Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Exhibit 10.11
-------------
EXCLUSIVE STRATEGIC ALLIANCE AGREEMENT
between
Engage Technologies, Inc. and ADSmart Corporation
and
Cross Beam Networks Corporation
January 7, 1998
TABLE OF CONTENTS
TABLE OF CONTENTS.......................................................... 2
1. DEFINITIONS........................................................... 3
2. LOCALIZATION OF SYSTEM................................................ 5
3. LICENSE OF LOCALIZED SYSTEM........................................... 6
4. MARKETING AND DISTRIBUTION OBLIGATIONS OF XBEAM....................... 8
5. MARKETING AND DISTRIBUTION OBLIGATIONS OF ADSMART..................... 9
6. COMPENSATION.......................................................... 12
7. REPRESENTATIONS AND WARRANTIES........................................ 14
8. LIMITATION OF LIABILITY............................................... 15
9. PROPRIETARY RIGHTS.................................................... 15
10. INDEMNIFICATION....................................................... 17
11. CONFIDENTIAL INFORMATION.............................................. 18
12. TERM AND TERMINATION.................................................. 19
13. MISCELLANEOUS......................................................... 21
SCHEDULES
Schedule A --Description of ADSmart System
Schedule B --ADSmart Marks
Schedule C --This Page Left Intentionally Blank
Schedule D --Error Correction
Schedule E --Implementation Timeline
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXCLUSIVE STRATEGIC ALLIANCE AGREEMENT
THIS EXCLUSIVE STRATEGIC ALLIANCE AGREEMENT (the "Agreement"), dated as of
January 7, 1998 (the "Effective Date"), is by and between Engage Technologies,
Inc., with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇ ("Engage")
and ADSmart Corporation, with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇, ▇▇▇
▇▇▇▇▇ ("ADSmart"), sister companies under common management, and Cross Beam
Networks Corporation, with offices at 1-32-2 Harmony Tower 14F ▇▇▇▇▇▇, ▇▇▇▇▇▇-
▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ("Xbeam").
WHEREAS, ADSmart has developed and operates a system for the sale and
distribution of advertisements on the World Wide Web (the "Web"); and
WHEREAS, Xbeam desires to operate on an exclusive basis within a limited
territory a version of such system localized for the Japanese market, and
ADSmart agrees to grant Xbeam such rights and develop such localized version on
the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
As used herein, the following capitalized terms shall have the meanings set
forth below.
1.1 "Ad Services" means the provision by Xbeam, solely in conjunction with
ADSmart's provision of Interim System Services as set forth in Section 5.1 or
Xbeam's use of the Localized System pursuant to Section 3, to Customers who are
advertisers and ad agencies, of the following advertisement sales and management
services, which are similar to the services provided by ADSmart to its network
of Web sites: Web media placement services, campaign-based ad serving and
management services, sales representation (including site promotion to
advertisers and agencies, audience promotion to advertisers and agencies,
proposal generation, client support, campaign and revenue reporting, overall
marketing and branding of the network of Xbeam affiliated Web sites) and
management services (including order entry and provision of sales automation for
a site's sales force, creative management and approval, ad serving and
targeting, client support, campaign reporting and billing and collections).
3
1.2 "Affiliate" means any person or entity directly or indirectly
Controlling, Controlled by or under common Control with either party, as the
context may require. "Control" shall mean an ownership interest of more than
fifty percent (50%).
1.3 "Confidential Information" means, subject to the limitations set forth
in Section 11 of this Agreement, any written or visual, technical, trade secret
or business information of either party hereto or an Affiliate (the "Disclosing
Party") which is confidential or proprietary in nature and specifically
designated as confidential or proprietary or, where orally or visually
disclosed, reduced to writing by the Disclosing Party within three (3) days
after the disclosure, including, without limitation, the following: business
plans and/or strategy, the System and the Localized System, in whole or in part,
business activities (past, present and future), pricing, financial information,
product development, customer information and the terms and conditions of this
Agreement.
1.4 "Customer" means a person with a primary residence, or an entity with
a principal place of business or corporate headquarters, in the Territory that
purchases Ad Services from Xbeam as contemplated hereunder.
1.5 "Derivative Works" means works that are based upon the System and
Localized System, in whole or in part, such as a revision, modification,
translation, abridgment, condensation, expansion, or any other form in which the
System or Localized System may be recast, transformed, or adapted, and which, if
prepared without authorization of the owner of the copyright in the System or
Localized System would constitute a copyright infringement.
1.6 "Documentation" means the administrator and user documentation of
software and processes, provided in hard copy or electronic on-line format,
required for the intended and proper use of the System or the Localized System,
as the context may require.
1.7 "Enhancements" means new features added to the System or Localized
System.
1.8 "Error" means a Class 1, Class 2 or Class 3 error, as defined in
Schedule D
----------
1.9 "Internationalized System" means the core code base which is double
byte enabled or further enhanced and which supports the System to be localized.
1.10 "Localized System" means the version of the System localized pursuant
to Section 2 for use solely in the Territory.
1.11 "Proprietary Materials" has the meaning set forth in Section 10.1.
4
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1.12 "Revenues" means the [**], if applicable, and (ii) the [**], to the
Web site(s), if any, on which ads were placed.
1.13 "System" means the ADSmart proprietary materials, techniques,
processes and know-how, including computer software, Documentation and related
materials, as further described in Schedule A.
----------
1.14 "Term" has the meaning set forth in Section 12.
1.15 "Territory" means the country of Japan.
2. LOCALIZATION OF SYSTEM.
2.1 ADSmart Obligations. With the assistance and cooperation of Xbeam as
-------------------
set forth in Sections 2.2, 2.3 and 2.4, ADSmart shall according to schedule as
set forth in Schedule E use best efforts to localize the System and deliver the
System and Localized System to Xbeam, and provide updates and revisions thereof
on an ongoing basis, including double byte-enablement, user interface,
translation of user interface and end user documentation and modification of
operational policies and procedures. ADSmart shall be solely responsible for the
Localized System and System, excluding all contributions solely by Xbeam.
2.2 Xbeam Obligations. Xbeam shall use vigorous and diligent efforts to
-----------------
provide ADSmart assistance required for ADSmart to comply with its obligations
under Section 2.1, including advising ADSmart on the legal, cultural and other
requirements for the Localized System and providing ADSmart the financial and/or
personnel resources available for Xbeam and agreed by parties for reduction of
the amount of the costs pursuant to Section 2.5.
2.3 Testing of Localized System. Upon initial completion of the Localized
---------------------------
System, ADSmart shall provide one (1) copy of the Localized System and (1) copy
of the Documentation thereof to Xbeam to be used solely for testing purposes and
not for any productive or other use. Xbeam shall test the Localized System, and,
in accordance with Schedule D, shall promptly report to ADSmart any substantial
----------
Errors related to the Localized System. ADSmart shall address such Errors as set
forth in Schedule D.
----------
2.4 Receipt of Localized System for service by Xbeam. After successful
------------------------------------------------
testing of the Localized System according to operational criteria to be mutually
5
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
established and accepted by the parties, Xbeam shall submit to ADSmart written
certification of acceptance of the Localized System.
2.5 Costs and Expenses of Localization Efforts. The parties shall share
------------------------------------------
equally the cost and expense incurred by ADSmart in internationalizing and
localizing the System, both initially and applicable to later new releases (the
"Expenses") provided that Xbeam's share of the Expenses shall not exceed [**]
payable on a monthly basis as expenses are accrued ("Xbeam's Share") the ADSmart
sends invoices to Xbeam with proper voucher. Notwithstanding the foregoing
provision, the amount of the costs borne by Xbeam shall, after prior agreement
by both parties, be reduced if Xbeam provides engineering resources for
localization. The amount of the reduction shall be decided based on the amount
of the engineering resources provided by Xbeam as agreed by parties before Xbeam
provides engineering resources. Xbeam shall not be required or obliged to bear
any costs other than those of internationalization and localization of the
System for Japan pursuant to this provision.
Xbeam's payment, or reimbursement, of monies to ADSmart pursuant to this
Section 2 shall be in accordance with Section 6.4.
2.6 Localization of On-Going Features and Enhancements. Xbeam agrees to
--------------------------------------------------
share equally the costs and expense incurred by ADSmart for any on-going
features and enhancements, which have not been developed and planned to be
developed for US market, to the System and Localized System required
specifically for the Japanese market.
3. LICENSE OF LOCALIZED SYSTEM.
3.1 Grant of Rights. Provided that Xbeam timely pays all fees due ADSmart
---------------
hereunder and otherwise complies with the terms of this Agreement during the
term of this Agreement, ADSmart grants to Xbeam a non-transferable, exclusive
right, with the right of sublicence to the joint venture when established by
Xbeam and ADSmart and/or third parties which Xbeam shall be free to select
subject to AD Smart's prior approval, such approval not being unreasonably
withheld, (provided that in the joint venture Sumitomo Corporation has a
controlling interest in the joint venture and Xbeam shall create a joint venture
with no more than one (1) ad network at any one time), for the operation of the
System or Licensed System in Japan to use only internally the object code
version of the System, subject to Section 5.1, and the Localized System solely
for the purpose of performing Ad Services in the Territory for Customers, and
not for internal advertising purposes or for Affiliates, unless Xbeam shall
compensate ADSmart for such uses as provided in Section 6.1. Xbeam
6
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
may make two (2) back-up copies of the Localized System. Prior to the
completion, testing and delivery of the Localized System as set forth in Section
2, ADSmart shall provide Xbeam with the System services set forth in Section 5.1
so that Xbeam can market and sell Ad Services in the Territory on an interim
basis.
3.2 Restrictions. Xbeam may not use the System or Localized System for
------------
any purpose other than that specified in Section 3.1. Xbeam shall not, and shall
not permit any employee, contractor or other third party to, use, modify, copy,
disclose, publish, distribute, assign, sublicense, sell, rent, lease, transfer,
reverse engineer, disassemble, decompile, dispose of, or use for "outsourcing"
or "service bureau" purposes the System or Localized System, in whole or in
part, except as specifically permitted herein. Xbeam has the right to request
modifications to the Oracle database tables and ADSmart shall respond to such
enhancement requests as specified in Schedule D or give approval to modify to
Xbeam. All of Xbeam's rights to use the System and Localized System are
expressly stated herein; there are no implied rights and ADSmart reserves all
rights not expressly granted to Xbeam.[**]
3.3 Misuse of System or Localized System. Xbeam shall provide ADSmart
------------------------------------
with written notice of any material breach of this Agreement, including any
misuse of the System or Localized System by Xbeam, where misuse is defined as
any usage beyond that specified in Section 3.2 or expressly authorized under the
terms and conditions of this Agreement (hereafter 'Misuse'), excluding with
ADSmart's prior approval, such approval shall not be unreasonably withheld,
including but not limited to (i) copying, sale, rental, distribution or
repackaging of the System, Localized System and clickstream data in any form;
(ii) use of the System, Localized System or clickstream data for sites outside
the ADSmart network in the Territory; (iii) use of the System, Localized System
or clickstream data with software tools other than those provided by ADSmart and
Engage; and (iv) operating the System, Localized System and clickstream data on
hardware and software platforms not certified by ADSmart or Engage; and (v)
modifying Oracle database tables for the System or Localized System. If Xbeam
materially breaches the terms of this Agreement or if Xbeam Misuses the System
or Localized System and such breach or Misuse is not cured within thirty (30)
days after written notice thereof from Xbeam, ADSmart shall have no further
obligation with respect to any warranty, support or maintenance of the part of
the System or Localized System, and, notwithstanding any provision to the
contrary herein, Xbeam shall not be entitled to a refund of any amounts paid to
ADSmart and shall discontinue all Ad Service operations in Japan.
3.4 Equitable Relief. Xbeam acknowledges that the Misuse of ADSmart's
----------------
System or Localized System will substantially diminish the value to ADSmart of
the System and/or Localized System and cause irreparable injury in a short
period of
7
time, and that ADSmart's remedy at law for such Misuse is inadequate.
Accordingly, if Xbeam materially breaches any of its obligations with respect to
the use of the System or Localized System, ADSmart shall be entitled to
equitable relief to protect its interests therein, induding, but not limited to,
preliminary and permanent injunctive relief, in addition to any other remedies
it may have.
3.5 Marketing and Sale of Xbeam Ad Services. The parties respective
---------------------------------------
obligations regarding the marketing and sale of the Ad Services are set forth in
Sections 4 and 5.
4. MARKETING AND DISTRIBUTION OBLIGATIONS OF XBEAM.
With respect to marketing and sale of Ad Services, Xbeam shall have the
following obligations:
4.1 Market Development. Xbeam shall, at all times during the Term, use
------------------
its best efforts to develop the market for the Ad Services and to sell the Ad
Services in the Territory in a vigorous and diligent manner which shall
favorably reflect upon ADSmart's name, trademarks and the quality of its System
and Localized System.
4.2 Advertising and Promotion. Xbeam shall use its efforts through its
-------------------------
sales and merchandizing programs to advertise and promote the Ad Services
throughout the Territory in an adequate manner. Xbeam shall be responsible for:
(i) the distribution of all advertising and promotional materials provided to
Xbeam by ADSmart; (ii) the translation of such materials as well as all
instructional materials provided to Xbeam by ADSmart, as necessary to meet legal
and marketing requirements; and (iii) the distribution of advertising and
promotional materials, at Xbeam's expense, as appropriate in fulfilling its
obligations hereunder to develop the market for the Ad Services. For the
foregoing, ADSmart shall furnish to Xbeam, at no cost, with a reasonable
quantity of advertising, promotional and instructional materials, including
catalogues, quotation sheets, specifications and technical data in an electronic
on-line format. All advertising, promotional and instructional materials not
supplied by ADSmart, including any translations of any English-language
materials provided by ADSmart, must be approved in writing by AD Smart prior to
use. Xbeam further agrees that ADSmart shall own all rights to and interests in
any such translation of materials and shall undertake any necessary action to
perfect such rights and interests. All such materials shall remain the sole and
exclusive property of ADSmart and, except insofar as they are distributed by
Xbeam in the course of its performance of its duties under this Agreement, must
be promptly destroyed in accordance with Section 12.7 hereof upon the expiration
or termination of this Agreement.
4.3 Xbeam Prices. Xbeam shall be free to establish its own pricing for Ad
------------
Services that it sells. Xbeam shall notify ADSmart of its pricing, as in effect
from time to time.
8
4.4 Facilities and Staff. Throughout the term of this Agreement Xbeam
---------------------
shall maintain the facilities and a staff of competent sales, marketing,
technical and support personnel reasonably necessary to properly market, service
and support the Ad Services in the Territory. ADSmart shall not be responsible
for any performance failures significantly due to Xbeam's facilities or staff.
Xbeam shall be solely responsible for upgrades required by any third party
hardware, software and communications systems listed in Schedule A as well as
----------
staying current on all third party hardware, software and communications systems
listed in Schedule A. If the equipment, staff, facilities and personnel are not
----------
sufficient for ADSmart to fulfill its obligations then the penalty in Section
6.2 will not be applied.
4.5 Training. Xbeam shall be responsible for the instruction and training
--------
of its personnel as may be necessary to effectively support, market and
distribute the Ad Services in the Territory. Without limiting the foregoing,
Xbeam shall ensure that an adequate number of its (i) sales and technical
personnel attend the ADSmart sales and technical training courses described in
Section 5.4; and (ii) technical and support personnel receive formal training
from third-party certified trainers in Oracle database applications, Oracle web
server software, the Solaris operating system and third party router vendor
classes to the extent necessary or appropriate for the performance by Xbeam of
this Agreement.
4.6 Books and Records. Xbeam shall keep accurate and complete books and
-----------------
records of all sales of all Ad Services, whether such services are provided by
Xbeam or by ADSmart (as set forth in Section 5.7). Upon the reasonable prior
request of ADSmart, Xbeam shall permit ADSmart and its agents and
representatives, at ADSmart's cost and expense, to review such books and records
for the sole purpose of ensuring the accuracy of the amounts payable hereunder
pursuant to Section 6. Such audits shall be carried out at reasonable times and
in a manner that does not disrupt or otherwise adversely affect the conduct of
Xbeam's business. If an audit reveals that Xbeam has failed to account
accurately for any amounts due ADSmart, Xbeam shall promptly pay ADSmart such
amounts, and reimburse ADSmart for the cost and expense of such audit.
4.7 Support. Xbeam shall be responsible for (i) communicating with all
-------
Customers regarding maintenance and support, (ii) replicating and documenting
errors and problems identified by Customers, and (iii) reporting such errors and
problems to ADSmart. ADSmart shall have no direct responsibility for Xbeam's
Customers, but shall be responsible for performing error correction, as provided
in Schedule D.
----------
4.8 Non-Competition. Xbeam shall not, during the Term, research, design,
---------------
develop, sell, market or distribute in the Territory, either directly or
indirectly, any service or product that may reasonably be regarded as
competitive with the Ad Services or Localized System, and shall keep ADSmart
fully informed regarding any
9
services or products that might be considered so competitive whether then being
researched, designed, developed, distributed or being considered for
distribution by Xbeam, Xbeam also shall provide current market information to
ADSmart on a regular basis, including without limitation, general economic
trends and conditions affecting the industry, competitor activities, customer
attitudes and reactions, and other relevant information.
5. MARKETING AND DISTRIBUTION OBLIGATIONS OF ADSMART.
With respect to Xbeam's marketing and sale of the Ad Services, ADSmart
shall have the following obligations:
5.1 Interim System Services.
-----------------------
a. Commencing as per Schedule E and continuing in effect through the
----------
date that the Localized System is first used by Xbeam for productive purposes as
set forth in subsection 5.1(b), hereinafter the Interim Period, ADSmart, at its
facilities, where Xbeam shall bear the costs of setting up the Xbeam advertising
center including hardware and software platform costs (hereafter the 'Interim
Equipment') and communications costs of establishing the interim system in
Japan, shall provide Xbeam the services set forth in Schedule A according to the
----------
schedule in Schedule E for Xbeam to market and sell Ad Services to Customers in
----------
the Territory on an interim basis. At the conclusion of the Interim Period,
Xbeam shall be responsible for all transportation costs, tariffs and taxes
associated with shipping the Interim Equipment to the designated Xbeam
facilities in Japan.
b. ADSmart shall endeavor, as soon after the Effective Date as
commercially practicable, to provide Xbeam a copy of the System solely for Xbeam
to market and sell Ad Services to Customers in the Territory on an interim
basis. Xbeam's limited right to use the System under this subsection shall
terminate upon the date of its first productive use of the Localized System,
whereupon Xbeam shall immediately cease all use of the System and return to
ADSmart all tangible elements of the System, including without limitation all
software and documentation.
c. Xbeam is responsible for managing ▇▇ ▇▇▇▇▇▇▇▇▇ for their
customers, including proposal generation, order entry, order reservation,
booking and scheduling, creative submission and approval, inventory management,
reporting and billing, and ADSmart will provide web-based interfaces and access
rights to the advertising database applications during the Interim Period to
enable Xbeam to do so.
5.2 Advertising Material. ADSmart shall make available to Xbeam at no
--------------------
charge a reasonable supply of printed English language advertising,
instructional and promotional material for use by Xbeam in carrying out its
obligations in the Territory under this Agreement together with the electronic
on-line format thereof Such
10
materials shall remain the sole and exclusive property of ADSmart and, except
insofar as they are distributed by Xbeam in the course of its performance of its
duties under this Agreement, must be promptly returned to ADSmart or destroyed
in accordance with Section 12.7 hereof upon the expiration or termination of
this Agreement.
5.3 Quality and Delivery. ADSmart shall use best efforts to ensure that
--------------------
the Localized System is of a quality consistent with its intended use.
5.4 Training. At no charge to Xbeam, ADSmart shall make available initial
--------
technical training to Xbeam technical operations staff, customer service manager
and database administrator at a location designated by ADSmart to train
representatives of Xbeam to properly perform the Ad Services; provided that
Xbeam shall be responsible for payment of all associated travel, lodging, meal
and other expenses of Xbeam personnel. ADSmart will also endeavor to make
reasonably available further training services, support services, and in the
event of an emergency, including telephone support and localized system repair
services.
5.5 Improvements. ADSmart shall provide written notice to Xbeam of new
------------
models of, and improvements and enhancements to, the System that become
available for use by Xbeam in the Territory, and the localized models,
improvements and enhancements shall be considered to be part of the Localized
System defined in Section 1.10. Xbeam shall provide written notice to ADSmart
regarding enhancements specifically required for the Japanese market in the
Territory and for any joint venture created as per Section 3.1. ADSmart will
respond to these requests as per Schedule D and Xbeam will share equally the
----------
costs incurred by ADSmart for these enhancements according to Section 2.6.
5.6 Exclusivity. During the Term, ADSmart will sell the Ad Services in
-----------
the Territory exclusively to and through Xbeam, subject to the exclusivity
granted in Section 3.1 and will refer to Xbeam any orders or inquiries
concerning sale of Ad Services in the Territory.
5.7 Use of ADSmart's Network of Web Sites by Customer. Notwithstanding
-------------------------------------------------
any provision contained herein to the contrary, ADSmart shall, during the Term,
use vigorous and diligent efforts to provide ad services using ADSmart's System
and network of Web sites to Customers referred by Xbeam. If ADSmart accepts such
an order, ADSmart shall pay to Xbeam a Commission of five percent (5%) of the
Revenues derived, attributable or reasonably imputed to the sale or use of
services provided by ADSmart to such Customer. ADSmart hereby agrees that Xbeam
may, for and on behalf of ADSmart and at its discretion, receive the service
charges, fees or commissions to be received by ADSmart from the Customers in
respect of said service, and that Xbeam may deduct and set off the commission to
be paid by ADSmart to Xbeam hereunder from and against such service charges,
fees or commissions to be paid by Xbeam to ADSmart.
11
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
5.8 Commitment to Technology. ADSmart has an intention to continue during
------------------------
the Term its involvement and investment in web media technology, and to maintain
its efforts to develop and market leading-edge technology.
5.9 [**]. The parties agree to [**] the purposes of [**] creating a
business [**] in the Territory.
6. COMPENSATION.
License Fee.
6.1 In consideration of the exclusive license granted and the technical
assistance and services to be rendered by ADSmart hereunder, Xbeam agrees to pay
to ADSmart:
a. a down payment of [**] (the "Initial Fee") which shall be paid
within thirty (30) days after the Effective Date by telegraphic transfer
remittance to the bank account of ADSmart to be designated by ADSmart, provided
that, if this Agreement is terminated by Xbeam for any material breach of the
Agreement by ADSmart, and excluding any termination of the Agreement by ADSmart
pursuant to Article 12.2 and 12.3 or termination of the Agreement by Xbeam
pursuant to Section 12.9, ADSmart shall immediately refund to Xbeam an amount
equal to the Initial Fee less the amount set forth below:
Time of Termination of this Agreement Amount
-------------------------------------
(Each Year being measured from the Commencement Date)
-----------------------------------------------------
First Year [**]
Second Year [**]
Third Year [**]
Fourth Year [**]
and;
b. the Annual License Fee amount set forth below for the Second Year
to the Fourth Year (each year being measured from the Commencement Date on which
ADSmart commences provision of the interim system set forth in Section 5.1 (the
the Annual License Fee amount set forth below for the Second Year "Commencement
Date"):
First Year [**]
Second Year [**]
Third Year [**]
12
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Fourth Year [**]
Fifth Year and each [**] of the Revenue (the "Running Royalty")
year thereafter
if the parties hereto acting in good faith have not agreed to modify terms and
conditions within the last [**] to the end of the [**] as measured from the
Commencement Date. In the event of formation of a joint venture as per Section
3.1, the [**] Running Royalty payable by Xbeam to ADSmart shall be applied to
the aggregate revenue of the joint venture.
Within thirty (30) days after the Effective Date Xbeam shall pay to ADSmart the
Annual License Fee for the First year, and by end of prior year for Second to
Fourth year. Within thirty (30) days after the end of each calendar quarter or
after termination, Xbeam shall pay to ADSmart the Running Royalty (for the Fifth
year and each year thereafter) accrued during such calendar quarter or any
period immediately prior to the termination. The above payment shall be made by
Xbeam to ADSmart by telegraphic transfer remittance to the bank account of
ADSmart to be designated by ADSmart.
For the Fifth Year and each year thereafter Xbeam shall pay ADSmart [**] if the
parties hereto acting in good faith have not agreed to modify terms and
conditions within the last [**] to the end of the [**] as measured from the
Effective Date, as Prepaid Royalty to be credited against the Running Royalty
which shall be paid by the end of Prior year of such year, provided that, if
this Agreement is terminated by Xbeam for any material breach of the agreement
by ADSmart, excluding any termination of the Agreement by ADSMART pursuant to
Article 12.2 and 12.3 or termination of the Agreement by Xbeam pursuant to
Section 12.9, ADSmart shall immediately refund to Xbeam the amount equal to the
amount of the Prepaid Royalty less the aggregate amount of the Running Royalty
which has accrued until such termination in such year.
For the avoidance of doubt, if this Agreement is terminated or expires for any
reason, Xbeam shall not be obligated or required to pay any further Annual
License Fee for the years following the year in which the Agreement is
terminated or expires.
6.2 Delayed Delivery. If the completion of the Localized System will be
----------------
delayed beyond Scheduled F, ADSmart shall be obligated to Xbeam [**].
-----------
6.3 Reimbursement for Localization Efforts. ADSmart shall submit invoices
--------------------------------------
to Xbeam for reimbursement of costs and expenses incurred by ADSmart in the
13
localization effort with the relevant voucher. Subject to the limitation set
forth in Section 2.4, Xbeam shall pay such invoices within thirty (30) days of
receipt.
6.4 Payment. All payments due to ADSmart hereunder shall be paid in full
-------
in U.S. Dollars without deduction for import duties or other charges of any
nature whatsoever (except as stated in Section 6.6), by wire transfer, to such
bank or account as ADSmart may from time to time designate in writing. All costs
incurred in connection with such wire transfer shall be the responsibility of
Xbeam.
6.5 Overdue Amounts. In addition to any other remedies available to
---------------
ADSmart hereunder, if Xbeam fails to pay any amounts due and owing within thirty
(30) days of the date the amounts become due and payable, then Xbeam shall pay
ADSmart a late payment charge in U.S. Dollars) equal to one and one-half percent
(1.5%) per month on all overdue amounts, or the maximum percentage permitted by
law, whichever is lower, together with all costs and expenses incurred by
ADSmart in collecting such overdue amounts.
6.6 Taxes. Payments from Xbeam to ADSmart hereunder are exclusive of any
-----
sales, use and/or all other taxes or duties, however designated, except for (i)
taxes on AD Smart's net income and (ii) withholding taxes on the Initial Fee,
License Fee and Running Royalty payments payable the fifth year and each year
thereafter as per Section 6.1(b) that are required to be paid by Xbeam to a
Japanese taxing authority, if any. Any such taxes or duties required to be
withheld and paid by Xbeam shall be borne by ADSmart, provided that Xbeam shall
furnish ADSmart with all related tax receipts or other evidence showing payment
of any such taxes.
7. REPRESENTATIONS AND WARRANTIES.
7.1 ADSmart Representations and Warranties. ADSmart hereby represents and
--------------------------------------
warrants that:
a. Authority to Enter into Agreement. ADSmart has full power and
---------------------------------
authority to enter into this Agreement and to perform hereunder. This Agreement
has been duly authorized, executed and delivered by ADSmart and constitutes a
valid and binding obligation of ADSmart.
b. Right to Grant License. ADSmart has all the necessary right,
----------------------
title and interest in the System and Localized System to grant the licenses
contemplated herein.
c. Other Agreements. This Agreement and the licenses contemplated
----------------
herein do not and will not violate the terms of any other agreement or license
between ADSmart and any third party.
14
d. DISCLAIMER. THE WARRANTIES STATED ABOVE IN THIS SECTION 7.1 ARE
----------
THE ONLY WARRANTIES MADE BY AD SMART. ADSMART DOES NOT MAKE AND HEREBY DISCLAIMS
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.
7.2 Xbeam's Representations and Warranties. Xbeam hereby represents and
--------------------------------------
warrants that:
a. Authority to Enter into Agreement. Xbeam has full power and
---------------------------------
authority to enter into this Agreement and to perform hereunder. This Agreement
has been duly authorized, executed and delivered by Xbeam and constitutes a
valid and binding obligation of Xbeam.
b. Other Agreements. This Agreement and the licenses contemplated
----------------
herein do not and will not violate the terms of any other agreement or license
between Xbeam and any third party.
c. DISCLAIMER. THE WARRANTIES STATED ABOVE IN THIS SECTION 8.2 ARE
----------
THE ONLY WARRANTIES MADE BY XBEAM. XBEAM DOES NOT MAKE AND HEREBY DISCLAIMS ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.
8. LIMITATION OF LIABILITY
ADSMART'S LIABILITY FOR DAMAGES TO XBEAM FOR ANY CAUSE, REGARDLESS OF THE
FORM OF ACTION, SHALL NOT EXCEED THE LESSER OF (i) XBEAM'S ACTUAL DAMAGES OR
(ii) THE AGGREGATE AMOUNT PAID TO ADSMART BY XBEAM UNDER THIS AGREEMENT AS OF
THE DATE SUCH LIABILITY IS INCURRED. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER OR ANY THIRD PARTY FOR ANY DAMAGES CAUSED BY A PARTY'S FAILURE TO
PERFORM ITS COVENANTS AND RESPONSIBILITIES HEREUNDER, BY REASON OF NEGLIGENCE OR
OTHERWISE. ADSMART SHALL NOT BE LIABLE TO XBEAM OR ANY THIRD PARTY FOR DAMAGES
CAUSED BY XBEAM'S REPAIRS OR ALTERATIONS TO THE SYSTEM OR LOCALIZED SYSTEM
WITHOUT AD SMART'S PRIOR WRITTEN APPROVAL.
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY FOR
PUNITIVE, INCIDENTAL, INDIRECT, SPECIAL, RELIANCE, EXEMPLARY, COVER, OR
CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION LOST PROFITS, COSTS OF
DELAY, ANY FAILURE OF DELIVERY, COSTS OF LOST OR DAMAGED DATA OR DOCUMENTATION,
OR LIABILITIES TO THIRD PARTIES ARISING FROM ANY SOURCE, EXCEPT AS REQUIRED BY
APPLICABLE LAW.
15
9. PROPRIETARY RIGHTS.
9.1 Ownership of System and Localized System. Title to, and ownership of,
----------------------------------------
the System and Localized System, as well as any Derivative Works, translations,
releases or other versions thereof, including all patents, copyrights and other
intellectual property rights applicable thereto (collectively, the "Proprietary
Materials"), are and shall at all times remain solely and exclusively with
ADSmart, notwithstanding that Xbeam may contribute to the cost of or participate
in the making of such Proprietary Materials. Xbeam hereby assigns, and agrees to
assign in the future, to ADSmart and its successors and assigns, ownership of
all such Proprietary Materials, including all intellectual property rights
therein. From time to time upon ADSmart's request, Xbeam shall make such further
assignments and confirm such assignment by execution and delivery of such
assignments, confirmations of assignment, or other written instruments as
ADSmart may request. Except as specifically set forth in this Agreement, Xbeam
shall have no other rights to use the Proprietary Materials.
9.2 Xbeam Compliance. Xbeam agrees to abide by the terms of all patent,
----------------
trademark, copyright and other proprietary notices contained on any of ADSmart's
printed materials or Localized System made available by ADSmart to Xbeam
pursuant to this Agreement. Xbeam agrees that it will not at any time do
anything which may adversely affect the registration, validity or enforceability
of any trade secret, patent, trademark or copyright of ADSmart or the rights of
ADSmart therein. In addition, Xbeam shall not, and shall not permit any other
person or entity to, attempt to reverse engineer, disassemble, re-engineer,
decompile, or otherwise discover or recreate the structural framework or
functionality of the Localized System, in whole or in part, including without
limitation any computer software in the Localized System.
9.3 AD Smart's Proprietary Rights. Xbeam acknowledges that it has no
-----------------------------
interest in, and agrees that it will not at any time assert or claim any
interest in, nor register or attempt to register, AD Smart's trademarks, trade
names, insignias, or logos set forth on Schedule B attached hereto and
----------
incorporated herein (the "Marks") or any Marks confusingly similar thereto, and
will cooperate with ADSmart to secure ADSmart's registration of such Marks in
the Territory at ADSmart's cost and expense. Except in printed materials made
available by ADSmart to Xbeam, any use of such Marks shall be subject to
ADSmart's prior written approval. Xbeam shall not use the name "ADSmart" in the
name of the Xbeam without prior written permission from ADSmart. Xbeam shall
immediately notify ADSmart, upon discovery thereof, of any infringement or
potential infringement of ADSmart's interests in the Marks and undertakes to
cooperate with ADSmart in its efforts to cure such infringement at ADSmart's
cost and Expense.
16
9.4 License to Use Marks. ADSmart hereby grants Xbeam a non-transferable,
--------------------
exclusive, royalty-free license to use the Marks in the Territory for the Term,
provided that the Marks are used solely in connection with the marketing and
sale of the Ad Services. Upon termination or expiration of this Agreement, Xbeam
shall immediately take all action necessary to transfer and assign to ADSmart,
or its nominee, any right, title or interest in or to any of the Marks, and all
goodwill related thereto, and Xbeam shall immediately cease to use any ▇▇▇▇ of
ADSmart.
9.5 No Association with Other Localized System. Xbeam shall not advertise
------------------------------------------
or promote the Ad Services or Localized System in any manner that could imply
ADSmart's association with or endorsement of any non-ADSmart products or
services.
9.6 No Interference with Marks. Xbeam shall not change, alter or remove
--------------------------
any ▇▇▇▇, patent notice, copyright notice or any other designation affixed to
any Localized System, and shall not attach any additional designation to any
such Localized System.
9.7 Change of the Marks. If for any reason ADSmart should change the
-------------------
trade name or trademark of its service offering, currently identified as "the
ADSmart Network," Xbeam shall have the right to use the new trade name or
trademark under the same terms and conditions as any earlier trade name or trade
▇▇▇▇ licensed to Xbeam as per this Agreement.
10. INDEMNIFICATION.
10.1 ADSmart Duty of Indemnification. ADSmart will indemnify and hold
-------------------------------
harmless Xbeam from all demands, costs, damages, expenses, including reasonable
attorneys' fees, and liabilities for any claim or suit ("Claim") brought against
Xbeam by a third party (i) alleging that the use of the System or Localized
System by Xbeam, its directors, officers employees or agents hereunder infringes
upon any U.S. trademark, copyright, or trade secret, existing as of the
Effective Date of this Agreement or (ii) based on the System or Localized
System, if such Claim does not concern the actions of inaction of Xbeam, its
Affiliates, or their respective directors, officers employees or agents;
provided that Xbeam gives ADSmart written notice of the Claim of infringement
within ten (10) days of the date of notice of the same to Xbeam and Xbeam gives
ADSmart all necessary information, reasonable assistance and sole authority to
defend and/or settle the Claim. At ADSmart's option, it may satisfy its entire
obligation under this paragraph by: (a) modifying or replacing the System or
Localized System so that it performs comparable functions without material
degradation in efficiency and without infringement; (b) obtaining a royalty-free
license for Xbeam to use the infringing portion of the System or Localized
System; or (c) refunding to Xbeam the fees paid with respect to the infringing
portion of the System or Localized System less a pro-rata usage charge. ADSmart
shall have no liability for any claim or infringement based on (x) use or
17
combination of the System or Localized System with equipment, devices, software,
data or equipment not supplied by ADSmart; (y) the System or Localized System
having been modified by Xbeam, an Affiliate or a third party without the prior
written consent of ADSmart; (z) use of the System or Localized System in a
manner for which the System or Localized System was not designed.
10.2 Xbeam Duty of Indemnification. Xbeam shall indemnify and hold
-----------------------------
harmless ADSmart from all demands, costs, damages, expenses, including
reasonable attorneys' fees, and liabilities for any claim or suit ("Claim")
brought against ADSmart by a third party (i) alleging infringement resulting
from or arising out of the importation, manufacture, sale or use of the system
or Localized System in combination with another item not furnished by ADSmart,
(ii) alleging negligence of Xbeam, its directors, officers, employees, or
agents, or (iii) failing to allege facts that would, assuming their veracity,
constitute a material breach of this Agreement by ADSmart; provided that ADSmart
gives Xbeam written notice of such Claim within ten (10) days of the date of
notice of the same to ADSmart and ADSmart gives Xbeam all necessary information,
reasonable assistance and sole authority to defend and/or settle the Claim.
10.3 LIMITATION OF LIABILITY. THE PROVISIONS OF THIS SECTION 10 STATE THE
-----------------------
ENTRE LIABILITY OF ADSMART FOR PATENT, TRADEMARK, COPYRIGHT, TRADE SECRET AND
ALL OTHER PROPRIETARY RIGHT INFRINGEMENT BY THE SYSTEM, LOCALIZED SYSTEM OR ANY
▇▇▇▇ FURNISHED HEREUNDER.
11. CONFIDENTIAL INFORMATION.
11.1 Confidential Treatment. In the performance of this Agreement or in
----------------------
contemplation thereof, each "Party" (which, for purposes of this Section 11
shall include each party's Affiliates, employees, contractors and agents) may
disclose or receive sensitive Confidential Information. Accordingly, each Party
shall (i) hold in strict confidence Confidential Information of the other Party,
(ii) refrain from using, copying or publishing, disclosing Confidential
Information of the other Party, except strictly as necessary to perform its
obligations hereunder, and (iii) return Confidential Information of the other
Party at the Party's request. A Party disclosing Confidential Information
hereunder shall retain sole ownership of the contents of such information.
Nothing contained in this Section shall restrict either Party with respect to
information that becomes publicly available to a Party through no fault of such
Party, was lawfully received from a third party who rightfully acquired it and
did not obtain it in violation of any confidentiality agreement, or was required
to be disclosed by a court or other governmental authority and reasonable notice
was given to the disclosing Party. The Parties hereby acknowledge that the
burden of proving the exceptions set forth above resides with the Party
receiving such information.
18
Xbeam shall not publish, disclose, disseminate or use the ideas, concepts,
know-how or techniques related to the System or Localized System disclosed by
ADSmart hereunder; provided, however, that Xbeam shall be allowed to disclose
such information solely to the extent reasonably necessary to market and sell Ad
Services to Customers and prospective Customers.
This Section 11.1 shall survive termination or expiration of this Agreement
for a period of three (3) years.
11.2 Equitable Relief. If either Party breaches any obligation with
----------------
respect to the use or confidentiality of the Confidential Information, the other
Party shall be entitled to equitable relief to protect its interests therein,
including without limitation preliminary and permanent injunctive relief in
addition to any other remedies it may have.
11.3 Publicity. Neither Party shall identify the other as having entered
---------
into a strategic alliance relationship or into this Agreement in any
advertising, promotional literature or any other material, whether in written,
electronic or other form, distributed to any third party, without obtaining the
prior written approval of the other Party. Neither party may disclose the terms
of this Agreement to any third party.
12. TERM AND TERMINATION.
12.1 Term. This Agreement shall commence as of the Effective Date and
----
continue for a period of four (4) years after the Commencement Date, and
thereafter shall automatically renew for successive two (2)-year terms (the
"Term"); provided that either party may terminate this Agreement by giving the
other party written notice no later than sixty (60) days prior to the expiration
of the initial or any renewal term.
12.2 Events Permitting Termination. Either party shall have the right to
-----------------------------
terminate this Agreement, effective immediately, upon written notice to the
other party in the event any of the following should occur:
a. The other party becomes insolvent; is adjudicated bankrupt; a
receiver, trustee or custodian is appointed for it; there is an assignment of
the other party's business for the benefit of creditors; the other party
liquidates or dissolves; or the occurrence of any action or event involving
Xbeam which is, in the Territory, the equivalent of one or more of the events
described in this subsection;
b. The other party ceases to conduct its operations in the normal
course of business;
19
c. If any merger or consolidation occurs, which materially adversely
affects the ability of ADSmart or Xbeam to fulfill its obligations hereunder; or
d. Any Misuse of the System or Localized System by Xbeam, as defined
in Sec. 3.3, and such Misuse is not cured within thirty (30) days after written
notice thereof from ADSmart to Xbeam; or
e. Any change in control of Xbeam or Xbeam comes under the control
of any third party other than Sumitomo Corporation or any sale of all or
substantially all of the assets of Xbeam or if Sumitomo Corporation ceases to
have a controlling interest in any joint venture created by Xbeam as set forth
in Section 3.1.
12.3 Material Breach. Other than for occurrences covered by Section 12.2
---------------
hereof, either party shall have the right to terminate this Agreement upon
thirty (30) days' written notice if the other party materially breaches or fails
to perform any of its obligations, representations or undertakings hereunder,
and fails to cure such breach or failure within such thirty (30) day notice
period.
12.4 Termination of License. Upon the termination or expiration of this
----------------------
Agreement, Xbeam's right to use the System or Localized System shall terminate,
and Xbeam shall immediately cease all use of System and Localized System Code,
including without limitation any Error corrections or enhancements thereto that
have become a part of the System or Localized System, and shall make no further
copies of any of the foregoing. Xbeam shall immediately return to ADSmart all
copies of the System and Localized System, including without limitation any
Error corrections and enhancements that have become a part of the System or
Localized System. Xbeam shall warrant in writing, upon request of ADSmart, that
no copies of any such material have been retained or are within the control of
Xbeam.
12.5 Losses Due to Termination. ADSmart shall not by reason solely of any
-------------------------
expiration or termination of this Agreement be liable to Xbeam for any
compensation, reimbursement, expenses or damages, or on account of any loss of
prospective profits on anticipated sales, or on account of expenditures,
investments, leases or commitments in connection with Xbeam's business or good
will, or on any other account, and Xbeam hereby expressly waives any right to
make any such claim in any proceeding or otherwise with regard to such damages.
12.6 Payment of Monies Owed at Termination. Upon expiration or termination
-------------------------------------
of this Agreement, Xbeam shall immediately cease to be an ADSmart licensee and
all monies then owed to either party hereunder shall become immediately due and
payable notwithstanding any credit terms previously made available to Xbeam, and
each party's obligations to pay any sum of money due, payable or accrued under
this Agreement shall survive such expiration or termination.
20
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
12.7 Advertising Material. Upon the expiration or termination of this
--------------------
Agreement for any reason, Xbeam shall immediately cease any reference to its
status as an ADSmart licensee and any use of, or reference to, the Marks for any
purpose. In such event, Xbeam shall, either destroy all advertising and
promotional materials and all other materials concerning the Localized System or
the Marks.
12.8 Additional Remedies. Each party's remedies hereunder are in addition
-------------------
to any additional rights and remedies at law or in equity.
12.9 After the [**] year beginning on the Effective Date, and for a period
ending at the end of the [**] year from the Commencement Date, Xbeam may
terminate this Agreement by giving ADSmart written notice of intent to
terminate, such termination becoming effective [**] after receipt (the "Notice
Period"). Xbeam's termination as per this Section 12.9 shall not absolve Xbeam
of obligations for payments owed ADSmart during the Notice Period, including but
not limited to Licensee Fees, Localization fees, and Enhancements fees.
Notwithstanding anything to the contrary in this Agreement, upon Xbeam's
triggering of the Section 12.9, ADSmart shall be no longer liable for any refund
of the Initial Fee, License Fees, or Localization and Enhancements fees paid by
Xbeam to ADSmart prior to the effective date of termination. Upon effective date
of termination at the end of the Notice Period Xbeam shall be responsible for
operating the ADSmart Network for ten (10) additional months and ADSmart shall
be free to enter into an agreement with a new partner and initiate service
immediately.
13. MISCELLANEOUS.
13.1 Independent Contractors. Xbeam shall be considered to be an
-----------------------
independent contractor. The relationship between ADSmart and Xbeam shall not be
construed to be that of employer and employee, nor to constitute a partnership,
joint venture or agency of any kind. Xbeam shall have no right to enter into any
contracts or commitments in the name of, or on behalf of, ADSmart, or to bind
ADSmart in any respect whatsoever. In addition, Xbeam shall not obligate or
purport to obligate ADSmart by issuing or making any affirmations,
representations, warranties or guaranties with respect to the System or
Localized System to any third party, other than the warranties set forth in
Section 8 below or otherwise provided to Xbeam by ADSmart in writing during the
Term. Xbeam shall pay all of its expenses, including without limitation all
travel, lodging and entertainment expenses, incurred in connection with its
performance hereunder. ADSmart shall not reimburse Xbeam for any of those
expenses.
21
13.2 Compliance with Law. Each party's performance hereunder shall be in
-------------------
compliance with all applicable laws, regulations and other legal and
administrative requirements.
13.3 Regulatory Approvals. ADSmart shall be responsible for obtaining, and
--------------------
shall use its best efforts to obtain, any and all required U.S. governmental
approvals, authorization and permits pertaining to the System and Localized
System, including without limitation, any such approvals related to electrical
devices and medical devices. Xbeam shall be responsible for obtaining, and shall
use its best efforts to obtain, any and all required non-U.S. governmental
approvals, authorization and permits pertaining to the System and Localized
System, including without limitation, any such approvals related to electrical
devices and medical devices. Neither party shall be liable if any authorization
is delayed, denied, revoked, restricted or not renewed; each party shall bear
all such risks and costs caused thereby. In addition, upon termination of this
Agreement for any reason, ADSmart or its designee shall be exclusively entitled
to any rights Xbeam may have acquired as a result of, or in, governmental
approvals authorization or permits, and Xbeam shall take all necessary actions
to effect the transfer of interest in same to ADSmart or any third party
identified by AD Smart.
13.4 Force Majeure. Except with respect to the payment of monies due
-------------
hereunder and the responsibility to maintain the Confidential Information in
confidence, neither party shall be responsible for failure to perform hereunder
due to causes beyond its reasonable control, including, but not limited to,
governmental requirements (including, without limitation, export control laws
and regulations), work stoppages, fires, civil disobedience, embargo, war,
riots, rebellions, strikes, inability to secure products, raw materials or
transport, acts of God, and similar occurrences which are beyond the reasonable
control of the parties hereto. Performance shall be resumed as soon as possible
after the cessation of such cause.
13.5 Waiver. The waiver by either party of any breach of this Agreement by
------
the other party in a particular instance shall not operate as a waiver of prior
or subsequent breaches of the same or different kind.
13.6 Governing Law. This Agreement shall be governed and interpreted in
-------------
all respects by and according to the laws of the Commonwealth of Massachusetts,
USA, excluding its choice of law provisions. Words and phrases shall also be
interpreted as understood in the USA. It is the express intent and agreement of
the parties that the United Nations Convention for the International Sale of
Goods shall not apply to this Agreement or to purchase orders hereunder. All
disputes arising between the parties in connection with this Agreement shall be
settled by arbitration under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce before a single arbitrator selected under
those rules. In the event that ADSmart seeks arbitration, the place of
arbitration shall be Tokyo, Japan. In the event
22
that Xbeam seeks arbitration, the place of arbitration shall be Boston,
Massachusetts. The arbitral award may be enforced in any court having
jurisdiction thereof
13.7 Notices. All notices under this Agreement shall be in writing and
-------
shall be by registered or certified air mail, postage prepaid, return receipt
requested, reputable international express courier service providing return
notice of receipt, or by telecopy with hard copy to follow immediately via air
mail or express courier service in accordance with this Section 15.4, to the
addresses set forth below, or at such different addresses as may be designated
in writing by like notice from time to time. Such notice shall, when mailed, be
effective on the tenth day after it has been deposited in the mails, or, if sent
by courier, on the second business day in the jurisdiction of the recipient
after delivery to the courier, or if given by telecopy, upon receipt thereof by
the recipient's telecopy machine as indicated either in the sender's
identification line produced by recipient's telecopy machine or in the sender's
transmission confirmation report as produced electronically by sender's telecopy
machine.
If to Engage: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇
Attention: ____________________
Fax Number:
If to ADSmart: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇
Attention: ____________________
Fax Number:
If to Xbeam: at ▇-▇▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇,
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
Attention: ___________________
Fax Number:
13.8 Assignment. Except as expressly provided herein, neither party may
----------
assign this Agreement, or any of its interests herein, without the prior written
consent of the other party, except that each party may assign this Agreement
without such consent to an Affiliate, to its successor in connection with a
merger, acquisition or consolidation, or to the purchaser in connection with the
sale of all or substantially all of its assets; provided that (i) such assignee
shall agree in writing in a form reasonably satisfactory to the other party to
comply with such party's obligation under, and to be bound by, this Agreement.
Any assignment in violation of this Section shall be void. In the event of a
merger, acquisition or consolidation of ADSmart by Engage, Engage shall agree to
assume ADSmart's obligation under, and to be bound by, this Agreement.
23
13.9 Prior Agreements. This Agreement cancels and supersedes all prior
----------------
agreements and understandings, oral or written, entered into by the Parties.
This Agreement, including the Schedules A-E attached hereto, sets forth the
-------------
entire understanding of the Parties with respect to its subject matter and may
be changed or amended only by a writing signed by duly-authorized officers of
both Parties. All captions and headings contained in this Agreement are for
convenience only and are not a part of this Agreement.
13.10 Cumulative Rights. Any rights and remedies of either party shall be
-----------------
cumulative and may be exercised singularly or concurrently. The failure of
either party, in any one or more instances, to enforce any of the terms of this
Agreement shall not be construed as a waiver of future enforcement of that or
any other term.
13.11 Survival. Sections 3.2, 3.4, 6, 7.1, 8, 9.1, 9.3, 10, 11, 12.4,
12.5, 12.6, 12.7, and 13 shall survive the termination of this Agreement for an
indefinite period.
13.12 Severability. In the event that any one or more of the provisions
------------
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provisions had
never been contained herein. In such event, the Parties shall use their best
efforts to replace such invalid, illegal, or unenforceable provisions by
provisions that, to the extent permitted by the applicable law, achieve the
purposes intended under such invalid, illegal, or unenforceable provisions,
unless the deletion or replacement of such provision or provisions would result
in such a material change as to cause completion of the transactions
contemplated herein to be unreasonable.
13.13 Successors. This Agreement shall be binding upon and shall inure to
----------
the benefit of the parties and their respective successors and other legal
representatives and, to the extent that any assignment is permitted hereunder,
their assignees.
13.14 English. This Agreement has been drafted and executed in the English
-------
language. In the event of any ambiguity between the English language version and
any translation into any other language, the meaning and intent contained in the
English language version shall prevail.
24
13.15 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Exclusive
Strategic Alliance Agreement under seal as of the date first written above.
ENGAGE TECHNOLOGIES, INC.
By: /s/▇▇▇▇ ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
----------------
Title:_______________
ADSMART CORPORATION
By: /s/▇▇▇▇ ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
----------------
Title:_______________
CROSS BEAM NETWORKS CORPORATION
By: /s/Isao Momata
---------------------
Name: Isao Momata
----------------
Title: President
----------------
25
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SCHEDULE A
----------
Description of ADSmart System
The System is defined as ADSmart's software and business processes for Internet
advertising, including the following:
The ADSmart Network Enabling System
[**]
26
SCHEDULE B
----------
ADSmart Marks
ADSmart(TM)
ADSmart Corporation(TM)
▇▇▇▇▇▇▇.▇▇▇(TM)
▇▇▇▇▇▇▇.▇▇▇(TM)
Network Enabling System(TM)
Site Enabling System(TM)
The ADSmart Network(TM)
The ADSmart Network(TM)
True Targeting P1anner(TM)
True Targeting(TM)
True Targeting(TM)
27
SCHEDULE C
----------
THIS PAGE LEFT INTENTIONALLY BLANK.
28
SCHEDULE D
----------
Error Correction and Enhancements
Error Correction
----------------
During the terms of this Agreement, ADSmart shall provide error correction
services ("Error Correction Services") pursuant to the following procedures:
Each party shall designate a primary and secondary contact (with telephone,
pager and fax numbers and email addresses) for communications and receipt of
materials related to Error Correction Services.
1. Each party shall designate a primary and secondary contact (with telephone,
pager and fax numbers and email addresses) for communications and receipt of
materials related to Error Correction Services.
2. ADSmart's designated representative shall receive and process Xbeam's
reports of~any Errors in the Localized System between the hours of 9:00 a.m. to
5:00 p.m. EST Monday through Friday, excluding ADSmart holidays. For reporting
of a Class 1 Error, an ADSmart representative will be available by pager on a
24-hours per day.
3. Xbeam shall advise ADSmart of any Error within two (2) working days after
its becoming aware of such Errors. Xbeam shall provide all information
reasonably requested by ADSmart from time to time to assist ADSmart in
identifying and solving the Errors. Xbeam shall bear all shipping charges,
communications charges, and the like that are associated with providing such
data to AD Smart.
4. ADSmart and Xbeam shall mutually agree to classify reported Errors as
follows:
Class 1 Error: Renders the Localized System unusable or the use
thereof commercially infeasible.
Class 2 Error: Renders a significant function of the Localized System
unusable or the use thereof commercially unfeasible.
Class 3 Error All other Errors are Class 3 Errors, in particular, all
Documentation shortcomings and deviations that do not
have the operational or economic consequences as
defined for Class 1 and Class 2 Errors shall be deemed
Class 3 Errors.
29
In the event of any dispute related to the classification of an Error, Xbeam's
classification, if reasonable, shall govern.
5. With respect to Class 1 and Class 2 Errors, within two (2) working days of
receipt of notice of any such Error, ADSmart shall, at no additional charge, use
best efforts to either: (i) provide Xbeam with a response specific to the Errors
described, sufficient to alleviate any adverse effect of the Error on the
utility of the Localized System satisfactory to Xbeam, or (ii) provide Xbeam
with a response describing ADSmart's then-existing diagnosis of the Errors
described and outlining ADSmart's then existing plan and timetable for
correcting the Errors, in which case ADSmart shall report its progress in
correcting the Errors to correcting the Errors. As well as informing Xbeam at
least weekly. In addition, ADSmart shall inform Xbeam of any action that ADSmart
believes should be taken by Xbeam for data preservation or other damage.
6. With respect to Class 3 Errors ADSmart will respond with a proposed plan of
action back to Xbeam via email within five (5) working days and the parties will
mutually agree on the plan of action.
If Xbeam determines that the Errors will not be corrected by any action as above
and ask reasonably, ADSmart shall dispatch its competent engineer to correct
such Errors.
This paragraph states Xbeam's exclusive remedy and ADSmart's sole obligation~for
Error Correction. Under no circumstances does ADSmart warrant that all Errors
can or will be corrected.
Enhancements
------------
Xbeam will notify ADSmart, in writing, of all proposed enhancements to the
System and Localized System. ADSmart will respond with a proposed plan of action
back to Xbeam via email within fourteen working days and the parties will
mutually agree on the plan of action.
30
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SCHEDULE E
----------
Implementation Timeline
[**] of the Effective Date of the Agreement:
---------------------------------------
Xbeam and ADSmart agree upon facilities plan and order equipment, software and
network bandwidth.
[**] of the Effective Date of the Agreement
---------------------------------------
ADSmart trains Xbeam customer service manager and jointly defines Xbeam
classification system, user roles and access rights.
Xbeam and ADSmart agree upon staffing levels, hire appropriate staff and arrange
for training. ADSmart trains Xbeam technical operations staff and database
administrator at ADSmart's facility in Andover, MA.
[**] of the Effective Date of the Agreement:
---------------------------------------
Interim System Services (as listed in Section 5.1.a) provided by ADSmart.
[**] of the Effective Date of the Agreement
---------------------------------------
Xbeam uses English language Ad Server from their facility in Japan to serve ads
within Territory using ADSmart's English-Language database applications based in
ADSmart's Andover facility.
[**] of the Effective Date of the Agreement:
---------------------------------------
Xbeam uses Japanese language Ad Server from their facility in Japan to serve ads
within Territory using ADSmart's English-language database applications located
in ADSmart's Andover facility.
[**] of the Effective Date of the Agreement
---------------------------------------
Xbeam uses Japanese-language Ad Server along with Japanese-language database
applications from their facility in Japan to serve ads.
31
ADDENDUM
--------
Reference is made to Exclusive Strategic Alliance Agreement dated January 7,
1998 (the "Agreement") between Engage Technologies, Inc. ("EG"), ADSmart
Corporation ("ADSmart") and Cross Beam Networks Corporation ("Xbeam").
EG for itself and ADS mart and Sumitomo Corporation for itself and Xbeam hereby
agree as follows:
1. EG acknowledges that it has acquired the engineering division of ADSmart
and it shall be responsible for developing the next version of Accipiter
based ADSmart and also for providing on-going version-up of the same.
2. EG/ADSmart and SC/Xbeam shall immediately meet to clarify the status of the
project of such development on the part of ADSmart and shall discuss and
agree upon (i) the completion date for the localization of the next version
of Accipiter based ADS mart and (ii) the commencement date of the services
based on that next version, each of which shall be on or before the end of
December, 1998. Such next version needs to be acceptable to the customers
in Japan. Until the completion of such next version, EG shall provide full
support and assistance utilizing their commercial and technical resources
in order to keep the reputation and goodwill of ADSmart and keep the
services of ADSmart attractive to the customers in Japan. EG shall at its
responsibility procure that the localization and the commencement of the
services of ADSmart shall be completed by the above-mentioned dates. It is
a condition to SC's execution of the contract in relation to the
establishment of a joint venture company between SC and EG for the purpose
of pursuing the business opportunities in the territory of Japan through
the commercialization of Internet behavioral profiling and marketing
products, database subscription services and the performance of related
consulting services (the "Contract") that the above mentioned dates shall
have been agreed upon among EG/ADSmart and SC/Xbeam by the end of June,
1998. For avoidance of doubt, the foregoing shall be without prejudice to
SC/Xbeam's right to the payment of liquidated damages for delay payable by
ADSmart under the Agreement.
3. This Addendum is an integral part of the Agreement. Terms already defined
in the Agreement but not otherwise defined in this Addendum shall have the
same meanings defined in the Agreement.
32
Signature below by both parties signifies the foregoing:
For and on behalf of For and on behalf of
Engage Technologies, Inc. Sumitomo Corporation
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------ -------- ------------------- --------
▇▇▇▇ ▇. ▇▇▇▇▇▇ Date ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Date
President & CEO Director
Engage Technologies, Inc. Deputy General Manager
Media Business Division
Sumitomo Corporation
For and on behalf of For and on behalf of
ADSmart Corporation Cross Beam Networks Corporation
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------ -------- ---------------- --------
▇▇▇▇ ▇. ▇▇▇▇▇▇ Date ▇▇▇▇ ▇▇▇▇▇▇ Date
President & CEO General Manager
Engage Technologies, Inc. Information & Telecommunication
Business Department No. 2
Sumitomo Corporation
33
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SCHEDULE A
----------
Description of Advertising System
The Advertising System is defined as ADSmart's business processes and
Accipiter's software for automating Internet advertising placement. The business
processes have already been delivered to Xbeam. The software will be delivered
in two phases, the first phase based on Accipiter Ad Manager 2.2 and the second
based on Accipiter Ad Manager 4.0.
[**]
34
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SCHEDULE E
----------
Implementation Timeline
[**] after conclusion of original Agreement
---------------------------------------
Xbeam and ADS mart agree upon facilities plan and order equipment, software and
network bandwidth.
[**] after conclusion of original Agreement:
---------------------------------------
Xbeam provides ADSmart with site classification data, user roles and access
rights. Xbeam and ADSmart agree upon staffing levels, hire appropriate staff and
arrange for training.
ADSmart trains Xbeam technical operations staff and database administrator at
ADSmart's facility in Andover, MA.
[**] after conclusion of original Agreement:
---------------------------------------
ADSmart trains Xbeam customer service staff at ADSmart's facility in Andover,
MA.
[**] after conclusion of original Agreement:
---------------------------------------
Interim System Services (as listed in Section 5.1 .a) provided by ADSmart.
[**]
Engage delivers Phase 1 of the Advertising System, as described in Schedule A,
with the exception of Technical Consulting and Customer Support Training. Engage
continues to support ADSmart Interim System Services up until [**].
[**]
Engage delivers Technical Consulting and Customer Support Training for Phase 1
of the Advertising system, as described in Schedule A. Xbeam implements Phase 1
of the Advertising System, as described in Schedule A, in Japan. Xbeam ceases
use of AD Smart proprietary software.
[**]
Engage delivers Phase 2 of the Advertising System, as described in Schedule A,
with the exception of Technical Consulting and Customer Service Training.
After [**] but No Later Than [**]
----- ------------------
Engage delivers Phase 3 of the Advertising System, as described in Schedule A,
with the exception of Technical Consulting and Customer Service Training.
35
SECOND AMENDMENT TO
EXCLUSIVE STRATEGIC ALLIANCE AGREEMENT
--------------------------------------
This Second Amendment (the "Amendment") to the Exclusive Strategic Alliance
Agreement is entered into as of November 26, 1998 (the "Effective Date") by and
among Engage Technologies, Inc. ("Engage"), ADSmart Corporation ("ADSmart"),
Sumitomo Corporation ("Sumitomo"), Cross Beam Networks Corporation ("Xbeam"),
and Interactive Solutions, Inc. ("1S1").
WHEREAS Engage, ADS mart and Xbeam are parties to an Exclusive Strategic
Alliance Agreement dated January 7, 1998 (the "Agreement");
WHEREAS Engage, ADSmart, Sumitomo and Xbeam are parties to an addendum to
the Agreement executed as of June 18, 1998; and
WHEREAS Engage, ADSmart, Sumitomo, Xbeam and ISI desire to amend the
Agreement in order to assign all of the rights, obligations and liabilities
under the Agreement from Xbeam to ISI, a wholly-owned subsidiary of Sumitomo.
NOW, THEREFORE, Engage, ADSmart, Sumitomo, Xbeam and 1S1 agree as follows:
1. Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement.
2. Pursuant to Section 13.8 of the Agreement, Xbeam hereby assigns to ISI all
of its rights, obligations and liabilities under the Agreement, and ISI hereby
assumes all of the rights, obligations and liabilities (whether past, present or
future) of Xbeam under the Agreement, and the parties hereto hereby consent to
such assignment and assumption effective as of the Effective Date. All notices
to ISI under the Agreement shall be sent to the following address:
Interactive Solutions, Inc.
2FShinshu-Meitetsu Yasuda Building
▇-▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇
3. Except as specifically set forth herein, no other portion of the Agreement
shall be affected.
4. This Amendment may be executed in one or more counterparts, each of which
shall for all purposes be deemed to be an original and all of which shall
constitute the same instrument.
36
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective authorized representatives below as of the day and
year first above written.
ENGAGE TECHNOLOGIES, INC. ADSMART CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. Royal By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------- --------------------------
Name: ▇▇▇▇▇▇▇ ▇. Royal Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer Title: President
INTERACTIVE SOLUTIONS, INC. CROSS BEAM NETWORKS CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ Motohiko Ikweda
------------------------- --------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President Title: President
SUMITOMO CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: General Manager
Information & Telecommunications
Business Department No. 2
37
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
THIRD AMENDMENT TO
EXCLUSIVE STRATEGIC ALLIANCE AGREEMENT
--------------------------------------
This Third Amendment(the "Amendment") to the Exclusive Strategic Alliance
Agreement is entered into as of January 20, 1999 (the "Effective Date") by and
among Engage Technologies, Inc. ("Engage"), ADSmart Corporation ("ADSmart"),
Sumitomo Corporation ("Sumitomo"), and Interactive Solutions, Inc. ("ISI")
(collectively the "Parties").
WHEREAS the Parties entered into an Exclusive Strategic Alliance Agreement
dated January 7, 1998 (the "Agreement") as amended by addendum executed as of
June 18, 1998 and amendment dated November 26, 1998; and
WHEREAS the Parties desire to further amend the Agreement as set forth
below.
NOW, THEREFORE, the Parties agree as follows:
1. Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement. In the event of any conflict between the
terms and conditions of this Amendment and the terms and conditions of the
Agreement, this Amendment shall control,
2. Section 6.1(b) of the Agreement shall be amended as follows:
Notwithstanding any other provision of this Agreement: (i) the Annual
License Fee for the Third Year shall be [**], which amount shall represent
Engage's entire liability and sole and final payment for any delayed
delivery of the Localized System and/or any other deliverable under the
Agreement as amended; and (ii) by [**] Engage shall deliver Phases 2 and 3
of the Advertising System, as described in Schedule A, with the exception
----------
of Technical Consulting and Customer Service Training.
3. Except as specifically set forth herein, no other portion of the Agreement
shall be affected.
4. This Amendment may be executed in one or more counterparts, each of which
shall for all purposes be deemed to be an original and all of which shall
constitute the same instrument.
38
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective authorized representatives below as of the day and
year first above written.
ENGAGE TECHNOLOGIES, INC. ADSMART CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. Royal By: /s/▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------- --------------------------
Name: ▇▇▇▇▇▇▇ ▇. Royal Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer Title: President
INTERACTIVE SOLUTIONS, INC. SUMITOMO CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------- ----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇
-------------------
Title: President Title: General Manager
Information &
Telecommunications
Business Department
No. 2
39