
completion of the selection of the arbitrator(s). Each party agrees to
cooperate fully with the arbitrator(s) to resolve any dispute that is subject
to arbitration hereunder. The determination made by the arbitrator(s) shall
be final and binding upon the parties in any subsequent actions at law or in
equity and the parties agree to stipulate thereto in any such action. The
arbitrator(s) shall render a decision within ten (10) business days of the
close of the arbitration hearing, shall base his, her or their determination
on the terms of this Agreement and the evidence presented and shall render
such determination in
13
writing, including therein a statement of the findings of fact upon which the
determination is based.
IN WITNESS WHEREOF, Licensor and Licensee have entered into this License
and Option Agreement as of the date and year first above written.
LICENSOR: LICENSEE:
VALUECLICK, LLC a California VALUECLICK - JAPAN, a Japanese joint
Limited liability company stock corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------- --------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: CEO
-----------------------------
The undersigned shareholder of Licensee hereby executes this Agreement
solely for the purpose of indicating his consent and agreement to be bound by
the grant of the Option and the other provisions of Section 14.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
14
EXHIBIT A
GLOSSARY
1. "Confidential Information" shall mean all trade secrets or confidential
information in any form or media disclosed by one party to the other
party provided that, to be deemed Confidential Information, the
information, if in tangible form, must be marked or otherwise identified
as being "confidential" or if disclosed orally, must be identified at the
time it is disclosed as constituting a trade secret or confidential
information or with respect to written or oral disclosures, if the
information is reasonably understood to be confidential by the nature of
the information and the circumstances surrounding its disclosure.
"Confidential Information" shall not include any information that the
receiving party can establish (i) to be publicly known or available, or
that becomes publicly known or available, without breach of this
Agreement or any other obligation of confidentiality regarding such
information; (ii) has been intentionally publicly disclosed by the
disclosing party; (iii) is already in the possession of the receiving
party prior to disclosure by the disclosing party; or (iv) is rightfully
received by the receiving party from a third party without breach of an
obligation of confidentiality.
2. "Documentation" shall mean the documentation, whether in electronic form,
manuals, written instructions or user's guides, including any updates,
relating to the marketing and operation of the Services and the use of
the System that are provided to Licensee by Licensor in connection with
this Agreement.
3. "Licensed Copyrights" shall mean the works of authorship and other
tangible materials and designs that are protected under the United States
Copyright Law and which are used by Licensor in connection with the
marketing and operation of the Services, including but not limited to the
copyright in the Software, the Documentation and other proprietary
textual and graphic information that may be displayed by Licensee on host
websites in connection with the operation of the System and the Services.
4. "Licensed Marks" shall mean those certain trademarks, service marks,
tradenames and logos owned by the Licensor and used in connection with
the use of the System and the operation and marketing of the Services
including
15
VALUECLICK and any related registrations or pending registration
applications in the Territory.
5. "Localized Version" shall mean the versions of the Software and the
Documentation that have been translated and localized for use in the
Japanese language and characters such that text, visual displays,
printouts, and other elements of the System have been translated into
Japanese characters and formatted for use in Japan.
6. "Net Revenue" shall mean the aggregate gross revenues received by
Licensee of every kind and nature from its customers or otherwise in
connection with the marketing and sale of the Services and the use of the
Software, less only the aggregate amount of payments actually made by the
Licensee to website hosts for the right to place banner advertisements on
the host websites.
7. "Server" shall mean the primary server in Licensee's computer network
located in Tokyo, Japan.
8. "Services shall mean the internet-based advertising and marketing
services offered by Licensor to its customers. The Services are provided
by use of the Software and Documentation to facilitate the posting of
banner advertisements on host websites and to permit users to monitor,
track, administer, analyze, and report information and statistics
concerning the number of times that visitors to the website access
("click") the advertisement, and to calculate and ▇▇▇▇ the advertiser
based on such information.
9. "Software" shall mean the proprietary ValueClick computer software owned
by Licensor which permits the user to track and analyze information
concerning the rate and manner in which internet-based advertisements are
accessed by computer users and makes that information available to the
advertiser and the host website.
10. "System shall mean the product, technologies and related intellectual
property rights used by Licensor to operate its business of tracking,
administering, billing and reporting information relating to the number
of times that advertisements placed on host websites are accessed by
viewers. The System consists of the Software, the Documentation, the
Licensed Marks, and the Licensed Copyrights. The System may, at the
option of Licensor, be expanded or updated to include additional elements
during the term of this Agreement. In addition, the "System" shall also
mean the trade secrets, technology and know-how developed or accumulated
by Licensor by Licensor in connection with the development, operation and
administration of the System including designs, concepts, quality
control, operating techniques, specifications, reports, methods and other
information possessed by Licensor relating to the System.
16
11. "Territory" shall mean all internet-based websites that are exclusively
or substantially entirely in the Japanese language and intended for a
Japanese language audience. It is the expectation of the parties that
most, if not all, of the customers in the Territory will be located in
the country of Japan.
EXHIBIT B
SPECIFICATIONS AND QUALITY CONTROL STANDARDS
1. Licensee shall comply with the operational specifications included in the
Software and the materials included in the System, and as delivered to
Licensee from time to time by Licensor electronically or by written
communication.
2. Further, to preserve the ability of Licensor to oversee the use and
operation of the System, Licensee agrees that the prior written approval
of Licensor's management must be obtained by Licensee before engaging in
or agreeing to engage in any of the following transactions:
(a) Any capital expenditure in excess of $100,000 US;
(b) Any individual Salaries for employees or consultants in excess of
$100,00 US;
(c) Sale of any shares of ValueClick - Japan stock or any sale of all
or substantially all of the assets or stock of the company;
(d) ValueClick - Japan must submit to a yearly audit by a mutually
agreed upon accounting firm;
(e) ▇▇▇▇▇ ▇▇▇▇▇▇, CEO of ValueClick, or another person designated by
him, will be elected to and maintain a board of directors position
for ValueClick - Japan.
3. If for any reason this agreement is terminated, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
agrees not to compete with ValueClick in Japan or in any other country or
region in which ValueClick is doing business or is contemplating doing
business for a period of two (2) years after the date of termination.
17