EXHIBIT 10.16
JOINT MARKETING AGREEMENT
ADSERVERSONLINE, LLC AND
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MARKETCENTRALNET CORP.
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This agreement is made as of July 18, 2001, by and between AdServersOnline, LLC,
a Nevada limited liability company having its principal office at 000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 0-Xxxxx, Xxxxxxx, Xxxxxxxx 00000 (hereafter referred to as
"ADS") and XxxxxxXxxxxxx.xxx. Corp. a Texas corporation having its principal
office at 6401 South Boston Street, Villa Q-205, Xxxxxxxxx, Xxxxxxxx 00000
(hereinafter referred to as "MKTS") (collectively, hereinafter referred to as
the "Parties").
WITNESSETH
WHEREAS, the management personnel of each Party has had and will have
business relationships with certain accounts (the "Accounts");
WHEREAS, each Party believes that certain of the other Party's products and
services would be useful to the Accounts of the other Party;
WHEREAS, each Xxxxx desires to solicit business from the Accounts (the
"Soliciting Xxxxx") as potential users of the other Party's products and
services (the "Selling Party"); and
WHEREAS, the Selling Xxxxx is willing to permit the Soliciting Xxxxx to
solicit such business from the Accounts on an exclusive basis under the terms
and conditions of this Agreement and to grant such Party certain rights in
connection therewith.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants. conditions and agreements hereafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Purpose The purpose of the Agreement is to establish the Soliciting Party as
an authorized and non-exclusive sales representative that shall solicit orders
on behalf of the Selling Party and to set forth the respective functions, rights
and responsibilities of each Party.
2. Relationship. Except as otherwise agreed in writing by both Parties, all
expenses and disbursements incurred by each Party, or its agents or employees in
connection with this Agreement, after the date hereof shall be borne entirely by
such Party. Neither Party shall have nor shall it hold itself out as having any
right, power or authority to create any contract or obligation, either express
or implied, on behalf of, or in the name of or binding upon the other Xxxxx
unless the other Party shall consent same in writing. Each Party shall have the
right to appoint, and shall solely responsible for, it own agents. Each Party
will be deemed to have the status of independent contractor, and nothing in this
Agreement will be deemed to place the Parties in the relationship of
employer-employee, principal.agent, partners, or joint ventures, or any other
form of business organization relationship.
3. Accounts. The Soliciting Party shall be the exclusive sales
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representative for the Selling
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all products and services provided by the Selling Party to any such Account. To
design an Account, the Soliciting Party shall advise the Selling Party in
writing of the Soliciting Party intent to solicit business from the Account on
behalf of the Selling Party using the account notice form attached hereto as
Exhibit A (the "Account Notice"). The Soliciting Party shall have the exclusive
right to represent the Selling Party to the Account if both of the following
provisions are met (I) the Selling Party approves the Account Notice its
writing and, in accordance to Section 4(a), approval shall not be unreasonable
withheld by the Selling Party; and (ii) an agreement is entered into between the
Soliciting Party and the Account, acceptable to the Selling Xxxxx within ninny
(90) days of the date of the Account Notice, or longer if mutually agreed to
between the Patties. In the event that an Account is designated an Account of
both Patties (a "Joint Account"), as opposed to an Account of the Soliciting
Party, then each Party will be deemed (I) a Soliciting Party for the other
Party's products and services, and (ii) a Selling Party for its own products and
services
4. Terms and Conditions.
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(a) The Selling Party shall have sole discretion in accepting or
rejecting business solicited. Products and services shall be sold in accordance
with the terms, conditions and prices set by the Selling Party in its sole
discretion
(b) The Soliciting Party shall have no right, power or authority to
accept any business or to assume or create any obligations, express or implied,
upon or in behalf of the Selling Party and shall not represent itself to anyone
as having such right, power or
(c) The Selling Party agrees to act in good faith and in a commerciallv
reasonable manner when exercising the discretion allowed herein, and the Selling
Xxxxx will not arbitrarily reject business solicited by the Soliciting Party.
5. Confidential Information Each Party shall not, except with the
knowledge and consent of the other Party, in written form signed by its Chief
Executive Officer or an officer designated by
him, disclose to any third party price lists, customer lists, trade secrets or
any proprietary information furnished to it except for purposes related to each
Party's duties pursuant to this Agreement This obligation of confidentiality
shall remain in force for a period of twenty four (24) months after the
termination of the Agreement
0.Xxxxx Names, Trademarks and Service Marks. Each Party expressly reserves
all rights in any trade name, trademark, service xxxx, logotype or other
commercial symbol that such Party may adopt or use from time to time. Each Party
agrees that all trade names, trademarks and service marks adopted or used by
such Pasty from time to time at the sole and exclusive property of such Party
and that neither Party shall take any action which may constitute an
infringement of the other Party's rights therein without prior written
authorization from such Party.
7. The Soliciting Party's Responsibilities,
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(a) The Soliciting Party shall use its best efforts to solicit business
from the Accounts and to ensure that all such business solicited is properly
communicated to the management of the Selling Party in order that it may proceed
in providing products and services to meet customer specifications and needs.
Once an agreement has been entered into between the Selling Xxxxx and an
Account, the Soliciting Xxxxx will not be responsible for any day-to-day
operational or management matters regarding the Account other than to assist,
when requested by the Selling Xxxxx, in the collection of any amounts past due
to the Selling Party from the Account.
(b) The Soliciting Party shall abide by all sales policies and
regulations adopted by the Selling Party provided it is given at least fifteen
(15) business days notice of the same and such policies and regulations are
commercially reasonable.
(c) The Soliciting Xxxxx shall supply the Selling Xxxxx with a written
report at such times as requested by the Selling Party, but in no event less
than monthly, in form and content satisfactory to the Selling Party, summarizing
the Soliciting Party's activities on behalf of the Selling Party for the
preceding period. The Soliciting Party agrees to report immediately to the
Selling Party upon receipt of notice by the Soliciting Party, of any product or
service failure.
8. The Selling Party's Responsibilities.
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(a) The Selling Party will provide a designated staff member, at upper
management level, to interface in a timely manner with the Soliciting Party in
its efforts to develop, estimate, present and close the sale, and, subsequently,
to implement and service the Account.
(b) The Selling Party will provide the Soliciting Party product,
technical and service training and support on a continuing basis The Selling
Party will service and support the Accounts to the same extent and in the same
professional manner as the Selling Party Supports its other customers, taking
into consideration the size of the Account and the products and services being
sold to the Account The Selling Party will keep the Soliciting Xxxxx apprised of
any product and service enhancements and deficiencies.
9. Compensation
(a) Commission
As long as there is mu agreement between the Selling Party and an Account,
the Selling Party shall pay the Soliciting Party (I) fifty percent (50%)
commission on the amount of Contribution Margin (defined below) generated by
the Selling Party's primary products and services sold to the Account where
primary products and services solely consist of ADS' Ad-APT and MKTS' Graphical
User Interface; and, (ii) twenty percent (20%) commission on the amount of
Contribution Margin (defined below) generated by the Selling Party's other
products and services sold to the Account. Contribution Margin is defined as
sales price less the variable cost of the Account's products sold, Contribution
Margin will also be reduced by all Adjustments given to customers. Adjustments
include, but are not limited to, quantity discounts, credits and write off for
uncollectable accounts
Adjustments shall not include any marketing or promotional expenses. Such
Adjustments should be applied against commissions due for the month in which
such Adjustments are granted or made. if the Contribution Margin for any
transaction is negative, the Contribution Margin for such transaction will be
omitted from the calculation of the Soliciting Party commissions. Exhibit B,
attached hereto, indicates the methodology to be used by each Party in
calculating Contribution Margin. All numbers included in exhibit B are good
faith estimates; however, only actual amounts will be used in calculating
Contribution Margin
If the Soliciting Party arranges for advertising content to be included in
the Selling Party's product and or service offering, at no cost to the Selling
Xxxxx, the Soliciting Party will receive an additional ten percent (10%) of the
gross revenues generated from such advertising content.
(B) Payment of Commissions
The Selling Party shall pay to the Soliciting Party, not later than the 30th day
from the end of each calendar month, all commissions earned by the Soliciting
Party; provided, however, that the Selling Party may deduct from any such
payment the amount, if any of commissions previously paid to the Soliciting
Party for which Adjustments are made. The Soliciting Party is entitled to its
commission at the time the Selling Party receives payment not when the Selling
Party invoices. The Soliciting Party is entitled to a monthly statement of
account from the Selling Party. With fifteen (15) days written notice, the
Soliciting Party may audit the Selling Party records once during any consecutive
twelve (12) month period, to confirm products and services invoiced to and paid
by the Accounts and any Adjustments claimed by the Selling Xxxxx. The Soliciting
Xxxxx will be responsible for all costs and expenses it incurs to conduct such
an audit provided that the discrepancy between commissions paid and commissions
due, if any, is not greater than five percent (5%) in which case the Selling
Party will fully reimburse the Soliciting Party for its costs and expenses.
10. Terms of Agreement. Subject to the termination provisions contained in
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Paragraph 11 below, this Agreement shall be in effect for a term of three years,
commencing on the effective date hereof and shall be automatically renewed for
successive one year periods on the same terms and conditions, unless one party
gives written notice to the other of its intention to terminate this Agreement
at least one hundred and eighty (180) days prior to the expiration of the
initial term hereof or of any renewal period. The Soliciting Party is entitled
to its commissions, as set forth in Paragraph 9 above, on all the Selling
Party transactions with the Accounts after termination or non- renewal of this
Agreement, as set forth in Paragraph 12.
11. Termination. Either Party may terminate this Agreement for good cause by
providing written notice to the other Party not less than thirty (30) business
days prior to the effective date of such notice. Good cause shall be limited to
a breach by a Party of any of its obligations under this Agreement, after the
other Party has been given written notice of such breach and said breach has not
been and within the thirty (30) business day notice period.
12. Effect of Termination. Upon termination of this Agreement, each Party
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shall cease to
be an authorized sales representative of the other Party and shall immediately
cease to
hold itself out as such a sales representative. The Selling Party shall continue
to pay the Soliciting Party, in accordance with Paragraphs 9 and 10 above, all
commissions generated for all the
Accounts after the date of termination. The Soliciting Party retains the right
with fifteen (15) days written notice to audit the Selling Party records, once
during any consecutive twelve (12) month period, to confirm products and
services invoiced to and paid by the Accounts and any Adjustments claimed by the
Selling Party. The Soliciting Party will be responsible for all costs and
expenses it incurs to conduct an audit provided that the discrepancy between
commissions paid and commissions due, if any, is not greater than five percent
(5%) in which case the Selling Party will fully reimbursement the Soliciting
Party for its costs and expenses. Each Party shall mail or ship to the other
Party within ten (10) days of the effective xxxx of termination all products,
brochures, price, materials, of the other Party's which are in its possession,
its employees or agents. Each Party shall immediately cease to use all trade
names, trademark and service marks or other commercial symbols that are the
property of the other Party.
13. Hold Harmless. The Selling Party shall hold the Soliciting Party
harmless from and against and indemnify the Soliciting Party for all
liability, loss, cost, expenses, including attorney fees, or damages caused by
reason of any product or service (whether or not defective), or any act or
omission of the Selling Party, including but not limited to, any injuries
(whether to body, property, personal or business character or reputation)
sustained by any person or to any person or to property, and for infringement of
any patent rights, copyrights or other rights of their parties, governing the
products, services or their sales, which may result from the sale or
distribution of the Selling Party's products and/or services by the Soliciting
Party
14. Attorney's Fees. In the event any litigation brought by either Party
against the other in connection with this Agreement, the prevailing Party shall
be entitled to remove all reasonable attorney's fees, costs and expenses
incurred in connection with such litigation.
15 Successors and Assigns. This Agreement shall be binding upon and inure
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to the benefit of the respective successors and assigns of the parties hereto.
16. Waiver of Provisions. The failure by either Party to this Agreement to
insist upon strict compliance with any provision contained or incorporated
herein shall not be deemed or construed to be a waiver of such party's right to
require strict compliance with the same or any other provision of this Agreement
at any time thereafter.
17. Severability. If any provision of this Agreement shall, for any reason, be
adjudged by a court having competent jurisdiction to be invalid or
unenforceable, it is the intent of the parties that such judgment shall not
affect, impair or invalidate the remainder of this Agreement but shall be
confined in its operation to the invalidated or unenforceable provision.
18. Assignment. This Agreement may be assigned by either Party, and the
performance of its duties hereunder delegated provided that the other Party is
provided written notice at least thirty (30) business days prior to such
assignment
19. Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of Illinois, and any court of competent jurisdiction in
the State of Illinois shall have jurisdiction over any lawsuit bought by MKTS
against ADS arising out of the Agreement. This Agreement shall be construed in
accordance wit the laws of the State of Texas, and any court of competent
jurisdiction in the State of Texas shall have jurisdiction over any lawsuit
brought by ADS against MKTS, arising out of the Agreement.
20. Counterparts. This Agreement may be executed in any number of' counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
IN W1TNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on their behalf on the 18tb day of July, 2001.
AdServers Online, LLC: a Nevada limited liability company
By /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: president
Xxxxxxxxxxxxx.xxx Corp., a Texas Corporation
By: / s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: CEO
Exhibit B
Contribution Margin
Example
(a) (b)
MKTS AD
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ADSGross Revenues (a1) S1,000 $1,000
Costs:
Royalties(b)(a2) 435 150
ADHOC - Royalty (ci) 25
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Net Revenues (b2) $ 540 $ 850
Net Revenue Sharing:
Royalty for PromulGate
Technology (C2) 213
Channel Provider (d1)(d2) 108 213
Sales Commission (el) 54
Ad Agency (e2) 128
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Margin $ 378 $ 296
Sales Commission (f2) 30
Internal Costs 36
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Contribution Margin $ 378 $ 378
(a1) Assumes 250 subscribers at $4.00 per month.
(bi) Assumes $1.74 per subscriber, which is dollar-based and not
percentage-based
(cl) Amount is $5,000.00 @ month for the first 50,000 subscribers and $2,500 @
month for each additional 50,000 subscribers thereafter.
(dl) Up to twenty percent (20%) of Net Revenues.
(e1) Equals ten percent (10%) of Net Revenues.
(a2) Royalty for compression, assuming 10% payment to Impact Imaging, Inc. and
5% payment to Optimum Video, Inc., an Illinois S Corporation owned by Xxxx
Xxxxxxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxxxx. and Xxxxxxx Xxxxxxxxxx.
(b2) Per the definition of the DelFin Project Patent License Agreement
with the Company
(c2) Royalty for Promulgate Technology (25% of Net Revenues)
(d2) Up to twenty-five percent (25%) of Net Revenue are paid to the
Channel Provider by ADS on the same terms as Section 9(b) Any different
arrangement, such as a guaranteed monthly payment negotiated to MKTS with the
Channel Provider, must be pre-approved in writting by the President of ADS.
(e2) Assumed to be fifteen percent (15%) of Net Revenues. If MKTS
arranges for the advertising content at rates acceptable to ADS, and at no
expense to ADS, an additional commission of ten percent (10%) of Net Revenues
will be paid to MKTS.
(f2) Equals ten percent (10%) of Margin
