**** CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
EXHIBIT 10.28
IP TELEPHONY SERVICES DISTRIBUTION AND INTERACTIVE MARKETING AGREEMENT
----------------------------------------------------------------------
This IP Telephony Services Distribution and Interactive Marketing Agreement
(this "Agreement"), dated as of July 14, 1999 (the "Effective Date"), is between
ICQ, Inc., a Delaware corporation, with offices at 00000 XXX Xxx, Xxxxxx,
Xxxxxxxx 00000 ("ICQ"), and Net2Phone, Inc. ("N2P"), a Delaware corporation,
with offices at 000 Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000. ICQ and N2P may be
referred to individually as a "Party" and collectively as the "Parties."
INTRODUCTION
------------
ICQ is a provider of online communication services, including the ICQ
Service, and is a subsidiary of America Online, Inc., a Delaware corporation
("AOL"). N2P is a provider of various IP Telephony services. The Parties wish
for N2P to develop and provide to ICQ a customized version of certain N2P
Services that can be distributed through the ICQ Service so as to enable ICQ
Users to send and receive free, or low cost, Internet-enabled telephony
communications. This relationship is further described below and is subject to
the terms and conditions set forth in this Agreement. Defined terms used but
not defined in the body of the Agreement shall have the meanings ascribed to
such terms in Exhibit A hereto.
TERMS
-----
1. ICQ IP TELEPHONY SERVICES GENERALLY
-----------------------------------
1.1 Description of ICQ IP Telephony Services. The N2P Services to be
----------------------------------------
offered collectively as the customized ICQ IP Telephony Services shall
be comprised of the following:
1.1.1. PC-to-PC Service. A PC-to-PC calling service (the
----------------
"PC-to-PC Service"), which shall allow any ICQ User (through use of
the ICQ IP Telephony Software as distributed through the ICQ Service
in accordance with the terms of this Agreement) to originate a voice
conversation on an Internet enabled PC and to terminate such
conversation on another Internet-enabled PC. The PC-to-PC Service
initially shall be provided to ICQ Users without a per-minute or other
similar charge. The provision of such PC-to-PC Service by N2P shall
not be designed to compromise the ability of any ICQ User to make PC-
to-PC calls through ICQ with other clients (e.g., ****).
1.1.2. PC-to-Phone Service. A PC-to-telephone calling
-------------------
service (the "PC- to-Phone Service"), which shall allow any ICQ User
to originate a voice conversation on an Internet-enabled PC (through
use of the ICQ IP Telephony Software as distributed through the ICQ
Service in accordance with the terms of this Agreement) and terminate
such conversation on a telephone located virtually anywhere in the
world.
1.1.3. Phone-to-PC Service. A telephone-to-PC calling service
-------------------
(the "Phone-to-PC Service"), which shall allow any ICQ User to
originate a voice conversation from a telephone and terminate such
voice conversation on an Internet-enabled PC (through use of the ICQ
IP Telephony Software as distributed through the ICQ Service in
accordance with the terms of this Agreement). Such calls shall be
initiated by any such ICQ User by dialing a local and/or toll-free N2P
access number (i.e., a local POP) and entering any such ICQ User's
account number and PIN, and then the number of the receiving party.
The Phone-to-PC Service generally shall enable telephone conversations
with any ICQ User online even if such ICQ User is also using his or
her only telephone line for online access.
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXECUTION VERSION
1.1.4. Phone-to-Phone Calling Card Service. A
-----------------------------------
telephone-to-telephone calling card service using IP Telephony (the
"PTP Calling Card Service"), which shall allow any ICQ User to call a
third party by dialing a local and/or toll-free N2P access number
(i.e., local POP) and entering the ICQ User's account number and PIN,
and then dialing the phone number of the person whom such ICQ User is
calling. For the avoidance of doubt, the Parties acknowledge that the
PTP Calling Card Service shall include fax-to-fax service.
1.1.5. Conference Calling Service. A conference calling
--------------------------
service (the "Conference Calling Service"), which shall allow
conference calls initiated from a combination of phones and/or
Internet-enabled PCs.
1.1.6. Optional Services. ICQ shall provide N2P with a ****
-----------------
(for a period not to exceed **** with respect to the provision of the
following additional services as additional ICQ IP Telephony Services:
(i) an integrated voice-messaging service, whereby ICQ Users shall be
able to send and receive voice messages online and via telephone; (ii)
a video conference calling service; (iii) a universal messaging
service, whereby ICQ Users shall be able to access voice mails, e-
mails, faxes, etc., in one area of the ICQ Service, with such
messaging capable of being accessed via telephone, the ICQ Client or
the Worldwide Web; and (iv) **** (the **** aforementioned services,
collectively, the "Optional Services" and each, an "Optional
Service"). In the event that the Parties cannot agree, within any such
**** period, to the terms and conditions pursuant to which N2P would
offer any such Optional Service(s) to ICQ Users, then ICQ shall have
the right to enter into an arrangement with any third party
(including, without limitation, any N2P Competitor) regarding the
provision of any such Optional Service(s) to ICQ Users through the ICQ
Service. In addition, the Parties shall, within **** after the
Effective Date, mutually determine whether (i) a PC-to-fax service,
whereby ICQ Users may send faxes from their PCs to a facsimile machine
of a third party, (ii) a fax-to-PC service, whereby ICQ Users may
receive faxes through their PCs from a facsimile machine of a third
party, and/or (iii) a virtual private network (VPN) service shall be
added to this Agreement as additional ICQ IP Telephony Services.
Moreover, ICQ shall provide N2P with a **** (for a period not to
exceed ****) with respect to the offering of any Core Premium Services
in any country other than a Collective International Gateway.
N2P acknowledges, for the avoidance of doubt, that the right to access the
ICQ IP Telephony Services initially shall be free of any member fee or
similar access charge (but excluding per-minute, flat-rate or other usage
charges and Internet service provider access charges) to ICQ Users,
provided that N2P reserves the right to charge any fee or charge for such
--------
services consistent with its obligations under Sections 3.1 and 3.3. In
addition to the foregoing services, N2P shall (i) provide APIs and (ii) to
the extent commercially reasonable (a) provide connection for ICQ to N2P's
local equipment and (b) assist finding space for ICQ and its Affiliates to
locate equipment along with or near N2P's local equipment to enable ICQ and
its partners to link into aspects or features of the ICQ IP Telephony
System to provide related services (e.g., voice messaging); provided,
--------
however, that any such arrangement shall be subject to the mutual agreement
-------
of the Parties as to the reasonable terms and conditions for such
arrangement.
1.2 Performance Each Party shall cause all aspects of the ICQ IP Telephony
-----------
Services within its control, including customer service and billing,
network coverage and performance and fraud detection, to comply in all
material respects with the applicable standards set forth on Exhibits B, C
and D.
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
2
EXECUTION VERSION
1.3 Launch Cutoff
-------------
1.3.1 Cutoff Dates. N2P shall cause (i) the PTP Calling Card
------------
Service to be fully prepared for launch on the ICQ Service (A) for
calls originating in the United States, within **** (****) ****
following the Effective Date, (B) for calls originating in the Primary
International Gateways, within **** (****) **** following the
Effective Date, and (C) for calls originating in the Secondary
International Gateways, within **** (****) **** following the
Effective Date; and (ii) each of the Secondary ICQ IP Telephony
Services (including, without limitation, with respect to the
Collective International Gateways) to be fully prepared for launch on
the ICQ Service by the respective cutoff dates therefor set forth on
Exhibit I to this Agreement (each such date in clauses (i) and (ii)
above, a "Cutoff Date," and collectively, the "Cutoff Dates"). If any
Core Premium Service is not fully prepared for launch in a particular
country (whether the United States or a Collective International
Gateway) by the applicable Cutoff Date, ICQ shall have the right to
terminate the exclusivity (as set forth in Section 9 of this
Agreement) with respect to such Core Premium Service in such country
(each such country, a "Non-Exclusive Gateway"), and thereby enter into
an agreement with any third party (including a N2P Competitor) with
respect to such Core Premium Service in such Non-Exclusive Gateway. In
the event that within **** (****) **** following any Cutoff Date (as
to a Core Premium Service), N2P shall not have caused any such Core
Premium Service to be fully prepared for launch in any such Non-
Exclusive Gateway and fails to cause such Core Premium Service to be
fully ready for launch in substitute gateways approved by ICQ (such
approval not to be unreasonably withheld) that would provide a
substantially similar percentage of the ICQ User base access to such
Core Premium Service, then ICQ shall have the right to terminate the
exclusivity (as set forth in Section 9 of this Agreement) with respect
to such Core Premium Service, and thereby to enter into an agreement
with any third party (including, without limitation, any N2P
Competitor) with respect to such Core Premium Service.
1.3.2 ICQ Assistance. To the extent that it shall be reasonably
--------------
necessary for ICQ to undertake any activities within ICQ's reasonable
control (including providing information or materials) reasonably
requested by N2P in order to enable N2P to fulfill its development and
deployment obligations and meet any Cutoff Date, ICQ shall undertake
any such activities in a timely manner.
1.3.3 Excusable Delays. Each applicable Cutoff Date (together
----------------
with any rights of ICQ related thereto, including, without limitation,
any right to terminate this Agreement or any exclusivity hereunder)
shall be deemed extended, subject to the remainder of this Section
1.3.3, to the extent (and only for the duration in which): (i) ICQ
fails to undertake the reasonably requested and reasonably necessary
activities described in Section 1.3.2 with respect to any Core Premium
Service, and N2P has provided ICQ with reasonable informal notice
(e.g., by e-mail message to the ICQ Technical Liaison or through
discussion at the quarterly meetings described in Section 2.8) of such
failure and of its causal effect on N2P's ability to meet any such
Cutoff Date (an "ICQ Delay"); (ii) there is (or is reasonably
expected to be) a U.S. or other regulation which would prevent N2P
from offering a Core Premium Service in the United States or in any
Collective International Gateway (or which such regulation would make
it commercially unreasonable for N2P to offer any such Core Premium
Service (in such country)) (collectively, a "Regulatory Event"); or
(iii) any other Force Majeure Event occurs. The Parties, through the
Management Committee, shall determine in good faith the period by
which the Cutoff Date is to be extended (or any other obligations or
criteria that are to be affected), if at all, by any of the events
described in this Section 1.3.3; provided, however, that, unless
-------- -------
otherwise agreed by the Parties, the extension of any Cutoff Date
resulting from any Regulatory Event or Force Majeure Event shall not
exceed **** (****) **** in the aggregate. In the event that a
Regulatory Event or Force Majeure Event affects N2P Competitors
generally with respect to the provision of the PTP Calling Card
Service, then
**** CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
3
EXECUTION VERSION
ICQ shall discuss with N2P in good faith extending the Cutoff Date
beyond such **** (**) *** period. Notwithstanding the foregoing, so
long as any such Regulatory Event or Force Majeure Event prevents N2P
from offering the PTP Calling Card Service to ICQ Users in any
particular Collective International Gateway(s), then N2P's exclusivity
with respect to the PTP Calling Card Service in such Collective
International Gateway(s) shall extend beyond such **** (**) *** period
unless and until a third party is in a position to provide a
comparable phone-to-phone calling card service in such Collective
International Gateway(s) and ICQ enters into an agreement with such
third party for the provision of such phone-to-phone calling card
service to ICQ Users in such Collective International Gateway(s). For
the avoidance of doubt, any extension of a Cutoff Date due to an ICQ
Delay shall be as mutually agreed upon in writing by the Parties.
1.4 Launch Dates. The Parties shall record the date on which each ICQ IP
------------
Telephony Service is launched (each such date, a "Launch Date") in a
written instrument signed by both Parties promptly following any such
Launch Date; provided, however, that in the event that the Parties
-------- -------
cannot agree as to the definitive Launch Date with respect to a
particular ICQ IP Telephony Service, the Parties shall submit such
Dispute to the dispute resolution provisions set forth in Section 17
of this Agreement.
2. DEVELOPMENT OBLIGATIONS
-----------------------
2.1 Initial Version. The initial version of each of the ICQ IP
---------------
Telephony Services shall be developed by N2P, by customizing each of
the existing N2P Services as set forth in Sections 1.1.1 through 1.1.5
to conform to the product specifications set forth in Exhibit B to
this Agreement (collectively, together with such modifications thereto
or any such additional specifications as may be agreed to in writing
by the Parties after the Effective Date, the "Specifications"). As
part of such customization, the N2P Services shall be developed to
function in an integrated manner with the operation of the ICQ Client
to the extent set forth in the Specifications or elsewhere in this
Agreement. To the extent that any material conflict exists between
(i) Exhibit B to this Agreement and (ii) the provisions of the
principal body of this Agreement, the principal body of this Agreement
(i.e., Sections 1 through 18 hereof) shall govern.
2.2 Updates.
-------
2.2.1 Notification of Updates. If, during the Term, N2P
---------------------
develops any Update of any N2P Service that is generally commercially
available to users of the N2P Services, N2P shall, in each such case,
(i) promptly notify ICQ of such Update and (ii) promptly (i.e., in the
shortest commercially reasonable time period) include such Update
(provided that such Update complies with the Specifications or the
---------
terms of this Agreement) in the applicable ICQ IP Telephony Service.
2.2.2 No Notification Required. N2P shall not be
------------------------
obligated to notify ICQ of or to provide to ICQ any modification,
improvement, addition, deletion, feature or functionality of the N2P
Services provided by N2P to another customer if such modification,
improvement, addition, deletion, feature or functionality is subject
to contractual restrictions that would prohibit N2P from providing it
to ICQ hereunder. For the avoidance of doubt, the Parties acknowledge
that N2P shall not be required to notify ICQ of or provide to ICQ any
modification, improvement, addition, deletion, feature or
functionality of any Optional Service, Expanded Service or other IP
Telephony Service (apart from any Core Premium Service) unless the
Parties have agreed to the provision by N2P to ICQ Users of any such
service pursuant to the terms of this Agreement.
**** CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
4
EXECUTION VERSION
2.2.3 Disagreement. In the event of any disagreement between
------------
the Parties regarding the provision by N2P of any such Updates to ICQ
(e.g., as to whether any such Update is generally commercially
available, the length of the time period in which any such Update is
to be implemented, etc.), such disagreement shall be submitted to the
Management Committee pursuant to Section 17 of this Agreement.
2.3 Additional ICQ Modifications.
----------------------------
2.3.1 Definition. ICQ may in its discretion, from time
----------
to time during the Initial Term, request that N2P, to the extent
commercially reasonable, (i) add new functionality or features to any
ICQ IP Telephony Service(s), (ii) modify elements related to the ICQ
GUI (but not elements of the ICQ GUI itself), and/or (iii) modify the
ICQ IP Telephony Services in connection with modifications of the ICQ
Client and ICQ Service (which modifications shall be subject to
Section 2.7 and which modifications ICQ estimates will occur at least
twice a year), (each of (i), (ii) and (iii) above, an "Additional ICQ
Modification"). The Parties agree that any features, functionality,
additions, deletions or other modifications necessary to be carried
out by N2P in order for N2P to comply with its obligations under
Section 3 of this Agreement (collectively, the "Necessary
Modifications") shall not constitute Additional ICQ Modifications and
that ICQ shall not be required to pay for any such Necessary
Modifications.
2.3.2 Request for Non-Substantial Modification. In the
----------------------------------------
event that ICQ requests Additional ICQ Modifications that N2P
reasonably believes would not involve (i) a substantial cost or
expense to N2P (i.e., less than **** Dollars
($****) in the aggregate during any Year of this Agreement) or (ii)
a substantial commitment of N2P personnel, N2P shall develop the
Additional ICQ Modifications in cooperation with ICQ on a schedule to
be mutually agreed upon by the Parties. Each Party shall allocate
development resources on a high priority basis to complete such
Additional ICQ Modifications in accordance with such schedule. ICQ
shall pay for the actual, reasonable, fully-allocated cost of
developing any such Additional ICQ Modifications.
2.3.3 Request for Substantial Modification. In the event
------------------------------------
that ICQ requests an Additional ICQ Modification that N2P reasonably
believes would involve a substantial cost or expense to N2P, or a
substantial commitment of N2P personnel, the Parties shall negotiate
in good faith regarding the request for such Additional ICQ
Modification, including, without limitation, the appropriate schedule
for development and deployment, rights to the results of the
development, interoperability requirements, and the relevant business
terms (e.g., amount of any payments for the development, the revenue
model for the features or functions, etc.). If and when the Parties
reach agreement on the terms and conditions for such Additional ICQ
Modification, N2P shall develop the Additional ICQ Modification in
cooperation with ICQ, and each Party shall allocate development
resources on a high priority basis to complete such Additional ICQ
Modification in accordance with such schedule.
2.3.4 Commissioned Works. Notwithstanding the foregoing,
------------------
in the event that the Parties are unable to agree as to the
development or deployment of any Additional ICQ Modification in
accordance with Section 2.3.3, ICQ shall have the right during the
Initial Term to require N2P to assist ICQ in securing a mutually
agreed-upon third party to develop any such Additional ICQ
Modifications for ICQ; provided, however, that either N2P or (at ICQ's
-------- -------
option) ICQ may perform such development. In the event that a third
party is secured to perform such development, N2P will use
commercially reasonable efforts to assist such third party in
performing such development. Any development by any such third parties
shall not be considered the responsibility of N2P, and such third
parties shall not be considered contractors of N2P. To the extent that
portions of such Additional ICQ Modifications (including intellectual
property rights therein) are developed
**** CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
5
EXECUTION VERSION
by N2P specifically for ICQ pursuant to this Section 2.3.4, such
portions shall be considered "Commissioned Works," but "Commissioned
Works" shall exclude, any software, modules, routines or subroutines,
documentation or other materials, and any methods, processes,
techniques or inventions, that were (i) developed by or for N2P prior
to such development for ICQ or (ii) developed independently by or for
N2P (i.e., independent of the development carried out for ICQ under
this Section 2.3.4 by N2P). To the extent that (a) N2P develops any
Commissioned Works pursuant to this Section 2.3.4 without requiring
that ICQ pay for such Commissioned Works (in cash or such other
consideration as may be agreed to by the Parties), then N2P shall own
all right, title and interest in and to such Commissioned Works
(provided, however, that in such case, ICQ shall have a fully paid-up,
-------- -------
royalty-free, non-exclusive, non-transferable and worldwide license
for the Term to use, reproduce, directly and indirectly distribute,
transmit, display, perform, sublicense and adapt such Commissioned
Works), (b) ICQ pays (in cash or such other consideration as may be
agreed to by the Parties) for any such Commissioned Works pursuant to
this Section 2.3.4, then ICQ shall own all right, title and interest
in and to such Commissioned Works, and (c) the Parties so agree, the
Parties shall co-own all right, title and interest in and to such
Commissioned Works, which shall be treated as Joint Work Product for
purposes of this Agreement. Each Party shall cooperate with the other
Party in documenting and perfecting all rights with respect to the
Commissioned Works, including executing any necessary assignments,
applications or other documentation with respect to the Commissioned
Works.
2.3.5 Disagreement. In the event that the Parties
------------
disagree as to the development or deployment of any Additional ICQ
Modification, including any disagreement as to the terms and
conditions for the development or deployment thereof, the Parties
shall submit such Dispute to the Management Committee in accordance
with the terms of Section 17 of this Agreement.
2.4 Expansion to Cover Other Services and Platforms of ICQ.
------------------------------------------------------
2.4.1 Request by ICQ to Encompass Expanded Service Within an ICQ
----------------------------------------------------------
Telephony Service. ICQ may in its discretion, from time to time
-----------------
during the Initial Term, seek to expand any ICQ IP Telephony
Service(s) to provide service through any and all platforms and
services hereafter offered by ICQ or an Affiliate of ICQ (other than
the ICQ Service) (the "Expanded Services"). In such event, ICQ may in
its discretion request that N2P develop or deploy or assist with the
development or deployment of any such Expanded Services. Upon the
receipt of any such request, and before any development or deployment
of any Expanded Services, the Parties shall negotiate in good faith
regarding the request for any such Expanded Services, including,
without limitation, with respect to the appropriate schedule for any
development and deployment, and the relevant business terms (e.g., the
amount of any payments for any development, the revenue model for the
Expanded Services, etc.). If and when the Parties reach agreement on
the terms and conditions related to the development and deployment of
such Expanded Services, each Party shall allocate development and
deployment resources on a high priority basis towards the development
and deployment of an updated version of the applicable ICQ IP
Telephony Software to support such Expanded Services in accordance
with the terms and conditions agreed upon by the Parties.
2.4.2 Failure to Agree. In the event that the Parties disagree
----------------
as to the development or deployment of any Expanded Service, including
any disagreement as to the terms and conditions for the development or
deployment thereof, the Parties shall submit such Dispute to the
Management Committee in accordance with the terms of Section 17 of
this Agreement; provided, however, that in the event that the
-------- -------
Management Committee is unable to agree as to the terms and conditions
regarding such development and deployment, such Expanded Service shall
not constitute an ICQ IP Telephony
6
EXECUTION VERSION
Service for purposes of this Agreement, and N2P shall not have any
rights or obligations with respect to such Expanded Service.
2.4.3 Agreement. Nonetheless, if the Parties agree to add an
---------
Expanded Service to this Agreement, such Expanded Service, for all
purposes hereof, shall be considered part of the ICQ IP Telephony
Services, and all rights and obligations of ICQ and N2P hereunder
shall apply to such Expanded Service and users of such services shall
be considered ICQ Users for purposes of this Agreement. For purposes
of calculating the Revenue Share and the Revenue Threshold hereunder,
any such agreed-upon Expanded Service shall be aggregated with the ICQ
IP Telephony Services as if only one service existed (unless otherwise
agreed upon by the Parties).
2.5 Delivery and Acceptance.
-----------------------
2.5.1 Initial Versions. Following the completion of the
----------------
development and internal testing of each initial version of the Core
Premium Services, N2P shall deliver each such initial version to ICQ
for evaluation and acceptance in accordance with the delivery dates
set forth on Exhibit I hereto. ICQ shall have thirty (30) days
following such delivery by N2P to evaluate whether each such initial
version functions in accordance with the Specifications and without
any Severity 1 or Severity 2 Problems. If ICQ reasonably determines
that any such initial version of any Core Premium Service does not
function in material conformity with the Specifications and/or without
Severity 1 or Severity 2 Problems, ICQ may reject such version by
providing N2P with written notice within such thirty (30) day period
specifying in detail the reason for rejection. Any initial version of
the Core Premium Services that has not been so rejected within such
thirty (30) day period shall be deemed accepted. If ICQ rejects any
initial version of any Core Premium Service, then following such
rejection, N2P shall use commercially reasonable efforts to correct
(as promptly as commercially possible but in any case by the
applicable Cutoff Date) in all material respects, the deficiencies in
such initial version that were specified in ICQ's notice of rejection.
If the deficiencies specified in any such ICQ notice of rejection have
not been remedied in all material respects by such Cutoff Date, ICQ
shall have the right to terminate the exclusivity (as set forth in
Section 9 of this Agreement) with respect to such Core Premium Service
and thereby enter into an agreement with any third party (including a
N2P Competitor) with respect to such Core Premium Service.
2.5.2 Subsequent Versions. Following the completion of the
-------------------
development and internal testing of each subsequent version (i.e.,
subsequent to the initial version) of any Core Premium Service (or any
initial version of any Optional Service, Expanded Service or other IP
Telephony service mutually agreed upon by the Parties to be provided
by N2P hereunder) (each, a "Subsequent Version"), N2P shall deliver
each such Subsequent Version to ICQ for evaluation and acceptance.
ICQ shall have thirty (30) days following such delivery by N2P to
evaluate whether such Subsequent Version functions in accordance with
the Specifications and without any Severity 1 or Severity 2 Problems.
If ICQ reasonably determines that any such Subsequent Version does not
function in material conformity with the Specifications and without
Severity 1 or Severity 2 Problems, ICQ may reject such Subsequent
Version by providing N2P with written notice within such thirty (30)
day period specifying in detail the reason for rejection. Any
Subsequent Version that has not been so rejected within such thirty
(30) day period shall be deemed accepted.
2.5.3 Acceptance Process. The acceptance criteria set forth in
-------------------
Sections 2.5.1 and Section 2.5.2 of this Agreement shall not include
as factors the Core ICQ Obligations, and ICQ shall not withhold any
such acceptance due to its failure to comply with the Core ICQ
Obligations.
7
EXECUTION VERSION
2.6 Assistance from ICQ. ICQ shall provide N2P with reasonable
-------------------
consultative assistance in connection with the development obligations
of N2P as set forth in this Section 2. In addition, during the Term,
ICQ agrees to notify N2P in advance of any modifications and/or
changes to the ICQ Service that ICQ believes may result in
incompatibility between the Parties' respective systems or
interruptions in the ICQ IP Telephony Services (including without
limitation, network configuration changes and system maintenance).
The Parties shall work together to resolve any such potential or
actual incompatibility, or interruptions, in connection with ICQ's
implementation of any such change and/or modification.
2.7 Other Modifications. ICQ reserves the right to redesign and/or modify
-------------------
the organization, structure, "look and feel," navigation, features and
other elements of the ICQ Service and the ICQ IP Telephony Services
(subject to (i) the technical limitations and design requirements of
the N2P Services and N2P System (which shall themselves remain subject
to the Specifications) and (ii) the requirement that such ICQ Service
and ICQ IP Telephony Services remain in compliance with the terms and
conditions of this Agreement. ICQ shall provide N2P with reasonable
notice of any proposed redesign and/or modification in advance of
developing such redesign or modification, and the Parties shall
consult in good faith on how to avoid any adverse effect on the ICQ
Telephony Services (including, without limitation, any adverse effect
on the functionality or performance thereof) as a result of such
redesign and/or modification. Such notice shall be sufficiently in
advance of the proposed redesign or modification such that the Parties
will have a reasonable opportunity to complete the process, and avoid
the adverse effect on the ICQ IP Telephony Services, as contemplated
by this Section 2.7.
2.8 Meetings. In furtherance of the rights and obligations of the Parties
--------
under this Agreement, the Parties shall meet, in person on a quarterly
basis (the "Quarterly Meetings") and by telephone on a monthly basis
(the "Telephone Meetings"). With respect to the four (4) Quarterly
Meetings to take place during each Year of the Initial Term, two (2)
such Quarterly Meetings shall take place in Israel (at ICQ
headquarters or such other location as mutually agreed upon by the
Parties) and the other two (2) such Quarterly Meetings shall take
place in the United States (at N2P headquarters or such other location
as mutually agreed upon by the Parties). The Quarterly Meetings shall
be used to discuss, inter alia, long-term planning, strategic and
----- ----
development issues, and marketplace and performance information
regarding the obligations and criteria applicable to the Parties
hereunder (including the obligations and criteria under Section 3),
and shall be attended by the Technical Liaisons and appropriate senior
development and management personnel. The Parties anticipate that the
first such Quarterly Meeting shall occur as promptly as possible
following the Effective Date but in no event later than two (2) months
following the Effective Date. The Telephone Meetings shall be used to
discuss, among other things, the activities and relationship
contemplated by this Agreement, including the proposed implementation
and/or progress of any Updates or Additional ICQ Modifications,
changes to the operating standards set forth on Exhibit B, Exhibit C
or Exhibit D hereto, ICQ Exclusive Offers to be provided during the
subsequent quarter, and the redesign or modification of elements of
the ICQ Service or ICQ IP Telephony Services.
2.9 No Support for ICQ Modifications. The Parties acknowledge that any
--------------------------------
modifications or additions to the ICQ IP Telephony Services that are
carried out by ICQ (or carried out for ICQ by a third party not
contracted or subcontracted by N2P) shall not affect the determination
of whether N2P has met its obligations or the criteria set forth in
Sections 1.3 or 3 of this Agreement.
8
EXECUTION VERSION
3. N2P PERFORMANCE
---------------
3.1 Pricing and Terms. N2P will ensure that the prices (including any
-----------------
other required consideration) for each Core Premium Service and other
aspects of such Core Premium Service (including, without limitation,
the terms and conditions related to such Core Premium Service, the
scope, quality and functionality of each such Core Premium Service,
customer service and billing, user experience and interface) are,
taken as a whole, not materially less favorable as compared to the
corresponding N2P Service as offered by or on behalf of N2P directly
to retail customers through any Additional N2P Channel. In the event
that at any time during the Initial Term, N2P fails to comply with
such obligation (i) as to any pricing aspect of a Core Premium Service
(a "Pricing Failure"), and such Pricing Failure is not cured within
**** (****) **** after notice to N2P of such Pricing Failure (unless
otherwise agreed upon in writing by the Parties), or (ii) as to a non-
pricing aspect of a Core Premium Service (a "Non-Pricing Failure"),
and such Non-Pricing Failure is not cured within **** (****) *****
after notice thereof to N2P (unless otherwise agreed upon in writing
by the Parties), ICQ shall have the right to suspend, until such time
as N2P cures such failure, (i) distribution of such Core Premium
Service, (ii) any of ICQ's promotional obligations hereunder related
specifically to such Core Premium Service, and/or (iii) any Listings
related specifically to such Core Premium Service. In addition, in the
event that N2P fails to cure such Pricing Failure within **** (****)
**** after notice thereof to N2P or such Non-Pricing Failure within
**** (****) **** after notice thereof to N2P (or, in each case, such
shorter period as is reasonably feasible) ICQ shall have the right to
terminate the exclusivity granted to N2P hereunder with respect to
such non-compliant Core Premium Service (and in the event that N2P
shall have failed to cure, within thirty (30) days after notice
thereof to N2P, any such Pricing Failure and/or Non-Pricing Failure as
to a total of **** (****) **** during the Initial Term, then ICQ shall
have the right to terminate this Agreement in accordance with Section
16.6 hereof). For purposes of this Section 3.1, the categorization of
what constitutes retail customers, as opposed to wholesale customers,
shall be consistent with general telecommunications industry practice,
and the characterization (as retail or wholesale) of services provided
to customers through a N2P Affiliate shall be based on the delivery
mechanism of such services by such N2P Affiliate to any third party
(i.e., if the services are sold by N2P Affiliates to third parties on
a retail basis, then such services shall be deemed to be retail
services for purposes of this Section 3.1). Any dispute as to such
categorization shall be submitted to the Management Committee in
accordance with Section 17 of this Agreement.
3.2 Operating Standards.
-------------------
3.2.1 Compliance. During the Term, N2P will cause the ICQ IP
----------
Telephony Services to comply in all material respects with the
standards set forth in each of Exhibit B, Exhibit C and Exhibit D. To
the extent standards are not established in Exhibits B, C or D with
respect to any aspect of the ICQ IP Telephony Services, N2P will use
commercially reasonable efforts to provide such aspect at a level of
quality, completeness or timeliness which meets or exceeds prevailing
standards in the IP Telephony industry. Without limiting the
generality of the foregoing, N2P will use commercially reasonable
efforts to provide all hardware, software, telecommunications lines
and other infrastructure necessary to meet traffic and usage demands
on the ICQ Service in connection with the offering of the ICQ IP
Telephony Services.
**** CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
9
EXECUTION VERSION
3.2.2 N2P Technical Problem.
---------------------
(a) Occurrence; Cure Period. In the event of any
-----------------------
material technical problem (over which N2P exercises control)
affecting the use by ICQ Users of any ICQ IP Telephony Service
and constituting a Severity 1 Problem or Severity 2 Problem (an
"N2P Technical Problem"), ICQ shall have the right to suspend (i)
distribution of such ICQ IP Telephony Service, (ii) any of ICQ's
promotional obligations hereunder related specifically to such
ICQ IP Telephony Service, and/or (iii) any Listings related
specifically to the such ICQ IP Telephony Service until such time
as N2P corrects such N2P Technical Problem. Prior to suspending
any such distribution of any particular ICQ IP Telephony Service,
related promotional obligations of ICQ or related Listings
hereunder, ICQ shall provide N2P with notice and an opportunity
to cure, as provided below, unless, in its reasonable discretion,
ICQ will be materially and adversely affected in a substantial
manner by failing to act immediately or at some subsequent time
prior to the completion of the notice and cure period. Any such
notice shall be in writing and shall contain a reasonably
detailed explanation for ICQ's intention to suspend (and, in
reasonable detail, the reasons for suspending) access to the
particular ICQ IP Telephony Service and related promotional
obligations and Listings due to the occurrence of the N2P
Technical Problem. Upon receipt of such notice, N2P will have at
least **** (****) **** to cure the applicable N2P Technical
Problem to ICQ's reasonable satisfaction and, if cured, ICQ shall
not suspend the affected ICQ IP Telephony Service(s) and/or
related promotional obligations or Listings. ICQ will make good
faith efforts to facilitate N2P's cure efforts and to extend the
cure period as appropriate, so long as ICQ, in its reasonable
discretion, is not materially adversely affected by any such
extension. In the event ICQ suspends distribution of any ICQ IP
Telephony Service, any ICQ promotional obligations and/or any
Listings due to the occurrence of any such N2P Technical Problem,
ICQ will notify N2P in writing within **** (****) **** of such
decision, setting forth in reasonable detail the explanation
therefor.
(b) Cure; Resumption of Distribution. When and if the cure
---------------------------------
to an N2P Technical Problem is demonstrated to ICQ's reasonable
satisfaction, which satisfaction shall not be unreasonably
withheld, ICQ shall resume distribution of the affected ICQ IP
Telephony Service, promotional obligations and Listings as soon
as commercially practical; provided, however, that (in addition
-------- -------
to any other remedies available to ICQ in this Agreement,
including, without limitation, in Section 16.6 hereof) in the
event that N2P shall fail to cure any such N2P Technical Problem
within thirty (30) days following notice thereof by ICQ to N2P,
then ICQ shall have the right to terminate the exclusivity (as
set forth in Section 9 of this Agreement) with respect to the
Core Premium Service(s) affected by such N2P Technical Problem
and thereby enter into an agreement with any third party
(including any N2P Competitor) to promote (or offer the services
of) such third party with respect to such Core Premium
Service(s).
3.3 Competitive Performance Standards. N2P will use commercially
---------------------------------
reasonable efforts during the Initial Term to cause each of the Core
Premium Services included in the ICQ IP Telephony Services to be "Best
of Breed." For purposes of this Agreement, "Best-of-Breed" means, as
to each Core Premium Service, that, as determined by a cross-section
of mutually agreed-upon third-party reviewers who are recognized
authorities in the IP Telephony industry, (i) such Core Premium
Service is competitive, when taken as a whole, with the same or
substantially similar services offered by any N2P Competitor through
any similar online distribution channel; (ii) the rates associated
with such Core Premium Service (including per-minute rates), when
taken as a whole, are equal to or lower than the rates, when taken as
a whole, for the same or substantially similar
**** CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
10
EXECUTION VERSION
products or services offered by any N2P Competitor; and (iii) N2P is
included within the top **** (****) providers of such IP Telephony
Service (when taken as a whole) in the IP Telephony industry, taking
into consideration, as a whole, such factors as pricing, scope and
selection of products and services, technology platform and other
aspects of the distribution channel, quality and ease of use of
products and services, functionality, call quality, quality of
customer support, success rates of call completion and overall level
of customer satisfaction. The determination of "Best-of-Breed" shall
not take into account limited promotions (e.g., ****) In the event
that at any time during the Initial Term, a Core Premium Service fails
to be Best-of-Breed, ICQ may notify N2P of such failure (including the
reasons therefor and the basis for the determination thereof under
this Agreement) and of its intention to terminate exclusivity with
respect to the non-Best-of-Breed Core Premium Service. For a period of
**** (****) **** following receipt of such notice, N2P shall have the
opportunity to remedy the failure. Notwithstanding the foregoing (and
in addition to any other remedies available to ICQ in this Agreement,
including, without limitation, in Section 16.6 hereof), in the event
that N2P has not cured any such failure (regardless of the level of
effort by N2P to cure such failure) by the end of such **** (****)
**** period (unless the Parties mutually agree in writing to extend
such cure period), ICQ shall have the right to terminate the
exclusivity (as set forth in Section 9 of this Agreement) with respect
to such non-Best-of-Breed Core Premium Service and thereby enter into
an agreement with any third party (including a N2P Competitor) to
promote (or offer the services of) such third party with respect to
the corresponding non-Best-of-Breed Core Premium Service.
3.4 No Payment by ICQ. For the avoidance of doubt, the Parties
-----------------
acknowledge that ICQ shall not be required to pay N2P any compensation
in connection with any modification, addition, deletion, feature or
functionality or other improvement required to be provided by N2P in
order for N2P to comply with its obligations under Section 3 of this
Agreement.
3.5 N2P Not Responsible for Core ICQ Obligations. The Parties acknowledge
---------------------------------------------
that the Core ICQ Obligations shall not affect the determination as to
whether N2P has satisfied the criteria and obligations set forth in
Section 3 of this Agreement. The Parties also acknowledge that the
determination of whether N2P has satisfied the criteria and
obligations set forth in Sections 3.1, 3.2 or 3.3 of this Agreement
shall not be affected by features or functionality that N2P offers to
ICQ and that ICQ (a) declines to implement or support or (b) cannot
(e.g., due to technological or operational constraints within the
control of ICQ) reasonably implement or support, provided that (i) in
either such case, N2P provides ICQ with reasonable prior, informal,
written notice (e.g., by e-mail) of the anticipated effects of ICQ's
not implementing or supporting the features or functions on the ICQ IP
Telephony Services and (ii) in the case of technological or
operational constraints within ICQ's control, N2P provides ICQ with
reasonable prior informal notice of such constraints.
4. DISTRIBUTION AND PROMOTION
--------------------------
4.1 Distribution and Promotion Requirements. During the Term, subject to
---------------------------------------
the terms and conditions herein, the Parties agree to the following:
4.1.1. Access to ICQ IP Telephony Service. ICQ shall distribute
----------------------------------
the ICQ IP Telephony Services and the ICQ IP Telephony
Software, provided that ICQ shall determine in its
reasonable discretion (upon consultation with N2P) the
manner in which such distribution occurs (e.g., through the
bundling with the ICQ Client of the ICQ-customized N2P IP
Telephony Software, through a "plug-in" of such software,
etc.).
4.1.2 Distribution of ICQ IP Telephony Software.
-----------------------------------------
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
11
EXECUTION VERSION
(a) PTP Calling Card Service. Promptly upon the
------------------------
acceptance by ICQ of the initial version of the PTP Calling Card
Service (including any Updates thereto), ICQ shall promote and
distribute such initial version as part of the ICQ Service
subject to the remainder of this Section 4.1.2.
(b) Secondary ICQ IP Telephony Services. Following the
-----------------------------------
acceptance by ICQ of the initial version of any Secondary ICQ IP
Telephony Service (including any Updates thereto) and subject to
the remainder of this Section 4.1.2, ICQ shall promote and
distribute such accepted Secondary ICQ IP Telephony Service as
part of the 2000a ICQ Client and related version of the ICQ
Service. ICQ shall launch (i.e., make generally commercially
available) such 2000a ICQ Client and version of the ICQ Service
no later than **** provided, however, that in the event
-------- -------
that ICQ shall not have launched the 2000a Client and related
version of the ICQ Service by **** (as N2P's sole and
exclusive remedy hereunder), the Initial Term shall be extended
by one day for each day beyond **** that ICQ fails to
launch the 2000a ICQ Client and related version of the ICQ
Service.
(c) Distribution. The version of the ICQ Client that is
------------
generally made available for downloading on the ICQ Service or
otherwise generally distributed in connection with the ICQ
Service shall include either the ICQ IP Telephony Software or a
means (consistent with Section 4.1.4 of this Agreement) by which
ICQ Users can access and use the ICQ IP Telephony Services.
(d) Exceptions. ICQ shall be relieved of the foregoing
----------
obligations under the conditions of, and in accordance with,
Section 4.2 and the other terms of this Agreement. In addition,
ICQ may also support other IP Telephony services (including those
of N2P Competitors) as to which, and in the countries in which,
N2P (on the Effective Date or thereafter) does not have
exclusivity. Moreover, but subject to the requirements of this
Agreement, ICQ may provide to a particular customer a version of
the ICQ Client that does not include the customizations developed
by N2P hereunder or any other IP Telephony capability if such
customer requests (provided that ICQ does not encourage such
customer to so request or offer such customer in a prominent
fashion an opportunity to so request) that it receive a version
of the ICQ Client that does not include N2P customizations.
(e) Subsequent Versions. Following the acceptance by ICQ
-------------------
of any Subsequent Version, ICQ will distribute such Subsequent
Version with the ICQ Service within a time period (of not more
than six (6) months) to be determined by ICQ in its reasonable
discretion (e.g., taking into account such factors as the
imminence of the launch of a new version of the ICQ Client,
etc.), upon consultation with N2P.
4.1.3 Localized Versions. At such time as ICQ makes generally
------------------
commercially available localized versions of the ICQ Client
(including, without limitation, any translation service
distributed by ICQ in connection therewith) for use in the
Collective International Gateways (or in any other countries in
which the Parties agree that N2P shall provide the ICQ IP
Telephony Services) (collectively, the "Localized Versions"), N2P
shall cause (within a commercially reasonable time period) to be
fully prepared for launch through the ICQ Service versions of the
Core Premium Services, if any, that are required to be compatible
with such Localized Versions. The Parties shall use commercially
reasonable efforts to develop, make available and otherwise
distribute Updates to such Localized Versions, from time to time
as Updates for the U.S. English-language versions of
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
12
EXECUTION VERSION
the ICQ IP Telephony Services are publicly released. ICQ shall be
responsible for the localization of the ICQ GUI.
4.1.4 N2P Listing and Promotion. ICQ (together with any Affiliate of
-------------------------
ICQ that offers the ICQ Service) shall feature, offer and
promote the ICQ IP Telephony Services prominently in the ICQ
Service.
(a) In furtherance and as part of the foregoing, the initial
implementation of such promotional requirement shall include,
where feasible, the following (and any future implementation
shall be consistent in terms of prominence (e.g., in terms of
size, location, appearance and the like) with the following):
(i) Each ICQ IP Telephony Service will be "sub-branded"
with the name "Net2Phone," "N2P" or any other N2P Xxxx designated
by N2P, subject to the approval of ICQ not to be unreasonably
withheld (the "N2P Name"). "Sub-branding" means that each ICQ IP
Telephony Service will be labeled and marketed with the name
"****" or such other ICQ name as ICQ designates (the "ICQ Name"),
but that each such ICQ IP Telephony Service shall, where feasible
and to the extent not inconsistent with the ICQ Look and Feel,
have a prominent tag line such as "****" or "****," and a N2P
Xxxx. The N2P tag line and Xxxx (the "Brandings") will be
included prominently in (and where feasible, will be placed
within reasonable proximity to the ICQ brandings in) the (A)
areas which provide information regarding the use of and enable
ICQ users to launch the ICQ IP Telephony Service (collectively,
the "Support Area"), (B) other areas within the ICQ Service that
relate principally to the ICQ IP Telephony Services (including,
without limitation, ****), and (C) the ICQ IP Telephony Software
or areas within the ICQ Client that relate principally to an ICQ
IP Telephony Service (the "Branded Areas").
(ii) The Brandings will also appear prominently in
advertising, promotional, public relations and marketing material
relating principally to the ICQ IP Telephony Services.
(iii) There will be links (evidenced by the ICQ Name or
a graphical image of a telephone, or such other link as ICQ
selects) to the PC-originated ICQ IP Telephony Services
(initially, the PC-to-PC Service and PC-to-Phone Service)
throughout the ICQ Service in areas providing ICQ Users with the
ability to perform communication functions (e.g., white page
results, yellow page results, directory search results, ****
etc.) (collectively, the "Links"). The Links will launch the ICQ
IP Telephony Services.
(b) The name, design and "look and feel" of the Branded
Areas, the Brandings and the Links (collectively, the "Listings")
will be determined by ICQ in its reasonable discretion in
consultation with N2P. The Listings will properly convey the
functionality of the ICQ IP Telephony Services.
(c) ICQ generally will provide to N2P branding, marking and
promotion that are no less prominent, in terms of size,
placement, appearance and the like, than those accorded to
****. In the event that ICQ begins to sell advertising inventory
on **** "****" ****, ICQ shall provide N2P with
an opportunity to bid on the purchase of a placement within such
inventory.
(d) Subject to the other requirements of this Section 4.1.4
and the other provisions of this Agreement, the foregoing will
not preclude users from
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
13
EXECUTION VERSION
linking to another such provider from the ICQ Service, provided
that the link to such other provider is limited to a ****
--------
that is no more prominent than any similar reference to N2P.
Nothing in this Agreement shall prevent ICQ from offering
(whether through buttons, icons or otherwise) an AOL PC-to-PC
communication function on the ICQ Service, subject to the other
requirements of this Section 4.1.4.
4.1.5 Promotion of ICQ Service by N2P; Promotion of ICQ IP Telephony
--------------------------------------------------------------
Services by ICQ.
---------------
(a) N2P. N2P shall promote the ICQ Service to its
---
customers and partners, and shall use reasonable efforts to
encourage such customers and partners to adopt the ICQ Service as
an integrated component of the IP Telephony products and services
provided to such customers and partners by N2P, as and to the
extent set forth in Exhibit E. ICQ shall assist N2P, as
reasonably requested by N2P, in such promotional efforts.
(b) ICQ. ICQ shall use reasonable efforts to ****
---
as part of the products and services offered to their
respective users. N2P shall assist ICQ, as reasonably requested
by ICQ, in such promotional efforts.
4.2 General Conditions to Distribution and Promotional Obligations.
--------------------------------------------------------------
Notwithstanding anything contained in this Section 4, ICQ shall have
no obligation to promote a particular version of the ICQ IP Telephony
Services, to distribute to ICQ Users a particular version of the ICQ
IP Telephony Services or to provide any Listing therefor to the
extent that and for so long as:
(i) ICQ has received notice (whether written or verbal) of, and
reasonably believes, that the reproduction, use or distribution
of such version of the ICQ IP Telephony Services in accordance
with this Agreement infringes or misappropriates the
intellectual property rights of any third party, provided that
--------
ICQ may not promote or offer access to any other IP Telephony
product unless ICQ reasonably believes that it raises a lesser
risk of infringement or misappropriation; or
(ii) An aspect of any such version of the ICQ IP Telephony Service
exists, other than an acknowledged security risk that a
corporation/user accepts by opening up holes in its firewall to
enable use of any such ICQ IP Telephony Service (and other than
security risks ordinarily associated with Web-based
communications products), that could be exploited in a manner
that ICQ reasonably believes (a) would expose ICQ Users to
potential efforts to invade their privacy or damage or modify
data, software or hardware in an unauthorized manner or (b)
would otherwise result in meaningful and serious claims that any
such ICQ IP Telephony Service presents a security risk to its
users, provided that ICQ may not promote or offer access to any
--------
other IP Telephony product unless ICQ reasonably believes that
it raises a lesser security risk.
4.3 Exclusive Offers/ICQ User Benefits. N2P shall offer through the
----------------------------------
ICQ Service on a regular and consistent basis (but no less than once
per quarter) special offers comparable to those available through
Additional N2P Channels (e.g., preferred rates to specific termination
points to be offered periodically, raffle or sweepstakes conducted
from time to time, etc.), which such special offers shall be
exclusively available to ICQ Users (the "ICQ Exclusive Offers"). Each
ICQ Exclusive Offer made available by N2P shall provide a substantial
member benefit to ICQ Users, either by virtue of a meaningful price
discount, product enhancement, unique service benefit or other special
feature. N2P will provide ICQ with reasonable prior notice of ICQ
Exclusive Offers so that ICQ
**** CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
14
EXECUTION VERSION
can market the availability of such ICQ Exclusive Offers in the manner
ICQ deems appropriate in its reasonable discretion; provided that ICQ
--------
shall consult with N2P regarding the marketing of the ICQ Exclusive
Offers.
4.4 ICQ Search Keywords. During the Initial Term, subject to the
-------------------
terms and conditions hereof, ICQ (in its sole discretion) may provide
N2P with ICQ Search Keywords to be mutually agreed upon by the
Parties.
5. ICQ USER REGISTRATION AND INFORMATION
-------------------------------------
5.1 Ownership of Assets and Customer Relationships. ICQ shall own
----------------------------------------------
all tangible and intangible assets (and all personal and intellectual
property) provided by ICQ in developing the ICQ IP Telephony Services
(except as otherwise expressly set forth herein) and the Support Area,
including all materials provided by ICQ to N2P for the purpose of
branding the ICQ IP Telephony Service and the Support Area ("ICQ
Branding Materials"), and the relationship with ICQ IP Telephony
Users, including, without limitation, all aspects of such relationship
specified in this Section 5. ICQ shall own any and all rights in the
call detail records generated in providing the ICQ IP Telephony
Services which shall be treated as Confidential Information for
purposes of this Agreement (collectively, the "Call Detail Records").
ICQ hereby grants N2P a non-exclusive, non-transferable, worldwide,
royalty-free license to use the Call Detail Records only to the extent
necessary to provide the ICQ IP Telephony Services to be provided by
N2P hereunder (including any related planning and development). Such
license shall continue through the end of the Term, but shall survive
expiration of the Term with respect to the provision by N2P of the PTP
Calling Card Service.
5.2 ICQ User Relationship.
---------------------
5.2.1 Registration Information. In order to use the Surcharged
------------------------
ICQ IP Telephony Services, an ICQ User will be required to register
for such ICQ IP Telephony Services. The Parties shall determine by
mutual agreement the terms and conditions of use to be agreed to by
such ICQ Users (including, without limitation, with respect to any
special access codes to be used by such ICQ Users in connection with
the ICQ IP Telephony Services, provided, that neither Party shall
--------
unreasonably withhold such agreement with respect to the use of such
special access codes), and ICQ shall determine both (i) the
information to be collected from the ICQ Users as part of the
registration process (provided that such information shall in any
--------
event include information that N2P reasonably requests in connection
with the provision of the ICQ IP Telephony Services, including,
without limitation, any Personal Identification Numbers (PINs) for use
by ICQ Users in connection with the ICQ IP Telephony Services) and
(ii) any domain names, unique identifier numbers, e-mail addresses and
passwords to be assigned and/or used by such ICQ Users in connection
with such ICQ IP Telephony Services. Notwithstanding the foregoing,
it is the Parties' intention that ICQ Users initially shall not be
required to register for, or provide any information in connection
with the use of, the PC-to-PC Service. Registration for the ICQ IP
Telephony Services shall take place at the Support Area or at such
other location as may be mutually agreed upon by the Parties. ICQ
shall use reasonable efforts to build into the end of the registration
process for the ICQ Service (the "ICQ Registration Process") a sub-
routine for the registration for the ICQ IP Telephony Services.
Notwithstanding the foregoing, in the event that any ICQ Users shall
not have registered for the Surcharged ICQ IP Telephone Services prior
to attempting to use any such service, ICQ shall cause any such ICQ
User to register for the Surcharged ICQ IP Telephony Services prior to
the use thereof. N2P shall determine the pricing for the Core Premium
Services and other ICQ IP Telephony Services to be provided by N2P
hereunder. In addition, N2P shall handle the assignment of applicable
phone numbers to ICQ Users (using the ICQ User unique identifier
number as an identifier and provided that such phone numbers and
--------
special access codes (unless
15
EXECUTION VERSION
otherwise agreed upon in writing by the Parties) shall be different
from any phone numbers and access numbers used in connection with any
N2P Services), and shall handle the billing and collection of any fees
or other amounts to be charged to ICQ Users from time to time in
connection with the ICQ IP Telephony Services (collectively, the "IPT
Fees"); provided, however that, unless otherwise expressly consented
-------- -------
to in writing by ICQ, N2P shall not directly contact or communicate
with any ICQ IP Telephony Users other than in connection with the
billing and collection of the IPT Fees, or in connection with
maintenance and customer support for the ICQ IP Telephony Services;
provided, further, that such communications shall be limited to
-------- -------
obtaining billing information, providing pricing information related
to the ICQ IP Telephony Services and ensuring collection of the IPT
Fees or providing maintenance or customer support, and shall not be
used by N2P as a platform to sell, market, advertise or promote any
products or services other than the ICQ IP Telephony Services.
5.2.2 Billing Transition. Notwithstanding the foregoing, at any
------------------
time during the Term and at ICQ's sole discretion, ICQ shall have the
right to assume responsibility for the aforementioned billing and
collection obligations with respect to the IPT Fees (collectively, the
"Billing Transition"); provided, however, that (i) ICQ shall give N2P
-------- -------
reasonable advance notice of any such Billing Transition; (ii) the
Billing Transition shall be subject to agreement of the Parties on
arrangements (a) for N2P to receive the same portion of revenue from
the ICQ IP Telephony Services as it would have received before the
Billing Transition (and on procedures to verify the proper payment of
such revenue), (b) for handling fraud, and (c) for the handling of the
billing for the PTP Calling Card Service after the Initial Term, and
(iii) ICQ shall be responsible for all costs and out-of-pocket
expenses incurred by N2P in connection with such Billing Transition.
In the event of such Billing Transition, N2P hereby agrees to provide
ICQ with reasonable assistance (and to otherwise cooperate with ICQ),
at ICQ's expense, regarding such Billing Transition, and following
such Billing Transition, ICQ shall use commercially reasonable efforts
to ensure that the billing services comply in all material respects
with the standards set forth in Exhibits B and C of this Agreement.
5.3 ICQ User Information and Solicitation.
-------------------------------------
5.3.1 Ownership of ICQ User Information. ICQ shall own any and
---------------------------------
all information collected from ICQ Users in connection with the ICQ IP
Telephony Services, including, without limitation, information
collected during the registration processes for the ICQ Service and/or
any ICQ IP Telephony Service, respectively, and information then or
subsequently obtained from any use of the ICQ Service and/or any ICQ
IP Telephony Services, including without limitation ****
(collectively, "User Information"). All User Information shall be
deemed Confidential Information of ICQ. N2P agrees, both during and
after the Term, not to (i) use any User Information for any purpose
other than in connection with the operation of the ICQ IP Telephony
Services or (ii) disclose any such information to any third party
without the prior written consent of ICQ, which consent may be
granted or withheld in ICQ's sole and absolute discretion;
provided, however, that N2P may disclose User Information solely as
necessary (and only to the extent necessary) to comply with applicable
laws, regulations and government orders or requests; provided,
--------
further, that N2P shall use all reasonable efforts to limit any such
-------
disclosure to the maximum extent possible and to provide ICQ with as
much advance written notice of N2P's intended use or disclosure as is
practicable. N2P agrees to comply with the ICQ Privacy Policy to the
same extent as ICQ, as such policy exists on the Effective Date (i.e.,
the ICQ Privacy Policy dated as of January 26, 1999), as the same may
be modified and notified to N2P from time to time. N2P shall not sell,
license, rent or otherwise transfer any ICQ User Information or any
list of ICQ Users for any
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
16
EXECUTION VERSION
purpose whatsoever, without ICQ's prior written consent.
Notwithstanding the foregoing, N2P shall have the right to use User
Information to the extent necessary to provide the PTP Calling Card
Service to then-existing ICQ User customers following the expiration
of the Initial Term, and ICQ shall provide N2P with the customer
records and other information to the extent necessary for N2P to
continue providing the PTP Calling Card Service to such customers for
the **** period immediately following the expiration of the Initial
Term, subject to Section 5.3.2 and 5.3.3 of this Agreement and
prohibitions, if any, under applicable law.
5.3.2 No Competitive Solicitation. During the Term and for the
---------------------------
**** period following the expiration or termination of this
Agreement (and without limiting any other provision of this Agreement,
including Section 5.3.1), neither N2P nor its agents shall use the ICQ
Service or the ICQ IP Telephony Services or information owned by ICQ
or an ICQ Affiliate to (i) solicit third parties or ICQ Users when
that solicitation is for the benefit of any entity (including N2P)
which could reasonably be construed to be or to become in competition
with ICQ, the ICQ Service or the ICQ IP Telephony Services, or (ii)
promote any services or products which could reasonably be construed
to be in competition with services or products provided by ICQ,
through the ICQ Service or through the ICQ IP Telephony Services.
Except as otherwise prohibited in this Section 5, nothing in this
Section 5.3.2 shall be construed to prohibit N2P or its agents from
soliciting or promoting the N2P Services to any third party, whether
during the Term or thereafter, provided that, in connection with such
solicitation or promotion, N2P complies with the terms of (a) Section
9 (Exclusivity) during the Initial Term and (b) Section 13
(Confidential Information) during the Term (and after the Term for the
period set forth in such Section 13). The Parties acknowledge that
any incidental (i.e., de minimis) failure by N2P to comply with the
terms of this provision shall not be deemed a material breach of this
Agreement; provided, however, that N2P shall take appropriate steps to
-------- -------
prevent any further failure to comply with the terms of this Section
5.3.2.
5.3.3 No Communication. During the Term and for the ****
----------------
period following the expiration or termination of this Agreement
(and without limiting any other provision of this Agreement, including
Section 5.3.1), N2P agrees not to send any ICQ User any messages or
communications on or through the Qualified ICQ Services for any
commercial purpose, unless N2P has an Independent Business
Relationship with such ICQ User. Any commercial e-mail communications
(i.e., e-mail communications offering products or services) to ICQ
Users on or through the ICQ Service or the ICQ IP Telephony Services
which are otherwise permitted hereunder (i.e., permitted as exceptions
to general prohibitions included in this Agreement) shall include a
prominent and easy means to "opt-out" of receiving any future
commercial e-mail communications from N2P. The Parties acknowledge
that any incidental (i.e., de minimis) failure by N2P to comply with
the terms of this provision shall not be deemed a material breach of
this Agreement; provided, however, that N2P shall take appropriate
-------- -------
steps to prevent any further failure to comply with the terms of this
Section 5.3.3.
6. TECHNICAL SUPPORT
-----------------
N2P shall provide all frontline technical and customer support to ICQ
Users as set forth in Exhibit B, including, without limitation,
technical and customer support for ICQ Users who have problems with,
or questions concerning, the installation, use, operation or
maintenance of the ICQ IP Telephony Service (collectively, the
"Frontline Support"). The Parties acknowledge that N2P may provide
such Frontline Support using e-mail and/or telephone support, at N2P's
option. N2P shall, at no cost to ICQ, provide to ICQ the back-end
support regarding the ICQ IP Telephony Service specified on Exhibit D.
During the Term, each Party will designate one (1) internal technical
contact (each such contact,
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
17
EXECUTION VERSION
a "Technical Liaison") and will conduct technical communication
activities as may be necessary for the optimization of the integration
of the ICQ IP Telephony Services into the ICQ Service. ICQ will use
commercially reasonable efforts to provide technical and marketing
assistance, including facilitating the maintenance of regular
communication channels between relevant personnel, for the purpose of
assisting both Parties in abiding by their respective obligations
under this Agreement. The initial Technical Liaison for N2P shall be
**** and the initial Technical Liaison for ICQ shall be ****,
unless otherwise designated from time to time by the Parties.
Each Party may change its Technical Liaison from time to time, in its
sole discretion. Unless otherwise agreed upon by the Parties, N2P
shall not be obligated to provide support for any modifications or
additions to the ICQ IP Telephony Services carried out by ICQ (or
carried out for ICQ by a third party not contracted or subcontracted
by or on behalf of N2P); provided, however, that where not required to
-------- -------
provide such support pursuant to the terms of this Section 6, N2P
shall assist in the support of such work to the extent necessary for
either Party to comply with its obligations under this Agreement.
7. PAYMENT AND REVENUE PROVISIONS
------------------------------
7.1 Guaranteed Payments; Refund. In partial consideration for ICQ's
---------------------------
marketing of the ICQ IP Telephony Services, N2P shall pay to ICQ a
non-refundable guaranteed payment of Seven Million Five Hundred
Thousand Dollars (US$7,500,000) as follows: (i) Four Million Dollars
(US$4,000,000) on the Effective Date, and (ii) Three Million Five
Hundred Thousand Dollars (US$3,500,000) on the earlier of (a) the one
(1) year anniversary of the Effective Date or (b) consummation of an
initial public offering of shares of N2P under the Securities Act of
1933, as amended. In the event of any termination of this Agreement
before expiration of the Initial Term in accordance with (i) Section
16.2 due to a material breach by ICQ of this Agreement, (ii) Section
16.3 due to a Change of Control of ICQ by a N2P Competitor or a Parent
Company Competitor or (iii) Section 16.5 due to the occurrence of a
Regulated Entity Event, ICQ shall refund to N2P the pro rata portion
--- ----
(based on a four (4) year term) of any guaranteed payments made by N2P
prior to the date of such early termination (e.g., if such termination
occurs on the **** anniversary of the Effective Date, and N2P has paid
ICQ **** (US$****) in guaranteed payments as required by the terms of
this Agreement, ICQ shall refund to N2P **** (****%) of such
guaranteed payments, ****. In the event of any termination of this
Agreement before the expiration of the Initial Term in accordance with
Section 16.6(i)(c) or Section 16.6(i)(d), then ICQ shall refund to N2P
**** of the pro rata portion (based on a four (4) year term) of any
--- ----
guaranteed payments made by N2P prior to the date of such early
termination. In partial consideration for such guaranteed payments,
ICQ shall provide N2P during the Initial Term with promotional
placements (on areas of the ICQ Service to be determined by ICQ in its
reasonable discretion as further set forth in Section 4.1.4) with a
value of **** (based on average amounts actually charged by ICQ for
comparable Advertisements or, if unavailable, amounts set forth on
ICQ's advertising rate card).
7.2 Net Advertising Revenue for IP Telephony Services.
7.2.1 Advertising Sales. ICQ shall have the right to license or
-----------------
sell promotions, advertisements, links, sponsorships, pointers or
similar services or rights ("Advertisements") through the ICQ Service,
subject to ICQ's then-applicable advertising policies.
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
18
EXECUTION VERSION
7.2.2 Revenue Sharing.
---------------
(a) Net Advertising Revenue. As partial
-----------------------
consideration for its marketing efforts hereunder, ICQ shall
retain **** percent (****%) of the Net Advertising Revenue. ICQ
shall pay N2P, within **** following the end of each quarter
during the Term, the remaining **** percent (****%) of the Net
Advertising Revenue that is actually collected by ICQ or any
Affiliate of ICQ (collectively, the "Advertising Revenue Share").
(b) Net Button Advertising Revenue. In the event
------------------------------
that ICQ sells (which such decision to sell shall be in ICQ's
sole discretion) any buttons that appear on the ICQ IP Telephony
client (the "Special Buttons"), (i) N2P shall receive (1) ****
percent (****%) of the Net Button Advertising Revenue generated
from the sale (without N2P participation or support) of any such
Special Button or (2) **** percent (****%) of the Net Button
Advertising Revenue generated from the sale (with N2P
participation or support) of any such Special Button, and (ii)
ICQ shall retain the remainder of such Net Button Advertising
Revenue (clauses (i) and (ii) above, collectively, the "Net
Button Advertising Revenue Share"). Notwithstanding the
foregoing, in no event shall the total portion of the Net Button
Advertising Revenue received by N2P during the Term exceed ****
Dollars (US$****) (i.e., after the receipt by N2P of US$**** in
Net Button Advertising Revenue, ICQ shall retain **** (****%) of
such Net Button Advertising Revenue). In the event that ICQ
utilizes such Special Buttons to promote any ICQ or other
commercial products or services, ICQ shall utilize a portion of
such Special Buttons (i.e., at least one such Special Button) to
promote the ICQ IP Telephony Services.
7.2.3 Definition of Net Advertising Revenue. For purposes of
-------------------------------------
this Agreement, "Net Advertising Revenue" shall mean, for any calendar
quarter, (i) the gross revenue (including cash and the value of any
non-cash consideration) received by ICQ, or any Affiliate of ICQ, from
Advertisements in (a) the Support Area, (b) other areas within the ICQ
Service that principally list the ICQ IP Telephony Services, or (c)
the ICQ IP Telephony Software or areas within the ICQ Client that
principally list the ICQ IP Telephony Services (collectively, the
"Designated Advertising Areas"), less (ii) the actual commissions paid
to third party agencies by ICQ in connection with the placement of
such Advertisements (or, if no such commissions were incurred, ****
percent (****%) of the gross revenues received by ICQ for such
Advertisements). If Advertisements in the Designated Advertising
Areas are sold or otherwise made available to a party that also
purchases or obtains Advertisements through one or more other areas or
media of ICQ or an Affiliate (collectively, a "Combined Sale"), the
revenue from the Combined Sale shall be allocated pro rata between
--- ----
such Designated Advertising Areas and such other areas or media (based
on list prices for such Designated Advertising Areas and other areas
or media). For the avoidance of doubt, "Net Advertising Revenues"
shall not include Net Button Advertising Revenues.
7.2.4. Ownership of Advertising. The right of N2P to
------------------------
participate in the Net Advertising Revenue pursuant to the provisions
of this Section 7.2 shall in no way create any ownership interest in
N2P with respect to ICQ advertising inventory. ICQ owns all right,
title and interest in and to the Advertisements and promotional spaces
within the ICQ Service, including the Support Area and the ICQ Client,
and ICQ has the sole authority to market and sell such Advertisements;
provided, however, that ICQ agrees that, during the Initial Term
-------- -------
within the Designated Advertising Areas, ICQ shall not include any
Advertisements for (or sell any advertising inventory to) N2P
Competitors with respect to
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
19
EXECUTION VERSION
(i) the Core Premium Services (to the extent that N2P enjoys
exclusivity with respect thereto under this Agreement) and (ii) any
Optional Service(s) or Expanded Service(s) which the Parties mutually
agree from time to time shall be exclusive to N2P). Further, ICQ shall
be responsible for all obligations, liabilities and duties under any
and all agreements that ICQ has with third parties and otherwise with
regard to such Advertisements, including serving such advertisements,
subject to Section 15 of this Agreement.
7.3 Transaction Revenues Sharing Arrangement.
----------------------------------------
7.3.1 Revenue Threshold. If at any time (i) during Year One the
-----------------
amount of Transaction Revenues received by N2P during such year
exceeds **** Dollars (US$****) or (ii) during each of Years Two
through Four of this Agreement, the amount of the Transaction
Revenues received by N2P exceed **** Dollars (US$****) (for each such
Year, the "Revenue Threshold"), then N2P will pay ICQ, in partial
consideration for ICQ's marketing and distribution efforts hereunder,
the Revenue Share with respect to the incremental Transaction Revenues
received during any such Year above the Revenue Threshold for such
Year (the "Incremental Transaction Revenues"). N2P will pay all of the
foregoing amounts within thirty (30) days following the end of the
Year in which the applicable Transaction Revenues were received. At
the end of each such Year, the calculation of Transaction Revenues for
purposes of this Section 7.3.1 shall recommence. N2P shall have the
right to collect and retain all Transaction Revenues other than the
Revenue Share paid to or retained by ICQ. To the extent mutually
agreed upon by the Parties in writing in connection with any Billing
Transition, ICQ shall be responsible (following any such Billing
Transition) for calculating the Revenue Share and for paying N2P its
portion of such Revenue Share as contemplated by this Section 7.3.1.
7.3.2 Revenue Share. The "Revenue Share" shall mean the amounts
-------------
to be paid to ICQ (in each case, determined as a percentage of
Incremental Transaction Revenues) set forth on Exhibit H hereto.
7.3.3 **** Users. To the extent that N2P is required to
--------------
share revenue with ****(pursuant to agreements in full force and
effect on the Effective Date) for transaction revenues generated with
respect to the Core Premium Services, any Transaction Revenue received
by N2P hereunder from any **** user with respect to the Core Premium
Services shall not constitute Transaction Revenues for purposes of
this Section.
7.4 No Other Revenue Sharing. Except as expressly provided in this
------------------------
Section 7 and on Exhibit H, neither Party shall be entitled to any
revenues derived from, or related to, the activities of the other
Party.
7.5 Alternative Revenue Streams. In the event that N2P receives or
---------------------------
desires to receive (directly or indirectly) any compensation in
connection with the ICQ Service from the sale of any Products other
than the ICQ IP Telephony Services or as otherwise agreed to by the
Parties (an "Alternative Revenue Stream"), N2P will promptly inform
ICQ in writing, and the Parties will negotiate in good faith regarding
whether N2P will be allowed to market the Products producing such
Alternative Revenue Stream (the "Alternative Products") through the
ICQ Service, and if so, the equitable portion of revenues from such
Alternative Revenue Stream (if applicable) that will be shared with
ICQ.
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
20
EXECUTION VERSION
7.6 Reports and Payments. Each Party (the "Paying Party") shall comply
--------------------
with the following requirements in connection with its payment
obligations to the other Party (the "Payee Party") under this
Agreement: Within thirty (30) days following the end of each payment
period, the Paying Party shall provide the Payee Party with a report
that contains information detailing the amount payable for such
payment period. Such report shall, with reasonable detail, explain the
basis upon which such payment has been determined and shall be
accompanied by payment in full of all amounts indicated on such report
as due for such period. Each such report shall constitute Confidential
Information of the Paying Party. Without limiting the generality of
the foregoing:
7.6.1 Reports on Transaction Revenues. N2P will provide
-------------------------------
ICQ with a report in a mutually agreed-upon format, detailing the
following activity in such period (and any other information mutually
agreed upon by the Parties as required for measuring Transaction
Revenues): (i) summary sales information (e.g., total number of
orders, average sales per customer and per order); and (ii) detailed
sales information to be agreed upon by the Parties (collectively,
"Sales Reports"). ICQ will be entitled to use the Sales Reports only
in its internal business operations, subject to the terms of this
Agreement. The report will also contain information which supports the
payment based on Transaction Revenues, including information
identifying gross Transaction Revenues and all items deducted or
excluded from gross Transaction Revenues to produce Transaction
Revenues, including, without limitation, charge-backs and credits for
returned or canceled goods or services (and, where reasonably
practicable, an explanation in general of the types of reasons
therefor (e.g., bad credit card information, poor customer service,
etc.)).
7.6.2 Reports on Advertising Revenue Share. ICQ will provide
------------------------------------
N2P with a quarterly report in a mutually agreed-upon format,
detailing the following in such quarter (and any other information
mutually agreed upon by the Parties as required for measuring
Advertising Revenues): (i) aggregate cash, plus the fair market value
(and basis for determining the fair market value) of any non-cash
consideration received (such as barter advertising), received by ICQ
or any ICQ Affiliate from Advertisements in the Designated Advertising
Areas, (ii) to the extent applicable, the agency fees incurred in
connection with the placement of such Advertisements, and (iii) if
applicable, the basis for allocating revenue from Combined Sales to
Advertisements in the Designated Advertising Areas.
7.7 Late Payments; Wired Payments. All amounts owed hereunder not paid
-----------------------------
when due and payable will bear interest from the date such amounts are
due and payable at the prime rate in effect at such time. All
payments required to be paid to ICQ hereunder will be paid in
immediately available, non-refundable U.S. funds wired to ****. All
payments required to be paid to N2P hereunder will be paid in
immediately available, non-refundable U.S. funds wired to an account
to be designated by N2P (within thirty (30) days following the
Effective Date) in a written notification to ICQ.
7.8 Audit Rights. Each Party (as Paying Party) will maintain complete,
------------
clear and accurate records of the information required to determine
the amounts of payments made hereunder. For the sole purpose of
ensuring compliance with the payment obligations of this Agreement,
either Party (as Payee Party) will have the right to request that an
independent certified accountant selected by the Parties (and which
accountant enters into a confidentiality agreement mutually agreed to
by the Parties) conduct (no more than twice per calendar year of this
Agreement) a reasonable and necessary inspection of portions of such
books and records as are necessary to verify the correctness of the
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
21
EXECUTION VERSION
payments made hereunder. Any such audit may be conducted after twenty
(20) business days prior written notice to the Paying Party. The
Payee Party shall bear the expense of any audit conducted pursuant to
this Section 7.8 unless such audit shows an error in the Payee Party's
favor amounting to a deficiency in excess of five percent (5%) of the
actual amounts payable to the Payee Party hereunder, in which event
the Paying Party shall bear the reasonable costs and expenses incurred
in connection with such audit. The Paying Party shall pay the Payee
Party the amount of any deficiency discovered by the Payee Party
within thirty (30) days after receipt of notice thereof from the Payee
Party, except to the extent disputed in good faith by the Paying
Party.
7.9 Taxes. Each Party will collect and pay, and indemnify and hold
-----
harmless the other Party from, any sales, use, excise, import or
export value added or similar tax or duty required to be collected and
paid by such Party, including any penalties and interest, as well as
any costs associated with the collection or withholding thereof,
including attorneys' fees (collectively, the "Taxes").
7.10 Fraudulent Transactions. To the extent permitted by applicable law,
-----------------------
N2P will (i) provide ICQ with prompt notice of any fraudulent order (a
"Fraudulent Order"), including the date, screen name or e-mail address
and amount associated with such order, promptly following N2P
obtaining knowledge that the order is, in fact, fraudulent and (ii) as
promptly as possible following the occurrence of any such Fraudulent
Order (but in no event later than one (1) month after the occurrence
thereof), provide ICQ with a report regarding any such order and the
steps taken by N2P with respect thereto.
7.11 Most Favored Customer. N2P represents that the terms and conditions
---------------------
accorded to ICQ under this Agreement (including any consideration
provided to ICQ and any of its Affiliates in connection herewith) are,
taken as a whole, no less favorable than the terms and conditions
accorded to any (i) ICQ Competitor, (ii) AOL Competitor or (iii)
**** (a "Regulated Telecommunications Service Provider") with respect
to the N2P Services provided to ICQ hereunder. In addition, if during
the Initial Term, N2P enters into an agreement with an ICQ Competitor,
AOL Competitor or Regulated Telecommunications Service Provider with
respect to the N2P Services provided hereunder that accords to such
ICQ Competitor, AOL Competitor or Regulated Telecommunications Service
Provider terms and conditions that, taken as a whole, are more
favorable than those accorded to ICQ under this Agreement (including
any such consideration provided to ICQ and any of its Affiliates in
connection herewith), then N2P shall adjust the terms and conditions
of this Agreement so that ICQ obtains terms and conditions (including
any such consideration provided to ICQ and any of its Affiliates in
connection herewith) that, taken as a whole, are no less favorable
than those accorded to such ICQ Competitor, AOL Competitor or
Regulated Telecommunications Service Provider (as the case may be)
(including any consideration provided to such ICQ Competitor, AOL
Competitor or Regulated Telecommunications Service Provider (as the
case may be) and any Affiliates thereof).
8. STOCK WARRANTS
--------------
Attached hereto as Exhibit G is a form of common stock warrant to be
executed by N2P on behalf of ICQ, or, if ICQ so directs N2P in writing, any
parent, subsidiary or affiliate entity of ICQ (including AOL.). In the
event that ICQ directs N2P to issue such warrant to such other entity, the
Parties agree that such entity shall have the right to enforce the terms of
such warrant against N2P.
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
22
EXECUTION VERSION
9. EXCLUSIVITY
-----------
9.1 Scope.
-----
9.1.1 N2P Exclusivity. Except to the extent that ICQ is
---------------
expressly relieved of its exclusivity obligations under this
Agreement, N2P shall be the exclusive provider of the Core Premium
Services on the ICQ Service during the Initial Term (the "N2P
Exclusivity"); provided, however, that ICQ shall be free to enter into
-------- -------
agreements with third parties (including, without limitation, with any
N2P Competitor) for the use, integration, offering and/or promotion of
IP Telephony services (and any other telecommunications services or
products) other than the Core Premium Services within the ICQ Service.
Provided that N2P retains exclusivity hereunder with respect to any
Core Premium Service, ICQ will not promote on the ICQ Service any IP
Telephony service which is comparable to such Core Premium Service.
Notwithstanding the foregoing, unless otherwise agreed by the Parties,
the N2P Exclusivity shall not extend to any country outside the United
States other than the Collective International Gateways. The Parties
hereby acknowledge and agree that the N2P Exclusivity may be
terminated with respect to particular ICQ IP Telephony Services (or
with respect to particular Collective International Gateways) in
accordance with the terms of this Agreement.
9.1.2 ICQ Exclusivity. N2P agrees that N2P shall not (i)
---------------
authorize the public release before **** of a product in which N2P or
any third party has integrated (e.g., **** etc.) the N2P IP Telephony
Software (or any portion thereof) into or with an instant messaging or
similar online, real time messaging product of **** or **** or (ii)
announce or authorize the announcement of the release (whether planned
or actual) of such an integrated product of an **** or an **** (or
announce or authorize the announcement of the distribution of the N2P
IP Telephony Software by or through **** or **** where the
announcement refers to any instant messaging or similar online real
time communications service (e.g., **** etc.))) before the earlier of
**** or the date for public release of each of the initial versions of
the Core Premium Services ("ICQ Exclusivity"). During the Initial
Term, N2P will promote ICQ as a preferred integrated instant messaging
service and product; provided, however, that during the Initial Term,
-------- -------
N2P shall not promote an instant messaging service or similar online,
real time messaging product of an ICQ Competitor or an AOL Competitor
more prominently than ICQ. Notwithstanding the foregoing, the Parties
hereby acknowledge that N2P shall have the right to offer its PC-to-PC
voice-enabled chat service to any third party following the earlier of
(a) June 5, 2000 or (b) three (3) months following the date on which
ICQ integrates such voice-enabling chat service into the ICQ Service.
9.2 Optional Services. With respect to all Optional Services and other IP
-----------------
Telephony services not expressly contemplated by this Agreement, ICQ
shall offer N2P a **** (not to exceed **** (****)) with respect to the
offering of such additional services through the ICQ Service. In the
event that the Parties cannot agree, within such time period, to the
terms and conditions regarding the provision of any such additional
service to ICQ Users through the ICQ Service, ICQ shall have the right
to offer such additional service(s) to ICQ Users through any third
party (including, without limitation, any N2P Competitor).
9.3 Termination of Exclusivity. In the event that ICQ is entitled to
--------------------------
relief from the N2P Exclusivity as to a particular Core Premium
Service and/or country in accordance with the express terms and
conditions of this Agreement, then only the N2P Exclusivity with
respect to such Core Premium Service and/or country (as the case may
be and subject to Section 16 hereof) shall terminate.
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
23
EXECUTION VERSION
9.4 Exception to Exclusivity. For the avoidance of doubt, the Parties
------------------------
acknowledge that the N2P Exclusivity does not preclude the listing of
N2P Competitors or any AOL PC-to-PC communication function in any
whites pages, yellow pages or other online search or directory
service, subject to Section 4.1.4 and Section 7.2.4.
10. LICENSE FROM N2P
----------------
10.1 License.
-------
10.1.1 Software License. Subject to all the terms and
----------------
conditions of this Agreement, N2P hereby grants to ICQ a worldwide,
non-exclusive, non-transferable, royalty-free license for the Term to
use, reproduce, distribute directly and indirectly, transmit, display,
perform and sublicense (i.e., grant to end-users the right to use) and
adapt the ICQ IP Telephony Software, including any and all components
contained in the ICQ IP Telephony Software necessary to effectuate the
provision of the ICQ IP Telephony Services to ICQ, and the use by end-
users of the ICQ IP Telephony Services, in each case, in object code
form only (except as provided in Section 10.2) in accordance with the
terms of this Agreement. To the extent reasonably requested by ICQ,
N2P shall deliver the ICQ IP Telephony Software electronically to ICQ.
10.1.2 Purpose of License. The foregoing license is expressly
------------------
intended to permit (and limited to permitting) ICQ to effectuate all
of its rights and conduct all of the business expressly contemplated
hereunder, including distributing the ICQ IP Telephony Services
pursuant to the terms and conditions of this Agreement. Except as set
forth in Sections 10.2 and 12.1 or as otherwise set forth in this
Agreement (including, without limitation, with respect to the ICQ
GUI), ICQ acknowledges and agrees that N2P and its licensors retain
all rights, title and interest in and to the ICQ IP Telephony Software
in both object and source code forms. ICQ shall not have any right
under any circumstances, or authorize any third party (which, for
avoidance of doubt, includes any Affiliate of ICQ), to (i) **** the
ICQ IP Telephony Software (other than adaptation in accordance with
Section 10.1.1 or as otherwise authorized by the Source Code Escrow
Agreement or license described in Section 10.2), (ii) **** or
otherwise **** the source code for or underlying algorithms, processes
or methods of the ICQ IP Telephony Software that is provided in object
code form, or (iii) **** or **** the ICQ IP Telephony Software to any
third party (other than as expressly provided in this Agreement). All
copies of the ICQ IP Telephony Software made hereunder shall include
all proprietary notices included on the copy provided by N2P, and ICQ
shall not remove, deface or obscure or authorize to be removed,
defaced or obscured any of N2P's or its licensors' proprietary rights
notices on or in the ICQ IP Telephony Software or on output generated
by the software; provided that the placement of such notices, if any,
in the ICQ IP Telephony Software that are visible in the user
interface of such software shall be subject to ICQ's prior written
approval, which approval will not be unreasonably withheld. ICQ agrees
that any and all copies of the ICQ IP Telephony Software distributed
to third parties shall be pursuant to binding license agreements no
less restrictive or protective of N2P's rights than this Section 10.1.
ICQ agrees that any material violation of this Section 10.1 by ICQ
that is not cured by ICQ within thirty (30) days shall constitute a
material breach of this Agreement. N2P agrees to provide the ICQ IP
Telephony Software in object code form, including all required
Documentation, to ICQ as and when needed for ICQ to exercise its
rights under this Agreement. For the avoidance of doubt, the Parties
acknowledge that the host components of the ICQ IP Telephony Software,
if any, are for use only by ICQ and may not be provided to any third
party.
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
24
EXECUTION VERSION
10.2 Source Code License and Escrow.
------------------------------
10.2.1 Escrow Agreement. N2P and ICQ will enter into an escrow
----------------
agreement (the "Source Code Escrow Agreement"), containing terms and
conditions subject to the mutual agreement of the Parties, for the
limited use by ICQ of the ICQ IP Telephony Software in source code
form (the "Source Code") solely for the purposes of undertaking any
activity which N2P is obligated to perform or undertake hereunder and
fails to perform or undertake as required hereunder. The Source Code
Escrow Agreement shall provide that ICQ shall be entitled to a copy of
the Source Code only upon the occurrence of all of the following three
(3) events (collectively, the "Release Conditions"): (i) N2P's
material breach of its material obligations hereunder to provide,
maintain or support the ICQ IP Telephony Software, which breach
materially adversely affects the ICQ IP Telephony Services; (ii) ICQ's
written notice to N2P detailing such material breach; and (iii) N2P
fails to cure such material breach within ninety (90) days of receipt
of such notice. The license will not include any right to ****
the Source Code to any third party without N2P's prior written
consent, and the Source Code Escrow Agreement will contain provisions,
reflective of the sensitivity of the Source Code, to preclude the
unauthorized use or disclosure of the Source Code or information
derived therefrom. Promptly after execution of this Agreement, and in
any event within thirty (30) days, N2P and ICQ shall negotiate and
enter into the Source Code Escrow Agreement with Data Securities
International or another escrow holder acceptable to each Party. The
Source Code Escrow Agreement will contain provisions for N2P to
provide ICQ with reasonable assistance in understanding and using the
Source Code upon occurrence of the Release Conditions.
10.2.2 Limited Source Code License. To the extent reasonably
---------------------------
necessary for ICQ to modify, develop, add, delete or use any
functionality or features of the ICQ IP Telephony Services in
connection with the development of any Additional ICQ Modifications
pursuant to Section 2.3.4, N2P shall provide to ICQ APIs to the ICQ IP
Telephony Software so that such Additional Modifications (whether
developed by N2P, ICQ or any third party) can interoperate with
(including use of the principal functions of) the ICQ IP Telephony
Software; provided, however, that, to the extent that such APIs are
-------- -------
insufficient to enable such interoperability, N2P shall either (i)
modify, as promptly as commercially practicable, the APIs (at no cost
to ICQ), the ICQ IP Telephony Software or the Additional Modifications
to enable such interoperability, or (ii) in the event that (a) N2P
does not perform the work described in clause (i) of this Section
10.2.2 as promptly as commercially practicable or (b) elects not to
perform such work, provide to ICQ portions of the Source Code for the
ICQ IP Telephony Software (and grant a license) necessary to permit
ICQ to modify the APIs or ICQ IP Telephony Software to enable such
interoperability. If N2P elects to do the modifications, it shall
make the modifications as promptly as is commercially reasonable.
ICQ's use of the Source Code pursuant to this Section 10.2.2 will not
include any right to sublicense, transfer, assign, disclose or
distribute the Source Code to any third party without N2P's prior
written consent, and will be subject to mutually agreed provisions,
reflective of the sensitivity of the Source Code, to preclude the
unauthorized use or disclosure of the Source Code or information
derived therefrom.
10.2.3 Limits on Use. ICQ's use of the Source Code shall not
-------------
exceed the narrow purpose set forth in Section 10.2.1 or Section
10.2.2.
10.3 Trademark License. Subject to the terms and conditions of this
-----------------
Agreement, N2P will be entitled to use the following trade names,
trademarks, and service marks of ICQ: the "ICQ(TM)" trademark and
service xxxx and other trademarks and service marks relating
specifically to one or more of the ICQ IP Telephony Services, provided
that ICQ has approved in writing the use of each such other trademarks
or service marks (collectively,
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
25
EXECUTION VERSION
the "ICQ Marks"). Subject to the terms and conditions of this
Agreement, ICQ will be entitled to use the trademarks and service
marks of N2P set forth on Exhibit J hereto and other trademarks and
service marks relating specifically to one or more of the N2P IP
Telephony Services, provided that N2P has approved in writing the use
of such other trademarks or service marks (collectively, the "N2P
Marks") (collectively, together with the ICQ Marks, the "Marks");
provided that: (i) each Party does not create a unitary composite xxxx
--------
involving a Xxxx of the other Party without the prior written approval
of such other Party; (ii) each Party displays symbols and notices
clearly and sufficiently indicating the trademark status and ownership
of the other Party's Marks in accordance with applicable trademark law
and practice; and (iii) all such uses of the other Party's Marks shall
be subject to the quality standards set forth in Section 10.5 of this
Agreement, and the granting Party's prior written approval.
10.4 Ownership of Trademarks. Each Party acknowledges the ownership
-----------------------
right of the other Party in the Marks of the other Party and agrees
that all use of the other Party's Marks will inure to the benefit, and
be on behalf, of the other Party. Each Party acknowledges that its
utilization of the other Party's Marks will not create in it, nor will
it represent it has, any right, title, or interest in or to such Marks
other than the licenses expressly granted herein. Each Party agrees
not to do anything contesting or impairing the rights of the other
Party in such other Party's Marks.
10.5 Quality Standards. Each Party agrees that the nature and quality
-----------------
of its products and services supplied in connection with the other
Party's Marks will conform to quality standards set by the other
Party. Each Party agrees to supply the other Party, upon request,
with a reasonable number of samples of any materials publicly
disseminated by such Party which utilize the other Party's Marks.
Each Party will comply with all applicable laws, regulations, and
customs and obtain any required government approvals pertaining to use
of the other Party's Marks.
10.6 Infringement Proceedings.
------------------------
10.6.1 Notification. Each Party agrees to promptly notify the
------------
other Party of any third party's unauthorized use of the other Party's
Marks or other intellectual property rights (including, without
limitation, those set forth in Section 12) of which it has actual
knowledge. Each Party will have the sole right and discretion to
bring proceedings alleging infringement of its Marks and other
intellectual property rights; provided, however, that each Party
-------- -------
agrees to provide the other Party with its reasonable cooperation and
assistance with respect to any such infringement proceedings.
10.6.2 Infringement Claims. In addition to the remedies set
-------------------
forth in Sections 16.2 and 16.7 of this Agreement, in the event that
during the Initial Term, one (1) or more infringement actions, claims
or proceedings are brought against either Party concerning (i) ****
(each an "Infringement Claim" and collectively, "Infringement Claims")
and such Infringement Claim or Infringement Claims result(s) in the
issuance of a preliminary or permanent injunction prohibiting the
promotion, distribution or use of **** (****) **** during the Initial
Term, and which last (with respect to each such service) **** (****)
following the issuance thereof, ICQ shall have the following rights
and remedies with respect to N2P:
(a) ICQ may immediately terminate its exclusivity obligations with
respect to such preliminarily or permanently enjoined Core Premium
Services upon delivery of notice to N2P; and
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
26
EXECUTION VERSION
(b) ICQ shall be entitled to immediately terminate this Agreement
in the event that (a) an injunction or injunctions (whether
preliminary or permanent) is or are issued with respect to any Core
Premium Service or Core Premium Services, and (b) any such injunction
or injunctions lasts or last, in the aggregate, for a period of ****
(****) ****.
11. PUBLICITY
---------
11.1 Press Releases. After execution of this Agreement, N2P may issue an
--------------
initial press release, with terms to be mutually agreed by the
Parties, regarding this Agreement and the relationship between the
Parties established hereby. Prior to (i) the launch of the PTP
Calling Card Service and (ii) the launch of the 2000a ICQ Client, N2P
may issue an additional press release, with terms to be mutually
agreed by the Parties in advance. The Parties will mutually agree on
the appropriate timing of each such release and any other public
announcement of the relationship. Each Party agrees that it shall not
issue any other press release or make any public announcement
regarding this Agreement, including ICQ or the ICQ IP Telephony
Services, without the prior written consent of the other Party;
provided, however, that each Party shall be permitted, without the
-------- -------
other Party's prior consent, merely to list the other Party's as one
of its industry partners and to repeat factual information or
statements contained in any mutually agreed-upon press release.
11.2 Statements to Third Parties. Neither Party shall make, publish, or
---------------------------
otherwise communicate, or cause to be made, published, or otherwise
communicated, any deleterious remarks whatsoever to any third parties
concerning the other Party or its affiliates, directors, officers,
employees or agents, including without limitation, the other Party's
products, services, business projects, business capabilities,
performance of duties and services or financial position.
12. OWNERSHIP
---------
12.1 ICQ Properties. As between the Parties, ICQ owns all copyrights,
--------------
patents, trade secrets, trademarks, trade name rights, other
intellectual property rights, and all other right, title and interest,
in and to (i) the components of the ICQ Client and the ICQ Service,
and any Updates thereto, including, but not limited to the ICQ GUI,
that (in each case) are developed or supplied by ICQ and (ii) the
Commissioned Works (but excluding the Joint Work Product), subject to
the rights expressly granted to N2P as set forth in this Agreement.
Without limiting the generality of the foregoing, all right, title and
interest in and to all servers and server-based technology related to
the ICQ Service developed or supplied by ICQ (including, without
limitation, protocols, parameters, designs, specifications and user
identification algorithms and technology underlying such algorithms)
shall be owned by ICQ.
12.2 N2P Properties. As between the Parties, N2P owns all copyrights,
--------------
patents, trade secrets, trademarks, trade name rights, other
intellectual property rights, and all other right, title and interest,
in and to the N2P System, the N2P Services (including, but not limited
to, the elements of graphics, design, organization, presentation,
layout, navigation and stylistic convention (including the digital
implementations thereof) of the graphical user interface generally
associated with online areas contained within the N2P System and the
N2P Services), the N2P IP Telephony Software, the ICQ IP Telephony
Software and the ICQ IP Telephony Services (including, in each case,
Updates thereto) that (in each case) are developed or supplied by N2P
(but excluding the ICQ GUI, the Joint Work Product and the
Commissioned Works), subject to the rights expressly granted to ICQ as
set forth in this Agreement. Without limiting the generality of the
foregoing, all right, title
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
27
EXECUTION VERSION
and interest in and to all servers and server-based technology related
to the N2P System and the N2P Services developed or supplied by N2P,
including, without limitation, protocols, parameters, designs,
specifications and user identification algorithms and technology
underlying such algorithms, shall be owned by N2P.
12.3 Co-Development. Any works, including without limitation, software or
--------------
other copyrightable materials, as to which both Parties (or their
employees, contractors or agents) are joint authors, and any patents
as to which both Parties (or their employees, contractors, or agents)
are co-inventors (collectively, the "Joint Work Product") shall be
jointly owned by the Parties (with each Party having the right to use
and exploit, or authorize the use or exploitation by others of such
Joint Work Product, provided that such use or exploitation is not in
breach of this Agreement), without an obligation to obtain the consent
of, or to account to, the other Party and subject to N2P's and ICQ's
respective proprietary rights in any underlying software, works, or
technology to the extent incorporated or included in such Joint Work
Product. Notwithstanding the foregoing, to the extent that with
respect to any co-developed works created under this Agreement, the
Parties shall not constitute co-authors or co-inventors, and N2P owns
such works or inventions as a matter of law, any and all such works or
inventions shall be deemed included in the license set forth in
Section 10.1, and ICQ shall be deemed by this reference to have a
fully paid-up, royalty-free, non-exclusive, non-transferable and
worldwide license for the Term to use, reproduce, distribute (directly
and indirectly), transmit, display, perform, sublicense and adapt such
works as set forth in Section 10.1 of this Agreement. Each Party
shall cooperate with the other Party in documenting and perfecting all
rights with respect to the Joint Work Product, including executing any
necessary assignments, applications or other documentation with
respect to the Joint Work Product.
13. CONFIDENTIAL INFORMATION
------------------------
Each Party acknowledges that Confidential Information may be disclosed to
the other Party during the course of this Agreement. Each Party agrees
that it will take reasonable steps, at least substantially equivalent to
the steps it takes to protect its own proprietary information (and, in no
event, with less than the exercise of reasonable care), during the Term,
and for a period of **** (****) **** following expiration or termination
of this Agreement, to prevent the duplication or disclosure of Confidential
Information of the other Party, other than by or to its employees or agents
who must have access to such Confidential Information to perform such
Party's obligations hereunder, each of whom shall agree to comply with this
Section. Notwithstanding the foregoing, either Party may disclose
Confidential Information without the consent of the other Party, to the
extent such disclosure is required by law, rule, regulation or government
or court order. In such event, the disclosing Party will provide at least
five (5) business days' prior written notice of such proposed disclosure to
the other Party. Furthermore, in the event that such disclosure is required
of either Party under the laws, rules or regulations of the Securities and
Exchange Commission or any other applicable governing body, such Party will
(i) redact portions of this Agreement (as reasonably agreed to by both
Parties) to the fullest extent permitted under applicable laws, rules and
regulations and (ii) submit a request to such governing body that such
portions and other provisions of this Agreement receive confidential
treatment under the laws, rules and regulations of the governing body or
otherwise be held in the strictest confidence to the fullest extent
permitted under such laws, rules and regulations.
14. REPRESENTATIONS AND WARRANTIES; INDEMNITIES
-------------------------------------------
14.1 Joint. Each Party represents and warrants to the other Party that:
-----
(i) such Party has the full corporate right, power and authority to
enter into this Agreement, to grant the licenses
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
28
EXECUTION VERSION
granted hereunder and to perform the acts required of it hereunder;
(ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do
not and shall not violate any agreement to which such Party is a party
or by which it is otherwise bound or any applicable law; (iii) when
executed and delivered by such Party, this Agreement shall constitute
the legal, valid and binding obligation of such Party, enforceable
against such Party in accordance with its terms; and (iv) to the best
of its knowledge after due inquiry, the N2P Indemnified Properties (in
the case of N2P) and the ICQ Indemnified Properties (in the case of
ICQ) do not infringe, misappropriate or violate any patents,
copyrights, trade secrets, trademarks or other proprietary rights of
any third parties. Additionally, N2P hereby represents, to the best of
its knowledge and after due inquiry, that it possesses (and warrants
that it will obtain during the Term) all authorizations, approvals,
consents, licenses, permits, certificates and all other rights and
permissions necessary for it to (a) perform under this Agreement or
(b) to offer the ICQ IP Telephony Software and the ICQ IP Telephony
Services hereunder (including, without limitation, the N2P Services
and N2P IP Telephony Software offered as part thereof).
14.2 Intellectual Property Indemnity. Each Party (the "IP Indemnifying
-------------------------------
Party") shall, at its sole cost and expense, indemnify, hold harmless
and defend the other Party, and such other Party's officers,
directors, agents, affiliates, distributors, franchisees and employees
(the "IP Indemnified Party"), from any and all claims, demands,
liabilities, costs or expenses of third parties (including, without
limitation, reasonable attorney's fees) (collectively, the
"Liabilities") arising from or in connection with a third-party claim
that the N2P Indemnified Properties (in the case of N2P) or the ICQ
Indemnified Properties (in the case of ICQ) infringes upon any
patents, copyrights, trade secrets, trademarks or other proprietary
rights of such third party. The IP Indemnifying Party shall pay any
damages (including costs and attorneys' fees) finally awarded against
the IP Indemnified Party by a court of competent jurisdiction as a
result of such claim (or pay any settlement of such claim agreed to by
the IP Indemnifying Party). The foregoing obligation of the
Indemnifying Party shall not apply to any such claim to the extent
that it is based on or arises out of services, software, materials or
rights specifically granted pursuant to this Agreement by the IP
Indemnified Party. The IP Indemnified Party shall promptly notify the
IP Indemnifying Party in writing of any indemnifiable claim after the
IP Indemnified Party first learns of such claim, and shall provide the
Indemnifying Party with such assistance and cooperation as the IP
Indemnifying Party may reasonably request from time to time in
connection with the defense or settlement thereof. The IP Indemnified
Party shall have the right to employ separate counsel and to
participate in the defense of any such claim at its own expense. If
any settlement requires a material affirmative obligation of, results
in any material ongoing liability to, or prejudices or detrimentally
impacts in any material way, the IP Indemnified Party, then such
settlement shall require the IP Indemnified Party's written consent,
which shall not be unreasonably withheld. If the IP Indemnified Party
is enjoined or restrained from exercising any of its rights under this
Agreement as a result of an infringement claim, or if any such claim
is brought or threatened, the IP Indemnifying Party shall have the
right, at its option, to (i) obtain a license at no cost to the IP
Indemnified Party permitting continued use of the software or other
materials that are the subject of such claim on terms and conditions
consistent with the rights granted to the IP Indemnified Party
hereunder, (ii) modify the software or other materials that are the
subject of such claim to perform their intended function without
infringing third party rights and without materially affecting the
functionality or performance of such software or other materials,
(iii) substitute software or other materials that are the subject of
such claim with items of comparable functionality and performance, or
(iv) if none of the foregoing is reasonably practicable, terminate
this Agreement.
29
EXECUTION VERSION
14.3 Indemnity. Each Party (the "Indemnifying Party") shall, at its
---------
sole cost and expense, indemnify, hold harmless and defend the other
Party, and its officers, directors, agents, affiliates, distributors,
franchisees and employees (the "Indemnified Party"), from any and all
Liabilities arising from or in connection with a third-party claim
based upon the Indemnifying Party's material breach of any duty,
representation or warranty contained in this Agreement, and shall pay
any damages (including costs and attorneys' fees) finally awarded
against the Indemnified Party by a court of competent jurisdiction as
a result of such claim (or pay any settlement of such claim agreed to
by the Indemnifying Party). The foregoing obligation of the
Indemnifying Party shall not apply to any such claim to the extent
that it is based on or results from services, software, materials,
information or rights provided by the Indemnified Party. The
Indemnified Party shall promptly notify the Indemnifying Party in
writing of any indemnifiable claim after the Indemnified Party first
learns of such claim, and shall provide the Indemnifying Party with
such assistance and cooperation as the Indemnifying Party may
reasonably request from time to time in connection with the defense or
settlement thereof. The Indemnified Party shall have the right to
employ separate counsel and to participate in the defense of any such
claim at its own expense. If any settlement requires a material
affirmative obligation of, results in any material ongoing liability
to, or prejudices or detrimentally impacts the Indemnified Party in
any material way, then such settlement shall require the Indemnified
Party's written consent, which shall not be unreasonably withheld.
15. LIMITATION ON LIABILITY; DISCLAIMER
-----------------------------------
15.1 Liability. UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE
---------
OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES), ARISING FROM BREACH OF OR OTHERWISE
RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, INCLUDING,
WITHOUT LIMITATION, THE SALE OF PRODUCTS, THE USE OR INABILITY TO USE
THE ICQ SERVICE, THE ICQ CLIENT, THE ICQ IP TELEPHONY SERVICE, THE
SUPPORT AREA, THE ICQ IP TELEPHONY SOFTWARE, THE N2P SYSTEM, OR THE
N2P IP TELEPHONY SOFTWARE, INCLUDING, BUT NOT LIMITED TO, LOSS OF
REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS (COLLECTIVELY,
"DISCLAIMED DAMAGES"); PROVIDED THAT EACH PARTY WILL REMAIN LIABLE TO
THE OTHER PARTY TO THE EXTENT ANY DISCLAIMED DAMAGES ARE PAYABLE TO A
THIRD PARTY AND ARE SUBJECT TO INDEMNIFICATION PURSUANT TO SECTION
14.2 OR 14.3. EXCEPT FOR SUCH LIABILITY UNDER SECTIONS 14.2 AND
14.3, (I) LIABILITY ARISING UNDER THIS AGREEMENT WILL BE LIMITED TO
DIRECT, OBJECTIVELY MEASURABLE DAMAGES, AND (II) THE MAXIMUM LIABILITY
OF ONE PARTY TO THE OTHER FOR ANY CLAIMS ARISING IN CONNECTION WITH
THIS AGREEMENT WILL NOT EXCEED (EXCLUSIVE OF AMOUNTS ALREADY PAID BY
EITHER PARTY TO THE OTHER PARTY HEREUNDER) **** ($****); PROVIDED THAT
EACH PARTY WILL REMAIN LIABLE FOR THE AGGREGATE AMOUNT OF ANY PAYMENT
OBLIGATIONS DUE AND PAYABLE TO THE OTHER PARTY PURSUANT TO THE
AGREEMENT.
15.2 No Additional Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS
------------------------
AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY
DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF
DEALING OR COURSE OF PERFORMANCE. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, EACH PARTY SPECIFICALLY DISCLAIMS ANY WARRANTY
REGARDING THE
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
30
EXECUTION VERSION
REVENUE FROM OR SUCCESS OF THE ICQ IP TELEPHONY SERVICES.
16. TERM AND TERMINATION
--------------------
16.1 Term.
----
16.1.1 Initial Term. Unless earlier terminated as set forth
------------
herein, the initial term of this Agreement (the "Initial Term") shall
be four (4) years from the Effective Date.
16.1.2 Extension Periods. Upon the expiration of the Initial
-----------------
Term, ICQ may elect, in its sole discretion, to extend the term of
this Agreement for two additional periods of **** (****) **** each
(each, an "Extension Period"), up to an aggregate maximum of ***
(****) **** (the Initial Term, together with any Extension Periods,
collectively referred to herein as the "Term"). ICQ shall be deemed to
have exercised its option for any Extension Period unless, at least
thirty (30) days prior to the expiration of the Initial Term (or, as
to the second Extension Period, at least thirty (30) days prior to the
end of the first Extension Period), ICQ provides written notice to N2P
that ICQ does not wish to exercise its option for the forthcoming
Extension Period. During any Extension Period, the obligations of the
Parties with respect to exclusivity, development, promotions and
performance shall not apply. Without limitation of the generality of
the foregoing, during any Extension Period, (i) the Parties will not
be subject to the obligations of Sections **** of this Agreement; (ii)
N2P shall not be required to pay ICQ any guaranteed fixed payments;
and (iii) N2P shall continue to pay ICQ the Revenue Share set forth in
Exhibit H hereto with respect to all Transaction Revenues generated
during the Extension Period and ICQ shall continue to pay to N2P the
Advertising Revenue Share set forth in Section 7.2.2 of this
Agreement. In addition, N2P reserves the right during any Extension
Period to cease providing particular ICQ IP Telephony Services in
particular countries, provided that it may not cease providing the ICQ
--------
IP Telephony Services in the top **** percent (****%) of Collective
International Gateways, based on the respective amount of Transaction
Revenues generated in or from each such Collective International
Gateway during the Initial Term.
16.2 Termination for Breach. Except as expressly provided elsewhere in
----------------------
this Agreement, either Party may terminate this Agreement at any time
in the event of a material breach of the Agreement by the other Party
which remains uncured after thirty (30) days written notice thereof to
the other Party (or such other period as may be expressly specified
elsewhere in this Agreement); provided that the cure period with
--------
respect to any scheduled payment shall be thirty (30) days following
receipt by the Party owing such payment of written notice of the
failure to make such payment. For avoidance of doubt, the Parties
acknowledge that, if a particular provision of this Agreement includes
a right to terminate this Agreement due to breach of such provision
after a cure period set forth in such provision, only such other cure
period shall apply, and the thirty (30) day cure period set forth in
this Section 16.2 shall not be in addition to such other cure period.
16.3 Termination on Change of Control. Promptly upon undergoing any Change
--------------------------------
of Control, each Party shall provide the other Party with written
notice thereof. In the event of (i) a Change of Control of N2P
resulting in Control of N2P by an ICQ Competitor or AOL Competitor or
(ii) in the event that N2P is (at the time of such Change of Control)
Controlled by the Parent Company, any Change of Control of the Parent
Company resulting in Control of the Parent Company by any ICQ
Competitor or AOL Competitor, ICQ shall have the right to terminate
this Agreement by providing thirty (30) days' prior
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
31
EXECUTION VERSION
written notice of such intent to terminate. In the event of (i) a
Change of Control of ICQ resulting in Control of ICQ by an N2P
Competitor or Parent Company Competitor or (ii) if ICQ is (at the time
of such Change of Control) Controlled by AOL, any Change of Control of
AOL resulting in Control of AOL by any N2P Competitor or Parent
Company Competitor, N2P may terminate this Agreement by providing
thirty (30) days' prior written notice of such intent to terminate.
Notwithstanding anything to the contrary, each Party's termination
right under this Section 16.3 shall be exercised no later than thirty
(30) days following such Party's receipt of written notice of the
Change of Control triggering such termination right, and shall expire
if not exercised within such thirty (30) day period.
16.3.1 ICQ Buyout Right. Notwithstanding the provisions of the
----------------
Section 16.3, if during the Initial Term, AOL or ICQ is acquired by or
acquires a telecommunications company with a market capitalization in
excess of the Buyout Threshold, ICQ shall have the right to terminate
this Agreement by providing thirty (30) days prior written notice to
N2P and ICQ shall refund to N2P an amount equal to the product of the
pro rata portion (based on a four (4) year term) of any guaranteed
--- ----
payments made by N2P prior to the date of such early termination
multiplied by **** (****) (e.g., if such termination occurs on the two
(2) year anniversary of the Effective Date, and N2P has paid ICQ
**** (US$****) in guaranteed payments as required by the terms of this
Agreement, ICQ shall refund to N2P **** percent (****%) of such
guaranteed payments multiplied by **** (****), or **** Dollars
($****)).
16.4 Termination for Bankruptcy/Insolvency. Either Party may terminate
-------------------------------------
this Agreement immediately following written notice to the other party
if the other party (i) ceases to do business in the normal course,
(ii) becomes or is declared insolvent or bankrupt, (iii) is the
subject of any proceeding related to its liquidation or insolvency
(whether voluntary or involuntary) which is not dismissed within
ninety (90) calendar days or (iv) makes an assignment for the benefit
of creditors.
16.5 Termination for Regulated Entity Event.
--------------------------------------
16.5.1 United States. The Parties acknowledge that in
-------------
undertaking the obligations set forth herein, ICQ is not offering
services as a reseller of telecommunications services or as a provider
of telecommunications services. It is understood and agreed that if,
during the Term, the Federal Communications Commission or any other
relevant United States federal regulatory body issues (or is
reasonably likely to issue) a ruling that subjects (or is reasonably
likely to subject, as the case may be) ICQ to regulation as a reseller
or provider of telecommunications services (or similar regulation)
(collectively, a "Regulated Entity Event"), the Parties agree to work
together in good faith to amend this Agreement to ensure that ICQ can
secure the benefit of the bargain under this Agreement without being
subject to telecommunications related regulation in the United States
as a telecommunications reseller or provider (or similar status). If
the Parties are unable to agree upon such amendments within ninety
(90) days of ICQ's notification of the Regulatory Entity Event, ICQ
may terminate this Agreement without liability by providing written
notice of its intention to terminate.
16.5.2 International. In the event that during the Term any
-------------
non-US regulatory body issues (or is reasonably likely to issue) a
ruling that subjects (or is reasonably likely to subject, as the case
may be) ICQ to a telecommunications or similar regulation that could
prevent ICQ from obtaining the benefit of the bargain under this
Agreement (e.g., regulation as a reseller or provider of
telecommunications services (or similar status)), the Parties shall
work together in good faith to amend this Agreement to ensure that ICQ
can
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
32
EXECUTION VERSION
secure the benefit of the bargain under this Agreement without being
subject to telecommunications related or similar regulation in such
country. If the Parties are unable to agree upon such amendments
within ninety (90) days of ICQ's notification of the regulatory event
likely to cause ICQ to be subjected to any such regulation, ICQ may
terminate this Agreement with respect to the country (or countries) in
which such regulatory event applies without liability, upon delivery
of written notice.
16.6 Termination for Non-Competitiveness. At any time following the one
-----------------------------------
(1) year anniversary of the Effective Date, (i) ICQ shall have the
right to terminate this Agreement, in the event that:
(a) **** (****) or more of the Core Premium Services do not satisfy
the requirements of Section 3.1 of this Agreement;
(b) **** (****) or more of the Core Premium Services do not satisfy
the requirements of Section 3.2 of this Agreement;
(c) **** (****) or more of the Core Premium Services are not Best
of Breed as defined in Section 3.3(i) or Section 3.3(ii) of this
Agreement (notwithstanding N2P's efforts to satisfy such standard);
(d) N2P is not Best of Breed as defined in Section 3.3(iii) of this
Agreement (notwithstanding N2P's efforts to satisfy such standard); or
(e) N2P shall have missed the Cutoff Dates for **** (****) or more
Core Premium Services in accordance with and subject to Section 1.3 of
this Agreement;
unless (ii) N2P cures such failure within the applicable cure
------
periods set forth in Section 3.1 (in the case of clause (a) above),
Section 3.2 (in the case of clause (b) above), Section 3.3 (in the
case of clauses (c) and (d) above) or Section 1.3 and Exhibit I (in
the case of clause (e) above), respectively.
16.7 ICQ IP Termination Right. At any time during the Term, in the event
------------------------
that any Infringement Claim(s) materially adversely affect the
integration, distribution, promotion or offering of the ICQ IP
Telephony Software or any ICQ IP Telephony Service, then ICQ shall
have the right to terminate this Agreement upon thirty (30) days prior
written notice to N2P, and without any refund to N2P (collectively,
the "IP Termination Right").
16.8 Termination for Strategic Relationship; Termination Fee.
-------------------------------------------------------
If at any time after the two (2) year anniversary of the Effective
Date, AOL enters into a broad-ranging, strategic relationship with (i)
any major national or international telecommunications company
(****), (ii) any **** or (iii) any major wireless carrier (****) for
the distribution of telecommunication services across substantially
all of the properties of AOL and its Affiliates as in existence on the
Effective Date (collectively, the "New Strategic Relationship"), then
ICQ shall have the right to terminate this Agreement; provided,
--------
however, that ICQ and AOL (as applicable) shall use commercially
-------
reasonable efforts to have such company enter into an agreement with
N2P to distribute or otherwise offer the Core Premium Services in
connection with such New Strategic Relationship on terms and
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
33
EXECUTION VERSION
conditions comparable to those contained herein (including those with
respect to promotion, distribution, exclusivity for N2P and revenue
share to N2P, but specifically excluding any warrants or similar
rights). In the event of any such termination of this Agreement
pursuant to this Section 16.8, ICQ shall pay N2P (as its sole and
exclusive remedy), within **** (****) days after the earlier of notice
to N2P of the New Strategic Relationship or the public announcement by
AOL of the New Strategic Relationship, a termination fee of ****
dollars (US$****); provided, however, that (a) if, before the
-------- -------
expiration of such **** (****) day period, such company and N2P have
entered into such an agreement to distribute or otherwise offer some
but not all of the Core Premium Services in connection with such New
Strategic Relationship, then ICQ shall instead pay N2P (as its sole
and exclusive remedy) a termination fee equal to the pro rata share of
such **** Dollars (US$****), based on the percentage of the aggregate
Transaction Revenues to date represented by the Core Premium
Service(s) that will not be distributed or otherwise offered by such
company (i.e., the Core Premium Services of N2P that are not included
in such agreement between such company and N2P) (e.g., in the event
such company does not agree with N2P to distribute or otherwise offer
the PC-to-PC Service and the PC-to-Phone Service in connection with
such New Strategic Relationship, and the Transaction Revenues
generated by such services represent seventy-five percent (75%) of the
aggregate Transaction Revenues to date, then ICQ shall pay N2P ****
dollars (US$****)); or (b) if, before the expiration of such ****
(****) day period, such company and N2P have entered into such an
agreement to distribute or otherwise offer all of the Core Premium
Services in connection with such New Strategic Relationship, then ICQ
shall have no obligation to pay any such termination fee to N2P. The
Parties acknowledge and agree that the payment contemplated by this
Section 16.8 is solely a termination fee agreed to by the Parties, and
shall not be used to determine any damages payable by either Party to
the other Party hereunder, which shall be determined in accordance
with the remainder of this Agreement (including, without limitation,
Section 15.1 hereof) and applicable law.
16.9 Transition Assistance. In the event of any termination of this
---------------------
Agreement other than pursuant to Sections 16.1, 16.4 or 16.5, each
Party will provide to the other Party the dedicated, full-time
services of one (1) qualified engineer for a period of ninety (90)
days to assist the other Party in effecting an orderly termination of
this Agreement, including minimizing disruption for customers of the
ICQ IP Telephony Services. In the event of termination due to an ICQ
material breach of this Agreement pursuant to Section 16.2, or a
Change of Control of ICQ under Section 16.3, or the occurrence of a
Regulated Entity Event under Section 16.5, ICQ shall pay N2P the
actual, reasonable, fully-allocated costs incurred in connection with
N2P's assistance in the migration or transition. In the event of
termination due to a N2P material breach of this Agreement pursuant to
Section 16.2, a Change of Control of N2P under Section 16.3, or the
exercise by ICQ of its IP Termination Right under Section 16.7 of this
Agreement, N2P shall pay for the actual, reasonable, fully-allocated
costs incurred in connection with ICQ's assistance in the migration or
transition. In the event of any other termination of this Agreement,
each Party shall pay for its own costs and out-of-pocket expenses
incurred in connection with such migration or transition. For the
avoidance of doubt, such migration or transition assistance shall not
include development obligations. At ICQ's request, at the end of the
Initial Term, N2P shall use commercially reasonable efforts to
transfer to ICQ the phone numbers and special access codes referred to
in Section 5.2.1 of this Agreement unless such phone numbers are used
for N2P Services other than the ICQ IP Telephony Services.
16.10 Transition Period. For a period of up to ninety (90) days following
-----------------
the termination or expiration of this Agreement (the duration of
which, up to ninety (90) days, shall be determined by ICQ and notified
to N2P) (the "Transition Period"), the Parties shall cooperate to
effect an orderly termination of this Agreement, including minimizing
disruption for customers of the ICQ IP Telephony Services. During the
Transition Period, each of ICQ and N2P shall have all of the rights
and obligations set forth in this Agreement (including, without
limitation, with respect to the ICQ IP Telephony Services) that they
had prior to the date of termination or expiration (including, in the
case of ICQ, all rights necessary to enable ICQ to transition the ICQ
IP Telephony Services (other than PTP Calling Card Services) to
another system without interruption of service). Notwithstanding the
foregoing, during the Transition Period, N2P shall be entitled to
Transaction Revenues to the same extent as before such termination or
expiration, but the Parties shall not be subject to the obligations
and criteria in this Agreement with respect to exclusivity,
promotions, development, delivery, performance and Updates. During the
Transition Period, N2P shall remain obligated to provide to ICQ the
support services described in Section 6. Also, during the Transition
Period, N2P shall provide ICQ with reasonable assistance in migrating
or transitioning the ICQ IP Telephony
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
34
EXECUTION VERSION
Services (other than PTP Calling Card Services) to another provider.
Each Party shall be entitled to seek injunctive relief such as
specific performance in the event the other Party fails to comply with
its transition obligations under this Section 16.10; provided,
--------
however, that, following any termination or expiration of this
-------
Agreement, in the event either Party fails to comply with its
transition obligations under this Section 16.10, the Parties shall
attempt to resolve such failure to the satisfaction of both Parties
through the Management Committee, and in the event that the Parties
are unable to do so, ICQ shall be entitled to seek injunctive relief
in accordance with this Section 16.10. Notwithstanding the foregoing,
all end-user sublicenses of the ICQ IP Telephony Software shall
survive the termination or expiration of this Agreement pursuant to
the terms of such end user license agreement as provided herein.
16.11 Return of Information. Upon the expiration or termination of this
---------------------
Agreement, each Party shall, upon the written request of the other
Party, return or destroy (at the option of the party receiving the
request) all Confidential Information of the other Party.
16.12 Survival. Notwithstanding anything to the contrary contained
--------
herein, the provisions of Sections 7.1, 7.2, 7.3 and 7.6 (as to
amounts accrued but unpaid), 7.7, 7.8, 7.9, 12, 13, 14, 15, 16.8,
16.9, 16.10, 16.11, 16.12, 17, 18.1, 18.3, 18.5 and 18.14 shall
survive the termination, cancellation or expiration of this
Agreement. In addition, all payment terms of this Agreement and any
provision which, by its nature, must survive the expiration,
termination or cancellation of this Agreement, shall survive the
expiration, termination or cancellation of this Agreement. All
licenses granted by either Party to the other pursuant to this
Agreement shall terminate upon termination or expiration of this
Agreement except as otherwise expressly set forth herein with respect
to the Transition Period.
17. DISPUTE RESOLUTION
------------------
17.1 Management Committee. The Parties will act in good faith and use
--------------------
commercially reasonable efforts to promptly resolve any claim,
dispute, controversy or disagreement between the Parties or any of
their respective Affiliates, successors and assigns under or related
to this Agreement (including, without limitation) any document
executed pursuant to this Agreement or any of the transactions
contemplated hereby or any rights or obligations hereunder (each, a
"Dispute"). If the Parties cannot resolve any such Dispute within ten
(10) business days, such Dispute will be submitted to the Management
Committee for resolution. For ten (10) days following submission of
the Dispute to the Management Committee, the Management Committee
will have the exclusive right to resolve such Dispute; provided,
--------
further, that the Management Committee will have the final and
-------
exclusive right to resolve Disputes arising from any provision of the
Agreement which expressly or implicitly provides for the Parties to
reach mutual agreement as to certain terms. If the Management
Committee is unable to amicably resolve the Dispute during the ten
(10) day period, then such Dispute shall be subject to the resolution
mechanisms described below. Neither Party shall seek, nor shall be
entitled to seek, binding outside resolution of the Dispute unless
and until the Parties have been unable amicably to resolve the
Dispute as set forth in this Section 17.1 and then, only in
compliance with the procedures set forth in this Section 17. For the
avoidance of doubt, neither Party shall be required to submit any
Dispute to the Management Committee or to arbitration prior to
issuing any notice of suspension or termination under Sections 3, 4,
9 or 16 of this Agreement. In addition, the submission of any Dispute
to the Management Committee or to arbitration hereunder shall not
affect either Party's right to exercise any such suspension or
termination right under this Agreement, except as otherwise
determined, pursuant to a binding decision or order, by a court of
competent jurisdiction (in accordance with Section 17.4 of this
Agreement) or an arbitral panel (in accordance with Section 17.2 of
this Agreement).
35
EXECUTION VERSION
17.2 Arbitration.
-----------
17.2.1 Arbitration. Any Dispute not resolved by amicable
-----------
resolution as set forth in Section 17.1 shall be governed exclusively
and finally by arbitration conducted by the American Arbitration
Association ("AAA") in New York, New York in accordance with the
Commercial Arbitration Rules ("Commercial Rules") of the AAA,
including the AAA Supplementary procedures for Large Complex
Commercial Disputes ("Complex Procedures"), as such rules shall be in
effect on the date of delivery of a demand for arbitration ("Demand"),
except to the extent that such rules are inconsistent with the
provisions set forth herein. Notwithstanding the foregoing, the
Parties may agree in good faith that the Complex Procedures shall not
apply in order to promote the efficient arbitration of Disputes where
the nature of the Dispute, including without limitation the amount in
controversy, does not justify the application of such procedures.
17.2.2 Selection of Arbitrators. The arbitration panel shall
------------------------
consist of three (3) arbitrators. Each Party shall name one (1)
arbitrator within ten (10) days after the delivery of the Demand, and
the two Party-appointed arbitrators shall appoint the third
arbitrator. The third arbitrator shall be a neutral participant, with
no prior working relationship with either Party. If the two
arbitrators are unable to select a third arbitrator within ten (10)
days, a third neutral arbitrator shall be appointed by the AAA from
the panel of commercial arbitrators of any of the AAA Large and
Complex Resolution Programs.
17.2.3 Arbitral Rules. The Federal Arbitration Act, 9 U.S.C.
--------------
Secs. 1-16, and not state law, shall govern the arbitrability of all
Disputes. The arbitrators shall allow such discovery as is
appropriate to the purposes of arbitration in accomplishing a fair,
speedy and cost-effective resolution of the Disputes. The arbitrators
shall reference the Federal Rules of Civil Procedure then in effect in
setting the scope and timing of discovery.
17.2.4 Arbitration Awards. The arbitrators shall have the
------------------
authority to award compensatory damages only. Any award by the
arbitrators shall be accompanied by a written opinion setting forth
the findings of fact and conclusions of law relied upon in reaching
the decision. The award rendered by the arbitrators shall be final,
binding and non-appealable, and judgment upon such award may be
entered by any court of competent jurisdiction. The Parties agree
that the existence, conduct and content of any arbitration shall be
kept confidential and no Party shall disclose to any person any
information about such arbitration, except as may be required by law
or by any governmental authority or for financial reporting purposes
in each Party's financial statements.
17.2.5 Arbitration Expenses. Each Party shall pay the fees of
--------------------
its own attorneys, expenses of witnesses and all other expenses and
costs in connection with the presentation of such Party's case
(collectively, "Attorneys' Fees"). The remaining costs of the
arbitration, including without limitation, fees of the arbitrators,
costs of records or transcripts and administrative fees (collectively,
"Arbitration Costs") shall be borne equally by the Parties.
Notwithstanding the foregoing, the arbitrators may modify the
allocation of Arbitration Costs and award Attorneys' Fees in those
cases where fairness dictates a different allocation of Arbitration
Costs between the Parties and an award of Attorneys' Fees to the
prevailing Party as determined by the arbitrators.
17.3 Governing Law. This Agreement shall be governed by and interpreted
--------------
under the laws of the State of New York, without reference to New
York's choice of law rules.
36
EXECUTION VERSION
17.4 Limited Interim Injunctive Relief; Consent to Jurisdiction.
----------------------------------------------------------
Notwithstanding the foregoing, the Parties hereby acknowledge and
agree that the Parties may seek interim injunctive relief with respect
to any Disputes arising under Sections 5.3, 10.3 and 13 of this
Agreement. In connection with any such Disputes, each of ICQ and N2P:
(i) irrevocably consents to the exclusive jurisdiction of any state or
Federal court located in the Borough of Manhattan, City of New York,
State of New York over any and all such interim injunctive relief;
(ii) waives personal service of any and all process upon it in
connection with such interim injunctive relief; (iii) consents that
any such service of process in connection therewith shall be made by
registered mail directed to ICQ or N2P (as the case may be), and that
such service shall be deemed to have been completed on the date
determined in accordance with Section 18.3 of this Agreement; and (iv)
waives any objection based upon forum non conveniens and any objection
----- --- ----------
to venue in connection with any such interim injunctive relief.
18. GENERAL PROVISIONS
------------------
18.1 Acknowledgment. ICQ AND N2P EACH ACKNOWLEDGE THAT THE PROVISIONS OF
--------------
THIS AGREEMENT WERE NEGOTIATED TO REFLECT AN INFORMED, VOLUNTARY
ALLOCATION BETWEEN THEM OF ALL RISKS (BOTH KNOWN AND UNKNOWN)
ASSOCIATED WITH THE TRANSACTIONS CONTEMPLATED HEREUNDER. THE
LIMITATIONS AND DISCLAIMERS RELATED TO WARRANTIES AND LIABILITY
CONTAINED IN THIS AGREEMENT ARE INTENDED TO LIMIT THE CIRCUMSTANCES
AND EXTENT OF LIABILITY. THE PROVISIONS OF THIS SECTION 18.1 SHALL BE
ENFORCEABLE INDEPENDENT OF AND SEVERABLE FROM ANY OTHER ENFORCEABLE OR
UNENFORCEABLE PROVISION OF THIS AGREEMENT.
18.2 Independent Contractors. The Parties to this Agreement are
-----------------------
independent contractors. Neither Party is an agent, representative,
or partner of the other Party. Neither Party shall have any right,
power or authority to enter into any agreement for or on behalf of, or
incur any obligation or liability of, or to otherwise bind, the other
Party. This Agreement shall not be interpreted or construed to create
an association, agency, joint venture or partnership between the
parties or to impose any liability attributable to such a relationship
upon either Party.
18.3 Notice. Any formal notice under this Agreement will be given in
------
writing and will be deemed to have been delivered and given for all
purposes (i) on the delivery date if delivered by confirmed facsimile;
(ii) on the delivery date if delivered personally to the Party to whom
the same is directed; (iii) one (1) business day after deposit with a
commercial overnight carrier, with written verification of receipt; or
(iv) five (5) business days after the mailing date, whether or not
actually received, if sent by U.S. mail, return receipt requested,
postage and charges prepaid, or any other means of rapid mail delivery
for which a receipt is available.
To ICQ: To N2P:
ICQ, Inc. Net2Phone Inc.
00000 XXX Xxx 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000 Xxxxxxxxxx, XX 00000
Attention: **** Attention: ****
Phone: **** Phone: ****
Fax: **** Fax: ****
E-mail: **** E-mail: ****
In the case of ICQ, such notice also will be provided to both the
Senior Vice President for
[****] REPRESENTS MATERIAL, WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
37
EXECUTION VERSION
Business Affairs (fax no. 000-000-0000 and the Deputy General Counsel
(fax no. 000-000-0000), each at the address set forth above. In the
case of N2P, such notice also will be provided to the General Counsel
at the address and fax number set forth above.
18.4 No Waiver. The failure of either Party to insist upon or enforce
strict performance by the other Party of any provision of this
Agreement or to exercise any right under this Agreement shall not be
construed as a waiver or relinquishment to any extent of such Party's
right to assert or rely upon any such provision or right in that or
any other instance; rather, the same shall be and remain in full force
and effect.
18.5 Entire Agreement. This Agreement sets forth the entire agreement, and
supersedes any and all prior and contemporaneous agreements of the
Parties with respect to the transactions set forth herein. Neither
Party shall be bound by, and each Party specifically objects to, any
term, condition or other provision which is different from or in
addition to the provisions of this Agreement (whether or not it would
materially alter this Agreement) and which is proffered by the other
Party in any correspondence or other document, unless the party to be
bound thereby specifically agrees to such provision in writing.
18.6 Amendment. No change, amendment or modification of any provision of
this Agreement will be valid unless set forth in a written instrument
signed by each Party by an executive or officer authorized to bind
such Party.
18.7 Assignment. Neither Party may assign any of its rights, interest or
----------
benefits or delegate any of its duties under this Agreement, or
otherwise transfer this Agreement without the prior written consent of
the other Party; provided that either party may assign this Agreement
as part of a reincorporation, change of domicile or merger of a Party
with or into, or sale of all or substantially all of the assets of a
Party to another entity that is not a competitor of the non-assigning
Party (i.e., an ICQ Competitor or AOL Competitor if ICQ is the non-
assigning Party or an N2P Competitor or Parent Company Competitor if
N2P is the non-assigning Party) if, in any such event, the assignee
(and any successor entity) agrees to be bound by this Agreement to the
same extent as the assigning Party. Subject to the foregoing, this
Agreement shall be fully binding upon, inure to the benefit of and be
enforceable by the Parties hereto and their respective successors and
assigns.
18.8 Construction. In the event that any provision of this Agreement
conflicts with the law under which this Agreement is to be construed
or if any such provision is held invalid by a court with jurisdiction
over the parties to this Agreement, (i) 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 (ii)
the remaining terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect.
18.9 Export Controls. With respect to their activities under this
Agreement, both Parties shall adhere to all applicable laws,
regulations and rules relating to the export of technical data and
shall not export or re-export any technical data, any products
received from the other Party or the direct product of such technical
data to any proscribed country listed in such applicable laws,
regulations and rules unless properly authorized.
18.10 Headings. The captions and headings used in this Agreement are
inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement.
18.11 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall
constitute one and the same document. This Agreement may also be
signed by facsimile transmission and any
38
EXECUTION VERSION
signature sent or received via facsimile transmission shall constitute
an original signature.
18.12 Force Majeure. N2P shall not be responsible for (any delays, errors,
failures to perform, interruptions or disruptions caused by or
resulting from any acts of God, strikes, lockouts, riots, acts of war,
fire, power failure, earthquakes, severe weather, floods or other
natural disaster or from any other unforeseeable events outside of
N2P's reasonable control (not including any subcontractor of services
provided by N2P hereunder) that prevents N2P from complying with any
of its material obligations under this Agreement (each, a "Force
Majeure Event"). The foregoing shall not relieve N2P from
responsibility to the extent that reasonable actions or actions
normally undertaken in the industry would have made such events within
N2P's reasonable control or prevented any such delays, errors,
failures, interruptions or disruptions. In addition, in no event will
a Force Majeure Event permit any delay, error, failure, interruption
or disruption for longer than a commercially reasonable time
considering the event (or beyond any applicable cure period expressly
set forth in this Agreement), and after such reasonable time period
(or express cure period, as the case may be), the Force Majeure Event
shall no longer be deemed to exist or apply.
18.13 Insurance. N2P, at its cost and expense, shall secure and maintain
---------
adequate insurance coverage as is necessary for N2P to bear all of its
obligations under this Agreement. Maintenance of such insurance shall
not be deemed to relieve or limit N2P of any responsibility or
obligation hereunder whatsoever. N2P assumes full and complete
liability for all injuries to, or death of, any person or for any
damages to property arising from its acts or omissions. N2P will add
ICQ as an additional insured on all appropriate insurance policies,
including all liability policies, with endorsements that require
thirty (30) days notice of ICQ of any cancellation of such policies,
and shall promptly provide ICQ with copies of such policies and
endorsements and any changes thereto from time to time. N2P's
insurance shall be primary as to any other insurance ICQ may have.
18.14 Remedies. Except where otherwise specified, the rights and remedies
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granted to a Party under this Agreement are cumulative and in addition
to, and not in lieu of, any other rights or remedies which the Party
may possess at law or in equity; provided that, in connection with any
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dispute hereunder, neither Party will be entitled to offset any
amounts that it claims to be due and payable from the other Party
against amounts otherwise payable by such Party to the other Party.
18.15 Disclaimers. Each ICQ IP Telephony Service shall contain an
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appropriate disclaimer (the specific form and substance to be mutually
agreed upon by the Parties).
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
ICQ, INC. NET2PHONE INC.
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxxxx Xxxxx
By: _______________________________ By: __________________________________
Print Name: Xxxxx X. Xxxxxxx Print Name: Xxxxxxxx Xxxxx
Title: Senior Vice President Title: Executive Vice President
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