'24/7 MEDIA - ASIA NETWORK'
MARKETING, DEVELOPMENT,
LICENSE
and
SOFTWARE
AGREEMENT
THE '24/7 MEDIA - ASIA NETWORK' MARKETING, DEVELOPMENT, LICENSE AND
SOFTWARE AGREEMENT, dated October 23, 1998 (the 'Agreement'), is made between
24/7 Media, Inc., a Delaware corporation, China Internet Corporation, a Bermuda
corporation, and China.com Corporation, a Cayman Islands company.
WHEREAS, 24/7 Media (as defined below), an Internet advertising and
marketing firm, has developed the brand name '24/7 Media' in the United States.
WHEREAS, China.com (as defined below) wishes to establish a
collaboration with 24/7 Media for the development and marketing of the 24/7
Media - Asia Network (as defined below) in the Territory (as defined below), and
24/7 Media wishes to enter into such a collaboration on the terms and conditions
set forth below.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, 24/7 Media, Intelligent Interactions Corporation, an affiliate of
24/7 Media, and China.com are entering into a Software License and Services
Agreement pursuant to which 24/7 Media will provide to China.com a nonexclusive
license to use 24/7 Media's Adfinity System to serve advertisements on the
Internet and support services in connection with the Adfinity System, on the
terms set forth therein.
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, 24/7 Media and China.com are entering into a Trademark License
Agreement pursuant to which 24/7 Media will provide to China.com an exclusive
license to use the '24/7 Media' trademark in the Territory in connection with
the 24/7 Media - Asia Network, on the terms set forth therein.
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THEREFORE, in consideration of the premises and of the covenants
herein contained, 24/7 Media, China.com and CIC (as defined below) agree as
follows:
ARTICLE I.
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings specified below.
'Adfinity System' shall mean the Adfinity(TM) software and
internet ad serving system owned by Intelligent Interactions Corporation, an
Affiliate of 24/7 Media, and licensed to China.com in connection with the 24/7
Media - Asia Network as provided in the Software License Agreement.
'Affiliate' shall mean any corporation or other entity which
controls, is controlled by, or is under common control with a party. A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls at least
fifty percent (50%) of the voting stock or other ownership interest of the other
corporation or entity, or if it possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the corporation
or other entity or the power to elect or appoint fifty percent (50%) or more of
the members of the governing body of the corporation or other entity.
'Affiliated Web Sites' shall mean all Web sites that have
authorized China.com to sell advertising on their behalf, including Co-Branded
Web Sites.
'Aggregate Minimum Revenue Target' shall mean $ * of Sales
Revenue generated by the 24/7 Media - Asia Network, provided, however, that if
the Equity Exchange is not consummated pursuant to Section 3.1 below, such
amount shall be $ * .
'Asian-based Advertising' shall mean advertising sold by
China.com or its Affiliates directed at internet users in the Territory.
'Base Revenue Target' shall mean $100,000 of Sales Revenue
generated by the 24/7 Media - Asia Network in a calendar month period.
'China.com' shall mean China.com Corporation, a Cayman Islands
corporation, together with any Designated Subsidiary.
'CIC' shall mean China Internet Corporation, a Bermuda
corporation, and its Affiliates.
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* Confidential treatment requested.
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'Co-Branded Web Sites' shall mean all Web sites now or in the
future operated on a joint or otherwise cooperative basis by China.com and
another person or entity under their joint names or under the name of the other
person or entity.
'Designated Subsidiary' shall mean a wholly-owned subsidiary
of China.com Corporation formed solely for the purpose of operating the 24/7
Media - Asia Network and exercising its rights under each of the Trademark
License Agreement and the Software License Agreement.
'Effective Date' shall mean the date first written above.
'Equity Exchange' shall mean the exchange of equity interests
in 24/7 Media and China.com on the terms set forth in Article III hereof.
'Interim Revenue Target' shall mean the lower of (i) the
cumulative Sales Revenue of $20 million generated by the 24/7 Media - Asia
Network or (ii) the dollar amount represented by the product of (A) 24/7 Media's
percentage share of the U.S. Internet advertising market and (B) the total
dollar value of the Asian-based Internet advertising market. As used in this
definition, the total dollar value of the U.S. Internet advertising market and
the total dollar value of the Asian-based Internet advertising market shall be
measured by Jupiter Communications (or, if Jupiter Communications is
unavailable, a similar third party provider of Internet market statistical
information mutually agreed upon by the parties).
'Initial Revenue Target' shall mean the lower of (i) the
cumulative Sales Revenue of $7.5 million generated by the 24/7 Media - Asia
Network or (ii) the dollar amount represented by the product of (A) 24/7 Media's
percentage share of the U.S. Internet advertising market and (B) the total
dollar value of the Asian-based Internet advertising market. As used in this
definition, the total dollar value of the U.S. Internet advertising market and
the total dollar value of the Asian-based Internet advertising market shall be
measured by Jupiter Communications (or, if Jupiter Communications is
unavailable, a similar third party provider of Internet market statistical
information mutually agreed upon by the parties).
'Joint Marketing Agreement' shall mean the Joint Marketing and
Advertising Agreement, dated June 17, 1998 between 24/7 Media and CIC attached
hereto as Exhibit D.
'Mutual Non-Disclosure Agreement' shall mean the Mutual
Non-Disclosure Agreement, dated September 9, 1998 between 24/7 Media and
China.com attached hereto as Exhibit C.
'Net Revenue' shall mean all Sales Revenue generated by
China.com and its Affiliates, minus (i) commissions paid to Affiliated Web Sites
and (ii) the imputed Web site fee set forth in Section 5.2(a)(2) below.
'Permitted Rights' shall mean the rights of China.com's
Co-Branded Web Site partners to sell their own inventory pursuant to China.com's
agreements with such partners.
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'Proprietary Web Sites' shall mean all Websites currently or
in the future owned and operated by China.com or its Affiliates, including but
not limited to the Websites located at the URLs www.China.com., www.Taiwan.com
and www.Hongkong.com, but excluding the China Wide Web (www.cww.com).
'Royalty Term' shall mean the period of seven years commencing
on the last day of the month in which China.com first achieves the Base Revenue
Target, unless extended pursuant to Section 7.1(a) below.
'Sales Revenue' shall mean all revenue generated from
advertising sales, net of commissions retained or paid to advertising agencies.
'Software License Agreement' shall mean the Software License
and Services Agreement of even date herewith between 24/7 Media, Inc. and
China.com. attached hereto as Exhibit A.
'Systems Personnel' shall mean those employees of 24/7 Media
or its Affiliates whose primary function is to support the Adfinity System.
'Territory' shall mean the Asian territories or countries of
Mainland China, Taiwan, Hong Kong, Singapore, Asean Nations, Australia, Korea
and Japan.
'Trademark License Agreement' shall mean the Trademark License
Agreement of even date herewith between 24/7 Media and China.com. attached
hereto as Exhibit B.
'Trademark License' shall mean the limited exclusive license
of the '24/7 Media' trademark to China.com pursuant to the Trademark License
Agreement.
'24/7 Media' shall mean 24/7 Media, Inc., a Delaware
corporation.
'24/7 Media - Asia Network' shall mean the Proprietary Web
Sites, the Affiliated Web Sites and Co-Branded Web Sites.
'24/7 Media - U.S. Network' shall mean the 24/7 Network of Web
sites operated by 24/7 Media in the United States.
'U.S.-based Advertising' shall mean advertising sold by 24/7
Media and its Affiliates directed at U.S. Internet users.
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ARTICLE II.
SCOPE AND STRUCTURE OF THE COLLABORATION
2.1. General. 24/7 Media and China.com wish to establish a collaborative
alliance to develop and market the 24/7 Media - Asia Network in the Territory.
During the course of this collaboration, 24/7 Media and China.com shall
communicate regularly and shall have the respective rights and responsibilities
described herein for the development and marketing of the 24/7 Media - Asia
Network in the Territory.
2.2. License of 24/7 Media Name. Simultaneously with the execution of this
Agreement, 24/7 Media is granting to China.com a limited exclusive license of
the '24/7 Media' name for use by China.com in the Territory solely in connection
with the 24/7 Media - Asia Network on the terms set forth in the Trademark
License Agreement.
2.3. Adfinity System. Simultaneously with the execution of this Agreement,
24/7 Media is granting to China.com a non-exclusive license of the Adfinity
System to China.com and providing support services in respect thereof upon the
terms set forth in the Software License Agreement.
2.4. Sale of Ad Inventory. Each of 24/7 Media and China.com shall sell ad
inventory for the 24/7 Media - Asia Network in accordance with Article V hereof.
2.5. Equity Exchange. As mutual consideration for this Agreement, the
parties shall acquire an equity interest in one another in accordance with
Article III hereof.
ARTICLE III.
EQUITY EXCHANGE
3.1. Equity Exchange. (a) Within 45 days after the Effective Date,
China.com shall issue to 24/7 Media shares of common stock of China.com
representing ten percent (10%) of the issued and outstanding capital stock of
China.com, and 24/7 Media shall issue to China.com shares of 24/7 Media common
stock with an equivalent fair market value. Each party covenants to use its best
efforts to consummate the Equity Exchange within 45 days after the Effective
Date.
(b) 24/7 Media shall have the right to substitute up to $3 million
of cash in lieu of a portion of the 24/7 Media common stock, valued at the then
fair market value; the proceeds of any such cash investment shall be dedicated
by China.com solely to the development and enhancement of the 24/7 Media - Asia
Network.
(c) The parties acknowledge that the Equity Exchange is a material
inducement to each party's willingness to enter into this Agreement. Within 30
days after the Effective Date, China.com shall obtain a valuation as of the
Effective Date of the capital stock of China.com from Merrill Lynch & Co., which
determination shall be binding on all parties. Each party hereto
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understands and acknowledges that Merrill Lynch has provided investment banking
services to each of China.com and 24/7 Media, and that the expenses and fees of
Merrill Lynch incurred in connection with such valuation shall be shared equally
between the parties hereto.
(d) The fair market value of 24/7 Media's common stock shall be
the average closing price per share quoted on the Nasdaq National Stock Market
for the fifteen trading days prior to the date on which the fair market value
per share of capital stock of China.com corporation is fixed.
(e) The parties agree to enter into a mutually acceptable exchange
agreement to consummate the Equity Exchange that contains customary and
appropriate representations and warranties, covenants and other provisions, and
otherwise reflects the terms of this Article 3.
ARTICLE IV.
DEVELOPMENT OF THE 24/7 MEDIA - ASIA NETWORK
4.1. Development of 24/7 Media - Asia Network.
(a) Web sites in the 24/7 Media - Asia Network. China.com shall
include in the 24/7 Media - Asia Network its Proprietary Web Sites and other
properties on the following basis:
(i) Proprietary Web Sites: All Proprietary Web Sites will be
added to the 24/7 Media - Asia Network on an exclusive agency license
basis, subject only to the right of Xinhua News, an Affiliate of
China.com, to sell inventory, on the terms set forth on Exhibit F attached
hereto.
(ii) Co-Branded Web Sites: Co-Branded Web Sites will be added
to the 24/7 Media - Asia Network on an exclusive agency license basis,
subject to the terms of China.com's agreements with, and the consent of,
its co-branding partners. Such Co-Branded Web Sites and co-branding
partners shall retain the right to sell their own ad inventory.
(b) Continual Recruitment of Web sites, Advertisers and Sales
Force. China.com covenants to use its best efforts to continually recruit Web
sites, advertisers and sales force and sell Asian-based advertising in order to
enhance, develop and promote the 24/7 Media - Asia Network for as long as the
Trademark License remains in effect.
(c) Continual Development of Network. Each of the parties
covenants to use its best efforts to develop, enhance and promote the 24/7 Media
- Asia Network. In connection therewith, each party and its respective
Affiliates agree that they shall not take any action to compete with, or to
establish a network of Web sites to compete with, the 24/7 Media - Asia Network
in the Territory.
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4.2. Sales Duties of China.com. China.com shall have the following duties
and responsibilities in connection with the 24/7 Media - Asia Network:
(a) Sales of Advertising. China.com shall sell all Asian-based
Advertising on the 24/7 Media - Asia Network and shall collect payments from
Customers and distribute appropriate payments to Affiliated Web Sites.
(b) Size of Sales Staff. China.com shall maintain a technically
competent and experienced sales force assigned to market the 24/7 Media - Asia
Network and devoted to maintaining accounts with Customers and developing new
accounts for sale of ad inventory.
(c) Other Duties. China.com and its Affiliates shall:
(i) Collect from Customers, to the extent required by law or
regulation, any customs and like charges, and sales, value added tax, if
any, and other taxes;
(ii) Comply in all respects with all applicable laws,
regulations and approvals governing the sale of ad inventory and the
operation of the 24/7 Media - Asia Network, and conduct itself in a
professional manner in accordance with industry standards so as not to
cause disrepute or ill favor to 24/7 Media or the 24/7 Media - Asia
Network;
(iii) Not enter into any agreements in respect of the
Proprietary Web Sites that would or might adversely impact the potential
benefits to be realized by 24/7 Media in connection with the 24/7 Media -
Asia Network or the provisions of this Agreement, the Software License
Agreement or the Trademark License Agreement;
(iv) Maintain the highest standards of quality and use its
best efforts to continually promote and protect the integrity of the 24/7
Media - Asia Network and the Trademark License, and continue to employ and
maintain the '24/7 Media' name and trademark in connection with all
marketing, promotion and sales of advertising related to the Web sites
included in the 24/7 Media - Asia Network as long as the Trademark License
remains in effect; and
(v) Promptly investigate and immediately report to 24/7
Media all customer complaints or reports of incidents or governmental
action relating to the 24/7 Media - Asia Network of which it has knowledge
and cooperate with 24/7 Media in the handling of such complaints, reports
of incidents and governmental action; and, during the Term of this
Agreement and for a period of five years thereafter, maintain records of
all sales of ad inventory.
4.3. Duties of 24/7 Media. (a) 24/7 Media shall provide consulting advice
on
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the development of the 24/7 Media - Asia Network. In particular, 24/7 Media will
provide the following:
(i) documentation and advice on recruitment of Web sites,
advertisers and sales force to the 24/7 Media - Asia Network,
(ii) advice in respect of development of marketing materials
and establishment of rate cards, and
(iii) other advice or documentation reasonably requested by
China.com or that 24/7 Media otherwise deems appropriate.
(b) 24/7 Media shall also have the following duties and
responsibilities in connection with the 24/7 Media - Asia Network:
(i) Maintain the highest standards of quality and use its
best efforts to continually promote and protect the integrity of the 24/7
Media - Asia Network and the Trademark License; and
(ii) Comply in all respects with all applicable laws,
regulations and approvals governing the 24/7 Media - Asia Network, and
conduct itself in a professional manner in accordance with industry
standards so as not to cause disrepute or ill favor to the 24/7 Media -
Asia Network.
ARTICLE V.
SALES REVENUE; SALE OF AD
INVENTORY; EXPENSES
5.1. Net Revenue. (a) Subject to Section 5.2 below, China.com shall pay to
24/7 Media * of the Net Revenue generated during the Royalty Term. The remaining
* of Net Revenue shall be retained by China.com.
(b) China.com shall pay all amounts due to 24/7 Media via wire
transfer of immediately available funds to an account at a bank in the United
States designated by 24/7 Media, or through other payment methods approved in
writing in advance by both China.com and 24/7 Media. Any payment shall be
payable to 24/7 Media monthly with the delivery of the financial reports
required by Section 5.6. All payments shall be made in U.S. dollars. China.com
shall prepare and deliver to 24/7 Media the financial reports required by
Section 5.6.
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* Confidential treatment requested.
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5.2. Sale of Advertising Inventory. For purposes of Section 5.1(a) above,
the following shall apply:
(a) Sales on Proprietary Web Sites.
(i) All sales of advertising on Proprietary Web Sites shall
be sold exclusively by China.com, except for sales by 24/7 Media pursuant
to Section 5.4(a) below and subject only to the right of Xinhua News as
provided in Exhibit F attached hereto;
(ii) Net Revenue from advertising sales on Proprietary Web
Sites shall be adjusted by subtracting an imputed Web site fee of * of
such Net Revenue to be retained by China.com; the Net Revenue allocable to
the 24/7 Media - Asia Network after such deduction shall be subject to
Section 5.1.
(b) Sales on Co-Branded Web Sites.
(i) All sales of advertising on Co-Branded Web Sites shall
be sold exclusively by China.com, except for sales by 24/7 Media pursuant
to Section 5.4 (a) below and any Permitted Rights;
(ii) Net Revenue from advertising sales on Co-Branded Web
Sites shall be adjusted by subtracting all agency and royalty
splits/payments between the Co-Branded Web Site and China.com; the New
Revenue allocable to the 24/7 Media - Asia Network after such deduction
shall be subject to Section 5.1.
5.3. Prior Sales Agreement. The parties hereto are parties to the Joint
Marketing Agreement attached hereto as Exhibit D. The parties agree that the
Joint Marketing Agreement is hereby terminated.
5.4. Sales by 24/7 Media on the 24/7 Media - Asia Network.
(a) 24/7 Media shall have the exclusive agency to sell U.S.-based
Advertising on the 24/7 Media - Asia Network. 24/7 Media shall use its best
efforts to collect all amounts due from the sale of advertising by 24/7 Media on
the 24/7 Media - Asia Network.
(b) 24/7 Media shall pay to China.com * of the Sales Revenue that
24/7 Media collects from the sale of U.S.-based Advertising on the 24/7 Media -
Asia Network. The remaining * of such Sales Revenue shall be retained by 24/7
Media. 24/7 Media shall pay to China.com all amounts due hereunder via wire
transfer of immediately available funds to an account at a bank in Hong Kong
designated by China.com, or through other payment methods approved in writing in
advance by both China.com and 24/7 Media. Any payment shall be payable
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* Confidential treatment requested.
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to China.com monthly with delivery of the financial reports required by Section
5.6. All payments shall be made in U.S. dollars. 24/7 Media shall prepare and
deliver to China.com the financial reports required by Section 5.6.
(c) In connection with sales pursuant to (a) above, 24/7 Media
shall maintain a technically competent and experienced sales force assigned to
the sale of U.S.-based Advertising on the 24/7 Media - Asia Network and devoted
to maintaining accounts with Customers and developing new accounts for sale of
ad inventory on the 24/7 Media - Asia Network. In particular, 24/7 Media shall
dedicate the following numbers of sales personnel to the sale of U.S.-based
Advertising on the 24/7 Media - Asia Network in accordance with the following
schedule:
(i) 1999: 1.5 full-time equivalent sales personnel,
(ii) 2000: 2 full-time equivalent sales personnel, and
(iii) 2001 and subsequent years: 3.5 full-time equivalent
sales personnel.
5.5. Sales by China.com on the 24/7 Media - U.S. Network.
(a) China.com shall have the exclusive agency to sell all
Asian-based Advertising on the 24/7 Media - U.S. Network. China.com shall use
its best efforts to collect all amounts due from the sale of advertising by
China.com on the 24/7 Media - U.S. Network.
(b) China.com shall pay to 24/7 Media * of the
Sales Revenue that China.com collects from the sale of Asian-based advertising
on the 24/7 Media - U.S. Network. The remaining * of such Sales
Revenue shall be retained by China.com. China.com shall pay to 24/7 Media all
amounts due hereunder via wire transfer of immediately available funds to an
account at a bank in the U.S. designated by 24/7 Media, or through other payment
methods approved in writing in advance by both China.com and 24/7 Media. Any
payment shall be payable to 24/7 Media monthly with delivery of the financial
reports required by Section 5.6. All payments shall be made in U.S. dollars.
China.com shall prepare and deliver to 24/7 Media the financial reports required
by Section 5.6.
(c) In connection with sales on the 24/7 Media - U.S. Network,
China.com shall dedicate the following numbers of sales personnel to the sale of
Asian-based Advertising on the 24/7Media - U.S. Network in accordance with the
following schedule:
(i) 1999: 2 full-time equivalent sales personnel,
(ii) 2000: 3 full-time equivalent sales personnel, and
(iii) 2001 and subsequent years: 5 full-time equivalent sales
personnel.
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* Confidential treatment requested.
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5.6. Financial Reports; Audit Rights.
(a) During the term of this Agreement, each of 24/7 Media and
China.com shall within thirty (30) days after each calendar month furnish to the
other party a written monthly report showing: (a) the Sales Revenue of the 24/7
Media - Asia Network sold by each such party and its respective Affiliates
during the reporting period and the calculation of Net Revenue from such Sales
Revenue; (b) the Sales Revenue by China.com on the 24/7 Media - U.S. Network
during the reporting period and the calculation of Net Revenue from such Sales
Revenue; (c) withholding taxes, if any, required by law to be deducted in
respect of such sales; and (d) the exchange rates used in determining the amount
of United States dollars. Each of 24/7 Media and China.com shall keep complete
and accurate records in sufficient detail to properly reflect all gross sales
and net sales.
(b) Upon the written request, each of 24/7 Media and China.com
shall permit an independent public accountant, mutually selected and approved by
both 24/7 Media and China.com, to have reasonable access during normal business
hours to the financial records and reports of each party as may be reasonably
necessary in connection with the Net Revenue calculations required by Section
5.1 and to verify the accuracy of the reports described in (a) above, in respect
of any fiscal year ending not more than thirty-six (36) months prior to the date
of such request. All such verifications shall be conducted upon reasonable prior
notice and not more than once in each calendar year. Each party agrees that all
information subject to review under this Section 5.6 is confidential and that it
shall cause its representatives to retain all such information in confidence in
accordance with the Mutual Non-Disclosure Agreement.
5.7. Reimbursement for Out-of-Pocket Travel Expenses of 24/7 Media.
China.com shall reimburse 24/7 Media's travel expenses for those employees
described in (a) and (b) below in accordance with the China.com Corporate Travel
Expense Reimbursement Policy, as set forth in Exhibit E hereto.
(a) Systems Personnel of 24/7 Media. China.com shall pay all
out-of-pocket expenses for 24/7 Media Systems Personnel to travel between the
United States and the Territory or otherwise in respect of the establishment,
development or support of the 24/7 Media - Asia Network.
(b) Non-Systems Personnel of 24/7 Media. Each of China.com and
24/7 Media shall pay one-half (1/2) of the out-of-pocket travel expenses for
24/7 Media Non-Systems Personnel to travel between the United State and the
Territory or otherwise in respect of the establishment, development or support
of the 24/7 Media - Asia Network.
5.8. Other Out-of-Pocket Expenses of 24/7 Media. China.com shall pay all
out-of-pocket expenses for all hardware, bandwith and all other non-software
requirements in respect of the 24/7 Media - Asia Network in accordance with the
estimate of such expenses set forth on Schedule 5.5 attached hereto.
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ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of each Party. Each party represents
and warrants to the other that it has the legal right and power to enter into
this Agreement, to extend the rights and licenses granted to the other in this
Agreement, and that the performance of such obligations will not conflict with
its charter documents or any agreements, contracts or other arrangements to
which it is a party.
6.2. Representations of China.com. China.com represents and warrants to,
and covenants with, 24/7 Media that:
(a) China.com is a corporation duly organized and validly existing
under the applicable laws of the Cayman Islands and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement;
(b) upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of China.com
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(c) the execution, delivery and performance of this Agreement, the
Trademark License Agreement and the Software License Agreement, the consummation
by China.com of the transactions contemplated hereby and thereby will not (i)
require the consent, license, permit, waiver, approval or other action of any
court or governmental authority, or any other individual, partnership,
corporation or other association, (ii) violate or conflict with any provision of
the Certificate of Incorporation or by-laws (or their equivalent) of China.com
as in effect immediately prior to and immediately after the Effective Date, or
(iii) constitute a default under, violate or conflict with, give rise to a right
of termination, cancellation, acceleration or modification under or result in a
loss of a material benefit under, any law, contract, rights related to
intellectual property to which China.com or its properties are bound;
(d) China.com has disclosed to 24/7 Media all material facts and
information known to China.com concerning China.com, its condition and this
Agreement or otherwise, and has not made any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
contained herein not misleading; and
(e) China.com represents that it owns and controls the Proprietary
Web Sites and has the authority to include such Proprietary Web Sites in the
24/7 Media - Asia Network on the basis described in this Agreement.
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6.3. Representations of 24/7 Media. 24/7 Media represents and warrants to,
and covenants with, China.com that:
(a) 24/7 Media is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement;
(b) upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of 24/7 Media
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(c) the execution, delivery and performance of this Agreement, the
Trademark License Agreement and the Software License Agreement, the consummation
by 24/7 Media of the transactions contemplated hereby and thereby will not (i)
require the consent, license, permit, waiver, approval or other action of any
court or governmental authority, or any other individual, partnership,
corporation or other association, (ii) violate or conflict with any provision of
the Certificate of Incorporation or by-laws of 24/7 Media as in effect
immediately prior to and immediately after the Effective Date, or (iii)
constitute a default under, violate or conflict with, give rise to a right of
termination, cancellation, acceleration or modification under or result in a
loss of a material benefit under, any law, contract, rights related to
intellectual property to which 24/7 Media or its properties are bound; and
(d) 24/7 Media has disclosed to China.com all material facts and
information known to 24/7 Media concerning 24/7 Media, its condition and this
Agreement or otherwise, and has not made any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
contained herein not misleading.
ARTICLE VII.
TERM AND TERMINATION
7.1. Term. The term of this Agreement shall be as follows:
(a) Term. Unless earlier terminated pursuant to Section 7.2 or
Section 7.3 below, the term of this agreement shall commence on the Effective
Date and end on the last day of the Royalty Term (as it may be extended pursuant
to Section 7.1(b)).
(b) Royalty Term Extended. The Royalty Term shall be extended upon
either of the following events:
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(i) Aggregate Minimum Target Not Achieved. If China.com
fails to achieve the Aggregate Minimum Revenue Target within seven (7)
years from the Effective Date, then the Royalty Term shall be extended
until the earlier of (A) the last day of the month in which the Aggregate
Minimum Revenue Target is achieved or (B) ten (10) years from the
Effective Date.
(ii) Equity Exchange Not Consummated. If the Equity Exchange
is not consummated as provided in Section 3.1, the Royalty Term shall be
extended until the earlier of (A) the last day of the month in which the
Aggregate Minimum Target Revenue (as adjusted) is achieved or (B) twenty
(20) years from the Effective Date.
7.2. Termination by Either Party. This Agreement may be terminated by
either party on 90 days' prior written notice to the other party upon the
occurrence of any of the following:
(a) a material breach by either party of any covenant, duty or
undertaking herein, which breach continues without cure for a period of 30 days
after written notice of such breach from the non-breaching party to the
breaching party;
(b) the failure of the 24/7 Media - Asia Network to achieve the
Initial Revenue Target within 18 months after the Effective Date.
(c) a material breach by either party of the Trademark License
Agreement or the Software License Agreement, which breach continues without cure
for a period of 30 days after written notice of such breach from the
non-breaching party to the breaching party.
7.3. Termination by 24/7 Media. This Agreement may be terminated by 24/7
Media on 90 days' prior written notice to China.com upon the occurrence of any
of the following:
(a) the failure of the 24/7 Media - Asia Network to achieve the
Base Revenue Target within one (1) year after the Effective Date; or
(b) the failure of the 24/7 Media - Asia Network to achieve the
Interim Revenue Target within 36 months after the Effective Date.
7.4. Effect of Termination.
(i) If this Agreement is terminated by 24/7 Media pursuant
to Section 7.2 or 7.3 above, all licenses and rights granted to China.com
hereunder, under the Trademark License Agreement and the Software License
Agreement shall terminate and China.com will immediately cease to sell
advertising for the 24/7 Media - Asia Network; and 24/7 Media shall be
entitled to claim from China.com all damages which would be due to 24/7
Media under law and equity.
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(ii) If this Agreement is terminated by China.com pursuant to
Section 7.2 above, 24/7 Media will immediately cease to sell advertising
for the 24/7 Media - Asia Network; and China.com shall be entitled to
claim from 24/7 Media all damages which would be due to China.com under
law and equity.
7.5. Obligation to Pay Survives Termination. The termination of this
Agreement shall not affect either party's obligation to pay the other any
amounts due from the sale of advertising on the 24/7 Media - Asia Network or the
24/7 Media - U.S. Network sold prior to the termination hereof.
ARTICLE VIII.
INTELLECTUAL PROPERTY RIGHTS
8.1. No Other Technology Rights. Except as otherwise expressly provided in
this Agreement, the Trademark License Agreement or the Software License
Agreement, under no circumstances shall a party hereto, as a result of this
Agreement, obtain any ownership interest in or other right to any technology,
trade secrets, know-how, trademarks, pending patent and trademark applications,
products, or other matters of any other party, including items owned, controlled
or developed by the other party, or transferred by the other party to such
party, at any time pursuant to this Agreement.
ARTICLE IX.
INDEMNITY
9.1. China.com Indemnity Obligations. China.com agrees to defend,
indemnify and hold 24/7 Media, its Affiliates and their respective employees,
officers, directors, counsel and agents harmless from all claims, losses,
damages or expenses (including, without limitation, reasonable attorneys' fees
and expenses and costs of investigation) arising as a result of: (a) the breach
by China.com of any covenant, representation or warranty contained in this
Agreement; (b) actual or asserted violations of any applicable law or regulation
by China.com or its Affiliates in connection with the sale of advertising on the
24/7 Media - Asia Network; (c) claims for bodily injury or property damage
attributable to the sale of advertising by China.com or its Affiliates; or (d)
any negligent act or omission of China.com or its Affiliates in the promotion,
marketing and sale of any advertisement on the 24/7 Media - Asia Network or any
other activity conducted by China.com or its Affiliates under this Agreement
which is the proximate cause of injury or property damage to a third party.
9.2. 24/7 Media Indemnity Obligations. 24/7 Media agrees to defend,
indemnify and hold China.com, its Affiliates, and their respective employees,
officers, directors, counsel and agents harmless from all claims, losses,
damages or expenses (including, without limitation, reasonable attorneys' fees
and expenses, and costs of investigation) arising as a result of: (a) the breach
by 24/7 Media of any covenant, representation or warranty contained in this
Agreement; (b) actual or asserted
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violations of any applicable law or regulation by 24/7 Media or its Affiliates
in connection with the sale of advertising on the 24/7 Media - Asia Network; (c)
claims for bodily injury or property damage attributable to the sale of
advertising by 24/7 Media or its Affiliates; or (d) any negligent act or
omission of 24/7 Media or its Affiliates in the promotion, marketing and sale of
any advertisement on the 24/7 Media - Asia Network or any other activity
conducted by 24/7 Media or its Affiliates under this Agreement which is the
proximate cause of injury or property damage to a third party.
9.3. Procedure. A party or any of its Affiliates or their respective
employees, officers, directors, counsel or agents (the 'Indemnitee') that
intends to claim indemnification under this Article 9 shall promptly notify the
other party (the 'Indemnitor') of any loss, claim, damage, liability or action
in respect of which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an Indemnitee shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the Indemnitor, if representation of such Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other party represented by such
counsel in such proceedings. The indemnity agreement in this Article 9 shall not
apply to amounts paid in settlement of any loss, claim, damage, liability or
action if such settlement is effected without the consent of the Indemnitor,
which consent shall not be withheld unreasonably. The Indemnitor may not settle,
or otherwise consent to an adverse judgment with respect to, any loss, claim,
liability or action without the consent of the Indemnitee, which consent shall
not be withheld unreasonably. The failure to deliver notice to the Indemnitor
within a reasonable time after the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such Indemnitor
of any liability to the Indemnitee under this Article 9 to the extent of such
prejudice, but the omission so to deliver notice to the Indemnitor will not
relieve it of any liability that it may have to any Indemnitee otherwise than
under this Article 9. The Indemnitee, its employees and agents, shall cooperate
fully with the Indemnitor and its legal representatives in the investigation of
any action, claim or liability covered by this indemnification. In the event
that each party claims indemnity from the other and one party is finally held
liable to indemnify the other, the Indemnitor shall additionally be liable to
pay the reasonable legal costs and attorneys' fees incurred by the Indemnitee in
establishing its claim for indemnity.
ARTICLE X.
MISCELLANEOUS
10.1. Further Assurances. Each of the parties hereto has the right from
time to time to request a meeting with the other party to review and in good
faith renegotiate, if appropriate, the revenue targets set forth herein. Each
such request must be reasonably based upon a material adverse event that has
affected or will reasonably be expected to affect either party or the U.S. or
Asian Internet advertising markets. The meeting must be mutually consented to
upon by each party, whose consent shall not be unreasonably withheld.
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10.2. Non-Disclosure Obligations. The parties agree to be bound by the
Mutual Non- Disclosure Agreement attached hereto as Exhibit C.
10.3. Force Majeure. Neither party shall be held liable or responsible to
the other party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement when
such failure or delay is caused by or results from causes beyond the reasonable
control of the affected party, including but not limited to fire, floods,
failure of communications systems or networks, embargoes, war, acts of war
(whether war is declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other party; provided,
however, that the party so affected shall use reasonable commercial efforts to
avoid or remove such causes of nonperformance, and shall continue performance
hereunder with reasonable dispatch whenever such causes are removed. Either
party shall provide the other party with prompt written notice of any delay or
failure to perform that occurs by reason of force majeure. The parties shall
mutually seek a resolution of the delay or the failure to perform as noted
above.
10.4. Sublicense and Assignment. Neither party may sublicense and/or
assign any rights or obligations under this Agreement without the prior written
consent of the other party; provided, however, that no such consent shall be
required if the sublicensee or assignee is an entity controlled by, in control
of, or under common control with, the party purporting to sublicense or assign a
right or obligation hereunder. Any such sublicensee or assignee shall agree in
writing to be bound by the terms of this Agreement applicable to the sublicense
or assignment, and the assigning or sublicensing party shall remain responsible
to the other party for the performance of such sublicensee's or assignee's
obligations under this Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assignees and sublicensees.
10.5. Severability. Should one or more provisions of this Agreement be or
become invalid, the parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their economic
effect are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the parties would have entered into this Agreement with
such valid provisions. In case such valid provisions cannot be agreed upon, the
invalidity of one or several provisions of this Agreement shall not affect the
validity of this Agreement as a whole, unless the invalid provisions are of such
essential importance to this Agreement that it is to be reasonably assumed that
the parties would not have entered into this Agreement without the invalid
provisions.
10.6. Notices. All notices and other communications under this Agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its address or facsimile
number given below (or at such other address or facsimile number for such party
as shall be specified by notice given under this Section 10.5):
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If to 24/7 Media:
-----------------
24/7 Media, Inc.
1250 Broadway, 27th Floor
New York, New York 10001
Attention: Mark E. Moran
Fax: (212) 629-7173
with a copy to:
---------------
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Attn: Ronald R. Papa, Esq.
Fax: (212) 969-2900
If to China.com:
----------------
China Internet Corporation
16/F Guardian House
32 Oi Kwan Road
Wanchai, Hong Kong
China
Attention: Mr. Peter Yip
Facsimile No.: (852) 2893-5245
with a copy to:
---------------
Rogers & Wells LLP
Jardine House, 8th Floor
One Connaught Place
Hong Kong, China
Attention: Thomas M. Britt, Esq.
Facsimile No.: (852) 2844-3555
All such notices and communications shall be deemed received upon (a) actual
receipt by the addressee, (b) actual delivery to the appropriate address or (c)
in the case of a facsimile transmission, upon transmission by the sender and
issuance by the transmitting machine of a confirmation slip confirming that the
number of pages constituting the notice have been transmitted without error. In
the case of notices sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided for above. However, such mailing shall in no way alter the time at
which the facsimile notice is deemed received.
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10.7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
choice of laws provisions thereof.
10.8. Dispute Resolution, Choice of Forum. Any disputes arising between
the parties relating to, arising out of or in any way connected with this
Agreement or any term or condition hereof, or the performance by either party of
its obligations hereunder, whether before or after the expiration of this
Agreement, shall be promptly presented to the Chief Executive Officer of 24/7
Media and the President of China.com for resolution and if they or their
designees cannot promptly resolve such disputes, then either party shall have
the right to bring an action to resolve such dispute under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce by one or
more arbitrator in accordance with the said rules, as follows:
(a) Each of the parties shall designate its arbitrator within
fifteen (15) days from notification by registered letter. The two arbitrators
thus designated shall designate a third arbitrator within 30 days from
designation of the second arbitrator, such third arbitrator shall preside over
the arbitration court. Arbitration shall be held in London.
10.9. Entire Agreement. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof. All
express or implied agreements and understandings, either oral or written,
heretofore made are expressly merged in and made a part of this Agreement. This
Agreement may be amended, or any term hereof modified, only by a written
instrument duly executed by both parties.
10.10. Headings. The captions to the several Articles and Sections hereof
are not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
10.11. Independent Contractors. China.com and 24/7 Media shall each act as
independent contractors. Neither party shall exercise control over the
activities and operations of the other party accordingly, each party shall be
responsible for paying all applicable social security, withholding, other
employment and income taxes for itself and its employees. China.com and 24/7
Media shall bear all expenses incurred in their sales endeavors, except those
for which the other party agrees in writing to pay. China.com and 24/7 Media
shall each conduct all of its business in its own name and as it deems fit,
provided it is not in derogation of the other's interests. Neither party shall
engage in any conduct inconsistent with its status as an independent contractor,
have authority to bind the other with respect to any agreement or other
commitment with any third party, nor enter into any commitment on behalf of the
other.
10.12. Waiver. The waiver by either party hereto of any right hereunder or
of the failure to perform or of a breach by the other party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
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10.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first set forth above.
CHINA.COM CORPORATION
By: /S/ Peter Yip
--------------------------------
Name: Peter Yip
Title: Vice Chairman
CHINA INTERNET CORPORATION
By: /S/ Peter Yip
--------------------------------
Name: Peter Yip
Title: Vice Chairman
24/7 MEDIA, INC.
By: /S/ Mark E. Moran
--------------------------------
Name: Mark E. Moran
Title: Senior Vice President and
General Counsel
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Marketing, Development, License and Software Agreement - 24/7 Media Inc., China Internet Corp., and China.com Corp.
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