Exhibit 10.5
ADSmart Corporation
Representation Agreement
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THIS REPRESENTATION AGREEMENT (the "Agreement") is made on this 11th
day of June, 1999 (the "Effective Date"), by and between ADSmart Corporation
("ADSmart") with its principal place of business located at 000 Xxxxxxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxxx, XX 00000 and Tritium Network ("TN") with its
principal place of business located at 00000 Xxxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ADSmart and TN agree to the
following:
1. ADSmart Responsibilities.
(a) Representation. ADSmart will provide advertising sales representation and
consultation services (collectively the "Representation Services") on behalf of
TN's web site(s) (the "Website") set forth in Attachment A ("Attachment A") and
made a part of this Agreement. In connection with such Representation Services,
ADSmart shall actively promote the Website and solicit advertising for the
Website.
(b) Exclusivity. ADSmart is appointed the exclusive outside sales representative
for TN's entire Allocated Inventory as defined in section 2(a) below for the
initial Term and all Renewal Terms of this Agreement, as defined below.
(c) Management Services. ADSmart will provide the following management services
("Management Services"):
(i) Collect advertising creative ("Creative") from advertisers or ad
agencies ("Advertisers") that will be displayed on the Website.
(ii) Provide pipeline reports (the "Pipeline Reports") every two (2) weeks,
which outline advertising schedule, including costs, number of impressions
and outstanding proposals to Advertisers.
(iii) Update TN on the progress and demand of the Internet advertising
marketplace.
(iv) Consult with TN on marketing and advertising opportunities.
(d) Ad Serving & Tracking:
(i) Banners. TN will utilize banner serving through ADSmart. There will be
no charge by ADSmart for this service. ADSmart shall have exclusive control
of the Allocated banner Inventory allocated to ADSmart by TN as defined in
2(a) below and ADSmart shall have reasonable discretion over the content and
nature of the banners that can be sold to cover banner serving and
bandwidth cost. ADSmart will not run any advertising campaign on the
Website, which TN reasonably determines to be offensive to TN or its
customers or inconsistent with TN's editorial policy.
(ii) Specific Requests. If TN requests specific paid or non-paid campaigns
to be placed as part of the Allocated Inventory to ADSmart, TN shall pay
ADSmart $.55 net per thousand impressions, for paid or non-paid open
inventory banner serving, auditing and reporting. ADSmart will deduct fees
ADSmart Corporation
Representation Agreement
------------------------
for banner serving from checks being sent to TN for advertising revenue. If
TN requests banners to be served for its own internal purposes, using the
cost listed above, the amount of banner impressions will not exceed ten
percent (10%) of the monthly Allocated Inventory exclusively allocated to
ADSmart by TN as defined in 2(a) below.
(iii) Internal Inventory. For the remaining internal inventory ("Open
Inventory" as defined in 2a below), the same fees will apply should TN
choose to utilize ADSmart's banner serving technologies. Otherwise, there
will be no ad serving charges for those ads served directly by TN utilizing
internal TN servers.
2. TN's Responsibilities.
(a) Impressions. TN will exclusively allocate 75% of all available banner
advertising impressions ("Impressions") per month to ADSmart (the "Allocated
Inventory"). Impressions shall be a cross section of all available Impressions
on the Website. TN will make reasonable efforts to ensure that the Impressions
committed to ADSmart are available and notify ADSmart immediately in the event
that any major increase or decrease in Impressions is foreseen. The remaining
25% inventory (the "Open Inventory") shall remain the property of TN and may be
utilized at the discretion of TN for those purposes TN deems appropriate. Any
sales of Open Inventory will be achieved by either TN internal sales or provided
exclusively to ADSmart by TN under the same terms as Allocated Inventory.
(b) Website Information. Upon execution of this Agreement. TN will provide
ADSmart with the following information: available demographic and psychographic
(interest and behavioral) information regarding Website audience, Website
description by section, advertising and sponsorship opportunities, technical
specifications relating to advertising, marketing information, and contact
information. TN agrees to keep all information provided to ADSmart current and
will advise ADSmart on new opportunities with its Website and new services
offered by TN.
(c) Tracking. TN will provide ADSmart with a detailed inventory projection
analysis of the Website's traffic, including visitor and page view totals for
its primary sections.
(d) Editorial Policy. TN will provide ADSmart with its Website editorial policy.
(e) Fulfillment of Advertising Campaigns. TN shall use its best efforts to
fulfill all advertising campaigns obtained by ADSmart in a timely manner.
(f) In-House Sales. ADSmart acknowledges that TN's in-house sales force will
continue its advertising sales efforts concurrently with this agreement for only
the Open Inventory and ADSmart and TN agree to work together to prevent
duplication of sales efforts and to inform the other of targeted advertisers. To
facilitate this process, TN shall provide ADSmart with a report every two (2)
weeks, which contains the same information provided by ADSmart to TN in
ADSmart's Pipeline Report.
ADSmart Corporation
Representation Agreement
------------------------
(g) Advertiser Exclusions. ADSmart shall not pursue any Advertiser listed on
Attachment B ("Attachment B") and made a part of this Agreement.
3. Marketing Material.
(a) Highlighting and Approval. ADSmart will highlight the Website in its World
Wide Web site on the Internet located at xxx.xxxxxxx.xxx and within its media
kit. TN will have the right to review in advance and approve the final version
of the media kit.
(b) Marketing Materials. TN agrees and acknowledges that ADSmart may market and
promote the Website to potential Advertisers, by such means as it deems
appropriate, including, without limitation, listing the in directories, trade
publications, ADSmart proposals and presentations, advertisements, and other
promotional opportunities.
(c) Promotional Material. TN agrees to provide ADSmart with reasonable amounts
of TN's promotional materials.
(d) Press Releases. Both parties must approve all press releases or
announcements referring to any ADSmart/TN agreement before they are released
to the press or any third party.
(e) Registry as Agent. TN authorizes ADSmart Corporation to register as TN's
agent in all relevant periodicals, directories, and other marketing sources
identified by ADSmart and approved in advance by TN within the scope of and
during the Initial Term and all Renewal Terms of this Agreement.
4. Compensation.
(a) Commission. For the Representation Services and Management Services
provided by ADSmart, TN agrees to pay ADSmart a thirty five (35%) percent
commission on all new advertising revenues invoiced and collected by
ADSmart arising out of the advertisements placed upon the Website by
ADSmart during the term of this Agreement, less credits, refunds and sales
or use taxes.
(b) Guarantee. Adsmart also agrees to pay TN a minimum CPM on all banner
impressions served by Adsmart on behalf on TN. The actual minimum CPM will
be determined at the end of each month, based on TN's banner click-through
performance list in Attachment C ("Attachment C").
(c) Stock Consideration. ADSmart and TN will negotiate in good faith the
issuance by TN to ADSmart, at ADSmart's request, an affiliate of ADSmart,
of Common Stock of TN (the "Shares") representing up to 9.9% of the
outstanding shares of capital stock of TN. The parties anticipate that the
Shares would be issued (i) in partial consideration for the execution of
this Agreement, (ii) only upon satisfaction of the terms set forth in
Attachment D and (iii) upon approval in writing of both parties after
satisfactory due diligence is completed and other terms, including
customary representations and warranties of the parties and registration
rights, have been agreed to by the parties.
5. Billing.
(a) Collection. ADSmart will invoice and collect all advertising revenue from
Advertisers on behalf of TN.
(b) Billing. Billing by ADSmart is calculated using gross invoice amount, equal
to CPM in effect at the time of signature of the Insertion Order, multiplied by
the number of impressions delivered divided by one thousand. The net invoice
amount is the gross invoice amount less an advertiser 15% agency commission
(where applicable when an outside advertising agency- or the like- may have been
involved in the sale). The invoice sent by ADSmart to the Advertiser will
include both a gross invoice amount and the net invoice amount in applicable
situations. ADSmart shall pay TN the amount for each campaign calculated from
the net invoice amount billed to the Advertiser (i.e., the amount that we are
actually due to receive from the Advertiser), less ADSmart's Commission, as
set forth in Section 4 above.
(c) Reports. ADSmart will provide written details of ADSmart generated activity
on the Website. These reports will, at a minimum, summarize (i) the ADSmart xx
xxxxxxxxx that ran and how long they ran, (ii) the number of Impressions
delivered.
(d) Payment. ADSmart shall remit amounts due to TN within fifteen (15) business
days from when we are in receipt of payment or within sixty (60) days from
the end of the campaign, whichever occurs first.
6. Confidential Information. "Confidential Information" means all information
identified in written or oral format by the Disclosing Party as confidential,
trade secret or proprietary information, and, if disclosed orally,
summarized in written format within thirty (30) days of disclosure.
Confidential information shall also include the terms and conditions of this
Agreement. "Disclosing Party" is the party disclosing Confidential Information,
"Receiving Party" is the party receiving Confidential Information. The Receiving
Party shall not use the Confidential Information except to carry out the
purposes of this Agreement, or disclose the Confidential information to any
third party other than persons in the direct employ of the Receiving Party who
have a need to have access to and knowledge of the Confidential Information
solely for the purpose authorized above. Each party shall take appropriate
measures by instruction and agreement prior to disclosure to such employees to
assure against unauthorized use or disclosure. The Receiving Party shall have
no obligation with respect to information which (i) was rightfully in
possession of or known to the Receiving Party without any obligation of
confidentially prior to receiving it from the Disclosing Party; (ii) is, or
subsequently becomes, legally and publicly available without breach of this
Agreement; (iii) is rightfully obtained by the Receiving Party from a source
other than the Disclosing Party without any obligation of confidentiality; or
(iv) is disclosed by the Receiving Party under a valid order created by a court
or government agency, provided that
the Receiving Party provides prior written notice to the Disclosing Party of
such obligation and the opportunity to oppose such disclosure. All Confidential
information shall remain confidential except a) in connection with any filing
with any governmental body including the US securities laws and any applicable
rules and regulations of any stock exchange or quotation system; b) in
a confidential disclosure made in connection with a contemplated financing,
merger, acquisition, consolidation or sale of capital stock of either party.
Upon written demand of the Disclosing Party, the Receiving Party shall cease
using the Confidential Information and return the Confidential Information and
all copies, notes or extracts thereof to the Disclosing Party within seven (7)
days of receipt of notice.
7. TN's Representations and Warranties. TN represents and warrants that (i) it
has full power and authority to enter into this Agreement, (ii) this Agreement
does not conflict with any other agreement or commitment made by TN, (iii) it
shall not do anything to harm or bring into disrepute or disparage ADSmart or
any Advertiser, (iv) the Website is year 2000 compliant, and (v) it will use
its best efforts to provide its services in accordance with the terms of this
Agreement and in accordance with industry standards, and (vi) all of the
outstanding shares of Common Stock of TN are duly and validly authorized and
issued, fully paid and nonassessable and were not issued and are not now in
violation of or subject to any preeemptive rights. The Shares when issued and
delivered in accordance with this Agreement, will be duly and validly issued and
outstanding, fully paid and nonassessable and will not have been issued in
violation of or be subject to any preemptive rights.
8. ADSmart's Representations and Warranties. ADSmart represents and warrants
that (i) it has full power and authority to enter into this Agreement, (ii) this
Agreement does not conflict with any other agreement or commitment made by
ADSmart, (iii) it shall not do anything to harm or bring into disrepute or
disparage TN, and (iv) it will use its best efforts to provide its services in
accordance with the terms of this Agreement and inaccordance with industry
standards.
9. Warranty Disclaimer. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES
PROVIDED IN THIS AGREEMENT, BOTH PARTIES MAKE NO REPRESENTATION OR WARRANTY
EXPRESS OR IMPLIED WITH RESPECT TO ANY MATTER WHATSOEVER, INCLUDING WITHOUT
LIMITATION, NETWORK FAILURES, THIRD-PARTY AD SERVING DIFFICULTIES, THE SOFTWARE
PROGRAMS, SERVICES PROVIDED HEREUNDER, OR ANY OUTPUT OR RESULTS THEREOF. BOTH
PARTIES SPECIFICALLY DISCLAIMS TO EACH OTHER ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
10. Indemnification. Each party agrees to indemnify, defend, and hold harmless
the other party, and its successors, officers, directors, employees, agents and
assigns, from and against any and all third party actions, causes of action,
claims, demands, costs, liabilities, expenses and damages arising out of or in
connection with any claim which, if true, would be a breach of the warranties,
representations, and covenants set forth in this Agreement. ADSmart is not a
party to and has no liability for any and all problems which may arise in
connection with the Website, including, without limitation, failure to fulfill
an advertising insertion order obtained as part of the Representation Services.
11. Limitation of Liability. Both parties will be limited to total liability
arising out of this Agreement or the services provided hereunder, whether based
on contract, tort or otherwise, to not exceed the compensations or commissions
paid to ADSmart for xx xxxxxxxxx run on TN's behalf or $50,000, whichever is
less.
12. Exclusion of Damages. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL,
INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES. INCLUDING, BUT NOT LIMITED TO,
LOSS OF DATA, LOSS OF USE, OR LOSS OF PROFITS ARISING HEREUNDER OR FROM THE
PROVISION OF SERVICES, INCLUDING ADVERTISING ON TN'S WEBSITE, EVEN IF ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
13. Term and Termination.
(a) Basic Provisions. This Agreement shall have an initial term thirty months
(the "Initial Term") and shall automatically renew for periods of one year
thereafter (each, a "Renewal Term"), unless either party provides ninety (90)
days written notice of their intent to terminate the Agreement immediately prior
to any renewal.
(b) Breach and Cure. In the event a party is given notice that it is in material
breach of this agreement, it shall have thirty (30) days from receipt to cure
its breach in all material respects. On the failure so to cure, the
non-breaching party may terminate this agreement. In the event of termination
pursuant to this section, all revenue due TN (minus all ad-serving fees &
compensations due ADSmart) prior to termination will be paid in accordance with
this Agreement.
(c) Content. ADSmart may, in its sole discretion, decide to terminate this
Agreement after 180 days notice if ADSmart feels that continuing to represent
TN's Website conflicts with ADSmart's standards, the standards being set by
other websites in ADSmart's network and TN does not resolve this difference
after the initial notice. Examples of this include: pornography, excessive
violence, abusive and/or foul language, or a pattern of neglect on the Website
such that it appears TN is not updating it regularly, or has abandoned it
altogether. This section will not apply to TN's access service where the
content and website destination is determined by the user.
(d) Ad Serving Performance: TN's viability will depend on ADSmart and as such
seeks to create a strategic alliance enhanced with equity compensation. Should
ADSmart fail to deliver the minimum CPM or minimum sell-through of the
Allocated inventory, TN will have the option to either open the contract to
another ad network for redistribution of the Allocated Inventory or immediately
terminate this agreement.
(e) For a period of six (6) months following the expiration or earlier
termination of this agreement, ADSmart shall continue to be entitled to its
commission for advertising revenue generated from any and all advertisers
initially obtained by ADSmart and placed as a paying advertiser on TN.
14. Non-Competition. Both parties agree that during the Initial Term and all
Renewal Terms of this Agreement and for a period of six (6) months following the
expiration or earlier termination of the Agreement, neither party shall retain
the services of any of the other party's employees, including, without
limitation, as a full or part-time employee or independent contractor.
15. Miscellaneous. Sections 4, 6, 7, 8, 9, 10, 11, 12, 13, 13(d), 14, 15 and
Attachment D shall service expiration or earlier termination of this Agreement.
Nothing in this Agreement shall be deemed to create a partnership or joint
venture between the parties and neither ADSmart nor TN shall hold itself out as
the agent of the other, except for that specified in this Agreement. Neither
party shall be liable to the other for delays or failures in performance
resulting from causes beyond the reasonable control of that party, including,
but not limited to, acts of God, labor disputes or disturbances, material
shortages or rationing, riots, acts of war, governmental regulations,
communication or utility failures, or casualties. Any notice required or
permitted to be given by either party under this Agreement shall be in writing
and shall be personally delivered or sent by a reputable overnight mail service
(e.g., Federal Express), or by first class mail (certified or registered).
Failure by either party to enforce any provision of this Agreement will not be
deemed a waiver of future enforcement of that or any other provision. Any
waiver, amendment or other modification of any provision of this Agreement will
be effective only if in writing and signed by the parties. If for any reason a
court of competent jurisdiction finds any provision of this Agreement to be
unenforceable, that provision of the Agreement will be enforced to the maximum
extent permissible so as to effect the intent of the parties, and the remainder
of this Agreemment will continue in full force and effect. This agreement shall
be interpreted under the laws of the Commonwealth of Massachusetts, and the
parties submit to the exclusive jurisdiction of the courts of the Commonwealth
of Massachusetts, including the federal courts located there. Headings used in
this Agreement are for ease of reference only and shall not be used to interpret
any aspect of this Agreement. This Agreement, including all attachments which
are incorporated herein by reference, constitutes the entire agreement between
the parties with respect to the subject matter hereof, and supersedes and
replaces all prior and contemporaneous understandings or agreements, written or
oral regarding such subject matter.
IN WITNESS OF THE FOREGOING, the parties have caused the Agreement to be
signed as of the Effective Date set forth above.
ADSMART CORPORATION Tritium Network
By: /s/ Xxxx Xxxxxxxx By: /s/ Xxxxxxx Xxx
------------------- -----------------
Name: Xxxx Xxxxxxxx Name: Xxxxxxx Xxx
----------------- ---------------
Title: CEO Title: CEO
---------------- --------------
Date: Date: July 19, 1999
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Attachment A:
Definition "Website"
This Attachment dated July 19, 1999 supersedes any previous drafted Attachment.
Representation by ADSmart for TN includes the following Website(s) and internet
services:
Site Name:
xxx.xxxxxxx.xxx registration page
--------------- -----------------
xxx.xxxxxxx.xxx start page
Service Name:
Tritium Network free access services
ADSmart Corporation
Representation Agreement
Attachment B:
No Contact List
This Attachment dated July 19, 1999 supersedes any previous drafted Attachment.
ADSmart is not to contact any of the following accounts on behalf of TN, unless
TN formally notifies ADSmart in writing:
6/21/99: TN will currently defer any and all existing accounts to ADSmart. TN
will notify ADSmart on any future internal account relationships and will list
them accordingly as part of this Attachment.
ADSmart Corporation
Representation Agreement
Attachment C:
Click to CPM Guarantee
This Attachment dated July 19, 1999 supersedes any previous drafted Attachment.
ADSmart agress to pay Tritium Network a minimum Gross CPM, listed below, based
on average banner click-through performance calculated at the end of each month.
Guarantee CPM Scale
Click % Guarantee
Scale
------ --------
1.00% $3.00
0.92% $2.75
0.83% $2.50
0.75% $2.25
0.67% $2.00
0.58% $1.75
0.50% $1.50
0.42% $1.25
0.33% $1.00
Conditions:
1) Creative material must be renewed at a maximum of 60 days.
2) Creative material over 60 days will be considered "old" and not able to
achieve the same click rates as "new" material - material less than 60 days.
3) Click rates above apply only to the New Material.
ADSmart Corporation
Representation Agreement
Attachment D:
Equity Earn Out
This Attachment dated June___, 1999 supersedes any previous drafted Attachment.
The following outlines ADSmart's equity earn out, subject to the provisions of
Section 4(c) of this Agreement, for the Shares:
1} On the first day of each calendar quarter (commencing at such time agreed
to by the parties) (the "stock issuance date"). TN will issue to ADSmart,
without payment of any cash consideration by ADSmart, 140,000 of the Shares
(as adjusted for stock splits, stock dividends and similar changes in
capitalization of TN), provided that ADSmart has paid to TN all amounts
that first become due and are required to be paid by ADSmart to TN under
Section 5(d) of this Agreement during each of the three calendar months
immediately preceding the stock issuance date. The consideration for the
Shares will be the entering into and performance rendered by ADSmart under
this Agreement. The terms of the Attachment D shall survive termination of
this Agreement.
2) If ADSmart has not paid to TN the full amount due under Section 5(d) of
the Agreement during any calendar month in a fiscal quarter, then on the
next stock issuance date, TN will issue to ADSmart, in lieu of issuing
140,000 of the Shares (as adjusted as further described above) pursuant to
paragraph (1) above, such number of Shares equal to the product of 140,000
(as adjusted as further described above) multiplied by a fraction, the
numerator of which shall be the number of calendar months in the fiscal
quarter immediately preceding the stock issuance date that ADSmart paid to
TN all amounts due under Section 5(d) of the Agreement, and the denominator
of which is three. For purposes of this Agreement, amounts which TN
believes were owed by ADSmart and not paid will be considered unpaid only
for the month they were due and not for successive months.
3) If, in accordance with paragraph 2 above, there is a dispute with respect
to amounts owed by ADSmart by TN under the Agreement for any particular
calendar month, and that dispute is resovled after the stock issuance date
for such month, TN will issue on the next succeeding stock issuance date,
in addition to the Shares that would otherwise be issued on such stock
issuance date, such number of Shares (as adjusted as further described
above) as had been withheld in connection with the dispute.
4) Notwithstanding any other provision of this Agreement, on any stock
issuance date, the number of Shares to be issued to ADSmart under this
Agreement will be reduced to the extent required so that after such
issuance ADSmart beneficially owns no more than 9.9% of the outstanding
shares of TN common stock.
