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Exhibit 10.6
MEMORANDUM OF AGREEMENT
FOR
XXXXXXXXXX.XXX / AD-STAR WEB-BASED JOB ADVERTISEMENT POSTING PRODUCT AGREEMENT
This Memorandum of Agreement ("MOA") is entered into by and between
XxxxxxXxxx.xxx, LLC, a Delaware limited liability company ("XxxxxxXxxx.xxx") and
Ad-Star Services, a New York corporation ("Ad-Star") as of March 11, 1999 (the
"MOA Date").
1) DEFINITIVE AGREEMENT. XxxxxxXxxx.xxx and Ad-Star agree to use their best
efforts to negotiate and execute a more detailed definitive agreement with
respect to the matters set forth in this MOA (the "Definitive Agreement")
based on the terms set forth in this MOA within thirty (30) days after the
MOA Date. Notwithstanding the parties' agreement to use their best efforts to
negotiate and execute the Definitive Agreement, the parties acknowledge that
this MOA reflects the parties' agreement on the essential terms of the
parties' agreement with respect to the business relationship and other
matters set forth in this MOA and the parties intend that this MOA shall be a
binding and enforceable agreement of the parties, notwithstanding any failure
of the parties to execute the Definitive Agreement. If the parties fail to
execute the Definitive Agreement, all references in this MOA to the
Definitive Agreement shall be deemed to refer to this MOA.
2) FUNCTIONAL SPECIFICATIONS. XxxxxxXxxx.xxx will deliver to Ad-Star, after
consultation, assistance and mutual agreement from Ad-Star, within seven (7)
days after the MOA Date, functional specifications (the "Functional
Specifications") setting forth the requirements (as established in the
marketing requirements document attached hereto) for the Service (as defined
below).
3) WEB-BASED JOB ADVERTISEMENT POSTING SERVICE. Ad-Star will provide to
XxxxxxXxxx.xxx and its affiliates who provide job-related products or
services ("Affiliates") a complete web-based job advertisement service,
including software (the "Product") and related services, conforming to the
Functional Specifications (the "Service"), including but not limited to the
following:
a) Phase I Development. Within thirty (30) days after the parties agree
upon the Functional Specifications, Ad-Star will provide the "Phase I
Development" as per the Functional Specifications, including but not
limited to the following:
i) An Ad-Star project manager acceptable to XxxxxxXxxx.xxx during the
Term who will function as the primary point of contact with Ad-
Star and have authority to manage and authorize Ad-Star's
performance;
ii) Development and hosting of a XxxxxxXxxx.xxx branded and
XxxxxxXxxx.xxx/Xxxxxxxxx co-branded web-enabled ad taking product
for XxxxxxXxxx.xxx and at least ten (10) Affiliates;
iv) Multiple ad insertions covered by a single xxxx;
v) Credit card clearing;
vi) An online proofing tool for XxxxxxXxxx.xxx operations use in the
ad approval process;
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vii) Customer support during the Term by qualified personnel Monday
through Thursday 6 a.m. to 5 P.M. and on Friday from 6 a.m. to 7 P.M.
Pacific Standard Time to XxxxxxXxxx.xxx, Affiliates and customers of
XxxxxxXxxx.xxx and its Affiliates;
viii) Conform the ads to a format specified by XxxxxxXxxx.xxx;
ix) Delivery of the online ads to XxxxxxXxxx.xxx for addition to
XxxxxxXxxx.xxx's database(s) in conformance with the delivery schedule
specified by XxxxxxXxxx.xxx in its sole discretion, but in no event
will the frequency of delivery be less than daily;
x) Forwarding of credit card billing data to XxxxxxXxxx.xxx except for the
credit card account numbers;
xi) Delivery of reports providing information on total national
advertisements, total local advertisements, advertisements per Affiliate
and other information to be specified in the Functional Specifications;
xii) Commercially reasonable initial training of XxxxxxXxxx.xxx and Affiliate
personnel by qualified Ad-Star personnel in the use of the Product, to be
further specified in the Functional Specifications; and
xiii) Daily backup of the Product and XxxxxxXxxx.xxx data. The backup media
shall be stored in a secure, off-site location.
b) Phase II Development. Within sixty (60) days after the parties agree
upon the Functional Specifications, Ad-Star will provide the "Phase II
Development" as per the Functional Specifications, including but not
limited to the following:
i) Development and hosting of a XxxxxxXxxx.xxx/Xxxxxxxxx web-enabled
co-branded job advertisement posting product for the remainder of the then
current Affiliates (up to 100), in addition to the ten (10) Affiliates
covered by Phase I. In addition, Ad-Star will develop and host such a
product for new Affiliates promptly after they become Affiliates;
ii) Account creation/administration for XxxxxxXxxx.xxx to create and
administer accounts for Affiliates, advertising agencies, and customers as
per the Functional Specification;
iii) Account creation/administration for Affiliates to create and administer
accounts for advertising agencies and customers as per the Functional
Specification;
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iv) Advanced reports for XxxxxxXxxx.xxx, Affiliates, agencies, companies
and individuals, including but not limited to end-user information
and statistics, to be further specified in the Functional
Specifications;
v) Integration with Affiliate and/or XxxxxxXxxx.xxx front end billing
when requested by Affiliates or XxxxxxXxxx.xxx for contract and other
advertisers and modifiable to various advertiser rate cards;
vi) Archival of current and past advertisements during the Term for
editing, modification and resubmission;
vii) Ongoing software support such as updating pricing for national and
local ads, changes to ad package frequencies, updating features and
data feed protocols/specifications and other general maintenance and
support for XxxxxxXxxx.xxx and all Affiliates as further specified
in the Functional Specifications;
viii) Participation in the XxxxxxXxxx.xxx/Xxxxxxxxx working group for
discussion and development of the Product and future enhancements;
ix) Advanced payment options available to the end-user such as checking
account and telephone xxxx as further specified in the Functional
Specifications;
x) Forwarding of all billing information to XxxxxxXxxx.xxx except for
credit account numbers;
xi) Additional commercially reasonable training of XxxxxxXxxx.xxx and
Affiliate personnel by qualified Ad-Star personnel in the use of the
Product, to be further specified in the Functional Specifications;
and
xii) At the option of XxxxxxXxxx.xxx and its Affiliates, online to
print ad placing capabilities in the Product for XxxxxxXxxx.xxx and
all Affiliates may be added, and compensation for such capability
shall be mutually agreed upon, but in no event shall such
compensation exceed 5% of the gross ad price for such print ads.
c) FUTURE PRODUCT DEVELOPMENT
i) All updates, upgrades and additional enhancements and bug fixes
done in the general course of Ad-Star product development will be
provided to XxxxxxXxxx.xxx and its Affiliates free of charge.
ii) XxxxxxXxxx.xxx shall also receive additional upgrades, enhancements
and bug fixes to the Product as specified in the Functional
Specifications free of charge.
iii) Ad-Star will work with XxxxxxXxxx.xxx to continually enhance the
Service and Product and generate future releases of the Product. The
parties will meet at least quarterly to discuss enhancements and
future releases of the Product in order to maintain the
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Product as a "best of class" product. Upon XxxxxxXxxx.xxx's request,
Ad-Star shall promptly provide all development and other services necessary
to produce such enhancements and future releases. Such services will be
provided on commercially reasonable terms, including commercially
reasonable rates, and Ad-Star will allocate all resources necessary to
undertake such efforts in an efficient and prompt manner.
4. Performance Standards. Ad-Star will create and deliver a "best of class"
Product that will represent XxxxxxXxxx.xxx with the highest standards in
the World Wide Web marketplace. The Product will be delivered within the
specified time as outlined in this MOA. If Ad-Star anticipates that there
will be any delay in delivering material components of the Product, such
delay must be documented and submitted in writing to XxxxxxXxxx.xxx at
least two (2) weeks prior to the scheduled delivery date and Ad-Star will
exhaust all possible solutions to deliver the Product within the scheduled
delivery date, including, but not limited to, the hiring of more personnel.
XxxxxxXxxx.xxx may terminate this Agreement if it determines, in its sole
discretion, that the Product will not meet XxxxxxXxxx.xxx's business
objectives because of such delay.
5. Ad-Star Web Service. During the Term, the response time of the Ad-Star web
site(s) containing the Product shall be as quick or quicker than most major
commercial web sites. Initially, from the time a request is received from
an end user, the Ad-Star service must respond within 1.5 seconds and send
the response back out to the end-user over the internet. The Ad-Star web
site(s) containing the Product shall have 99.9% availability. In addition,
the Functional Specifications will include additional technical performance
standards consistent with "best of class" performance.
6. Intellectual Property. Ad-Star represents and warrants that the Service and
Product and its performance under this MOA and the Definitive Agreement
shall not violate any intellectual property rights of a third party and
Ad-Star agrees to indemnify XxxxxxXxxx.xxx, the Affiliates and their
respective officers, directors, agents and affiliates from and against any
claims, losses and expenses related thereto. All intellectual property
developed by Ad-Star for XxxxxxXxxx.xxx in connection with Ad-Star's
performance under this MOA and the Definitive Agreement ("Developed
IP")(but excluding pre-existing intellectual property of Ad-Star's used in
Ad-Star's general products or general upgrades or enhancements developed
for Ad-Star's general products) shall be deemed to be a "work made for
hire" as that term may be defined from time to time in Section 101 of the
Copyright Act (17 U.S.C. 101) or any successor, and will be the sole
property of XxxxxxXxxx.xxx. Ad-Star hereby assigns all rights in and to the
Developed IP to XxxxxxXxxx.xxx. The parties understand that Ad-Star is
concurrently developing the Product for general release and distribution in
addition to XxxxxxXxxx.xxx's use. In order to avoid confusion, the parties
agree that the Developed IP delivered by Ad-Star pursuant to this MOA for
the one time development fee of $58,000 shall be limited to the customized
materials related specifically to XxxxxxXxxx.xxx and Affiliates and shall
not include any general functionality of the Product. Nothing contained
herein shall prohibit Ad-Star from upgrading or enhancing its general
products separately from the specific work it does for XxxxxxXxxx.xxx, to
be a "best of class" Product that will provide Ad-Star's affiliates with
the highest standards in the World Wide Web marketplace, provided that no
Developed IP is used. Ad-Star hereby grants to XxxxxxXxxx.xxx a
royalty-free (other than the consideration expressly set forth in this
MOA), non-exclusive, worldwide license to all intellectual property other
than the Developed IP included during the Term within the Product and the
parties shall promptly after the Product becomes operational enter into a
commercial reasonable software
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escrow agreement with a reputable escrow service for the deposit and
escrow of the source code to all software used from time to time in the
Product. The rights and licenses granted under this MOA and the Definitive
Agreement are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101 of the U.S.
Bankruptcy Code.
7. Financial Consideration. In consideration for Ad-Star's provision of the
Product and the performance of Ad-Star's other obligations under the
Definitive Agreement, XxxxxxXxxx.xxx will make the following payments to
Ad-Star.
a) One Time Development and Implementation Fee. Subject to meeting the
three milestones set forth below, XxxxxxXxxx.xxx will pay to Ad-Star
a one-time, non-recurring development and implementation fee of
$58,000. This fee will be paid in three (3) installments based on
milestones. One-third (1/3) of this fee will be paid on the MOA Date.
If the parties cannot agree upon the Functional Specifications as set
forth in Section 2, Ad-Star shall immediately refund such fee. An
additional one-third (1/3) of this fee will be paid after the Phase
I Development is delivered by Ad-Star and accepted by XxxxxxXxxx.xxx.
The remaining one-third (1/3) of this fee will be paid after the
Phase II Development is delivered by Ad-Star and accepted by
XxxxxxXxxx.xxx. The parties shall mutually agree upon an additional
implementation fee, if any, for the addition of more than one hundred
(100) Affiliates as set forth in Section 3(b)(i).
(b) Percentage of Revenues. Ad-Star is entitled to five percent (5%) of
revenues for ads taken by the Ad-Star system. Ad-Star will xxxxxx five
percent (5%) of the gross ad price. For example an ad sells online for
$100.00, Ad-Star will receive $5.00. Revenue will be paid once a month
after billing reconciliation. All returns and charge backs occurring
within that month will be credited against the gross amount due to
Ad-Star in that month.
(c) Additional Dedicated End User Support. If XxxxxxXxxx.xxx requests
additional dedicated personnel to provide end user support in addition
to the customer support provided pursuant to Section 3 above,
XxxxxxXxxx.xxx will pay Ad-Star for Ad-Star's reasonable and approved
out of pocket cost of providing such additional dedicated customer
support personnel. XxxxxxXxxx.xxx will bear the burden of cost for
support phones lines answered under the XxxxxxXxxx.xxx name.
(d) Most Favored Financial Terms. If Ad-Star offers to any other person
or entity more favorable financial terms than the terms offered to
XxxxxxXxxx.xxx, Ad-Star must offer to XxxxxxXxxx.xxx the best terms
offered to any such other person or entity.
(e) Payment Processing Fee. XxxxxxXxxx.xxx will pay all payment
processing fees such as those incurred for online processing of
credit cards and ACH debiting. These fees will be passed along from
Ad-Star to XxxxxxXxxx.xxx at cost. In addition, a reasonable reserve
for fraud may be established by Ad-Star.
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8. TERM. The term of the Definitive Agreement ("Term") will be three (3)
years. XxxxxxXxxx.xxx may extend the Term annually, for additional
one (1) year periods by providing notice to Ad-Star no less than one
hundred and eighty (180) days prior to the expiration of the Term or
extended Term. If XxxxxxXxxx.xxx elects not to extend the Term, then
beginning one hundred and eighty (180) days prior to such expiration,
Ad-Star will cooperate with XxxxxxXxxx.xxx in a commercially reasonable
manner to ensure a smooth transition to any other web-based job posting
capabilities that XxxxxxXxxx.xxx chooses to utilize.
9. EXCLUSIVE PROMOTIONAL AND MARKETING AGREEMENT. From the MOA Date until the
sixtieth (60th) day following the effective date of the Definitive
Agreement, XxxxxxXxxx.xxx and Ad-Star will exercise commercially reasonable
efforts to negotiate and execute an exclusive promotional and marketing
agreement in the area of employment advertising on the World Wide Web. Such
agreement may include without limitation, the premium positioning of
XxxxxxXxxx.xxx on all sales and distribution channels that Ad-Star offers
through its Microsoft Windows based and web-based ad taking service, and
the positioning of AdStar on the XxxxxxXxxx.xxx and/or its Affiliate sites.
During such period Ad-Star shall not enter into discussions or
negotiations with any other person or entity in connection with a similar
agreement. The exclusive promotional and marketing agreement will include a
promotional, marketing and/or other relationship beyond the scope of the
basic provision of development and services primarily addressed in this
MOA.
10. CONFIDENTIALITY. XxxxxxXxxx.xxx and Ad-Star agree that all of the terms of
this MOA and any other information provided by one party to the other that
(a) if written, is labeled confidential or proprietary, or (b) if oral, is
clearly indicated by the disclosing party to be confidential or proprietary
prior to disclosure, ("Confidential Information") will be kept confidential
by and will not be used by the receiving party or any of its officers,
directors, agents or other affiliates except as necessary to perform under
this MOA or the Definitive Agreement until the earlier of (a) the date as
of which both parties agree otherwise in writing and (b) January 1, 2002.
In addition, the terms of the Non-Disclosure Agreement between the parties
dated January 27, 1999 is incorporated in this Section 10 by reference. In
order to avoid confusion, the existence of and the terms contained in
Section 9 are Confidential Information. The receiving party shall be
obligated to use at least the same level of care in protecting the
disclosing party's Confidential Information as it uses in protecting its
own proprietary or confidential information, which shall in no event be
less than commercially reasonable efforts. For avoidance of doubt,
Confidential Information shall not include information that (i) is known to
the receiving party prior to the receipt from the disclosing party directly
or indirectly from a source other than one having an obligation of
confidentiality for the disclosing party; (ii) becomes known (independently
of disclosure by the disclosing party) to the receiving party directly or
indirectly from a source other than one having an obligation of
confidentiality to the disclosing party; (iii) becomes publicly known or
otherwise ceases to be secret or confidential, except through a breach of
this MOA or the Definitive Agreement by the receiving party; or (iv) is
independently developed by the receiving party. The parties agree that the
confidentiality provisions of this Section 10 shall be binding upon the
parties and shall survive the termination of this MOA and the Definitive
Agreement and the failure of the parties to execute the Definitive
Agreement.
11. INJUNCTIVE RELIEF. The Parties acknowledge that it will be impossible to
measure in money the
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damages that would be suffered if the parties fail to comply with their
obligations under this MOA or the Definitive Agreement and that in the event
of any such failure, an aggrieved party will be irreparably damaged and
will not have an adequate remedy at law. The parties agree that in addition
to any other remedies available to the parties under this MOA or the
Definitive Agreement or at law, the parties shall have the right to obtain
injunctive relief, including specific performance, and if any action should
be brought in equity to enforce any of the provisions of this MOA or the
Definitive Agreement, neither party shall raise the defense that there is an
adequate remedy at law.
12. SEVERABILITY. In the event that any provision of this MOA or the Definitive
Agreement is held to be invalid, illegal or unenforceable by an arbitrator,
court or other authority of competent jurisdiction, (i) the validity,
legality and enforceability of the remaining provisions hereof shall not be
affected or impaired thereby in any way, and such invalid, illegal, or
unenforceable provision shall be construed by limiting such provision so as
to be valid, legal and enforceable to the maximum extent permitted by law
and (ii) the parties shall use their best efforts to enter into alternative
arrangements which will grant each of the parties the same, or as nearly the
same as possible, economic and other rights and obligations as were granted
under the provisions of this MOA or the Definitive Agreement which were held
to be invalid, illegal or unenforceable.
13. FURTHER ASSURANCES. From time to time, as and when requested by a party, the
other party shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions as may be reasonably necessary or
desirable to consummate the transactions contemplated by this MOA or the
Definitive Agreement.
14. CHOICE OF LAW, ARBITRATION, AMENDMENT, ASSIGNMENT, EXECUTION. This MOA and
the Definitive Agreement shall be governed by and construed in accordance
with the laws of the State of California without regard to the conflicts of
law principles thereof. All disputes relating to this MOA or the Definitive
Agreement that the parties are unable to resolve shall be submitted to
arbitration before the American Arbitration Association in Los Angeles,
California, before a single arbitrator, in accordance with the arbitration
rules of the American Arbitration Association. Notwithstanding the
foregoing, the parties may seek specific performance or injunctive relief in
any court of competent jurisdiction. This MOA and the Definitive Agreement
may be amended only by a written agreement executed by both parties. This
MOA and the Definitive Agreement shall inure solely to the benefit of and be
binding upon each of the parties and their respective successors and
permitted assigns. This MOA and the Definitive Agreement shall not be
assignable without the prior written consent of the other party. This MOA
may be executed in counterparts, which taken together shall constitute one
and the same instrument.
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XxxxxxXxxx.xxx and Ad-Star have caused this MOA to be executed by persons duly
authorized as of the day and year first above written.
XXXXXXXXXX.XXX,LLC AD-STAR SERVICES
/s/ Xxxxxxx X. Ste. Xxxxx /s/ Xxxxxx Xxxxxxxx
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Chief Executive Officer President, CEO
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