1
EXHIBIT 10.40
PRIVILEGED AND CONFIDENTIAL
COOPERATION AND DEVELOPMENT AGREEMENT
This Cooperation and Development Agreement (this "AGREEMENT") is
entered into and effective as of June 2, 2000, (the "EFFECTIVE DATE"), by and
between MICROSOFT CORPORATION, a Washington corporation located at Xxx Xxxxxxxxx
Xxx, Xxxxxxx, Xxxxxxxxxx, 00000 ("MICROSOFT"), and NET2PHONE, INC., a Delaware
corporation located at 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx, 00000
("NET2PHONE"). In this Agreement, Microsoft and Net2Phone are sometimes referred
to collectively as the "PARTIES" and individually as a "PARTY".
RECITALS
WHEREAS, Microsoft desires to include PC-to-PC and PC-to-Phone voice
capabilities in its MSN Messenger Service and other MS Products;
WHEREAS, Net2Phone has developed N2P Deliverables and provides services
technology and equipment necessary for PC-to-PC and PC-to-Phone voice
transmission and delivery over the Internet, N2P Managed Network and other
public networks; and
WHEREAS, the Parties desire to enter into a relationship to (a)
integrate the N2P Deliverables into the MSN Messenger Service in order to
provide MSN Messenger Service with voice transmission and receipt capabilities
for inclusion in a new version of the MSN Messenger Service (referred to herein
as the MSN Messenger 3.0) to be released on the Target Launch Date and (b)
permit Microsoft to integrate and distribute the N2P Deliverables in other MS
Products.
NOW THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the adequacy of which is hereby acknowledged, the Parties
agree as follows:
AGREEMENT
1. DEFINITIONS AND OBJECTIVES
1.1 Definitions. Capitalized terms used in this Agreement shall have
the meanings ascribed to them in this Agreement or in Exhibit A hereto, as the
case may be.
1.2 Objectives. In accordance with the terms and conditions of this
Agreement, Microsoft and Net2Phone desire to provide End Users of the MSN
Messenger Service with the ability to make and receive PC-to-PC and PC-to-Phone
voice transmissions. Microsoft currently owns and operates the MSN Messenger
Service. Net2Phone has developed, owns or has licensed from third parties N2P
Deliverables and will provide Microsoft with rights specified herein to
integrate, use, debug and distribute such N2P Deliverables in conjunction with
the MSN Messenger Service and other MS Products. Net2Phone will provide the N2P
Deliverables to Microsoft for integration into the MSN Messenger Service and
other MS Products. Microsoft will integrate the N2P Deliverables into the MSN
Messenger Service and endeavor to release such functionality as MSN Messenger
3.0 on the Target Launch Date. Other than the N2P Deliverables integrated
therein, Microsoft shall be solely responsible for the development, design,
implementation and launch of the MSN Messenger 3.0. Microsoft may, in its sole
discretion, debug the [****], but Microsoft shall have no other rights to use or
modify the [****]
2
PRIVILEGED AND CONFIDENTIAL
and Net2Phone shall own all bug fixes, including those, if any, made by
Microsoft to the [****]. Along with delivering the N2P Deliverables, Net2Phone
shall, in accordance with the terms of this Agreement, (a) transmit and deliver
voice communications over the Internet, the N2P Managed Network and other public
networks; (b) maintain and service the N2P Deliverables and the N2P Managed
Network; (c) provide second tier customer support to End Users; and (d) host and
maintain web pages in order to provide billing services to End Users.
2. DEVELOPMENT COOPERATION
2.1 General. Microsoft and Net2Phone shall each assign appropriate
resources and use commercially reasonable efforts to cooperate in the
development and release, on the Target Launch Date, of the MSN Messenger Service
with PC-to-PC and PC-to-Phone voice capabilities in accordance with the
specifications attached hereto as Exhibit B (the "MS VOICE SPECIFICATIONS").
2.2 Microsoft Development Obligations. Microsoft shall (a) develop,
code, and build the MSN Messenger Service to contain all of the user interface
necessary for voice transmissions using the N2P Deliverables; (b) develop, code
and build the user interface design, including the layout and other features of
the MSN Dial-Up Window, to allow End Users to utilize voice functionality on the
MSN Messenger Service; and (c) develop, code and build all set-up programs
required to install and operate the N2P Deliverables on the MSN Messenger
Service.
2.3 Net2Phone Deliverables. Net2Phone shall deliver the N2P
Deliverables to Microsoft in accordance with the schedule set forth in Exhibit
C. Microsoft will only use the N2P Deliverables in accordance with the terms and
conditions of this Agreement.
2.4 Updates
2.4.1 As used herein [****] means an [****].
2.4.2 As used herein [****] means each [****].
2.4.3 Net2Phone shall offer all [****] to Microsoft, and Microsoft,
in its sole discretion, may accept and/or implement any [****]. In the event
that Microsoft implements any [****], then such [****] will be deemed part of
the N2P Deliverables licensed to Microsoft pursuant to Article 3.
2.5 Updated Schedules. The Parties from time to time may agree on
updated schedules for the N2P Deliverables. These updated schedules shall take
into account the desire to launch the MSN Messenger 3.0 by the Target Launch
Date, the availability of components, the Parties' internal development
schedules and the timing of development activities to test deployment.
2.6 Control of Software. Microsoft shall use the N2P Deliverables only
as specifically licensed in Article 3. In all cases, Microsoft shall treat all
Net2Phone object and source code as Confidential Information and with respect to
the [****], shall comply with the additional procedures set forth in Exhibit P
related to source code control. Microsoft shall use and modify the [****] only
as specifically licensed to do so in Section 3.2.
-2-
3
PRIVILEGED AND CONFIDENTIAL
3. LICENSE GRANTS
3.1 N2P Deliverables. During the Term of this Agreement, except for the
[****], Net2Phone hereby grants to Microsoft a worldwide, non-exclusive and
[****] right and license to use, distribute and sublicense the N2P Deliverables
in object code form integrated into the MSN Messenger Service and/or, subject to
Section 6.2.3, any other MS Product.
3.2 [****]. During the Term of this Agreement, Net2Phone hereby grants
to Microsoft a worldwide, non-exclusive [****] right and license to use the
[****] solely for the purposes of debugging the N2P Deliverables integrated into
the MSN Messenger Service and/or, subject to Section 6.2.3, any other MS
Product. Microsoft shall provide Net2Phone with all Bug Fixes and any such Bug
Fixes shall be owned by Net2Phone. Net2Phone hereby grants Microsoft a
world-wide, non-exclusive and [****] right and license to use, modify and
develop any Bug Fixes and to distribute and sublicense, in object code form as
integrated into the N2P Deliverables, any Bug Fixes.
3.3 Modification. Microsoft shall not modify, disassemble, or reverse
compile any object code provided as part of the N2P Deliverables.
3.4 Sublicense Terms. Any sublicense of the N2P Deliverables to End
Users shall be made by Microsoft only pursuant to the end-user license terms
listed in Exhibit N.
3.5 Proprietary Notices. Microsoft shall not remove or grant any third
party permission to remove any copyright or other proprietary rights notices
from any of the N2P Deliverables.
3.6 Distribution Without MS Product. Microsoft shall not sell, lease or
otherwise distribute the N2P Deliverables as a standalone software program or as
a component or components of a software program, except as part of the MSN
Messenger Service or other MS Product.
4. ONSITE COOPERATION
4.1 Cooperation.
4.1.1 To accomplish the development objectives under this
Agreement, Microsoft may determine it is desirable and request Net2Phone to send
Net2Phone developers to the Microsoft Premises on a temporary basis not to
exceed two (2) weeks during each month for the duration of the Term of this
Agreement. Net2Phone agrees to so provide Net2Phone employees for development
purposes in reasonable numbers upon any request made by Microsoft under this
Agreement.
4.1.2 Microsoft shall allocate and provide, as deemed necessary
in Microsoft's sole discretion, Microsoft developers to develop the MSN
Messenger Service to allow integration of the N2P Deliverables. Microsoft shall
not modify the N2P Deliverables, but may request Net2Phone developers to make
modifications to the N2P Deliverables to facilitate integration of the N2P
Deliverables into the MSN Messenger Service.
-3-
4
PRIVILEGED AND CONFIDENTIAL
4.2 Onsite Requirements. In the event the Net2Phone developers are
located at the Microsoft Premises, Net2Phone is not authorized to use, and
agrees that it shall not use its location on the Microsoft Premises, or its
access to Microsoft employees or facilities, to obtain information or materials
from sources at Microsoft, other than as expressly authorized by Microsoft. For
example, although a Net2Phone employee may be given security card access to
select facilities at Microsoft, it is Microsoft's intent to grant access to only
the office space allocated to Net2Phone and such other spaces as may be
designated by Microsoft from time to time. It is not Microsoft's intent to grant
Net2Phone employees full access to all areas of the Microsoft Premises
accessible by security card or to other floors of such premises. Net2Phone
agrees to direct its employees not to access areas of the Microsoft Premises
other than those specifically designated by Microsoft. Net2Phone's employees
shall abide by all Microsoft rules, regulations, and security measures while
present at the Microsoft Premises, provided that in the event of any
inconsistency between such rules, regulations and security measures and this
Agreement, this Agreement shall prevail with respect to confidentiality and
ownership of and rights to Intellectual Property.
4.3 Personnel. Each Party shall ensure that all members (including, in
the case of Microsoft, all developers that have access to the [****]) of its
development team working on the integration of the N2P Deliverables into the MSN
Messenger Service and other MS Products, shall execute and return to the other
Party a copy of the Programmer Confidentiality Agreement attached hereto as
Exhibit Q and, in the case of Microsoft developers that have access to the
[****], comply with the Source Code Control Procedures set forth in Exhibit P.
5. MSN MESSENGER 3.0 COMMITMENTS
5.1 Net2Phone Commitment. Net2Phone hereby covenants that it will
provide development, voice transmission and delivery, customer support and other
services in the Territory as set forth in this Agreement so that Microsoft may
release MSN Messenger 3.0, which operates in accordance with the MS Voice
Specifications, to the general public on the Target Launch Date.
5.2 Microsoft Commitment. Microsoft intends to release MSN Messenger
3.0 with the N2P Deliverables to the general public on or before the Target
Launch Date. However, Microsoft reserves the right to delay the release of MSN
Messenger 3.0 or not to release MSN Messenger 3.0 due to Net2Phone's failure or
inability to provide N2P Deliverables or services in accordance with the terms
and conditions of this Agreement. Microsoft shall not release MSN Messenger 3.0
on or before the Target Launch Date with any technology (other than the N2P
Deliverables) that performs similar functions to the N2P Deliverables.
5.3 No Obligation. After the Launch Date and notwithstanding any other
provision in this Agreement, Microsoft shall have no obligation to market, sell
or otherwise distribute the N2P Deliverables in any MS Product, including, but
not limited to the MSN Messenger Service. Other than as expressly provided for
in Section 5.2, nothing in this Agreement shall be construed as restricting
Microsoft's ability to acquire, license, develop, manufacture or distribute for
itself, or have others acquire, license, develop, manufacture or distribute for
Microsoft, independent of the technology provided by Net2Phone, similar
technology performing the same or similar
-4-
5
PRIVILEGED AND CONFIDENTIAL
functions as the technology contemplated by this Agreement or to market and
distribute such similar technology in addition to, or in lieu of, the technology
contemplated by this Agreement.
5.4 [****]
6. FUTURE OPPORTUNITIES
6.1 Future Cooperation. At Microsoft's request and subject to further
agreement by the Parties, the Parties agree to use [****] to cooperate in the
development of additional voice features for the MSN Messenger Service and to
explore opportunities to include PC-to-PC and PC-to-Phone voice functionality in
other MS Products such as "MSN Communities/Chat", "Yellow Pages" and "Hotmail".
6.2 Paid Calls.
6.2.1 Microsoft shall use [****] to release a new version of the
MSN Messenger Service with capabilities for making paid PC-to-Phone voice
transmissions using the N2P Deliverables ("PAID CALL CAPABILITY") on or before
[****]. Upon such a new release of the MSN Messenger Service with Paid Call
Capability and for the [****] thereafter, Microsoft shall cause [****] of the
paid PC-to-Phone voice traffic generated by such MSN Messenger Service to be
directed to Net2Phone's transmission and delivery services; provided, that
Net2Phone is able to provide such transmission and delivery services in
accordance with the terms and conditions set forth in Article 7.
6.2.2 In the event that Microsoft does not release a new version of
the MSN Messenger Service with Paid Call Capability on or before [****], then,
beginning on [****] and on the first day of each month thereafter during such
time as a new version of the MSN Messenger Service with Paid Call Capability has
not been released by Microsoft, (a) the number of months termination notice
required to be given by (i) Microsoft pursuant to Section 18.2.1 shall be
increased by [****]; provided, that the notice period for Microsoft may not be
increased to a period greater than [****]; and (ii) the number of months
termination notice required to be given by Net2Phone pursuant to Section 18.3.1
shall be decreased by [****]; provided, that the notice period for Net2Phone may
not be decreased to a period of less than [****]; and (b) the number of months
of dedicated paid PC-to-Phone traffic specified in Section 6.2.1 shall be
increased by [****]. The provisions of the preceding sentence shall not apply in
the event that the release of the MSN Messenger Service with Paid Call
Capability results from Net2Phone's inability to deliver in a timely manner any
development assistance, software, modifications and/or services which may be
necessary to release the MSN Messenger Service with Paid Call Capability in
conformance with such specifications and standards as may be required by
Microsoft, except where such inability to deliver results from Microsoft's
failure to notify Net2Phone of such requirements on or before [****]. At such
time as Microsoft releases a new version of the MSN Messenger Service with Paid
Call Capability, the notice periods required under Sections 18.2.1 and 18.3.1
shall revert back to the original periods set forth in this Agreement.
6.2.3 [****]
-5-
6
PRIVILEGED AND CONFIDENTIAL
6.3 Additional MS Products. The Parties acknowledge and agree that
Microsoft, at its sole discretion, may integrate the N2P Deliverables into other
MS Products and release such MS Products under this Agreement. Microsoft shall
provide reasonable notice to Net2Phone regarding the release of any such
additional MS Products with N2P Deliverables. Subject to the limitations set
forth in Section 7.2.3, Net2Phone shall provide voice transmission and delivery
services for such additional MS Products that include the N2P Deliverables in
accordance with the terms and conditions of Article 7.
7. VOICE TRANSMISSION AND DELIVERY
7.1 Net2Phone Responsibilities. As between Microsoft and Net2Phone and
subject to Section 23.5, Net2Phone shall be solely responsible for the
transmission and completion over the Internet, the N2P Managed Network and other
public networks of PC-to-Phone and PC-to-PC voice transmissions in the Territory
generated from the N2P Deliverables included in the MSN Messenger 3.0, and,
subject to the limitations set forth in Section 7.2.3, any other MS Product.
7.1.1 Net2Phone shall provide such voice transmission and delivery
services as are set forth in the N2P Quality of Service Level Agreement attached
hereto as Exhibit D.
7.1.2 In order to transmit and complete PC-to-PC and PC-to-Phone
voice transmissions pursuant to this Agreement, Net2Phone shall (a) develop,
provide and maintain all necessary equipment; (b) enter into and maintain any
agreements with third parties, including, but not limited to, telecommunication
providers and internet service providers, necessary to transmit and deliver
voice transmissions; (c) subject to Section 7.6, obtain and keep in effect any
and all Governmental Authorizations necessary to fulfill its responsibilities
under this Article 7; and (d) be solely responsible for any and all costs and
expenses incurred in maintaining, operating and transmitting voice
communications under this Agreement.
7.2 Voice Traffic Requirements.
7.2.1 In order to assist Net2Phone with planning for anticipated
voice traffic requirements, Microsoft shall provide Net2Phone with [****]
setting forth Microsoft's "base" and "aggressive" projections with respect to
the aggregate amount of End Users using voice features of MS Products and the
aggregate amount of minutes of voice traffic ("VOICE TRAFFIC") that Microsoft
anticipates will require transmission and delivery services from Net2Phone
during [****]. Microsoft shall prepare such projections in good faith and using
its best efforts. Exhibit R sets forth Microsoft's Voice Traffic projections for
[****].
7.2.2 Net2Phone shall ensure that at all times, its voice
transmission and delivery services are able to accommodate, carry and complete
the minimum amount of voice transmissions equal to the Minimum Service Level.
"MINIMUM SERVICE LEVEL" shall mean for any given month [****].
7.2.3 In the event that Microsoft desires to release additional MS
Products with the N2P Deliverables, then, provided that the additional voice
traffic projected by the release of such additional MS Product does not exceed
the Minimum Service Level (as modified in accordance with Section 7.2.1 from
time to time) then Net2Phone shall provide voice transmission and delivery
services for such MS Products in accordance with Article 7. In the
-6-
7
PRIVILEGED AND CONFIDENTIAL
event that a proposed release of additional MS Products with the N2P
Deliverables would, in the good faith opinion of Net2Phone, increase the voice
traffic beyond the applicable Minimum Service Level, then the Parties hereto
shall enter into good faith negotiations to determine a commercially reasonable
solution for releasing such additional MS Products. In the event that the
Parties are not able to mutually agree upon terms and conditions for Net2Phone
transmitting and delivering the increased voice traffic above the Minimum
Service Level projected by additional MS Products, then the N2P Deliverables
shall not be incorporated into such other MS Products and Net2Phone shall not be
obligated to provide voice transmission and delivery services for calls created
by such additional MS Products.
7.3 Quality. Net2Phone shall ensure that, at all times, the quality of
the voice transmission and delivery for PC-to-Phone and PC-to-PC voice
transmissions using the N2P Deliverables in the MSN Messenger 3.0 and/or other
MS Products: (a) meets or exceeds the requirements and standards set forth in
the Quality of Service Level Agreement; and [****].
7.4 Fees.
7.4.1 [****]
7.4.2 [****]
7.4.3 [****]
7.4.4 [****]
7.4.5 [****] The rates which shall be charged to End Users for paid
PC-to-Phone voice transmissions shall be mutually agreed upon by the Parties,
and shall be in accordance with the terms and conditions of Sections 6.2.1 and
7.4.6. [****]
7.4.6 [****]
7.5 [****]
7.6 Limitation of Responsibilities.
7.6.1 During the Term of this Agreement, in the event that in any
country within the Territory for which voice transmission services are provided
by Net2Phone pursuant to this Agreement, Net2Phone or the services provided by
Net2Phone become subject to regulation by the United States Federal
Communications Commission ("FCC") or any other domestic or foreign Governmental
Body, either as a telecommunications carrier under the Communications Act of
1934 (47 U.S.C. 151 et seq.) as amended, and the rules and regulations
promulgated by the FCC thereunder, or under any similar foreign law, rule or
regulation, or any other regulation that has, or would have, a materially
adverse effect on the business interests of Net2Phone under this Agreement or
materially increases, or would materially increase, Net2Phone's costs associated
with providing such services in a country of the Territory (collectively, a
"REGULATED ENTITY EVENT"), Net2Phone shall promptly so notify Microsoft in
writing. Microsoft agrees to work together in good faith with Net2Phone to amend
this Agreement to ensure that Net2Phone is not materially adversely impacted as
a result of such
-7-
8
PRIVILEGED AND CONFIDENTIAL
Regulated Entity Event. If Net2Phone and Microsoft are unable to agree in good
faith to amend this Agreement within fifteen (15) business days of such notice
(or such shorter time period as may be required to avoid violating such law,
rule or regulation, or to mitigate any damages or penalties that may be incurred
as a result of any actual or prospective violation), Net2Phone shall have the
right to terminate services which it provides pursuant to this Agreement for
such country upon fifteen (15) days prior written notice to Microsoft (or such
shorter time period as may be agreed upon by the Parties to avoid violating such
law, rule or regulation, or to mitigate any damages or penalties that may be
incurred as a result of any actual or prospective violation), and upon the
effective date of such notice, such country shall no longer be considered part
of the Territory. Discontinuation of services in any country pursuant to this
Section 7.6.1 shall not relieve Net2Phone of any of its obligations to provide
services under this Article 7 to the remainder of the Territory.
7.6.2 Net2Phone shall use reasonable efforts to monitor whether any
Governmental Body has adopted or proposes to adopt any laws, rules or regulation
which may adversely affect Net2Phone or its services, or any End User of any MS
Product which incorporates the N2P Deliverables. Net2Phone shall promptly inform
Microsoft about any such adopted or proposed law, rule or regulation of which it
becomes aware.
8. NET2PHONE SUPPORT SERVICES
8.1 Maintenance and Quality Fix Engineering Support. Microsoft shall be
responsible for supporting and maintaining the MSN Messenger Service.
Notwithstanding the foregoing, during the Term of this Agreement, Net2Phone
shall be solely responsible for the maintenance and quality fix engineering
support of the N2P Deliverables, including fixing any defects, inefficiencies or
bugs that are related to the [****], including its interaction with any
Microsoft software, in order to ensure that the N2P Deliverables conform in all
material respects to the functional specifications set forth in the MS Voice
Specifications and any agreed upon amendments thereto. Net2Phone shall provide
such maintenance and support services as are specified in Exhibit E.
8.2 Second Tier Support. Net2Phone shall be solely responsible for
providing second tier customer support ("SECOND TIER SUPPORT") to End Users for
the PC-to-PC and PC-to-Phone services in connection with the MSN Messenger 3.0.
Net2Phone shall provide such Second Tier Support Services as are specified in
Exhibit F.
8.3 Billing Services. If and when future releases of MSN Messenger 3.0
and/or other MS Products provide Paid Call Capability, Net2Phone shall create,
develop, implement and maintain, through the Co-Branded Pages, billing services
for all paid calls using the Net2Phone voice features of the MSN Messenger 3.0
and, if applicable, other MS Products, in accordance with Article 9.
9. MSN/N2P WEB SITE; BILLING SERVICES; PRIVACY
9.1 MSN/N2P Web Site. Microsoft and Net2Phone shall develop and
implement a co-branded Web site (the "MSN/N2P WEB SITE") which initially will
provide End Users of the PC-to-PC and PC-to-Phone features of the MSN Messenger
3.0 with pertinent information
-8-
9
PRIVILEGED AND CONFIDENTIAL
regarding the MSN Messenger 3.0 voice capabilities. The Parties shall develop
and implement the MSN/N2P Web Site concurrently with the release of MSN
Messenger 3.0 in accordance with this Section 9.1.
9.1.1 Microsoft shall be solely responsible for hosting and
maintaining the MSN/N2P Web Site and shall retain all ownership rights to the
MSN/N2P Web Site, except that Microsoft shall not have any rights in the N2P
Deliverables or any Net2Phone Licensed Marks, other than those rights explicitly
granted herein.
9.1.2 The MSN/N2P Web Site will be co-branded by Microsoft and
Net2Phone. Microsoft shall have sole discretion with respect to the design,
content, layout and features, including the size and positioning of any
trademarks or other references to Microsoft and Net2Phone on the MSN/N2P Web
Site and the Web Pages contained therein.
9.1.3 Microsoft shall use reasonable efforts to accommodate
Net2Phone's requests regarding the layout and content of the MSN/N2P Web Site;
provided, however, that in the event that the Parties are not able to agree on
any matters regarding the layout or content of the MSN/N2P Web Site, Microsoft's
decision with respect to the layout and content of the MSN/N2P Web Site shall be
final. Microsoft shall supply Net2Phone with suitable specimens of use of the
Net2Phone Licensed Marks in connection with the MSN/N2P Website, as and when
requested by Net2Phone. Microsoft shall cooperate fully with Net2Phone to
facilitate periodic reviews of Microsoft's use of the Net2Phone Licensed Marks
and of Microsoft's compliance with the quality standards described herein.
9.2 Web Site Billing Services. If and when future releases of the MSN
Messenger 3.0 and/or other MS Products provide Paid Call Capability, Net2Phone
shall host pages ("CO-BRANDED PAGES") co-branded with the Microsoft Licensed
Marks on its Web Site (the "NET2PHONE WEB SITE") to enable billing of End Users.
The Co-Branded Pages shall provide End Users with the ability to access and use
on line support, billing and account management features, including the ability
to see a history of their calls, to place money on their account, to see their
updated balances and to provide additional information or purchase additional
services.
9.2.1 Net2Phone shall be solely responsible for the billing of End
Users and collection of fees including through the Co-Branded Pages in
accordance with this Section 9.2.
9.2.2 Net2Phone shall be solely responsible for hosting and
maintaining the Co-Branded Pages and agrees, at all times, to maintain the
Co-Branded Pages at a level that is at least commensurate with the quality of
the MSN/N2P Web Site.
9.2.3 The Co-Branded Pages will be co-branded by Microsoft and
Net2Phone. Microsoft and Net2Phone shall mutually agree with respect to the
design, content, layout and features, including the size and positioning of any
trademarks or other references to Microsoft and Net2Phone on the Co-Branded
Pages and the Web Pages contained therein.
9.2.4 Net2Phone shall supply Microsoft with suitable specimens of
use of the Microsoft Licensed Marks in connection with the Co-Branded Pages, as
and when requested by Microsoft. Net2Phone shall cooperate fully with Microsoft
to facilitate periodic reviews of
-9-
10
PRIVILEGED AND CONFIDENTIAL
Net2Phone's use of the Microsoft Licensed Marks and of Net2Phone's compliance
with the quality standards described herein.
9.2.5 Net2Phone shall incorporate Microsoft's Passport and Wallet
into its billing system on the Co-Branded Pages. Microsoft shall provide
Net2Phone with such information and assistance as may be necessary for Net2Phone
to incorporate Microsoft's Passport and Wallet into the Net2Phone billing
system. Net2Phone shall not be prevented from offering other third-party wallet
services on the Net2Phone Web Site; provided, however, that no other third party
wallet services may be advertised on, offered by, or linked to the Co-Branded
Pages or the MSN/N2P Web Site.
9.2.6 Prior to incorporating the Passport and Wallet on the
Co-Branded Pages, Net2Phone agrees to enter into a Passport and Wallet License
Agreement, each in substantially the form attached hereto as Exhibit G;
provided, however, that Microsoft shall modify the terms of the Passport and
Wallet License Agreement with respect to Net2Phone's collection, receipt,
distribution and use of User Information to the extent necessary to make such
terms consistent with the terms of this Agreement. Net2Phone shall use the
Passport and Wallet only in accordance with the terms set forth in the Passport
and Wallet License Agreement, the MS Privacy Policies (as defined below), and
other policies as may be provided by Microsoft, in its sole discretion, to
Net2Phone from time to time.
9.3 Privacy. The Parties shall post privacy policies on the MSN/N2P Web
Site and the Co-Branded Pages which accurately reflect both Net2Phone's and
Microsoft's privacy policies attached hereto as Exhibit H, as may be amended
from time to time by Microsoft ("MS PRIVACY POLICIES") and Exhibit O, as may be
amended from time to time by Net2Phone ("N2P PRIVACY POLICIES"), and conform
with then current industry recognized privacy standards and privacy legislation.
Such posted policies (a) must be readily accessible to any End User from a Link
on the MSN/N2P Web Site, the Co-Branded Pages and any other site from where
Personal Information about End Users may be collected by either Net2Phone or
Microsoft; and (b) must include, without limitation, notices to End Users
regarding: (i) what Personal Information is collected; (ii) what organization is
collecting the Personal Information; (iii) how the Personal Information is used;
(iv) with whom the Personal Information may be shared; (v) what choices are
available to End Users regarding the collection, use and distribution of the
Personal Information; (vi) what kind of security procedures are in place to
protect the loss, misuse or alteration of Personal Information; (vii) how an End
User may correct any inaccuracies in his or her Personal Information; and (viii)
how an End User may choose to consent to the use and sharing of the End User's
Personal Information. Net2Phone and Microsoft will collaborate to obtain Trust-E
or other similar approval for such privacy policies.
10. ADVERTISING
10.1 General. The Parties shall permit advertising on or in conjunction
with the MSN Dial-Up Window during PC-to-Phone voice sessions and allocate fees
and revenues in accordance with this Article 10 throughout the Term of this
Agreement. No advertising shall be sold for any PC-to-PC voice sessions without
the prior written consent of each Party. Except as set forth in this Article 10
[****].
-10-
11
PRIVILEGED AND CONFIDENTIAL
10.2 Reviews of Advertising Procedures. Microsoft and Net2Phone agree
to review, on a monthly basis, the advertising products, performance (including
"CPM" and "sell out" rates) process, pricing, and advertiser exclusions with the
goal of mutually maximizing financial benefits and, if necessary, to
periodically update upon the mutual agreement of the Parties, the terms and
conditions of this Article 10.
10.3 Microsoft Exclusive Ad Sales.
10.3.1 During the period commencing on the Effective Date and
terminating on February 1, 2001 [****].
10.3.2 In the event that [****] has unsold Advertising Inventory
during an exclusive period, [****] may request to sell a portion of such unsold
Advertising Inventory. [****] shall not unreasonably withhold its consent for
[****] to sell such unsold Advertising Inventory; provided, however, that (a)
[****] only may receive the right to sell unsold Advertising Inventory which
shall expire within [****]; (b) in the event that [****] sells any Advertising
Inventory for the same advertising medium as [****], any Advertising Inventory
sold by [****] shall receive a pre-emptive priority right with respect to
placement; provided, that the Advertising Inventory sold by [****] has a CPM
rate not less than the CPM rate of the Advertising Inventory sold by [****],
and, further provided, that the Parties may mutually agree on other criteria in
considering whether to pre-empt any [****] Advertising Inventory with [****]
Advertising Inventory; and (c) any Advertising Inventory may be sold by [****]
only as a part of the [****] and not exclusively for the MSN Dial-Up Window.
10.4 Joint Advertising Sales. If [****] does not exceed the Minimum
Billing during any applicable term, then [****] shall have the option to sell up
to [****] of the Advertising Inventory. [****] shall provide [****] with [****]
written notice of its desire to sell Advertising Inventory pursuant to this
Section, whereupon the Parties shall mutually agree upon the terms and
conditions regarding the joint sale of Advertising Inventory. Such terms and
conditions shall include the following: (a) Advertising Inventory may be sold by
[****] only as part of the [****] Network and not exclusively for the MSN
Dial-Up Window; (b) without prior approval from the other Party, neither Party
may discount Advertising Inventory by more than [****] from the rate card prices
mutually agreed upon by the Parties; (c) provided that a Party has sold [****]
of the Advertising Inventory allocated to such Party, such Party may request
from the other Party the right to sell additional Advertising Inventory in
excess of its [****] Advertising Inventory allocation and the other Party shall
not unreasonably withhold approval for such request.
10.5 Net2Phone Sales Force. The Parties acknowledge that Net2Phone
initially will use third party contractors to place Advertising Inventory across
the Net2Phone Affiliate Advertising Network and will use commercially reasonable
efforts to develop its own sales force for such advertising sales. Any third
party contractors only may sell such Advertising Inventory permitted to be sold
by Net2Phone pursuant to Article 10, and only in accordance with the terms and
conditions set forth under Articles 10 and 11. Net2Phone shall promptly notify
Microsoft of any agreements to place Advertising Inventory entered into with
such third party contractors and shall provide Microsoft with copies or
summaries of all information provided by Net2Phone to such third party
contractor and related to the Advertising Inventory. Net2Phone shall ensure that
such third party contractors are made aware of and agree, in writing, to abide
by the terms of
-11-
12
PRIVILEGED AND CONFIDENTIAL
Articles 10 and 11, including all Microsoft privacy requirements. Net2Phone
shall remain primarily liable for any damages, losses, expenses, fees or other
costs resulting from or in connection with the acts and/or omissions of such
third party contractors.
10.6 Prohibited Ad Sales. Except as otherwise expressly permitted
herein, during such time that Microsoft will be the exclusive seller of
Advertising Inventory, Net2Phone shall not sell any Advertising Inventory as
part of the Net2Phone Affiliate Advertising Network. In no event shall Net2Phone
be permitted to sell Advertising Inventory on the MSN Dial-Up Window as a
stand-alone site separate from the Net2Phone Affiliate Advertising Network.
10.7 Advertising Products.
10.7.1 Advertising Inventory shall initially be limited to a 234 x
60 pixel Banner displayed on the MSN Dial-Up Window, to be served at a frequency
of no more than three times per minute. Microsoft, in its sole discretion, may
modify the frequency of permitted Banner advertising and shall determine the
permitted size and placement of all advertising on the MSN Dial-Up Window.
Subject to the terms and conditions in this Agreement, the Parties will work
together to determine the products, pricing and terms for all Advertising
Inventory. Advertising Inventory specifications shall be in accordance with
standard Internet Advertising Bureau and Microsoft advertising specifications.
10.7.2 The Parties acknowledge their mutual desire to include audio
advertisements in the MSN Messenger Service. At such time as the Parties
mutually agree that they are mutually able to support and sell audio
advertisements, [****] audio advertisement shall be played during each call
set-up time. The terms and conditions regarding the sale, support and play of
such audio advertisements shall be mutually agreed upon by the Parties.
10.7.3 Microsoft shall include in the release of the MSN Messenger
3.0, the ability to advertise on a "leave behind" advertising unit which would
appear once and for a limited duration to an End User at such time as the End
User disengages from the MSN Dial-Up Window. Such "leave behind" advertising
units shall not be smaller than 240 x 240 pixels. Advertising Inventory for such
"leave behind" advertising units shall be sold in accordance with the terms and
conditions set forth in this Article 10; provided, however, that either Party
reserves the right, at any time, to request that such "leave behind" advertising
units be terminated in the event that it receives, in the reasonable discretion
of such Party and using such standards as are utilized by such Party in its
ordinary course of business to measure customer satisfaction, a material amount
of negative feedback from its End Users, and upon such termination request, both
Parties shall cooperate in removing such "leave behind" impression feature from
the MSN Messenger 3.0 as soon as reasonably practicable.
10.8 Ad Serving. Microsoft shall serve all of the Advertising
Inventory. Advertising Inventory sold by Net2Phone shall be served by Microsoft
via a redirect to a third party ad serving solution sourced by Net2Phone.
Net2Phone shall be responsible for all tracking, reporting, and billing
requirements for such third party ad serving solution. The Parties shall
mutually define and implement operational processes, which shall include, but
not be limited to, insertion/order entry and issue escalation. In the event that
the Parties mutually and reasonably
-12-
13
PRIVILEGED AND CONFIDENTIAL
agree that Microsoft's advertising serving solution is inadequate, then the
Parties shall develop an alternative advertising serving solution mutually
agreeable to both Parties.
10.9 Marketing and Training. Each Party shall ensure that all
Advertising Inventory is accurately represented in its marketing material. Each
Party shall provide the other Party with copies of all marketing materials which
in any way reference the other Party and each Party shall have the right to
approve any reference to its company or its products or services before any such
material is distributed to any third party. In addition, Net2Phone shall from
time to time provide Microsoft with Net2Phone Affiliate Advertising Network
information regarding products, performance, effectiveness and best practices.
10.10 Prohibited Advertisers. No Advertising Inventory shall be sold by
either Party to any prohibited advertiser listed on Exhibit K. The list is
subject to continual change, and will be updated every month. Each Party
reserves the right to once a month remove, or add a reasonable amount of
additional names to Exhibit K and shall provide written notification to the
other Party of any such modification in accordance with the notice
specifications set forth in this Section 10. If, within [****] days after
receiving additional names of prohibited advertisers, a Party delivers to the
Party designating such additional prohibited advertisers a signed, unconditional
and binding advertising agreement with a newly prohibited advertiser, then such
newly prohibited advertiser shall nevertheless be permitted to display or play
its Advertising Inventory for the duration of the term of such agreement;
provided, that if a Party notifies the other Party that an advertising exclusion
is a high priority, then the other Party shall use reasonable efforts to
discontinue any previous commitment as soon as possible. The Parties agree to
comply with other advertising policies and limitations adopted by either Party
from time to time (including but not limited to prohibitions on advertising
tobacco, alcohol, or nudity).
10.11 Collection and Distribution of Advertising Revenue. During the
Term of this Agreement, all Revenues shall be collected and distributed in the
following manner:
10.11.1 Each Party shall xxxx and collect all Revenues from
advertising sold by such Party.
10.11.2 Each Party, within [****] days after the end of each
calendar quarter, shall remit a Carriage Fee for such quarter to a joint account
established by Net2Phone.
10.11.3 [****]
10.11.4 [****]
10.11.5 Along with each payment, each Party shall deliver to the
other Party for the period to which the payment relates a statement which sets
forth the Revenues, Carriage Fees and N2P Network Costs, as applicable, and the
calculation of the advertising payment due for such quarter. Such documents
shall be certified by an authorized financial officer of such Party or his
designee to be true and accurate in all material respects, subject to normal
year-end adjustments.
10.11.6 Receipt or acceptance by either Party of any reports
furnished pursuant to this Agreement or any sums paid hereunder shall not
preclude such Party from questioning the
-13-
14
correctness thereof at any time, up to [****] after receipt of any report or
payment. In the event that any mistake is discovered in any such report or
payment, the other Party shall immediately rectify the mistake.
10.12 Net2Phone Promotion.
10.12.1 Upon written consent of Microsoft, Net2Phone may display
advertisements promoting Net2Phone or its services during such periods for which
no Advertising Inventory is sold; provided, however, that [****]. Microsoft
shall respond to any Net2Phone request to advertise under this Section 10.11.1
within [****] days after receipt of any such request and shall not unreasonably
withhold its consent. Microsoft reserves the right withdraw its consent for the
advertising of any Net2Phone advertisement if Microsoft intends to release a
[****] within [****] days and Net2Phone shall promptly cease advertising any
services for which such consent is withdrawn.
10.12.2 Microsoft shall include Net2Phone brand attribution in
the MSN Dial-Up Window for PC-to-Phone voice transmissions made using the N2P
Deliverables; provided, however, that Microsoft shall only be required to
include such brand attribution only at and during such time that Microsoft is
able to confirm that a voice transmission is being transmitted and delivered by
Net2Phone. Such Net2Phone brand attribution shall consist of the statement
"Powered by Net2Phone" being displayed in the lower right hand portion of the
MSN Dial-Up Window. Microsoft shall consult with Net2Phone regarding the size,
color, font and other design characteristics of the brand attribution, provided,
that in the event of a dispute with respect to the size, color, font or other
design characteristics, the decision of Microsoft shall be final.
10.13 Records; Audit. During the Term of this Agreement and for [****]
thereafter, each Party agrees to keep all usual and proper records and books of
account and all usual and proper entries relating to the computation, collection
and distribution of the advertising and other revenues, if any, under this
Agreement. During the Term and for a period of [****] thereafter, each Party
(the "AUDITING PARTY") shall have the right to cause an audit and/or inspection
to be made of the applicable records and facilities of the other Party (the
"AUDITED PARTY") in order to verify statements issued by the Audited Party and
the Audited Party's compliance with the terms of this Agreement. Any such audit
shall be conducted by an independent certified public accountant selected by the
Auditing Party. Any audit and/or inspection shall be conducted during regular
business hours at the Audited Party's facilities with or without notice. The
Audited Party agrees to provide the Auditing Party's designated audit or
inspection team access to the relevant records and facilities. Such audits shall
be made no more often than [****]. If an audit reveals that the Audited Party
has under-paid the Audited Party by [****] or more of the amounts due for any
audited period of time, the Audited Party shall make immediate payment to the
Auditing Party of all amounts due, plus interest for any period when such
amounts were originally due and not paid, calculated using the [****] during
such time when any payment was due [****], and shall pay the Auditing Party all
costs and expenses incurred by the auditing party in conducting such audit and
collecting such payments, including, but not limited to, any amounts paid to any
outside auditor or attorney.
-14-
15
PRIVILEGED AND CONFIDENTIAL
10.14 Notices Regarding Advertising Issues. All notices, requests,
demands or other communications which are required or may be given pursuant to
this Article 10 shall be made in writing via electronic mail and deemed
delivered on the date of transmission when sent during normal business hours
with electronic, written or telephone confirmation of receipt and addressed to
the representatives of the Parties listed below, or to such other representative
as may designated by a Party from time to time:
If to Microsoft: Xxxxxxx Xxxxxxxx -- xxxxx@xxxxxxxxx.xxx
If to Net2Phone: Will Margiloff -- xxxxxxxxxx@xxx0xxxxx.xxx
11. USER INFORMATION
11.1 Aggregate Information. Microsoft agrees that Net2Phone may track,
use and store in aggregate form Aggregate Information solely as necessary to
perform the Net2Phone services under Article 7. The categories of data shall
include total telephony minutes, total number of End Users, total inbound,
outbound and PC-to-Phone and PC-to-PC minutes, domestic vs. international
telephony minutes, geographical tracking and time-of-day/day-of-week traffic
data. Net2Phone acknowledges and agrees that the data described in the preceding
sentence shall be solely owned by Microsoft and Microsoft hereby grants
Net2Phone a non-exclusive, non-transferable, [****] license to use such data
internally, solely to provide and to improve the performance and functionality
of the Net2Phone services delivered to Microsoft and its End Users; provided,
however, that Net2Phone will not sell, transfer or otherwise disclose such data
to third parties except as may be required to perform its obligations under this
Agreement, including billing and sales of Advertising Inventory.
11.2 Collection, Disclosure and Use of User Information.
11.2.1 Except as described in Section 11.2.2 and except for End
Users who are or become customers of Net2Phone or its other licensees
independent of this Agreement, Net2Phone shall not collect any User Information
from any End User without the prior written consent of Microsoft.
11.2.2 At such time as Paid Call Capability is offered, Net2Phone
shall have the right to collect User Information from End Users in connection
with billing services provided by Net2Phone through the Co-Branded Pages;
provided, that any User Information is collected only with the consent of the
End User.
11.2.3 Any collection, disclosure or use of User Information
collected or received by Net2Phone shall be subject to the End User's consent,
any Wallet and Passport policies, Microsoft's and Net2Phone's business practices
and the MS Privacy Policies and the N2P Privacy Policies, and, in all cases, in
compliance with any applicable laws governing the collection, dissemination and
use thereof.
11.2.4 Notwithstanding anything contained in this Agreement to
the contrary, Net2Phone agrees that, unless it has received Microsoft's prior
written consent, it will not sell, license or otherwise transfer to any third
party any User Information collected or received pursuant to this Agreement, nor
use any User Information to target promotions of any third
-15-
16
party's goods or services to End Users, except that Net2Phone may communicate
with End Users of the paid PC-to-Phone voice services; provided, that such End
Users have consented to such communication and that such communication is in
accordance with all MS Privacy Policies and applicable laws.
11.2.5 Microsoft reserves the right in its sole discretion, to
restrict or prohibit Net2Phone from collecting or using any User Information in
the event that Net2Phone breaches any of the terms of this Agreement or MS
Privacy Policies, or in the event that changes to any of the MS Privacy Policies
or any laws prohibit or restrict the use of User Information.
11.3 Ownership.
11.3.1 Except as specified in Section 11.3.2, and except for
information collected by Net2Phone from End Users who are or become customers of
Net2Phone or its other licensees independent of this Agreement, Microsoft shall
solely own all User Information collected by Microsoft or Net2Phone from End
Users during their use of PC-to-PC and PC-to-Phone voice functions of the MSN
Messenger 3.0, the MSN/N2P Web Site and/or any other MS Product, during the Term
of this Agreement. Any and all User Information owned by Microsoft shall be
considered Confidential Information of Microsoft.
11.3.2 Any User Information collected by Net2Phone through the
Co-Branded Pages shall be jointly owned by Microsoft and Net2Phone.
11.4 Profile Data for Advertising Targets. Upon the release of MSN
Messenger 3.0 and for the sole purpose of targeting advertising to End Users of
the MSN Messenger 3.0, Microsoft, shall, to the extent permitted by MS Privacy
Policies, provide Net2Phone with Personal Information obtained by Microsoft from
its End Users' Passport profiles for the following [****]. Microsoft shall, to
the extent permitted by MS Privacy Policies, provide Net2Phone with additional
information collected from its End Users' Passport profiles at such time as the
standard features of its MSN Messenger Service makes it technically feasible to
provide such information; provided, however, that upon the next release of the
MSN Messenger Service after the Launch Date, Microsoft shall use commercially
reasonable efforts to ensure that it is able to provide Net2Phone with all
demographic information from its End Users' Passport profiles.
11.4.1 Net2Phone may use any User Information provided by
Microsoft for targeting advertising only in accordance with the MS Privacy
Policies, the terms of this Agreement and applicable law. In no event shall
Net2Phone be permitted to sell advertising on behalf of Net2Phone or use any
User Information provided by Microsoft to contact such End User without the
prior written consent of Microsoft.
11.4.2 Microsoft shall not in any way be liable for the
completeness or accuracy of any User Information provided to Net2Phone under
this Agreement.
11.4.3 Microsoft reserves the right, in its sole discretion, to
withhold or to request the return or destruction of any and all User Information
in the event that Net2Phone breaches any of the terms of this Agreement or MS
Privacy Policies, or in the event that changes to the MS Privacy Policies or any
laws prohibit or restrict the use of User Information.
-16-
17
PRIVILEGED AND CONFIDENTIAL
11.4.4 Microsoft shall remain the sole and exclusive owner of all
rights to any and all User Information provided by Microsoft to Net2Phone
pursuant to this Agreement.
12. THIRD-PARTY DISTRIBUTION
12.1 Third-Party Distribution. The Parties acknowledge and agree that
Microsoft may distribute the MSN Messenger Service and other MS Products through
third parties. In the event that Microsoft distributes MSN Messenger Service or
other MS Products with voice transmission capabilities through third parties,
then Microsoft will use reasonable commercial efforts to include the N2P
Deliverables in the MSN Messenger Service and/or other MS Products. However,
Microsoft reserves the sole and exclusive right, in its sole discretion, to
remove the N2P Deliverables from the MSN Messenger Service and/or other MS
Products, and either to distribute through third parties the MSN Messenger
Service and/or other MS Products without any voice communication capabilities,
or to distribute the MSN Messenger Service and/or other MS Products with voice
capabilities developed by another party.
12.2 Advertising Rights. In the event that the N2P Deliverables are
included in any MSN Messenger Service distributed by third parties, then the
Parties shall retain the right to sell and serve advertisements in accordance
with the terms of Article 10. [****] Upon distribution of MSN Messenger Service
through third parties, each Party reserves the right to add additional names of
prohibited advertisers to the list specified in Section 10.10.
13. CONTRACT ADMINISTRATION AND REPORTING OBLIGATIONS
13.1 General Communications and Approvals. The Parties shall
communicate directly with one another in the administration of this Agreement,
and each Party shall designate at least one (1) authorized person to be the
primary contact for purposes of coordinating or granting approvals and consents
required hereunder. Such representatives shall not necessarily be devoted
exclusively to the administration of this Agreement. Informal and multiple lines
of communication between the Parties are encouraged; provided, that in
circumstances in which one Party seeks to rely on instructions or advice of the
other, each Party's designated representative shall be contacted.
13.2 Update Meetings. The Parties shall be represented by authorized
personnel directly responsible for performance hereunder at a service update
meeting to be held quarterly, alternating between the Microsoft Premises and the
Net2Phone Premises. At such quarterly meetings, the representatives of the
Parties shall review the performance of the Parties under this Agreement for the
preceding [****]. The Parties shall bear their own expenses with respect to such
meetings.
13.3 Reporting. Within [****] following the commencement of each
calendar quarter during the Term, Net2Phone shall provide Microsoft with a
quarterly report which shall provide, for the preceding quarter, the information
listed in Exhibit I.
-17-
18
PRIVILEGED AND CONFIDENTIAL
14. INTELLECTUAL PROPERTY
14.1 Ownership. Any Confidential Information, User Information and
Intellectual Property rights existing as of the Effective Date shall remain the
property of the Party owning such Confidential Information, User Information or
Intellectual Property rights.
14.2 No Joint Development.
14.2.1 Except as specifically set forth in Section 3.2, only
Net2Phone shall modify and improve the N2P Deliverables. Net2Phone shall be
entitled to any and all Intellectual Property rights in and to any
modifications, improvements or derivative works of or to the N2P Deliverables.
Only Microsoft shall modify and improve the MSN Messenger Service, MSN Messenger
3.0, Passport and Wallet, MSN/N2P Web Site or any other MS Product and Microsoft
shall be entitled to any and all Intellectual Property rights in and to any
modification, improvement or derivative works of to the MSN Messenger Service,
MSN Messenger 3.0, Passport and Wallet, MSN/N2P Web Site or any other MS Product
(excluding Net2Phone's or its licensors' underlying rights in the N2P
Deliverables).
14.2.2 In the event that the Parties agree to jointly develop any
Intellectual Property under this Agreement, then such Intellectual Property
shall be jointly owned by the Parties, with each Party owning an undivided one
half interest. The Parties agree that each Party shall be free to use and
commercially exploit their interest in any joint development and that there
shall be no obligation of payment or accounting to the other therefor.
14.3 Intellectual Property. As between the Parties, Net2Phone
acknowledges Microsoft's sole ownership of the MSN Messenger Service, MSN
Messenger 3.0, Passport and Wallet, the MSN/N2P Web Site and other MS Products
worldwide and all associated goodwill and Microsoft acknowledges Net2Phone's
sole ownership of the N2P Deliverables worldwide and all associated goodwill.
Net2Phone hereby assigns and shall assign in the future to Microsoft all rights
related to Intellectual Property that it may acquire by operation of law or
otherwise in the performance of this Agreement, in or to the MSN Messenger
Service, MSN Messenger 3.0, Passport and Wallet, the MSN/N2P Web Site or any
other MS Product, including all applications or registrations therefor along
with the goodwill associated therewith. Except for any rights expressly granted
under this Agreement, Microsoft hereby assigns and shall assign in the future to
Net2Phone all rights related to Intellectual Property that it may acquire by
operation of law or otherwise in the performance of this Agreement, in or to the
N2P Deliverables, including all applications or registrations therefor along
with the goodwill associated therewith.
14.3.1 Net2Phone is authorized to use the MSN Messenger Service,
MSN Messenger 3.0, Passport and Wallet, MSN/N2P Web Site and other MS Products
only in accordance with the terms of this Agreement or as approved in writing by
Microsoft. Microsoft is authorized to use the N2P Deliverables only in
accordance with the terms of this Agreement or as approved in writing by
Net2Phone. Each Party shall fully and promptly correct and remedy any
deficiencies in its use of, in the case of Net2Phone, the MSN Messenger Service,
MSN Messenger 3.0, Passport and Wallet, MSN/N2P Web Site or any other MS
Product, or, in the case of Microsoft, the N2P Deliverables, upon notice from
the other Party.
-18-
19
PRIVILEGED AND CONFIDENTIAL
14.3.2 Each Party shall have the sole right to and in its sole
discretion may commence, prosecute or defend, and control any action concerning,
in the case of Microsoft, the MSN Messenger Service, MSN Messenger 3.0, Passport
and Wallet, MSN/N2P Web Site, MS Products and/or other Microsoft Intellectual
Property, and in the case of Net2Phone, the N2P Deliverables, in the Territory.
Neither Party shall, during the Term of this Agreement, contest the validity of,
by act or omission jeopardize, or take any action inconsistent with, in the case
of Net2Phone, Microsoft's rights or goodwill in the MSN Messenger Service, MSN
Messenger 3.0, Passport and Wallet, MSN/N2P Web Site, MS Products and/or other
Microsoft Intellectual Property, and in the case of Microsoft, Net2Phone's
rights or goodwill in the N2P Deliverables in any country.
14.4 Notification of Claims. Each Party shall promptly notify the other
in writing of any acts, claims, demands or causes of action of which it learns,
based upon, relating to, or arising from any attempt by any other Person to use
the other Party's Intellectual Property or any colorable imitations thereof, in
any unauthorized manner of which either Party becomes aware.
15. TRADEMARKS
15.1 Microsoft Trademark License
15.1.1 Microsoft hereby grants to Net2Phone for the Term of this
Agreement and subject to and expressly conditioned upon compliance with the
terms and conditions of this Agreement, a non-exclusive, non-assignable,
non-transferable, [****], worldwide license to use the Microsoft Licensed Marks
solely in conjunction with the Co-Branded Pages in the manner described in the
Branding Specifications attached as Exhibit J hereto (the "BRANDING
SPECIFICATIONS"), including the right to include the MSN trademark in the URL
for the Co-Branded Pages, and otherwise as provided in this Agreement or
specified in writing by Microsoft from time to time. Except as expressly
provided in this trademark license in this Section 15.1.1, this Agreement does
not grant Net2Phone any right, title, interest, or license in or to any of
Microsoft's names, logos, trade dress, designs or other trademarks and under no
circumstances shall anything in this Agreement be construed as granting by
implication, estoppel or otherwise, a license to any Microsoft technology or
proprietary right other than the permitted use of Microsoft Licensed Marks. Use
of the Microsoft Licensed Marks shall be solely as expressly specified in this
Agreement or as authorized by Microsoft in writing from time to time.
15.1.2 Net2Phone acknowledges Microsoft's sole ownership of the
Microsoft Licensed Marks worldwide and all associated goodwill. All uses
hereunder of the Microsoft Licensed Marks shall inure solely to the benefit of
Microsoft. Net2Phone hereby assigns and shall assign in the future to Microsoft
all rights it may acquire by operation of law or otherwise in the Microsoft
Licensed Marks, including all applications or registrations therefore, along
with the goodwill associated therewith.
15.1.3 Net2Phone is authorized to use the Microsoft Licensed Marks
only as affixed to the Co-Branded Pages and certain marketing materials in
accordance with the terms of this Agreement and as may be approved in writing by
Microsoft. Net2Phone shall use the Microsoft Licensed Marks in a manner that
does not derogate from Microsoft's rights in the Microsoft Licensed Marks and
will take no action that will interfere with or diminish Microsoft's
-19-
20
PRIVILEGED AND CONFIDENTIAL
rights to the Microsoft Licensed Marks. Net2Phone shall not adopt, use or
register any corporate name, trade name, domain name (except as provided
herein), trademark, service xxxx or certification xxxx, or other designation
similar to containing, in whole or in part, the Microsoft Licensed Marks.
Net2Phone shall not use the Microsoft Licensed Marks in any way as an
endorsement or sponsorship of Net2Phone by Microsoft. Net2Phone shall fully and
promptly correct and remedy any deficiencies in its use of the Microsoft
Licensed Marks, upon reasonable notice from Microsoft.
15.1.4 Microsoft shall have the sole right to and in its sole
discretion may commence, prosecute or defend, and control any action concerning
the Microsoft Licensed Marks in the Territory. Net2Phone shall not contest the
validity of, by act or omission jeopardize, or take any action inconsistent
with, Microsoft's rights or goodwill in the Microsoft Licensed Marks in any
country, including attempted registration of the Microsoft Licensed Marks, or
use or attempted registration of any xxxx confusingly similar thereto.
15.2 Net2Phone Trademark License.
15.2.1 Net2Phone hereby grants to Microsoft for the Term of this
Agreement and subject to and expressly conditioned upon compliance with the
terms and conditions of this Agreement, a non-exclusive, non-assignable,
non-transferable, [****], worldwide license to use the Net2Phone logo as
depicted in Exhibit L hereto (the "NET2PHONE XXXX") in conjunction with the
MSN/N2P Web Site Pages in the manner described in the Branding Specifications
attached as Exhibit M hereto (the "N2P BRANDING SPECIFICATIONS"), including the
right to include the Net2Phone trademark in the URL for the MSN/N2P Web Site,
and otherwise as provided in this Agreement or specified in writing by Net2Phone
from time to time. Except as expressly provided in this trademark license in
this Section 15.1.1, this Agreement does not grant Microsoft any right, title,
interest, or license in or to any of Net2Phone names, logos, trade dress,
designs or other trademarks and under no circumstances shall anything in this
Agreement be construed as granting by implication, estoppel or otherwise, a
license to any Net2Phone technology or proprietary right other than the
permitted use of Net2Phone Xxxx. Use of the Net2Phone Xxxx shall be solely as
expressly specified in this Agreement or as authorized by Net2Phone in writing
from time to time.
15.2.2 Microsoft acknowledges Net2Phone's sole ownership of the
Net2Phone Xxxx worldwide and all associated goodwill. All uses hereunder of the
Net2Phone Xxxx shall inure solely to the benefit of Net2Phone. Microsoft hereby
assigns and shall assign in the future to Net2Phone all rights it may acquire by
operation of law or otherwise in the Net2Phone Xxxx, including all applications
or registrations therefore, along with the goodwill associated therewith.
15.2.3 Microsoft is authorized to use the Net2Phone Xxxx only as
affixed to the MSN/Net2Phone Web Site Pages and certain marketing materials in
accordance with the terms of this Agreement and as may be approved in writing by
Net2Phone. Microsoft shall use the Net2Phone Xxxx in a manner that does not
derogate from Net2Phone's rights in the Net2Phone Xxxx and will take no action
that will interfere with or diminish Net2Phone's rights to the Net2Phone Xxxx.
Microsoft shall not adopt, use or register any corporate name, trade name,
domain name (except as provided herein), trademark, service xxxx or
certification xxxx, or other designation similar to containing, in whole or in
part, the Net2Phone Xxxx. Microsoft shall not
-20-
21
PRIVILEGED AND CONFIDENTIAL
use the Net2Phone Xxxx in any way as an endorsement or sponsorship of Microsoft
by Net2Phone. Microsoft shall fully and promptly correct and remedy any
deficiencies in its use of the Net2Phone Xxxx, upon reasonable notice from
Net2Phone.
15.2.4 Net2Phone shall have the sole right to and in its sole
discretion may commence, prosecute or defend, and control any action concerning
the Net2Phone Xxxx in the Territory. Microsoft shall not contest the validity
of, by act or omission jeopardize, or take any action inconsistent with,
Net2Phone's rights or goodwill in the Net2Phone Xxxx in any country, including
attempted registration of the Net2Phone Xxxx, or use or attempted registration
of any xxxx confusingly similar thereto.
16. CONFIDENTIALITY; PRESS RELEASES
16.1 NDA. The Parties acknowledge and agree that the terms and
conditions of the Microsoft Corporation Non-Disclosure Agreement (the "NDA")
entered into by the Parties, on November 30, 1999 with respect to Microsoft and
on December 2, 1999 with respect to Net2Phone, are incorporated into this
Agreement. In the event that any of the incorporated terms of the NDA are
inconsistent with or conflict with this Agreement, then the terms of this
Agreement shall control.
16.2 Injunctive and Equitable Relief. Each Party acknowledges that
monetary damages may not be a sufficient remedy for unauthorized disclosure or
use of Confidential Information and that each Party may seek, without waiving
any other rights or remedies, such injunctive or equitable relief as may be
deemed proper by a court of competent jurisdiction.
16.3 Press Releases. Subject to compliance with the rules and
regulations of the United States Securities and Exchange Commission and any
applicable stock exchanges, neither Party shall issue any press release or make
any similar public announcement(s) relating in any way whatsoever to this
Agreement or the relationship established by this Agreement without the express
prior written consent of the other Party and the Parties agree that any
announcements of the product and relationship set forth in this Agreement shall
not be disclosed until such time as MSN Messenger 3.0 is launched. Without
limitation to the foregoing, the Parties shall jointly determine the terms,
context, format, and text of any announcement relating to this Agreement and the
implementation of the provisions and requirements contained herein. Subject to
compliance with the rules and regulation of the United States Securities and
Exchange Commission and any applicable stock exchanges, on the Launch Date,
Microsoft will include in any press release related to the launch of MSN
Messenger 3.0 the fact that Net2Phone is the current provider of PC-to-Phone and
PC-to-PC voice services for the MSN Messenger Service.
17. REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
17.1 Microsoft. Microsoft represents, warrants and further covenants
that:
17.1.1 Microsoft has the power and authority to enter into this
Agreement and to perform fully its obligations hereunder; and
17.1.2 Microsoft has obtained, and shall maintain in full force
during the Term hereof, such Governmental Authorizations as are necessary to
operate and to otherwise perform
-21-
22
PRIVILEGED AND CONFIDENTIAL
its obligations under this Agreement, and will be in compliance with all
applicable laws and regulations governing such performance.
17.2 Net2Phone. Net2Phone represents, warrants and further covenants
that:
17.2.1 Net2Phone has the power and authority to enter into this
Agreement and to perform fully its obligations hereunder;
17.2.2 The execution of this Agreement by Net2Phone and the
performance of its obligations hereunder does not and will not violate or
conflict with the terms and conditions of any other agreements, arrangements or
understanding entered into by Net2Phone;
17.2.3 Net2Phone has obtained, and shall maintain in full force
during the Term of this Agreement, such Governmental Authorizations or other
licenses or other third party arrangements as are necessary to operate and to
otherwise perform its obligations under this Agreement in the Territory
(collectively, "PERMISSIONS"), at standards at least consistent with those
commonly observed in the industry, and shall comply with all applicable laws and
regulations governing such performance.
17.2.4 Neither Net2Phone nor any of its business operations are
regulated by the FCC either as a telecommunications carrier under the
Communications Act of 1934 (47 U.S.C. 151 et seq.), as amended, and the rules
and regulations promulgated by the FCC thereunder, or otherwise, as of the
Effective Date hereof, or under any similar foreign law, rule or regulation
promulgated by any foreign Governmental Body in any country within the
Territory, except to the extent Net2Phone has the relevant Permissions; and the
services that Net2Phone provides are not regulated by the FCC as
telecommunications services or as any other type of regulated service, or by any
foreign Governmental Body in any country within the Territory under any similar
foreign law, rule or regulation, except to the extent that Net2Phone has the
relevant Permissions. Without Microsoft's consent, Net2Phone shall not provide
any services to Microsoft under this Agreement that shall cause Microsoft or its
End Users to be regulated by the FCC or any foreign Governmental Body in any
country within the Territory, or that shall cause any services provided by
Microsoft under this Agreement to be regulated by the FCC or any foreign
Governmental Body in any country within the Territory as telecommunications
services or any other type of regulated service.
17.2.5 As between the Parties, in the event that Net2Phone is or
anticipates being in violation of the representations and warranties of Section
17.2.3 or Section 17.2.4, Net2Phone shall be considered the sole provider of
telecommunications services or other regulated services, as the case may be, and
Net2Phone shall either (a) take any and all actions that are required to ensure
compliance with such representations and warranties, including without
limitation the payment of any applicable taxes, fees and assessments, or (b) if
the terms of Section 7.6.1 are applicable, provide notice to Microsoft as
provided therein.
17.2.6 Net2Phone represents and warrants that it will at no time
intentionally impair the operation of the MSN Messenger 3.0, the MSN/N2P Web
Site, the Co-Branded Pages or any other MS Product that utilizes the N2P
Deliverables and that its services and materials will not knowingly contain any
feature that prevents or interrupts its use, including but not
-22-
23
PRIVILEGED AND CONFIDENTIAL
limited to any computer virus, worm, lock, drop-dead device, Trojan-horse
routine, trap door, time bomb, or any other code or instruction that may be used
to access, modify, delete, damage, or disable the functionality of the MSN
Messenger 3.0, the MSN/N2P Web Site, the Co-Branded Pages or any other MS
Product that utilizes the N2P Deliverables or prevent or impede the access or
use thereof by End Users; provided, however, that Net2Phone makes no
representation or warranty that access to or use of the N2P Deliverables or any
product that incorporates that N2P Deliverables will be uninterrupted or
error-free; and
17.2.7 Exhibits and all other attachments, schedules, information,
reports and status reports provided by one Party to the other Party pursuant to
this Agreement shall be accurate and complete in all material respects.
17.3 Limitation of Representations. Should this Agreement be terminated
with respect to any country in the Territory pursuant to Section 7.6.1, the
representations and warranties of Section 17.2.4 shall also immediately
terminate with respect to such country as of the date of termination of services
to that country.
17.4 LIMITATION. EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE 17, ALL
PRODUCTS OR SERVICES DELIVERED UNDER THE TERMS OF THIS AGREEMENT SHALL BE "AS
IS" WITHOUT WARRANTY OR CONDITION OF ANY KIND. FOR SUCH PRODUCTS AND SERVICES,
THE ENTIRE RISK AS TO THE RESULTS AND PERFORMANCE THEREOF IS ASSUMED BY THE
RECEIVING PARTY AND ITS CUSTOMERS, END USERS, AND LICENSEES, IF ANY. THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 17 ARE THE ONLY
REPRESENTATIONS AND WARRANTIES MADE BY THE PARTIES. EACH PARTY DISCLAIMS ANY AND
ALL OTHER WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE, AND FITNESS FOR A
PARTICULAR PURPOSE. MICROSOFT EXPRESSLY DISCLAIMS ANY WARRANTIES RELATING TO THE
MSN MESSENGER SERVICE, MSN MESSENGER 3.0, OR ANY OTHER MS PRODUCT, INCLUDING ALL
WARRANTIES OF NON-INFRINGEMENT, COMPATIBILITY, ACCURACY, SECURITY, OR THAT
ACCESS TO OR USE THEREOF WILL BE UNINTERRUPTED OR ERROR-FREE. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED FOR IN THIS ARTICLE 17, NET2PHONE EXPRESSLY
DISCLAIMS ANY WARRANTIES RELATING TO THE N2P DELIVERABLES OR ANY OTHER NET2PHONE
PRODUCT, INCLUDING ALL WARRANTIES OF NON-INFRINGEMENT, COMPATIBILITY, ACCURACY,
SECURITY, OR THAT ACCESS TO OR USE THEREOF WILL BE UNINTERRUPTED OR ERROR-FREE.
18. TERM AND TERMINATION
18.1 Term and Renewal Terms. Subject to the other provisions of this
Article 18, this Agreement shall commence on the Effective Date and shall have
an initial term terminating on the date [****] after the Launch Date (the
"INITIAL TERM"). The Agreement thereafter shall be automatically renewed for
successive terms of [****] (each such term shall be referred to herein as a
"RENEWAL TERM") unless one Party gives the other Party written notice of its
intention not to automatically renew this Agreement at least thirty (30) days
prior to the scheduled expiration of
-23-
24
PRIVILEGED AND CONFIDENTIAL
the Initial Term or any subsequent Renewal Term. The Initial Term and all
Renewal Terms shall be referred to herein as the "TERM."
18.2 Right of Termination by Microsoft.
18.2.1 Convenience. Microsoft may terminate this Agreement at any
time and for any reason upon providing Net2Phone with not less than [****]
written notice of its intention to terminate this Agreement; provided, however,
that such notice period may be modified in accordance with Section 6.2.2.
18.2.2 [****]
18.2.3 Termination for Change of Control of Net2Phone.
(a) Net2Phone shall notify Microsoft of any agreement, arrangement
or understanding that requires or otherwise contemplates a Change of Control of
Net2Phone no later than [****] following the execution thereof (a "TRANSFER
NOTICE"). Such Transfer Notice shall disclose in reasonable detail (i) the
identity of the acquiring Person or Persons; (ii) the financial and other
material terms and conditions of the agreement contemplating the Change of
Control; and (iii) the proposed consummation date of the Change of Control of
Net2Phone. Net2Phone shall promptly notify Microsoft of any material changes to
the information set forth in the Transfer Notice. Net2Phone shall also notify
Microsoft in writing of the consummation of any Change in Control within [****]
after the completion thereof.
(b) Except where the Change of Control is a result of the
acquisition of capital or voting stock by AT&T Corporation, British Telecom
and/or Liberty Mutual, Microsoft shall have the right to notify Net2Phone at any
time after the date of the Transfer Notice, of its desire to terminate this
Agreement. If Microsoft provides such notice of termination to Net2Phone, this
Agreement shall terminate either immediately or on the date immediately
preceding the date when the Change of Control will take effect, in either case
as set forth by Microsoft in its notice of termination.
18.3 Right of Termination by Net2Phone.
18.3.1 Termination for Convenience. Net2Phone may terminate this
Agreement at any time and for any reason upon providing Microsoft with not less
than [****] written notice of its intention to terminate this Agreement;
provided, however, that such notice period may be modified in accordance with
Section 6.2.2. Microsoft, upon receipt of such termination notice, shall review
whether it is commercially feasible to terminate this Agreement at an earlier
date. If Microsoft, in its sole discretion, determines that it may accommodate
an earlier termination of this Agreement, then the Parties may agree to
terminate this Agreement at such earlier date.
18.3.2 Failure to Release. Net2Phone may terminate this Agreement
immediately upon written notice to Microsoft if the Launch Date does not occur
on or before [****].
-24-
25
PRIVILEGED AND CONFIDENTIAL
18.4 Termination for Cause. In addition to any other rights or remedies
that a Party may have under the circumstances, all of which are expressly
reserved, a Party may terminate this Agreement with immediate effect at any time
if:
18.4.1 The other Party becomes insolvent or makes any assignment
for the benefit of creditors or similar transfer evidencing insolvency; or
suffers or permits the commencement of any form of insolvency or receivership
proceeding; or has any petition under any bankruptcy law filed against it, which
termination pursuant to this Section 18.4.1 shall be effective immediately upon
written notice or as otherwise specified herein;
18.4.2 The other Party is in material breach of any warranty,
representation, term, condition or covenant of this Agreement, and fails to cure
that breach within thirty (30) days after written notice thereof; or
18.4.3 The other Party is in breach of any of the confidentiality
provisions of this Agreement.
18.5 Continuing Obligations Upon Certain Termination. In the event that
this Agreement is terminated by Microsoft pursuant to Section 18.2 or 18.4
hereunder, then:
18.5.1 For a period of [****] after the effective date of
termination, Net2Phone shall continue to provide services to End Users pursuant
to Article 7 hereunder to support PC-to-PC and PC-to-Phone voice functionality
of any MS Product utilizing the N2P Deliverables;
18.5.2 Microsoft shall, within fourteen (14) days of providing a
termination notice, provide Net2Phone with a good faith estimate of its service
level requirements for the [****] period specified in Section 18.5.1, along with
a good faith estimate of the percentage of voice traffic which Microsoft shall
provide Net2Phone in relation to any other providers of voice transmission and
delivery services. During the [****] period specified in Section 18.5.1,
Microsoft shall provide Net2Phone with priority over other service providers
with respect to any voice traffic directed from its MS Products in order to meet
its estimate of the percentage of traffic which Net2Phone is projected to
receive during the [****] period;
18.5.3 All sublicenses of the N2P Deliverables granted by
Microsoft to End Users shall continue in full force and effect for the period
set forth in Section 18.5.1 for the limited purpose of allowing the End Users to
utilize the voice functionality of the MS Product for such period; and
18.5.4 For a period of [****] after the effective date of
termination, the Parties shall (i) use commercially reasonable efforts to
fulfill any commitments made to third parties with respect to advertising and
(ii) collect and distribute Revenues, Carriage Fees and Net Revenues in
accordance with the procedures set forth in Article 10 and, within [****] after
the effective date of termination, each Party shall provide a final accounting
with respect to all amounts collected and distributed pursuant to this Agreement
and make any applicable outstanding payments required under the terms of Article
10.
-25-
26
PRIVILEGED AND CONFIDENTIAL
18.6 Effect of Termination.
18.6.1 The termination or expiration of this Agreement shall not
release any Party from any obligations that have previously accrued or are
expressly required to survive the termination of this Agreement hereunder.
18.6.2 Upon termination or expiration of this Agreement each Party
shall, at the other Party's direction, return or certify destruction of
Confidential Information of such other Party. No Party shall be liable to the
other for damages of any sort resulting solely from terminating this Agreement
in accordance with its terms.
18.6.3 Immediately upon termination or expiration of this
Agreement for any reason, Microsoft shall return to Net2Phone all source code
provided by Net2Phone pursuant to this Agreement. In addition, except to the
extent required to carry out any continuing obligations under Section 18.5, each
Party shall immediately cease all use of all trademarks of the other Party
licensed hereunder, and Microsoft shall cease all use of the N2P Deliverables.
18.7 Survival. The following Articles and Sections shall survive the
termination and expiration of this Agreement: Articles 11, 14, 16, 19, 20 and
21; Sections 15.1.2, 15.1.4, 15.2.4, 15.2.2 and 23.2; and, Section 3.2 solely to
the extent related to Net2Phone's ownership of Bug Fixes; and to the extent
limited by Section 18.5, Articles 7 and 10, and Sections 3.1; 3.2; 8.1; 8.2;
9.3; 15.1.1;15.1.3; 15.2.1; and 15.2.3.
19. INDEMNIFICATION
19.1 Indemnification of Claims. A Party (the "INDEMNIFYING PARTY")
shall, at its expense and the request of the other Party, defend any third-party
claim or action, (a "CLAIM") brought against such Party, or its Affiliates,
directors, officers, employees, licensees, agents and independent contractors
(the "INDEMNIFIED PARTIES"), to the extent (a) such Claim is based upon a claim
that, if true, would constitute a breach of a warranty, representation or
covenant of the Indemnifying Party set forth in this Agreement; or [****].
19.2 Procedures. The Indemnified Party shall promptly notify the
Indemnifying Party in writing, specifying the nature of the action and the total
monetary amount sought or other such relief as is sought therein. The
Indemnified Party shall cooperate with the Indemnifying Party at the
Indemnifying Party's expense in all reasonable respects in connection with the
defense of any such action. The Indemnifying Party may upon written notice to
the Indemnified Party undertake to control and conduct all proceedings or
negotiations in connection therewith, assume and control the defense thereof,
and if it so undertakes, it shall also undertake all other required steps or
proceedings to settle or defend any such action, including the employment of
counsel which shall be reasonably satisfactory to the Indemnified Party, and
payment of all reasonably incurred expenses. The Indemnified Party shall have
the right to employ separate counsel to provide input into the defense, at the
Indemnified Party's own cost. The Indemnifying Party shall reimburse the
Indemnified Party upon demand for any payments made or loss suffered by it at
any time after the date of tender, based upon the judgment of any court of
competent jurisdiction or pursuant to a bona fide compromise or settlement of
claims, demands, or actions, in respect to any damages to which the foregoing
relates. The Indemnifying Party shall not settle
-26-
27
PRIVILEGED AND CONFIDENTIAL
any claim or action under this Article 19 on the Indemnified Party's behalf
without first obtaining the Indemnified Party's written permission, which
permission shall not be unreasonably withheld, and the Indemnifying Party shall
indemnify and hold the Indemnified Party harmless from and against any costs,
damages and fees reasonably incurred by the Indemnified Party, including fees of
attorneys and other professionals, that are attributable to such Indemnified
Claims. The Indemnifying Party shall not be responsible for any indemnification
obligations arising hereunder pursuant to the terms and conditions of any
settlement of an Indemnified Claim by the Indemnified Party unless such
settlement was approved by the Indemnifying Party (which approval shall not be
unreasonably withheld).
19.3 [****].
20. INSURANCE
20.1 Minimum Coverage. During the Term and for a period of [****] after
Net2Phone is obligated to provide any services under this Agreement, Net2Phone
shall procure and maintain insurance reasonably adequate to cover any and all
liability that Net2Phone may incur as a result of the performance of its
obligations under this Agreement. Such insurance shall be in a form and with
insurers reasonably acceptable to Microsoft and shall consist of policies that
comply with the following minimum requirements:
(a) commercial general liability insurance, with policy limits of not
less than (i) [****] for each occurrence of bodily injury or property damage,
and (ii) [****] personal and advertising injury limits;
(b) umbrella policy with minimum limits of [****]; and
(c) professional liability and errors and omissions liability insurance
with policy limits of not less than [****] for each claim with a deductible of
not more than [****]. In the event that Net2Phone's deductible is greater than
[****], then, within ten (10) days after the Effective Date, Net2Phone shall
deposit with an escrow agent and pursuant to escrow terms mutually agreed upon
by the Parties, an amount equal to the difference of the deductible and [****]
and shall hold such amounts in escrow for such time as Net2Phone's obligations
pursuant to this Section 20 are in effect or until such time as the deductible
is not greater than [****].
20.2 Maintenance. Net2Phone's insurance policy shall: (a) provide
professional liability and errors and omissions liability insurance coverage
from a date which is not later than the date at which Net2Phone began providing
services related to or in conjunction with this Agreement; (b) provide that no
cancellation, material reduction in amount, or material change in coverage shall
be effective until at least thirty (30) days after receipt by Microsoft of
written notice thereof; (c) provide for losses payable to Microsoft as its
interests may appear; and (d) be reasonably satisfactory in all other respects
to Microsoft. Net2Phone shall deliver to Microsoft a current certificate of
insurance and certifications of renewal of the insurance policies and a report
of a reputable insurance broker with respect to such insurance policies at least
once during each calendar year during such time as the insurance is in effect
and such other supplemental reports with respect thereto as Microsoft may
reasonably request from time to time. In the event that Net2Phone's certificates
and reports evidence coverage which Microsoft reasonably determines
-27-
28
PRIVILEGED AND CONFIDENTIAL
to be less than that required to meet Net2Phone's obligations under this
Agreement, then Net2Phone agrees that it shall promptly acquire such coverage
and inform Microsoft in writing thereof. Failure by Net2Phone to furnish
certificates of insurance or failure by Microsoft to request same shall not
constitute a waiver by Microsoft of any of the insurance requirements set forth
herein. Net2Phone shall notify Microsoft in writing at least thirty (30) days in
advance if Net2Phone's insurance coverage is to be canceled or materially
altered so as to no longer comply with the requirements of this Section 20.2.
21. LIMITATION OF LIABILITIES
NO PARTY SHALL BE LIABLE TO ANY OTHER FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, ARISING OUT OF OR RELATED TO THIS
AGREEMENT INCLUDING DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION,
LOSS OF BUSINESS INFORMATION, AND THE LIKE, EVEN IF SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. THIS SECTION SHALL NOT APPLY TO A PARTY'S
(A) ABILITY TO OBTAIN INJUNCTIVE OR OTHER EQUITABLE RELIEF; (B) CONFIDENTIALITY
OBLIGATIONS, INCLUDING THOSE RELATING TO SOURCE CODE; AND/OR (C) INDEMNIFICATION
OBLIGATIONS AS TO THIRD PARTY DAMAGES ASSESSED AGAINST THE INDEMNIFIED PARTY IN
CONNECTION WITH INDEMNIFIED CLAIMS UNDER ARTICLE 19.
22. NOTICES
All notices, requests, demands and other communications which are
required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed deliver (a) on the date of delivery when delivered
by hand; (b) on the date of transmission when sent by facsimile transmission
during normal business hours with telephone confirmation of receipt; provided,
an original also is sent the same day in accordance with (d), below; (c) one day
after dispatch when sent by reputable overnight courier maintaining records of
receipt; or (d) three days after dispatch when sent by registered mail, postage
prepaid, return-receipt requested, all addressed as provided below:
If to Microsoft: Microsoft Corporation
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With a copy to: Microsoft Corporation
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
-28-
29
PRIVILEGED AND CONFIDENTIAL
If to Net2Phone: Net2Phone, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With a copy to: Net2Phone, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, General Counsel
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
23. GENERAL PROVISIONS
23.1 Independent Contractors. The Parties are independent contractors
with respect to each other hereunder, and nothing in this Agreement shall be
construed as creating an employer-employee relationship, a partnership, agency
relationship or a joint venture between the Parties. Notwithstanding anything
contained in this Agreement to the contrary, each Party shall be solely
responsible for the performance of its obligations hereunder, no Party shall be
liable for any breach by any other Party, and nothing contained in this
Agreement shall be deemed to constitute a guarantee by any Party of performance
of any of the obligations of the other Party. Nothing in this Agreement shall be
construed as creating an employer-employee relationship between Microsoft and
Net2Phone's employees, on the one hand, or Net2Phone and Microsoft's employees,
on the other hand. Each party shall bear sole responsibility for any and all
compensation, benefits, withholding and other taxes, living expenses, travel
costs, and other applicable costs relating to its employees, except as otherwise
provided in this Agreement.
23.2 Governing Law. This Agreement shall be governed by the laws of the
State of Washington. In any action or suit to enforce any right or remedy under
this Agreement or to interpret any provision of this Agreement, the prevailing
Party shall be entitled to recover its costs, including reasonable attorneys'
fees and court costs. The Parties hereby irrevocably consent to the exclusive
jurisdiction of, and venue in the state and federal courts sitting in King
County of the State of Washington in connection with any and all claims brought
by Net2Phone arising out of or in connection with this Agreement and to the
exclusive jurisdiction of, and venue in the state and federal courts sitting in
Bergen County in the State of New Jersey in connection with any and all claims
brought by Microsoft arising out of or in connection with this Agreement.
23.3 Assignment. Except as expressly provided herein, neither Party may
assign this Agreement (whether directly or indirectly by sale or merger), in
whole or in part, without the other Party's written consent. Notwithstanding the
foregoing, neither party need obtain consent of the other Party to assign this
Agreement (a) to an Affiliate of the assigning Party, or (b) to the surviving
entity of a merger or consolidation, or to any entity that acquires all or
substantially all of the assets or shares of such Party; provided, that
Microsoft has not exercised its termination
-29-
30
PRIVILEGED AND CONFIDENTIAL
rights pursuant to Section 18.4. With respect to assignment to an Affiliate, the
assignor shall remain primarily liable for performance under this Agreement by
its Affiliate. This Agreement shall be fully binding upon, inure to the benefit
of and be enforceable by the Parties hereto and their respective permitted
successors and assigns.
23.4 Construction. In the event that any provision of this Agreement
conflicts with governing law or if any provision is held to be null, void or
otherwise ineffective or invalid by a court of competent jurisdiction, (a) such
provision shall be deemed to be restated to reflect as nearly as possible the
original intentions of the Parties in accordance with applicable law, and (b)
the remaining terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect. This Agreement has been negotiated by the
Parties and their respective counsel and shall be interpreted fairly in
accordance with its terms and without any strict construction in favor of or
against either Party. In all instances, the terms "include" and "including"
shall be construed to mean "including without limitation".
23.5 Excusal of Performance. No Party shall be responsible for, or be
in breach of this Agreement, if its performance is delayed for up to thirty (30)
days as a result of any act of God, war, fire, earthquake, sickness, accident,
civil commotion, act of government, or any other cause wholly beyond its
control, and not due to its own negligence or that of its contractors or
representatives, and which cannot be overcome by the exercise of due diligence.
Without limitation of the foregoing, a subcontractor's bankruptcy, inability or
failure to pay its obligations as they come due, assignment of its assets for
the benefit of creditors, institution of bankruptcy or receivership proceedings
against it, or appointment of a trustee, conservator or receiver or other
liquidating officer for it or its assets or other financial deficiency shall not
be deemed to excuse performance of this Agreement by the Party responsible for
such subcontractor's performance.
23.6 Non-Waiver. No delay or failure by either Party to exercise any
right under this Agreement and no partial exercise of any right under the
Agreement shall constitute a waiver of that right or any other right. No waiver
of any breach of any provision of this Agreement shall constitute a waiver of
any prior, concurrent or subsequent breach of the same or any other provisions
hereof, and no waiver shall be effective unless made in writing and signed by an
authorized representative of the waiving Party.
23.7 Headings; References. Headings in this Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
Unless otherwise expressly provided herein, any references to a "Section",
"Article" or "Exhibit" shall mean a "Section", "Article" or "Exhibit" of or to
this Agreement.
23.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
23.9 Entire Agreement. This Agreement, all Exhibits, schedules, and
appendices hereto and the NDA constitutes the entire agreement between the
Parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements or communications. This Agreement shall not be
modified except by a written agreement dated subsequent to the date of this
Agreement and signed on behalf of the Parties by their respective
-30-
31
PRIVILEGED AND CONFIDENTIAL
duly authorized representatives. The Parties agree to review the Exhibits to
this Agreement from time to time and may amend such Exhibits by mutual
agreement.
23.10 Not An Offer. This document does not constitute an offer by any
Party to any other Party. This Agreement shall not be effective unless and until
signed by both Parties.
23.11 Expenses. Each Party shall be solely responsible for its own
costs and expenses incurred in the preparation, negotiation and implementation
of the Agreement.
23.12 Limitation on Cooperation and Assistance. Notwithstanding
anything herein to the contrary, in no event shall either party's assistance or
cooperation afforded under this Agreement be read, interpreted or otherwise
construed to mean financial assistance as such assistance or cooperation shall
be limited to advice, recommendations and/or information only.
23.13 Export Control. Each Party agrees to comply with all applicable laws that
apply to the import or export of their respective products and services,
including the U.S. Export Administration Regulations, as well as end-user,
end-use and destination restrictions issued by the United States or foreign
countries.
24. EXHIBITS. The following Exhibits form an integral part of this
Agreement:
Exhibit A -- Definitions
Exhibit B -- MS Voice Specifications
Exhibit C -- N2P Deliverables
Exhibit D -- N2P Quality of Service Level Agreement
Exhibit E -- N2P Maintenance and Quality Fix Engineering Support
Exhibit F -- N2P Second Tier Support Services
Exhibit G -- Passport License Agreement and Wallet License Agreement
Exhibit H -- MS Privacy Policies
Exhibit I -- Quarterly Reporting Requirements
Exhibit J -- Branding Specifications
Exhibit K -- Prohibited Advertisers
Exhibit L -- Net2Phone Xxxx
Exhibit M -- N2P Branding Specifications
-31-
32
PRIVILEGED AND CONFIDENTIAL
Exhibit N -- Microsoft End-User License Agreement Terms
Exhibit O -- N2P Privacy Policies
Exhibit P -- Source Code Control Procedures
Exhibit Q - Programmer Confidentiality Agreement
Exhibit R - Initial Aggressive and Base Case Traffic Estimates
Exhibit S - Restricted Countries
[The remainder of this page intentionally has been left blank.
Signature page to follow.]
-32-
33
PRIVILEGED AND CONFIDENTIAL
The Parties have caused this Agreement to be executed by their duly
authorized representatives as of the dates set forth below.
MICROSOFT CORPORATION NET2PHONE, INC.
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxxx Xxxx
---------------- -----------------
Xxxxx Xxxxxx Xxxxxxxx Xxxx
Vice President MSN Communications President
[Signature Page to Microsoft and Net2Phone Cooperation
and Development Agreement]
-33-
34
PRIVILEGED AND CONFIDENTIAL
EXHIBIT A - DEFINITIONS
"ADVERTISING INVENTORY" shall mean any advertising including, but not
limited to Banners, audio advertisements, "leave behind" advertisements and
sponsorship placements played or displayed to End Users on or in conjunction
with the MSN Dial-Up Window.
"AFFILIATE" shall mean with respect to any Person, any other Person
that directly or indirectly Controls, is Controlled by, or is under common
Control with such Person.
"BANNER" shall mean an advertising banner in a Web Page that contains a
link to the advertisers Web Site.
"BUG FIXES" shall mean all bug fixes which modify the code of [****]
Source Code and which are developed by Microsoft.
"CARRIAGE FEES" shall mean [****]
"CHANGE IN CONTROL" shall mean a situation where (A) any Person or
group of Persons acting as a group other than those Persons who Control a party
as of the date hereof shall obtain Control of such party or (B) where a party
(i) fails to maintain its corporate existence; (ii) dissolves or otherwise
disposes of all or substantially all of its assets other than to an Affiliate
(whether in a single transaction or series of transactions); (iii) consolidates
with or merges with another Person, except that no Change in Control shall have
occurred if such party consolidates with or merges with another Person so long
as such party is the surviving entity of any such consolidation or merger; or
(iv) makes a public announcement of the impending occurrence of any of the
foregoing.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in the NDA.
"CONTROL" including its various tenses and derivatives (such as
"CONTROLLED") shall mean, with respect to any Person, the presence of the
following: (1) the legal, beneficial or equitable ownership, directly or
indirectly, of more than [****] of the capital or voting stock (or other
ownership or voting interest, if not a corporation) of such Person, or (2) the
ability, directly or indirectly, to direct the voting of a majority of the
directors of such Person's board of directors, or if the Person does not have a
board of directors, a majority of the positions on any similar body, whether
through appointment, voting agreement or otherwise.
"DOMAIN" shall mean the Internet protocol address of a network
connection and the corresponding "domain name", including all relevant URLs,
which identifies the owner of the address and establishes an address for a
network connection.
"END USER" shall mean any individual who uses the MSN Messenger
Service, MSN Messenger 3.0 or any other MS Product.
"GOVERNMENTAL AUTHORIZATION" shall mean any approval, consent, license,
permit, waiver, or other authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body.
A-1
35
PRIVILEGED AND CONFIDENTIAL
"GOVERNMENTAL BODY" shall mean any (a) nation, state, county, city,
town, village, district, or other jurisdiction of any nature; (b) federal,
state, local, municipal, foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); or (d)
body exercising, or entitled to exercise, any legislative, police, regulatory,
or taxing authority or power of any nature.
"INTELLECTUAL PROPERTY" shall mean any copyrights, patents (including
patent improvements), patent applications, patent rights, trademarks, trade
names, service marks, trade secrets, or other intellectual property rights under
applicable law.
"LAUNCH DATE" shall mean the date when MSN Messenger 3.0 with voice
functionality provided by the N2P Deliverables generally is made commercially
available (other than in Beta form).
"LINK" shall mean an embedded icon, object, graphic or text within a
Web Page that consists of a hypertext pointer to the URL address of a Web Page.
"MICROSOFT LICENSED MARKS" shall mean, collectively, the xxxx "MSN" and
the MSN Logo.
"MICROSOFT PREMISES" shall mean the Microsoft campus, located at Xxx
Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxxxxx and any other Microsoft premises owned or
leased by Microsoft.
"MS PRODUCT" shall mean any software, hardware or other product or
service owned by Microsoft or its Affiliates, which shall include, but not be
limited to products or services co-branded with and or distributed by third
parties.
"MSN DIAL-UP WINDOW" shall mean the dialog window appearing on the
screen of an End User's PC when the End User chooses to make a PC-to-Phone call
from the MSN Messenger Service or from any other MS Product or Service.
"MSN MESSENGER SERVICE" shall mean that service currently referred to
as the MSN Messenger Service operated by Microsoft and any upgrades thereto or
subsequent releases thereof independent of nomenclature.
"MSN MESSENGER 3.0" shall mean the Microsoft Messenger Service with PC
to PC and PC to Phone voice communication capabilities in accordance with the MS
Voice Specifications and any upgrades thereto or subsequent releases thereof
independent of nomenclature.
"N2P NETWORK COSTS" shall mean [****].
"N2P DELIVERABLES" shall mean the deliverables identified in Exhibit C,
along with any additions, modifications or enhancements thereto which may be
provided to Microsoft from time to time pursuant to this Agreement.
"N2P MANAGED NETWORK" shall mean the network managed by Net2Phone that
provides connectivity between the Internet and local telephone networks.
A-2
36
PRIVILEGED AND CONFIDENTIAL
"NET2PHONE AFFILIATE ADVERTISING NETWORK" shall mean those other
service properties belonging to, associated with or represented by Net2Phone,
which are offered by Net2Phone or its agents, representatives or affiliates to
advertisers as an aggregate package of potential advertising platforms.
[****].
"NET2PHONE PREMISES" shall mean any premises owned or leased by
Net2Phone.
"NET REVENUES" shall mean [****] for any corresponding period during
the Term of this Agreement.
"PASSPORT" shall mean that service currently referred to as the
Microsoft Passport Single Sign-in Service operated by Microsoft that enables
consumers to select a single user name and password for use across a network of
participant sites and allows consumers to store limited demographic and personal
information in a file stored on a Microsoft service and pass such information on
to web sites that have elected to accept such information.
"PC" shall mean any internet-enabled device, including, without
limitation, a laptop or desktop computer which contains a central processing
unit, a smart-phone, certain television devices, web terminals and personalized
digital assistants.
"PC-TO-PC" shall mean any voice transmission between any two PCs.
"PC-TO-PHONE" shall mean any voice transmission between a PC and a
Phone.
"PERSON" shall mean a natural person, a corporation, a limited
liability company, a partnership, a trust, a joint venture, a governmental
authority, or any other entity or organization.
"PHONE" shall mean any type of telephonic device used primarily for
voice transmission, including but not limited telephones, cellular phones and
mobile phones.
"REVENUES" shall mean all [****] during any relevant period for the
display or play of any [****].
"SECOND TIER SUPPORT" shall mean the services described in Exhibit F.
"TARGET LAUNCH DATE" shall mean [****].
"TERRITORY" shall mean the entire world, except for those countries set
forth in Exhibit S and such other countries as may identified pursuant to
Section 7.6.1.
"UNITED STATES" shall mean the United States of America and all of its
territories and possessions.
"URL" shall mean a uniform resource locator which serves as the address
of a Web Page.
"USER INFORMATION" shall mean both Aggregate Information and Personal
Information pertaining to an End User. "AGGREGATE INFORMATION" shall mean
information that describes the
A-3
37
PRIVILEGED AND CONFIDENTIAL
habits, usage patterns and/or demographics of users as a group but does not
indicate the identity of any particular End User, and information about an
individual End User presented in a form distinguishable from the information
relating to other End Users but not in a form that enables the recipient to
personally identify such individual End User. "PERSONAL INFORMATION" shall mean
information about a user permitting such End User to be specifically identified
and may include, but not be limited to, user name, user address, the user's
calling patterns, calling times, paid usage and other personally identifying
transaction data.
"WALLET" shall mean that consumer service operated by Microsoft
currently referred to as the Microsoft Passport Wallet Service which enables
consumers to store various information commonly utilized in e-commerce
transactions in a file stored on a secured server controlled by Microsoft.
"WEB PAGE" shall mean content in the World Wide Web portion of the
Internet accessed via a single URL, and excluding content on other Web Pages
accessed via Links in such content.
"WEB SITE" shall mean a collection of Web Pages related in some manner
and interconnected via Links within a specific Domain.
A-4
38
PRIVILEGED AND CONFIDENTIAL
EXHIBIT C - N2P DELIVERABLES
1. [****] - delivered on or before the Effective Date.
2. [****] - delivered on or before the Effective Date.
3. [****] - to be delivered on or before [****].
4. [****] - delivered on or before the Effective Date.
C-1
39
PRIVILEGED AND CONFIDENTIAL
EXHIBIT D -- N2P QUALITY OF SERVICE LEVEL AGREEMENT
A. WEB AVAILABILITY AND SERVICES
Net2Phone will provide support for the N2P Managed Network and the MSN
Messenger Service in accordance with the minimum service level performance
requirements set forth in this Exhibit D.
- PC-TO-PHONE. Net2Phone will maintain [****] termination switch
availability at service launch with [****] availability within [****]
days of service introduction. Such availability will be calculated
independent of the Internet availability, connection and quality and
outages induced by local-exchange-carrier ("LEC"). Net2Phone will
maintain a [****] availability for the N2P Managed Network. Such
availability is independent of outages induced by [****].
- Net2Phone will notify Microsoft about planned system downtime at least
[****] in advance. Turn-around time for resolution of any unplanned
system downtime shall be within [****] of such downtime being reported;
provided, however, that if the problem is a Severity 1 Problem or
Severity 2 Problem (as defined herein), the turn-around time shall be
within [****]. If turn-around time for resolution exceeds the times
specified herein, escalation as set forth below shall be necessary.
- All Web Pages (including images) shall load correctly, all Links work
and data shall be delivered at least [****] of the time.
- ACCOUNT MANAGEMENT. Net2Phone shall maintain accessibility to web-based
billing information and account management information [****] of the
time to Microsoft users. Such billing and account management
information shall include, without limitation, date and time of calls,
duration of calls, rate and total cost of each call made.
- SECURITY. Net2Phone shall use security features standard in the
industry. Credit card transactions shall be protected by
industry-standard encryption methods.
B. SEVERITY PROBLEM REPORTING, RESPONSE TIMES AND SUPPORT
(a) A Severity 1 Problem or Severity 2 Problem shall be reported
to Net2Phone by telephone to one of Net2Phone Technical
Contacts (as set forth below). If a Severity 1 Problem or
Severity 2 Problem is not reported in such manner, the
response times set forth in the table below shall not be valid
and Net2Phone shall be entitled to additional response time
based upon the reporting delay.
(b) Severity 3 Problems may be reported by telephone, fax or
e-mail to one of Net2Phone Technical Contact.
- SEVERITY PROBLEM NOTICE. If a Severity 1 Problem or Severity 2 Problem
occurs, Net2Phone will transmit to Microsoft an explanatory message to
be posted on the MSN/N2P Web Site to the extent technically feasible.
D-1
40
PRIVILEGED AND CONFIDENTIAL
- SUPPORT. Net2Phone will maintain a Network Operations Center manned
twenty-four hour per day, seven days per week. Net2Phone will also
provide Microsoft with a Technical Contact and a back-up Technical
Contact, each with a telephone number and an e-mail address. Net2Phone
will resolve each significant problem by providing either a reasonable
workaround, a hardware fix, an object code patch, or a specific action
plan as to how Net2Phone will address the problem and an estimate of
how long it will take to rectify the problem. Net2Phone will work with
Microsoft to provide a workaround to Severity 1 Problems and Severity 2
Problems that Microsoft identifies, classifies and reports; and
Net2Phone will use reasonable commercial efforts to respond to other
problems within the time frames set forth below.
---------------------------------------------------------------------------
LEVEL OF TARGET TIMES FOR PATCH,
SEVERITY WORKAROUND, OR TEMPORARY
PROBLEM RESPONSE TIME FIX
---------------------------------------------------------------------------
1 [****] [****]
---------------------------------------------------------------------------
2 [****] having been alerted [****]
---------------------------------------------------------------------------
3 [****] having been alerted [****]
---------------------------------------------------------------------------
Other [****] from having been alerted [****]
---------------------------------------------------------------------------
- ESCALATION FOR UNRESOLVED PROBLEMS WITHIN EXPECTED RESPONSE TIMES.
Net2Phone shall provide an executive contact for escalation of problems
that extend beyond the expected resolution time.
C. REPORTS
- REPORTS. Net2Phone will provide Microsoft with monthly reports of N2P
Managed Network outages within [****] after the end of the month. Such
reports shall include time of outage, length of outage, affected areas,
reason for outage, Microsoft contact notified (if any), average
response time and remedy to prevent outage reoccurrence (if any)
D. CUSTOMER SERVICE
Net2Phone will provide customer service to Microsoft users under this
Agreement, in accordance with the minimum service level performance requirements
set forth below.
- Net2Phone shall answer [****] of all customer calls within [****] or
less.
- Net2Phone shall maintain an abandonment rate of [****] or less for the
month.
X-0
00
XXXXXXXXXX XXX XXXXXXXXXXXX
- Xxx0Xxxxx shall answer emails from users relating to billing services
provided by Net2Phone to Microsoft users under this Agreement within
[****] of receipt of such emails from Microsoft users
- Net2Phone shall answer emails relating to free services provided by
Net2Phone to Microsoft users under this Agreement within [****] of
receipt from Microsoft users.
E. TECHNICAL CONTACTS
NET2PHONE TECHNICAL CONTACTS
-----------------------------------------------------------------------------
NAME EMAIL PHONE NUMBER
-----------------------------------------------------------------------------
Net2Phone NOC x0xxxx@xxx0xxxxx.xxx 000-000-0000 N/A
-----------------------------------------------------------------------------
Xxxxx Xxx-Oni xxxxx@xxx0xxxxx.xxx 000-000-0000 000-000-0000 -
PIN 6030166
-----------------------------------------------------------------------------
MICROSOFT TECHNICAL CONTACTS
-------------------------------------------------------------------------
NAME EMAIL PHONE NUMBER PAGER
-------------------------------------------------------------------------
Xxxxx Xxxxxxxxx xxxxxx@xxxxxxxxx.xxx 000-000-0000
-------------------------------------------------------------------------
-------------------------------------------------------------------------
F. DEFINITIONS
"SEVERITY 1 PROBLEMS" shall mean problems with respect to any N2P Managed
Network that halt or materially disrupt service execution, cause a major loss of
the material functionality of the MSN Messenger Service or otherwise create an
emergency which will cause significant financial or reputation loss or other
significant loss or business disruption to the provider of such MSN Messenger
Service.
"SEVERITY 2 PROBLEMS" shall mean problems with any N2P Managed Network that are
not Severity 1 Problems but that materially reduce the core functionality of the
MSN Messenger Service cause data corruption or damage, or otherwise require
prompt correction to maintain material use of the core functionality of the MSN
Messenger Service (such as, for example, a consistently reproducible problem
resulting in system crash or loss of core or material functionality, but which
can be avoided through a workaround without undue disruption).
"SEVERITY 3 PROBLEMS" shall mean problems with respect to the N2P Managed
Network, including bugs, that are not Severity 1 Problems or Severity 2
Problems, and all problems with the MSN Messenger Service related to the N2P
Deliverables.
D-3
42
PRIVILEGED AND CONFIDENTIAL
EXHIBIT E -- N2P MAINTENANCE AND QUALITY FIX ENGINEERING SUPPORT
This table represents a framework for the severity of bugs and QFE issues, and
Net2Phone's commitments to resolve the errors.
-----------------------------------------------------------------------------------------
Priority (Defined by Examples of Issues of Time for Net2Phone Best Efforts to
Microsoft) this Priority Response Resolve Within
-----------------------------------------------------------------------------------------
1 System crash, end user [****] [****]
data loss, application
crash, High-profile
security issue
-----------------------------------------------------------------------------------------
2 Potential end user data [****] [****]
loss, major
functionality loss,
potential security issue
-----------------------------------------------------------------------------------------
3 Support issue, minor [****] [****]
functionality
impairment, incorrect
visuals/text
-----------------------------------------------------------------------------------------
E-1
43
PRIVILEGED AND CONFIDENTIAL
EXHIBIT F -- N2P SECOND TIER SUPPORT SERVICES
Net2Phone will provide customer support to Microsoft End Users as follows:
The Net2Phone web help site will be available to all Microsoft End Users to
support all PC-to- PC and free PC-to-Phone calls.
Net2Phone customer service will be available to Microsoft End Users for any paid
PC-to-Phone calls. In addition, the Net2Phone web help site will be available to
all Microsoft End Users to support any paid PC-to-Phone calls.
F-1
44
PRIVILEGED AND CONFIDENTIAL
EXHIBIT I -- QUARTERLY REPORTING REQUIREMENTS
Net2Phone shall provide Microsoft with quarterly reports which set
forth monthly totals for:
1. Number of unique users.
2. Number of minutes used per user.
3. Total minutes.
4. Total [****] costs for quarter -- for both free and paid calls.
5. Revenues generated by Net2Phone.
I-1
45
PRIVILEGED AND CONFIDENTIAL
EXHIBIT J - MSN BRANDING SPECIFICATIONS
- Net2Phone shall use the Microsoft Licensed Marks in conjunction with, and
solely in connection with, the Co-Branded Pages, in accordance with the
terms of this Agreement (which shall include the Cooperation and
Development Agreement and all Exhibits thereto) and subject to Microsoft's
prior review and written approval.
- Net2Phone shall use the MSN Logo only as provided by Microsoft
electronically. Net2Phone may not alter the MSN Logo in any manner,
including size, proportions, colors, elements, etc., or animate, morph or
otherwise distort its perspective or two-dimensional appearance.
- Microsoft Licensed Marks may not be used in any manner that expresses or
might imply Microsoft's affiliation, sponsorship, endorsement,
certification, or approval, other than as contemplated by this Agreement.
- Net2Phone shall not use Microsoft Licensed Marks in association with any
third party trademarks in any manner that might suggest co-branding or
otherwise create potential confusion as to source or sponsorship of the
Co-Branded Pages or ownership of the Microsoft Licensed Marks.
- Microsoft Licensed Marks may not be included in any third party trade or
business name, domain name (except as specified in this Agreement), product
or service name, logo, trade dress, design, slogan, or other trademarks.
- Except as expressly provided in this Agreement, Microsoft Licensed Marks
may not be combined with any other symbols, including words, logos, icons,
graphics, photos, slogans, numbers, or other design elements.
- Microsoft Licensed Marks (including but not limited to MSN's logos,
logotypes, trade dress, and other elements of product packaging and
websites) may not be imitated in any manner in Net2Phone's products,
product packaging, websites, or other materials.
- Microsoft Licensed Marks shall include the appropriate (R) or (TM) symbol
at least at the first and most prominent mention on each
visually-distinguishable page of material.
- References to Microsoft or MSN in plain text may not be more prominent than
surrounding text, e.g., boldface, italics, larger type size, different
fonts, etc.
- The Licensed Marks may not be translated or otherwise localized in any
other language. Any localized versions of the Marks must be provided by
Microsoft.
- The Licensed Marks shall be attributed to its owner in all materials where
it is used, with the attribution clause: "MSN is a trademark of Microsoft
Corporation in the U.S. and other countries."
J-1
46
PRIVILEGED AND CONFIDENTIAL
EXHIBIT K -- PROHIBITED ADVERTISERS
Net2Phone Prohibited Advertisers
[****]
[****]
[****]
[****]
K-1
47
PRIVILEGED AND CONFIDENTIAL
EXHIBIT L -- NET2PHONE XXXX
[ATTACHED]
L-1
48
PRIVILEGED AND CONFIDENTIAL
EXHIBIT M -- N2P BRANDING SPECIFICATIONS
- Microsoft shall use the Net2Phone Xxxx in conjunction with, and solely in
connection with, the MSN/N2P Web Site Pages, in accordance with the terms
of this Agreement (which shall include the Cooperation and Development
Agreement and all Exhibits thereto) and subject to Net2Phone's prior review
and written approval.
- Microsoft shall use the Net2Phone Xxxx only as provided by Net2Phone
electronically and Microsoft's use of the Net2Phone xxxx shall be
consistent with Net2Phone's own use. Microsoft may not alter the Net2Phone
Xxxx in any manner, including size, proportions, colors, elements, etc., or
animate, morph or otherwise distort its perspective or two-dimensional
appearance.
- The Net2Phone Xxxx xxx not be used in any manner that expresses or might
imply Net2Phone's affiliation, sponsorship, endorsement, certification, or
approval, other than as contemplated by this Agreement.
- Microsoft shall not use the Net2Phone Xxxx in association with any third
party trademarks in any manner that might suggest co-branding or otherwise
create potential confusion as to source or sponsorship of the MSN/N2P Web
Site Pages or ownership of the Net2Phone Xxxx.
- The Net2Phone Xxxx xxx not be included in any third party trade or business
name, domain name (except as specified in this Agreement), product or
service name, logo, trade dress, design, slogan, or other trademarks.
- Except as expressly provided in this Agreement, the Net2Phone Xxxx xxx not
be combined with any other symbols, including words, logos, icons,
graphics, photos, slogans, numbers, or other design elements.
- The Net2Phone Xxxx (including but not limited to MSN's logos, logotypes,
trade dress, and other elements of product packaging and websites) may not
be imitated in any manner in Microsoft's products, product packaging,
websites, or other materials.
- The Net2Phone Xxxx shall include the appropriate (R) or (TM) symbol at
least at the first and most prominent mention on each
visually-distinguishable page of material.
- References to Net2Phone or N2P in plain text may not be more prominent than
surrounding text, e.g., boldface, italics, larger type size, different
fonts, etc.
- The Net2Phone Marks may not be translated or otherwise localized in any
other language. Any localized versions of the Net2Phone Xxxx must be
provided by Net2Phone.
- Net2Phone will provide Microsoft with the "Net2Phone Style Guide" which
lists guidelines for the size, typeface, colors and other graphical
characteristics of the Net2Phone Xxxx, which upon delivery to Microsoft
will be deemed incorporated into these guidelines.
The Net2Phone Marks shall be attributed to its owner in all materials where it
is used, with the attribution clause: "Net2Phone is a trademark of Net2Phone,
Inc. in the U.S. and other countries."
M-1
49
PRIVILEGED AND CONFIDENTIAL
EXHIBIT N -- MICROSOFT END-USER AGREEMENT TERMS
End users must agree:
- Not to modify, disassemble or reverse compile any software provided by
Microsoft related to the N2P Deliverables.
- To exclusions of liability and protection of Net2Phone licensors and
licensees as required in Net2Phone's standard end-user license agreement.
- That they have received and been granted no ownership interest in the N2P
Deliverables.
- To comply with the export control restrictions of the United States and any
applicable foreign jurisdictions.
N- 1
50
PRIVILEGED AND CONFIDENTIAL
EXHIBIT P -- SOURCE CODE CONTROL PROCEDURES
This Security Addendum describes the security obligations which
Microsoft ("Licensee") must perform in accordance with this Agreement between
Licensee and Net2Phone ("Licensor"). Licensee's executive responsible for
ensuring compliance with this Security Addendum is:
Name: Xxxxx Xxxxxxx
Phone Number: (000) 000-0000
or such other executive as Licensee may designate to Licensor pursuant to
Section 22 of the Agreement.
A. Software and Documentation
Licensee shall store all source code solely on the machine provided by
Licensor (the "Licensor Machine"), which shall be configured so that the
operating system is Windows 2000 or Windows NT, and shall include the proper
build environment for all source code. Licensee shall also store the source code
along with any documentation, and all tangible embodiments thereof, in whatever
form or medium, in a location or locations protected by cipher locks or key
locks (the "Secured Library"). Licensee shall provide cipher lock combinations
or keys to the Secured Library, as applicable, only to those employees of
Licensee who require access to the source code and documentation to perform
their duties in connection with this Agreement (the "Authorized Software
Personnel").
Licensee shall not disclose, directly or indirectly, the source code
and documentation to any person other than Authorized Software Personnel.
Licensee shall not allow any person other than Authorized Software Personnel to
remove the source code and documentation from the Secured Library. Licensee
shall require Authorized Software Personnel who remove MSS Software and
Documentation from the Secured Library to record the date upon which such
Authorized Software Personnel remove the source code and documentation from the
Secured Library and the date of return of same, along with all locations to
which such Authorized Software Personnel remove the source code and
documentation. Licensee shall report to Licensor any disclosure of the source
code and documentation not permitted by the License Agreement or this Section A
to Licensor immediately upon Licensee's receipt of knowledge of same.
B. Personnel
Licensee shall instruct all Authorized Software Personnel concerning
all procedures necessary to limit access to the source code and the
documentation and to protect the confidentiality of the source code and
documentation.
P-1
51
PRIVILEGED AND CONFIDENTIAL
Prior to receiving access to any source code, each Authorized Software
Personnel of Licensee that has access to the Licensor Machine or the source code
shall sign an agreement with Licensor that protects the confidential nature of
all source code and documentation in the form of Exhibit Q.
Licensee shall not allow more than three (3) programmers to be
considered Authorized Software Personnel at any given time.
C. Audit
Licensee shall diligently monitor and record Licensee's efforts to
comply with this Security Addendum. Licensee shall at all times maintain a list
of all Authorized Software Personnel. Upon request from Licensor, Licensee shall
provide Licensor with access to the location at which the source code and
documentation are stored and any records of Licensee necessary to audit
Licensee's compliance with this Security Addendum.
D. Logical Access
Licensee shall protect logical access to the source code with logical
access protection procedures and protections. Licensee shall control access to
the Licensor Machine and the source code and documentation via password
protection schemes and/or restricted access terminal rooms. Each system log-on
password must be randomly selected, not obvious or trivial, and at least six
numeric, five alpha, or four alphanumeric characters in length, and must be
changed at least once every month. Once terminal access has been established,
the terminal must not be left unattended until the terminal access is
terminated. Licensee shall not connect the Licensor Machine to any private or
public network, including the Internet or the N2P Managed Network, except that
Licensee may connect the Licensor Machine to Licensee's Ethernet network to
build the proper object code, provided that the Licensor Machine is configured
so that it may only receive files from such network and that it may not be
accessed from users on such network.
The provisions of this Exhibit P shall be in addition to the provisions of
Section 4.3 and the other provisions of this Agreement.
P-2
52
PRIVILEGED AND CONFIDENTIAL
EXHIBIT Q
PROGRAMMER CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (the "Agreement") is made and entered
into between [MICROSOFT CORPORATION/NET2PHONE INC.] (the "Company") and [OTHER
COMPANY'S EMPLOYEE] (the "Programmer") as of the ____ day of _______, 2000.
WHEREAS, the Company has disclosed and will disclose certain
information that is proprietary to the business of Company to the Programmer on
the basis that the Programmer will maintain the confidentiality thereof; and,
WHEREAS, the Programmer understands that such information may be
protected under the intellectual property laws of the United States and various
foreign countries;
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows:
1. "Proprietary Information" shall mean all information (whether technical,
marketing, business or otherwise, and including without limitation source
code and object code), in whatever form (whether tangible, orally
communicated, physically communicated or disclosed in writing,
electronically or otherwise, including without limitation information
disclosed by samples or demonstrations of processes, techniques or
equipment) which is disclosed by the Company to the Programmer prior to or
subsequent to the date of this Agreement and which relates in any way to
its technology and its business, including without limitation any documents
or other information prepared or generated by or at the request of any
third party from such information.
2. Notwithstanding Section 1 above, "Proprietary Information" shall not
include:
a. information that can be shown by the Programmer to be in the
public domain (provided that information in the public domain
has not or does not come into the public domain as the result
of disclosure by the Programmer);
b. information that is or was known to the Programmer prior to
disclosure hereunder and can be shown by the Programmer to
have been known to the Programmer prior to such disclosure;
c. information that becomes available to the Programmer on a
non-confidential basis from a source other than the Company
(provided that such source is not known to the Programmer to
be bound by a confidentiality agreement with the Company); or,
d. information that is independently developed by Programmer
without reference to or reliance upon any Proprietary
Information.
Q-1
53
PRIVILEGED AND CONFIDENTIAL
3. The Programmer hereby agrees that, for the duration of the Cooperation
Agreement and a period of one (1) year thereafter, the Programmer shall (i)
not make any use of the Proprietary Information of the Company other than
for the purposes of the Cooperation Agreement between the parties or
further transactions relating thereto or make any copies, except for such
purpose; (ii) maintain the Proprietary Information in strict confidence and
refrain from disclosing any part of the Proprietary Information to any
person or entity (other than to Programmers whose duties justify the need
to know such Proprietary Information in connection with such purpose and
who have previously agreed in writing to keep such information confidential
in terms substantially similar to the terms contained in this Agreement);
(iii) take all appropriate steps to protect the Proprietary Information
against disclosure, misuse, espionage, loss and theft, and (iv) comply with
the provisions of Section 2.6 and Exhibit P of the Cooperation and
Development Agreement entered into between Microsoft Corporation and
Net2Phone Inc. as of the 1st day of June, 2000 (the "Cooperation
Agreement").
4. In the event that the Programmer shall become legally compelled to disclose
any Proprietary Information, Programmer shall promptly notify the Company
of any legal request for disclosure so that the Company may take action to
safeguard its interests, and the Programmer shall cooperate with the
Company to preserve the confidentiality of the Proprietary Information.
5. The obligations of confidentiality set forth in this Agreement shall
survive any termination of this Agreement.
6. No other right to the Proprietary Information or to any of the Company's
patents, copyrights, trademarks or other proprietary rights is granted
hereby and nothing contained in this Agreement shall be construed as
creating an express or implied license to use the Proprietary Information
or such patents, copyrights, trademarks or other proprietary rights for any
purposes other than those specifically set forth herein, except such
licenses granted pursuant to the Cooperation Agreement.
7. It is agreed between the parties that: (a) no failure or delay by the
Company in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or future exercise thereof or the exercise of any right,
power or privilege hereunder; (b) the provisions of this Agreement shall be
severable and the illegality or invalidity of any provision shall not
affect the legality or validity of any other provision, and each provision
found illegal or invalid shall be judicially modified in any proceeding
brought to enforce such provision so as to be enforceable to the maximum
extent permissible under applicable law; and (c) any amendment of any
provision of this Agreement shall only be effective if in writing and
signed by all parties hereto.
8. This Agreement shall be governed by and construed in accordance with the
laws of the State of Washington.
Q-2
54
PRIVILEGED AND CONFIDENTIAL
9. The parties acknowledge and agree that in the event of any breach hereof by
a party receiving Proprietary Information, the Company will suffer
irreparable and immediate harm for which money damages alone could not
compensate it. Accordingly, the Company shall be entitled to all available
equitable relief, including injunction without the posting of any bond or
other security or proof of damage, as well as to its other legal remedies.
10. Each party represents and warrants to the other party that it has the right
to enter into this Agreement and receive the Proprietary Information and
that it is not a party to any other agreement, or under any obligation to
any third party, which would prevent it from entering into this Agreement
and performing its obligations hereunder.
11. This Agreement may be executed by the parties hereto individually or in any
combination, in one or more counterparts, each of which shall be an
original and all of which shall together constitute one and the same
agreement.
12. This Agreement shall inure to the benefit of the Company's successors and
assigns.
* * * * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
[MICROSOFT CORPORATION/NET2PHONE INC.]: [PROGRAMMER]:
_________________________________ __________________________________
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Q-3
55
PRIVILEGED AND CONFIDENTIAL
EXHIBIT R
INITIAL AGGRESSIVE AND BASE CASE TRAFFIC ESTIMATES
[****]
R-1
56
PRIVILEGED AND CONFIDENTIAL
EXHIBIT S
RESTRICTED COUNTRIES
[****]
S-1
