1
Exhibit 10.6
INTERNET SERVICE PROVISIONING AND MARKETING AGREEMENT
This INTERNET SERVICE PROVISIONING AND MARKETING AGREEMENT (the
"Agreement") is made and entered into as of the 5th day of October, 1999 (the
"Effective Date"), by and between Terra Networks Access Services USA, LLC, a
Delaware limited liability company with its principal place of business at 0000
Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000 ("TI USA ISP"), and IDT Corporation, a
Delaware corporation with its principal place of business at 000 Xxxx Xxxxxx,
Xxxxxxxxxx, XX 00000 ("IDT") (each a "Party" and together the "Parties").
WHEREAS, TI USA ISP was formed as a joint venture between Telefonica
Interactiva, S.A., a Spanish corporation with principal offices at Xxx xx xxx
xxx Xxxxxxxxx, 00 -- 00000 Pozuelo xx Xxxxxxx (Madrid, Spain) ("TI"), and IDT,
pursuant to a joint venture agreement dated October 5, 1999 (the "Joint Venture
Agreement"), and TI USA ISP is in the business of provisioning Internet services
to End Users, primarily within the Hispanic market of the United States;
WHEREAS, IDT is in the business of providing certain Internet services,
including Internet access, transport, technical and customer support, back
office and other information technology resources and services in connection
therewith ("IDT Internet Provisioning Services"); and
WHEREAS, TI USA ISP desires that IDT serve as the exclusive provider (for
the Term) of certain Internet services for purposes of offering and
re-provisioning the same to End Users in the Target Market (as those terms are
defined hereunder), for which TI USA ISP shall be identified and branded as the
Internet Service Provider ("ISP"), all subject to and in accordance with the
terms and conditions of this Agreement;
NOW THEREFORE, in consideration of the mutual promises and covenants set
forth in this Agreement, TI USA ISP and IDT hereby agree as follows:
1. Definitions.
1.1 "End User" means any individual, corporation or legal entity
who registers with and subscribes to TI USA ISP to receive the Services.
1.2 "End User Information" means any demographic or personal
identifying information, data or records relating to End Users and IDT
Customers, their subscriptions to and use of the Services, including, without
limitation, their respective names, email addresses, telephone numbers, account
information, usage statistics, communications exchanged and/or transactions
conducted via the Services.
1.3 "IDT Customers" collectively means all of IDT's dial-up
customers (which as of the Effective Date, represent at least a client base of
45,782 paying and 11,439 bundled IDT dial-up customers) to be transferred to
TI USA ISP as
2
described herein and that possess active accounts or are registered customers
with IDT or which are otherwise entitled to receive one or more of the IDT
Internet Provisioning Services provided by IDT, but that are not customers
acquired through IDT's reseller channels.
1.4 "IDT Information Technology Resources" means all information
processing, telecommunications, narrowband and broadband technology, backbone
capacity, networking infrastructure, software, systems, hardware, equipment,
devices, peripherals, operating environments and any other information
technology resources and facilities required and used by IDT to provide and
support the Services as more specifically described in Exhibit A attached
hereto.
1.5 "Services" means the IDT Internet Provisioning Services provided
by IDT to and or on behalf of End Users using the IDT Information Technology
Resources subject to and in accordance with mutually agreed upon service level
criteria as set forth in Exhibit B attached hereto.
1.6 "Target Market" means the Hispanic residential population and
Hispanic SOHO ("Small Office-Home Office") professionals in the United States.
2. IDT Services and Obligations.
2.1 IDT Internet Provisioning Services. IDT will provide to End
Users under the TSI USA ISP Brand (as defined in Section 8 below), narrowband
and broadband access to the publicly available network of computer networks
commonly referred to as the "Internet" together with technical support, and
other IDT Internet Provisioning Services related thereto as described in
Exhibit B, subject to and in accordance with the service level criteria
specified therein, and such other services and service level criteria as may be
agreed upon by the Parties during the Term of this Agreement.
2.2 Operations, Maintenance and Administrative Support. IDT shall
provide, on behalf of TSI USA ISP, certain operations, maintenance and
administrative services in connection with the provision of IDT Internet
Provisioning Services to End Users, as described in Exhibit C ("Operations,
Maintenance and Administrative Services")
2.3 Customer Support. IDT shall provide, on behalf of TI USA ISP and
for the benefit of its End Users, the customer technical support and call center
services as set forth on Exhibit D ("Customer Support Services"), and any other
customer support services mutually agreed upon by the Parties in writing during
the Term of this Agreement.
2.4 Back Office Services. IDT shall provide, on behalf of TI USA ISP
the billing, collection and fulfillment services as set forth on Exhibit E
hereto (the
-2-
3
"Back Office Services") and other such similar services mutually agreed upon by
the Parties in writing during the Term of this Agreement.
2.5 IDT Information Technology Resources. IDT shall be responsible
for providing, configuring, installing, operating and maintaining the IDT
Information Technology Resources (as required hereunder) at its sole cost and
expense according to the quality standards set forth in this Agreement and its
exhibits.
2.6 Internet Access Products. IDT shall provide TI USA ISP with
pre-paid Internet access products and distribute such products in accordance
with the terms of Exhibit F hereto.
2.7 Domain Name. TI USA ISP shall procure, in its own name, a new
domain name (the "Domain Name") for purposes of IDT providing the Services under
this Agreement. TI USA ISP agrees to pay any registration and maintenance fees
applicable to such registration of the Domain Name, and all right, title and
interest in and to the Domain Name shall be owned by TI USA ISP.
2.8 IDT Customers. IDT shall assign, transfer and convey to TI USA
ISP the IDT Customer accounts, registrations, agreements, lists and other
information and the right to service such IDT Customers, in accordance with the
terms and conditions set forth in Section 7 hereto.
2.9 Marketing Support. IDT shall provide marketing support to TI USA
ISP in accordance with the terms and conditions set forth in Section 8 hereto.
2.10 Activity Reports. IDT shall provide monthly account activity
reports, at a minimum equivalent to comparable reports it has or will continue
to generate for its own accounts, to TI USA ISP in a form to be agreed upon in
writing by the Parties.
2.11 Additional Services. In addition to the Services specified
hereunder, IDT will make available to TI USA ISP any other services which IDT
provides or otherwise makes available to any of its other customers, for an
additional charge, which may be requested by TI USA ISP from time to time during
the Term ("Additional Services"). IDT agrees it will not, directly or
indirectly, provide or itself offer or make available any such Additional
Services to any of IDT's other customers at rates, charges, terms, discounts
and/or prices (taking into account volumes and types of services) more favorable
than those offered to TI USA ISP. In the event IDT does grant more favorable
rates, charges, terms, discounts and/or prices to any of its other customers, TI
USA ISP shall have the right to notify IDT that this Agreement shall be amended
to provide for any or all such more favorable terms and, in the case of rates,
charges and/or prices, to reflect a reduction in the pricing to TI USA ISP which
is equivalent to the lesser of (a) the lowest market price for such services
(based on the then-prevailing rates of reputable and financially sound,
similarly situated ISPs for such services); or (b) the lowest pricing granted by
IDT to its comparable customers. TI USA ISP will be entitled to confirm this
pricing through, among other things, its audit rights
-3-
4
under Section 10 below. Any such Additional Services shall be performed at
service levels acceptable to TI USA ISP, and in any event, comparable in quality
to the service levels offered by similarly situated ISPs for such services.
2.12 Software License. IDT grants to TI USA ISP for the Term of this
Agreement the non-exclusive right to use any software used by IDT in connection
with the IDT Internet Provisioning Services, for the purposes of TI USA ISP's
provision of Internet Services to End Users. Such license shall be continued
after the term of the Agreement, if this Agreement is terminated by TI USA ISP
for a material breach by IDT, but only so long as is reasonably necessary to
continue to provide Service to customers of TI USA ISP until a suitable
replacement can be obtained.
2.13 Location of Services. The Services shall be performed by IDT
from Hackensack, New Jersey. IDT will, prior to the date on which TI USA ISP has
more than 350,000 End Users, transfer its infrastructure from the Hackensack
Network Operating Center to an alternative location satisfactory to TI USA ISP
either in Piscataway or Newark, New Jersey. Any additional infrastructure
required by IDT to provide the Services after the Effective Date will be placed
by IDT at the Piscataway Network Operating Center under technological and
infrastructure standards acceptable to TI USA ISP unless reasonably required to
continue operations in Hackensack at existing End User levels.
2.14 Sub-contractors. IDT may sub-contract the performance of any
non-material portion of the Services to a sub-contractor, subject to TI USA
ISP's prior written consent (which will not be unreasonably withheld). The
appointment of subcontractors will not relieve IDT from any of its liabilities
or obligations arising under this Agreement.
2.15 Transfer of Access Fees. During the Term, TI USA ISP hereby
appoints IDT as its agent for billing and collection of all monies owed by and
collected from End Users with respect to the Services provided to End Users
hereunder ("Access Fees"). IDT acknowledges and agrees that all Access Fees
shall be for the sole benefit of and retained exclusively by TI USA ISP and IDT
shall remit such Access Fees to TI USA ISP together with supporting
documentation and monthly account activity reports which substantiate each End
Users' respective charges as soon as the same are collected. TI USA ISP shall be
responsible for establishing and communicating to IDT a pricing structure for
Access Fees provided to End Users hereunder.
3. TI USA ISP Obligations.
3.1 General Obligations. TI USA ISP hereby agrees to: (i) comply
with the terms and conditions set forth in this Agreement; and (ii) comply fully
with all applicable federal, state, and local laws, regulations, and ordinances
relating to the Service to be provided and the performance of its obligations
hereunder.
-4-
5
3.2 Grant of License to Domain Name. In consideration of the
services to be provided by IDT to TI USA ISP hereunder, TI USA ISP hereby grants
to IDT a non-exclusive, royalty-free, worldwide, license for the Term to use the
Domain Name exclusively to provide Services to End Users under this Agreement,
and for related marketing purposes; provided, however, that any initial use by
IDT of the Domain Name shall be subject to the prior written approval of TI USA
ISP.
3.3 End User Terms and Conditions. TI USA ISP agrees that it will
require each End User to whom TI USA ISP resells the Service to agree in writing
or a legally acceptable equivalent, to acknowledge and comply with the terms and
conditions as set forth in section 10 herein and in Exhibit G attached hereto
("End User Agreement").
3.4 TI USA ISP agrees to furnish to IDT all such information in
connection with the business and operations of TI USA ISP as may be necessary
and reasonably requested by IDT for the purpose of enabling IDT to perform its
obligations under this Agreement and which IDT agrees to keep confidential and
treat as 'Proprietary Information' as that term is used in this Agreement.
4. Exclusivity.
TI USA ISP appoints IDT as its exclusive third-party Internet Service
provider ("ISP") for a period of eighteen (18) months (the "Exclusivity Period")
commencing on the Effective Date provided that IDT is in compliance (prior to
the end of any cure period set forth hereunder) with all of its material
obligations hereunder, including, without limitation, IDT's obligation to comply
with the service level criteria set forth in Exhibit B, the conditions set forth
in section 2.13 and IDT's pricing obligations hereunder. TI USA ISP agrees that
during the Exclusivity Period, TI USA ISP will not engage any third party to
provide Internet access services to the Target Market. The Exclusivity Period
herein may be extended by agreement of the Parties upon any extension of the
term of this Agreement.
5. Non-competition.
5.1 IDT agrees on behalf of itself, its parent company, subsidiaries
and affiliates (collectively the IDT Entities) that during the term of this
Agreement, the IDT Entities shall not, directly or indirectly, perform, market
or otherwise provide or enter into an agreement to provide the IDT Internet
Provisioning Services, in whole or in part, for or on behalf of any TI USA ISP
Competitor, nor shall the IDT Entities perform or agree to perform any services
or provide any materials or information, directly or indirectly, nor assign or
utilize any individual assigned to perform services for or on behalf of TI USA
ISP hereunder, to perform services for or in support of any TI USA ISP
Competitor or any task or work effort whose intent or result is or will be
substantially similar to the Services provided hereunder. The foregoing
restrictions do not apply to IDT's current Net2Phone products or the provision
of IDT Internet Provisioning Services to non-Hispanic or corporate End Users.
-5-
6
5.1.1. For purposes of this Agreement, the term "Competitor"
shall mean any other firm, person or enterprise conducting a
business or providing or supporting a product or service
substantially similar to TI USA ISP in and to the Target Market or
any task or work effort whose intent or result is or will be
substantially similar to the Services provided hereunder in and to
the Target Market (including, without limitation, any parent,
subsidiary, joint venture, partnership, operating, franchise and
affiliated companies and any merged or successor companies of
these). If there is any doubt whether a person, firm or enterprise
is a "Competitor" for purposes hereunder, IDT shall request
TI USA ISP's advance written approval (not to be unreasonably
withheld), and TI USA ISP's response to such request shall be deemed
final and controlling for all purposes hereunder.
5.1.2. Nothing contained in this Agreement shall be deemed or
construed to prohibit, and TI USA ISP hereby consents to,
cross-selling by IDT of any of IDT's products and services not
covered by this Agreement to TI USA ISP's customers in exchange for
commissions to be paid by IDT to TI USA ISP's at rates to be agreed
upon by the Parties.
5.2. IDT and the IDT Entities acknowledge and agree that in the
event of a breach or threatened breach of any of the provisions of this
Section 5, TI USA ISP will have no adequate remedy in damages and, accordingly,
shall be entitled to seek injunctive relief; provided, however, no specification
of a particular legal or equitable remedy shall be construed as a waiver,
prohibition or limitation of any legal or equitable remedies in the event of a
breach hereof.
6. Service Levels.
6.1. Service Levels. IDT shall provide the Services in accordance
with the service level criteria set forth on Exhibit B hereto (the "Service
Levels").
6.2. Adjustment of Service Levels. Two months after the Effective
Date, and every six months thereafter, during the Term, the Parties shall review
the Service Levels for the preceding 6 months (for the preceding two (2) months
for the first revision after the Effective Date) and may mutually agree in
writing to adjust such Service Levels for the subsequent six month period to
reflect increases, decreases or changes to the Services. In addition, either
Party may, at any time upon notice to the other Party, initiate negotiations to
review and, adjust any Service Level which such Party in good faith believes is
inappropriate at the time; provided, however, that in the event that the Parties
fail to mutually agree upon any such adjustment(s) to the Service Levels, the
original Service Levels as agreed to by the Parties as of the Effective Date
shall control.
6.3. Reports. IDT shall provide daily, weekly and monthly system
performance reports to TI USA ISP in such forms and at such times as are agreed
upon
-6-
7
by TI USA ISP and IDT as necessary, but at a minimum providing comparable
information as that contained in IDT's own similar system performance reports
and which are reasonably consistent with any industry standards for such
reports.
6.4. Root Cause Analysis. Within one day of receipt of a notice from
TI USA ISP with respect to (i) IDT's material failure to provide any of the
Services in accordance with the Service Levels or (2) IDT's repeated failure to
provide any of the Services in accordance with the Service Levels, IDT shall (a)
perform a root-cause analysis to identify the cause of such failure, (b) correct
such failure, (c) provide TI USA ISP with a report detailing the cause of, and
procedure for correcting, such failure, and (d) take all reasonable steps to
prevent recurrence of such failure.
7. Assignment of IDT Customers.
7.1 In consideration of the benefits derived by IDT from the Joint
Venture Agreement, the performance by TI USA ISP of its obligations hereunder
and other good and valuable consideration, and subject to the provisions of the
second sentence of Section 7.2 below, IDT hereby irrevocably assigns, transfers
and conveys to TI USA ISP all right, title and interest in and to the accounts,
agreements, registration and other information, lists and all customer data of
the IDT Customers and the right to service such IDT Customers so that TI USA ISP
shall have exclusive, unlimited ownership rights therein including, without
limitation, all End User Information relating thereto. As part of the Services,
IDT shall, at its sole cost and expense, arrange for the delivery, transfer and
integration of such IDT Customer accounts and all related End User Information
into a segregated customer database together with the other End User Information
maintained by IDT on behalf of TI USA ISP. The Parties will agree on joint
promotions to cross-sell IDT products and Services to TI's customers for a
commission to be agreed upon by the Parties.
7.2 TI USA ISP grants to IDT a limited, non-exclusive,
non-transferable license to use and access such necessary account information of
IDT Customers, any End User account with TI USA ISP and any End User Information
relating thereto, for the sole purpose of providing the Services to End Users as
specifically permitted hereunder and solely during the Term of this Agreement.
Except for purposes of cross selling activities permitted by Section 5.1.2 and
Section 7.1. IDT may not otherwise use, copy, reproduce, transmit, disclose or
exploit the End User Information or any component thereof for any reason, nor
sublicense, distribute, group, compile, aggregate or transfer the End User
Information for its own benefit or for the benefit of any third party, without
the prior written consent of TI USA ISP. IDT agrees to comply with all legal and
regulatory requirements in connection with the storage and use of the End User
Information and to comply with such other legal and regulatory requirements of
which it is notified in writing by TI USA ISP from time to time.
-7-
8
8. Marketing Obligations.
8.1 The Parties agree that the Services provided by IDT hereunder
shall be identified, marketed and promoted using TI USA ISP's Marks (as defined
below) under a brand name or identification designated by TI USA ISP in its sole
discretion ("TI USA ISP Brand"). IDT shall fully cooperate with TI USA ISP in
connection with any advertising, marketing and promotion that TI USA ISP desires
to undertake related to the promotion and marketing of the Services.
8.2 During the term of this Agreement, TI USA ISP hereby grants to
IDT a nonexclusive, nontransferable, non-sublicensable license to use its name;
all service marks, trademarks and logos owned by it, as indicated in writing by
TI USA ISP to IDT from time to time; and any other marks designated by TI USA
ISP to IDT in writing during the Term (TI USA ISP's name and such marks and
logos being referred to herein as the "Marks"), solely in connection with the
provision of Services by IDT to prospective and existing End Users in the Target
Market as described herein. Use of the Marks shall be subject to any reasonable
general usage guidelines and notice requirements provided by TI USA ISP from
time to time, including, without limitation, TI USA ISP's right, in its sole
discretion, to change the appearance and/or style of its Marks or add or remove
any Xxxx from the scope of the license granted hereunder. All use of the Marks
by IDT as permitted hereunder together with any goodwill resulting from such use
shall inure to the benefit of TI USA ISP and except for the limited right and
license granted above, IDT shall not have or obtain any right, title or interest
in or to the Marks. IDT agrees not to adopt, use or apply for registration of
the Marks (or any xxxx confusingly similar thereto) anywhere in the world, nor
shall IDT engage, participate or otherwise become involved in any activity or
course of action that diminishes and/or tarnishes the image and/or reputation of
the Marks. Each initial use of the Marks by IDT shall at all times be subject to
the review and prior written approval of TI USA ISP which will, so long as each
such use is consistent with this Agreement, not be unreasonably withheld, but
which is revocable at any time upon written notice to IDT. IDT will cooperate
with TI USA ISP and execute any documents (e.g., registered user agreements
filed with governmental agencies) which may be required or desirable in any
jurisdiction to protect TI USA ISP's rights in the Marks.
9. Pricing and Payment.
9.1 In consideration of the services to be provided by IDT
hereunder, TI USA ISP shall pay to IDT a services fee ("Services Fee") in
accordance with the conditions specified in Exhibit H. In all events, the
Services Fee shall be the lesser of (A) the lowest available market price for
comparable services provided by reputable and financially sound Internet access
providers and (B) the lowest price offered by IDT to any party for comparable
services. IDT will invoice TI USA ISP on a monthly basis for the Services Fees.
TI USA ISP will pay the Services Fees within 45 days of the date of the invoice
for the Services Fees.
-8-
9
9.2 Except as specifically set forth in this Agreement, each Party
remains responsible for establishing its own prices and charges to End Users,
customers, subscribers or otherwise in connection with its own offerings,
products and/or services available in the commercial marketplace. Furthermore,
except as otherwise provided herein or subsequently mutually agreed upon in
writing, each Party bears its own expenses and costs associated with performing
its obligations under this Agreement.
10. Right to Audit.
10.1 During the Term and for a period of 180 days thereafter, upon
at least five (5) business days notice to IDT, IDT shall provide TI USA ISP or
its external auditors with access to IDT's facilities during normal business
hours for the purpose of conducting an audit of IDT's operations as it deems
necessary to insure that (i) IDT has established reasonable and adequate
procedures for providing the Services, (ii) the accuracy of pricing under
Section 9.2 above, and (iii) protection of any TSI USA ISP Proprietary
Information obtained as a result of this Agreement, including, without
limitation, End User Information. IDT shall provide TI USA ISP with all
reasonable assistance as is necessary for the conduct of such audit by
TI USA ISP. In the event that TI USA ISP determines that IDT has not established
reasonable and adequate procedures for compliance with IDT's obligations
hereunder, IDT agrees to take such appropriate corrective action as the Parties
may mutually agree. IDT agrees, upon the request of TI USA ISP, to allow
representatives of TI USA ISP to meet with IDT's management in order to discuss
IDT's general procedures in providing the Services and protecting the security
of TI USA ISP Proprietary Information resident on IDT's systems or in the
possession of IDT. No such meetings, recommendations or other cooperation
between the Parties regarding security and confidentiality shall be construed or
deemed to relieve IDT of its obligations hereunder.
10.2 During the Term and for a period of eighteen (18) months
thereafter, upon at least five (5) business days notice to IDT, IDT shall
provide TI USA ISP or its external auditors with access to IDT's books and
financial records and any other supporting documentation relating to the Access
Fees due to TI USA ISP hereunder. Any such audit will be conducted during IDT's
normal business hours and at the IDT location where the relevant records are
kept in the normal course of business and shall be conducted to minimize any
disruption to IDT's business activities. In the event that any such audit
reveals that IDT has underpaid any amounts due to TI USA ISP under this
Agreement by more than five percent (5%) IDT will immediately pay the difference
(required payment minus actual payment) and interest thereon at LIBOR + 2% from
the date due until the date paid to TI USA ISP together with the reasonable
costs of such audit. If the audit reveals that IDT has overpaid any amounts due
to TI USA ISP under this Agreement by more than five percent (5%), then TI USA
ISP shall reimburse IDT the difference between the amount due and the amount
paid.
10.3 During the Term and for a period of at least three (3) years
thereafter, IDT shall retain complete and accurate books, records and supporting
-9-
10
documentation sufficient to document the Services provided to and Access Fees
paid by End Users and to satisfy its obligations under Sections 10.1 and 10.2
above.
11. Term and Termination.
11.1 This Agreement shall commence as of the Effective Date and shall
continue in full force and effect for an initial term of eighteen (18) months
("Term") unless terminated earlier in accordance with the termination provisions
hereunder. Upon at least thirty (30) days' notice prior to the expiration of the
Term TI USA ISP may elect to renew this Agreement for an additional one (1) year
term on the same terms and conditions, subject to making mutually agreed upon
adjustments to pricing and other terms necessary to reflect changes in market
conditions. Thereafter, TI USA ISP may elect to renew this Agreement on terms to
be mutually agreed upon by the Parties. Termination of this Agreement at any
time shall not affect any rights, obligations or interests arising prior to the
effective date of termination and which, to give effect to their meaning, must
continue in accordance with their terms.
11.2 If there is any material breach of this Agreement by one Party, the
other Party may (reserving cumulatively all other remedies and rights under this
Agreement and in law and in equity) terminate this Agreement, in whole or in
part, by giving thirty (30) days' written notice; provided, however, that such
termination shall not be effective if the breach has been cured prior to the
expiration of said thirty (30) days.
11.2.1 Notwithstanding the foregoing, IDT's material or
repeated failure to comply with the Service Levels set forth in this
Agreement in the manner described in Section 6.4 shall constitute a
material breach of this Agreement whereupon TI USA ISP may
(reserving cumulatively all other remedies and rights under this
Agreement and in law and in equity) terminate this Agreement, in
whole or in part, by giving IDT three (3) business days' written
notice; provided, however, that such termination shall not be
effective if the breach has been cured prior to the expiration of
said three (3) business days; provided, further, however, that the
failure to comply with a particular Service Level in three (3)
consecutive months or in five (5) months in any twelve (12) month
period shall entitle TI USA ISP to terminate this Agreement
notwithstanding any subsequent cure of such failure to comply.
11.3. TI USA ISP may terminate the Services provided under Sections
2.2, 2.3, 2.4 and 2.6 at any time without cause, in whole or in part, by giving
written notice to IDT prior to such termination as specified in the next
sentence of this Section 11.3. TI USA ISP may terminate the Services provided
under (i) Section 2.2 upon 30 days' written notice, (ii) Sections 2.3 or 2.4
upon 90 days' written notice and (iii) Section 2.6 upon 120 days' written
notice.
11.4. Either Party may immediately terminate this Agreement in the
event the other Party becomes bankrupt or insolvent, within the meaning of the
United
-10-
11
States Bankruptcy Code or any substantial and relevant portion of its assets are
included in any arrangement with its creditors, an order to windup or submission
to control by a receiver, assignee or trustee for the purpose of preserving the
assets, whether by the voluntary act of the affected party or otherwise.
11.5. TI USA ISP shall have the right upon termination of the
Exclusivity Period and/or termination or expiration of this Agreement, to
transfer the performance of Internet services to another ISP. IDT shall provide
reasonable assistance with any such migration or transfer on a time and
materials basis, at a rate not greater than the rate then offered to the IDT's
most favored customers, in order to ensure uninterrupted provision of Internet
services to the End Users. In the event that termination is due to a material
breach by IDT of any of its obligations under this Agreement, then such
migration shall be performed by the IDT at no additional cost to TI USA ISP.
12. Proprietary Information.
12.1. During the Term of this Agreement and for a period of two (2)
years thereafter, each of the Parties shall hold in confidence, and shall use
only for the purposes of this Agreement, any and all Proprietary Information of
one party which is disclosed, made available or otherwise obtained by the other.
Each Party agrees to hold such Proprietary Information in confidence for the
other and shall not, except in furtherance of the purposes of this Agreement,
use (directly or indirectly) any such Proprietary Information for its own
benefit or the benefit of any other party, nor disclose such Proprietarv
Information to any person, firm or enterprise, unless authorized by the other
Party in writing, and even then, to limit access to and disclosure of such
Proprietary Information to its employees, auditors, regulators, attorneys and
financial advisors on a "need to know" basis only. The term "Proprietary
Information" shall mean all information which one Party, directly or indirectly,
obtains from the other Party as a result of this Agreement, excluding
information falling into any of the following categories:
(a) Information that already is in the public domain through
no wrongful act of the other party;
(b) Information that, after disclosure hereunder, enters the
public domain other than by breach of this Agreement;
(c) Information that, prior to disclosure, hereunder, was
already in the recipient's possession, either without limitation on disclosure
to others or subsequently becoming free of such limitation;
(d) Information obtained by the recipient from a third party
having an independent right to disclose this information; and
-11-
12
(e) Information that is available through discovery by
independent research without use of or access to the Proprietary Information
acquired from the other party.
Each Party's obligation to maintain Proprietary Information in confidence
shall be deemed performed if such Party observes, with respect thereto, the same
safeguards and precautions which such Party observes with respect to its own
confidential, sensitive and proprietary information. It shall not be deemed to
be a breach of the obligation to maintain Proprietary Information in confidence
if Proprietary Information is disclosed upon the order of a court or other
governmental entity provided, however, that the Party served with such order
shall notify the other Party so as to enable such other Party to apply to a
court of law for a protective order.
12.2. Each Party shall, in advance, by agreement, instruction or
otherwise, ensure that each of their respective employees, auditors, regulators,
attorneys or financial advisors who may be bound by the non-competition and
confidentiality provisions herein, understands and agrees to comply with the
terms and conditions of this Agreement. Each Party further agrees to take any
other reasonable and adequate steps, by agreement, instruction or otherwise, to
ensure compliance with the obligations set forth herein.
12.3. Each Party acknowledges and agrees that in the event of a
breach or threatened breach of any of the confidentiality provisions of this
Agreement, the non-breaching Party will have no adequate remedy in damages and,
accordingly, shall be entitled to seek injunctive relief; provided, however, no
specification of a particular legal or equitable remedy shall be construed as a
waiver, prohibition or limitation of any legal or equitable remedies in the
event of a breach hereof.
13. Warranties.
13.1. Each Party represents and warrants to the other that: (i) it
has the right to enter into this Agreement and perform the required services
hereunder and its obligations are not in conflict with any other of its
obligations; and (ii) the materials, information and services, including,
without limitation, the Services, furnished and/or the use of same as permitted
under this Agreement, do not violate or infringe the rights of any other Party
or contravene the laws or regulations of any governmental, regulatory, or
judicial authority.
13.2. IDT further represents and warrants to TI USA ISP that: (i) it
is the owner of or otherwise has the right to provide and/or use the IDT
Information Technology Resources in connection with fulfilling its obligations
hereunder; (ii) the IDT Information Technology Resources and Services will
conform to the applicable technical specifications, service level criteria
and/or other descriptions and specifications provided hereunder; (iii) IDT shall
correct and repair, at no cost to TI USA ISP, any defect, malfunction or
non-conformity that prevents the IDT Information Technology Resources and
Services or any component thereof from conforming and performing as warranted
-12-
13
hereunder; (iv) the IDT Information Technology Resources will be reasonably free
in accordance with industry standards of any malicious or unauthorized
programming code, including, without limitation, any "virus", "worm", "self
destruction", "disabling", "lock out" or "metering" device, as such terms are
understood in the computer industry, which could impair TI USA ISP's and/or End
Users' use of the same; (v) that the occurrence in or use of dates before, on or
after January 1, 2000 (a) will not adversely affect the performance, operation
or use of the IDT Information Technology Resources or Services, (b) will not
abnormally end or provide invalid or incorrect results as a result of
date-dependent data, and (c) the IDT Information Technology Resources can
accurately recognize, manage, accommodate, and manipulate date-dependent data,
including, without limitation, single and multi-century formulas and leap years;
(vi) it has and will maintain in full force and effect, proper licensing,
permits, certifications, and authority required to operate and maintain the IDT
Information Technology Resources and provide, market and promote the Services to
End Users as specifically provided hereunder: (vii) that all Services will be
performed in a competent and professional manner by qualified and duly licensed
and authorized personnel; and (viii) that IDT is highly skilled and experienced
in performing Internet Provisioning Services, and that it possesses the
expertise needed to perform the Services hereunder; IDT expressly acknowledges
that TI USA ISP is relying upon the skill and expertise of IDT for the
performance of the Services under this Agreement.
13.3. EXCEPT AS SPECIFICALLY SET FORTH ABOVE, NEITHER PARTY MAKES
ANY OTHER OR DIFFERENT REPRESENTATIONS OR WARRANTIES TO THE OTHER OR TO ANY
THIRD PARTY, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
13.4. Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE
LIABLE, TO THE OTHER OR TO ANY THIRD PARTY, FOR ANY SPECIAL, INDIRECT,
INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES IN ANY MANNER IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, REGARDLESS OF THE FORM OF
ACTION OR THE BASIS OF THE CLAIM OR WHETHER OR NOT THE PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
14. Indemnification.
14.1. Each Party agrees to defend and/or handle at its own cost and
expense any claim or action against the other for actual or alleged infringement
of any intellectual or industrial property right, including, without limitation,
trademarks, service marks, patents, copyrights or the misappropriation of trade
secrets or other proprietary rights, based upon any materials or services as
furnished by such party for the possession and/or use thereof by the other party
and/or the End Users as permitted by this Agreement. The party responsible for
defense of any such claim or action further agrees
-13-
14
to indemnify and hold the other party harmless from and against any and all
liabilities, losses, damages, costs and expenses (including reasonable
attorneys' fees) associated with any such claim or action and shall have the
sole right to conduct the defense of any such claim or action and all
negotiations for its settlement or compromise, provided, however, that the
indemnified party may, at its own expense, fully participate with the
indemnifying party's full cooperation in such defense to protect its own
interests, if the indemnified party determines that such participation is
necessary. The indemnified party agrees to cooperate with the indemnifying
party, at the indemnifying party's sole cost and expense, and provide copies of
any documents or materials reasonably requested by the indemnifying party in
support of its defense of indemnified party hereunder, unless otherwise mutually
agreed upon in writing.
14.2. Without limiting Section 14.1 above, IDT agrees to defend
and/or handle at its own cost and expense any claim or action against TI USA ISP
based upon or in connection with (i) the Services provided by IDT hereunder or
the use thereof by TI USA ISP and/or the End Users as permitted by this
Agreement; and (ii) a violation of and/or non-compliance with any applicable law
or regulation governing the performance of any obligation hereunder which such
violation or non-compliance resulted from any acts, errors or omissions of IDT.
IDT further agrees to indemnify and hold TI USA ISP harmless from and against
any and all liabilities, losses, damages, costs and expenses (including
reasonable attorneys' fees) associated with any such claim or action and shall
have the sole right to conduct the defense of any such claim or action and all
negotiations for its settlement or compromise, provided, however, that TI USA
ISP may, at its own expense, fully participate with the IDT's full cooperation
in such defense to protect its own interests, if TI USA ISP determines that such
participation is necessary. TI USA ISP agrees to cooperate with IDT, at IDT's
sole cost and expense, and provide copies of any documents or materials
reasonably requested by the IDT in support of its defense of TI USA ISP
hereunder, unless otherwise mutually agreed upon in writing.
15. General.
15.1. Entire Agreement. This Agreement, together with the Exhibits
and other documents and/or attachments specifically referred to herein,
constitutes the entire agreement between the Parties and supersedes any prior or
inconsistent agreements, negotiations, representations and promises, written or
oral, regarding the subject matter hereunder.
15.2. Force Majeure. Neither Party will be liable to the other for
any loss, injury, delay, damage or other casualty suffered or incurred by such
other Party due to strikes, riots, earthquake, storms, fires, acts of God, war
or governmental act (a "Force Majeure Event"). In the event of a Force Majeure
Event, the affected Party will take all necessary actions to restore Services to
prior Service Levels as soon as possible, including the temporary hiring of a
third party service provider if necessary.
-14-
15
15.3. Assignment. Except in connection with a merger, sale,
transfer, conveyance, acquisition or other corporate reorganization or change in
control or ownership relating to all or substantially all of its stock, assets,
operations or business, neither Party may assign, transfer or subcontract this
Agreement and/or any rights and/or obligations hereunder, without the written
consent of the other and any attempt to do so shall be void. Notwithstanding the
foregoing, each party shall have the right to assign its rights and/or
obligations under this Agreement to an Affiliate provided that such Affiliate
remains an Affiliate. Each Party shall remain fully liable hereunder to the
extent any permitted subcontractor fails or negligently performs any services
contemplated hereunder and for any acts or omissions of any subcontractor and
its personnel.
15.4. Notices, All notices shall be in writing and either personally
delivered or sent proper postage prepaid by certified or registered mail or
overnight express service, with return receipt requested or by confirmed
electronic means with acknowledgment of receipt by the other Party to the
Parties as follow's:
If to TI USA ISP: Terra Networks Access If to IDT: IDT CORPORATION
Services USA, LLC
l22lBrickell Avenue 000 Xxxx Xxxxxx
Xxxxx, Xxxxxxx 00000 Hackensack, N.J. 07601
Attn: Attn: Xxx Xxxxxxx
Fax: Fax: (000) 000-0000
With a copy to: Xxxxxxxxx Traurig, P.A. With a copy to: Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx Xxxxxx 1290 Avenue of the Americas
Xxxxx, Xxxxxxx 00000 New York, New York
Attn: Xxxxxxxx Xxxxxxxx Attn: Xxxxxxx Xxxxxxxx
Cambo
Fax: (000)000-0000 Fax: (000)000-0000
Notices sent shall be deemed received when personally delivered or when
the return receipt is signed or when acknowledgment of receipt is transmitted.
Either Party may change the above address and/or addressees at any time upon
notice to the other.
15.5 Advertising. Except as specifically set forth in this
Agreement, neither Party shall use the name, service or Marks, or refer to the
other, its products and/or services in any advertising, publicity releases or
marketing communication, without prior written approval of such other party. At
all times during the term of this Agreement (including all extensions and
renewals hereof), the Parties shall maintain a positive public image and use
their best efforts to avoid negative publicity. Should either Party's public
image become negative, as determined by the other Party, notice shall be given
and the Parties shall endeavor to cooperate to remedy any such public image
problems.
15.6 Insurance. IDT, at its sole cost and expense, shall procure and
maintain a policy insuring itself against liability for errors and omissions
insurance in the
-15-
16
amount of at least $5,000,000 per year, subject to an annual deductible of no
more than $50,000, which shall remain in effect during the term of this
Agreement. Promptly following the execution of this Agreement, IDT shall furnish
to TI USA ISP a certificate of insurance and any other relevant documentation as
evidence of said insurance policy. TI USA ISP shall be named as an "additional
insured" under such policy.
15.7 Independent Contractors. Each Party is acting as an independent
contractor. Each Party's personnel are not employees or agents of the other
Party's for federal, state or other taxes or any other purposes whatsoever, and
are not entitled to compensation, employee benefits or other incidents of
employment from the other Party. Each Party assumes sole and full responsibility
for the acts and omissions of its own employees, representatives and agents.
Personnel of one Party have no authority to make commitments or enter into
contracts on behalf of, bind or otherwise obligate any other party in any manner
whatsoever. Except for the specific obligations set forth in this Agreement,
nothing hereunder shall be deemed to constitute, create, give effect to or
otherwise recognize a joint venture, partnership or business entity of any kind,
nor shall anything in this Agreement be deemed to constitute either Party the
agent or authorized representative of the other. Except for payments mutually
agreed upon and specifically described herein or otherwise mutually agreed upon
in writing, nothing shall be construed as providing for the sharing of profits
or losses arising out of the efforts of either or both of the Parties.
15.8 Governing Law. This Agreement shall be governed by, construed
under, and enforced in accordance with, the laws of the State of New York,
exclusive of its conflict of laws rules. Any legal action of whatever nature by
or against the Parties arising out of or related in any respect to the Agreement
shall be brought solely in such jurisdiction.
15.9 Arbitration. All claims, disputes and other matters in question
arising out of, or relating to, this Agreement shall be submitted to arbitration
in accordance with the Rules of the American Arbitration Association then
pertaining, unless the parties mutually agree otherwise, and pursuant to the
following procedures:
a. Notice of the demand for arbitration shall be filed in writing with the
other Party to this Agreement and with the American Arbitration Association.
Three arbitrators shall be chosen. Each Party shall select one arbitrator, and
the American Arbitration Association shall select the third arbitrator. A
determination by a majority of the panel shall be binding on the Parties.
b. Reasonable discovery, as determined by the sole discretion of the
arbitrators, shall be allowed.
c. All arbitration proceedings shall be held in Miami, Florida.
d. The Parties agree that the issues being resolved hereunder shall be
determined by arbitration pursuant to the provisions set forth herein and
pursuant to the
-16-
17
18
to the applicable rules of the American Arbitration Association then in effect
insofar as such rules are not inconsistent with the provisions set forth herein.
e. The costs and fees of the arbitration shall be allocated by the
arbitrators. The party or parties prevailing in the arbitration will be
entitled, in addition to such other relief as may be granted, to reasonable
attorney's fees, if any, as shall be awarded by the arbitrators.
f. The award rendered by the arbitrators shall be final and in
writing, and judgment may be entered in accordance with applicable law and in
any court having jurisdiction, thereof.
15.10 Waiver. No term or provision of this Agreement shall be deemed
waived and no breach excused unless such waiver or consent is in writing and
signed by the party claimed to have waived or consented.
15.11 Amendments. No amendment, change, waiver, or discharge hereof
shall be valid unless in writing and signed by both Parties.
15.12 Severability. Should any provision of this Agreement be held
to be void, invalid or inoperative, the remaining provisions of this Agreement
shall not be affected and shall continue in effect and the invalid provision
shall be deemed modified to the lease degree necessary to remedy such
invalidity.
15.13 Counterparts. This Agreement may be executed in several
counterparts, all of which taken together shall constitute the entire agreement
between the Parties hereto.
15.14 Survival. Any term which must survive, in order to give effect
to its meaning, shall survive termination of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the day and year first above written.
Terra Networks Access Services USA, LLC IDT Corporation
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxx Xxxxx
-------------------------------- -------------------------------------
Name: Xxxx Xxxxx Name: Xxxxxx Xxxxx
------------------------------ -----------------------------------
[Type or Print] [Type or Print]
Title: CEO Title: CEO
----------------------------- ----------------------------------
Date: 6 October 1999 Date: 10/5/99
------------------------------ -----------------------------------
-17-
19
EXHIBIT A
IDT INFORMATION TECHNOLOGY RESOURCES
Backbone: DS3 running ATM. IDT shall provide a DS3 Internet port
connection providing Internet connectivity from TI USA ISP's switch to IDT's
collocated Internet equipment and facilities. The DS3 Internet port connection
shall be capable initially to provide a connection bandwidth equal to
twenty-eight (28) T-1s (approximately 45 Mbps), expandable to full DS3
connection bandwidth commensurate with increased traffic demand.
POPs: 8 Super POPs located in Houston, Los Angeles, San Xxxx, Chicago, New
York, Hackensack, Washington D.C., and Boston. 26 Satellite POPs with T1
connectivity. Redundancy through Ring Topology in order to prevent loss of
connectivity. POPs include IDT and alliance POPs. The quantity of points of
access is approximately 750.
Switches: Nortel Passports.
Routers: Cisco 7500 series with 7200-2500 routers attached.
Peering: In order to maintain utilization under 60%, by routing traffic
more efficiently.
Servers: Sun/Solaris, Compaq/Win NT, deploying multiple software packages
(containing alarm systems) monitoring the network (bandwidth, peering,
connectivity, etc.). Network monitoring shall be 24/7 utilizing SNMP Polling and
Cabletron Spectrum for routers and circuits.
Service Contracts: Equipment Service contracts with Cisco, Nortel
Networks, ADC Kentrox, Netopia, Sun, Cabletron, 3Com, Compaq, Network Appliance
and others.
POP Capacity: Bay Networks and modem racks for optimal expansion.
Migration from smaller POPs to Super POPs in progress.
Mail and News Servers: Proprietary mail and news servers with redundancy
and load balancing for optimal performance.
Peering Links: Private peering links with major national backbone
providers, including GTE, UUNET and others.
Data Back-up Services: IDT will provide TI USA ISP with data backup
services, operational on the Effective Date, to backup End User Information and
other information related to TI USA ISP's operations or necessary to provide the
Services.
20
Additional Services: IDT will also provide all other hardware, software,
telecommunication services and equipment necessary to implement the Services to
be provided by it under the Agreement with the components of IDT's current
network. Any additional Services to be provided by IDT to TI USA ISP that
require new components to IDT's network will be provided by IDT on the terms and
conditions to be agreed upon by the parties in good faith.
21
EXHIBIT B
SERVICES AND SERVICE LEVELS
IDT will provide Services (as defined in the body of the Agreement) to TI
USA ISP in accordance with the following Service Level parameters:
1. Availability. IDT will use all reasonable commercial efforts to provide 100%
service availability, but, shall not be considered in material breach of the
Agreement unless IDT fails to provide 99.6% overall service availability
determined on an annual basis.
1.1 Reliability. Services will meet industry standard
Mean-Time-Between-Failure (MTBF) reliability requirements for voice grade
circuits and data services, as applicable.
1.2 Mean-Time-To-Repair (MTTR). Mean-time-to-repair IDT equipment in the
event of a Services outage will be no more than 4 hours for repair/replacement
of electronics after IDT's arrival at the failure site.
1.3 Migration. IDT will restore any failure within IDT's operational
control in the ISP within two (2) hours. IDT will use commercially reasonable
efforts to ensure that the Services are never interrupted. If a failure of the
ISP continues for more than two (2) hours, IDT will, within an additional four
(4) hour period, arrange for a third party to provide the Services until the
failure is corrected, including, if necessary, arranging for the migration of
the End Users to another ISP until the failure is corrected. TI USA ISP will not
be required to pay any Services Fees with respect to time periods in which the
ISP has been out of service for more than four (4) hours.
1.4 Monitoring. IDT will provide a system for monitoring and alarming on a
24 hours-a-day/seven days-a-week basis. This system will monitor and alarm POP
entrances into Piscataway, as well as all points of failure, including routers,
switches and all bandwidth services. IDT shall, to the extent of available
communication methods, notify a representative of TI USA ISP previously
identified in writing to IDT of any system failure within fifteen (15) minutes
in a manner to be agreed upon by the Parties, provided such TI USA ISP
representative is, at the time of such system failure, at the address and/or
telephone number previously provided to IDT.
2. Error Rate.
2.1 Errored Seconds. The Services will be 99.99% free of errored seconds
per monthly period, determined over an annual basis, other than for planned
service outages (e.g., scheduled maintenance) or as otherwise provided herein.
22
2.2 Background Bit Error Rate (BBER). Services will provide a background
bit error rate (i.e., transmission medium channel errors) of no greater than:
a. DS-3: <10(-10) for Fiber Span,
