EXHIBIT 10.8
IDT SERVICES AGREEMENT
IDT SERVICES AGREEMENT, dated as of May 7, 1999 (this "Agreement"), by and
between IDT Corporation, a Delaware corporation ("IDT"), and Net2Phone, Inc., a
Delaware corporation ("Net2Phone").
WHEREAS, Net2Phone is currently a subsidiary of IDT and obtains
administrative, customer support and other services from IDT;
WHEREAS, Net2Phone and IDT expect that equity interests in Net2Phone may be
sold to additional investors; and
WHEREAS, Net2Phone desires to continue to obtain administrative, customer
support and other services from IDT pursuant to the terms hereof and IDT desires
to continue to provide such services pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and mutual promises and
representations contained herein, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto do mutually
covenant, stipulate and agree as follows:
Section 1. Services.
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(a) IDT shall render to Net2Phone general accounting services, payroll
and benefits administration services, customer support and other services all as
more particularly described in Exhibit 1 hereto (collectively, the "Services").
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The Services shall be rendered by IDT in conformity with good commercial
practice, the terms and conditions of this Agreement and the reasonable
instructions of Net2Phone as set forth in this Agreement.
(b) Net2Phone shall provide to IDT when required all funds necessary to
perform the Services, including, without limitation, all amounts required to pay
payroll expenses of employees of Net2Phone and all amounts necessary to pay
accounts payable of Net2Phone.
(c) IDT shall have no authority pursuant to this Agreement to commit
Net2Phone to any obligation in any manner whatsoever with respect to third
parties, to use Net2Phone's name in any way or to enter into any contracts on
behalf of Net2Phone.
(d) In the event that Net2Phone requests services in addition to the
Services provided for herein, and if IDT agrees to provide such services, IDT
and Net2Phone shall negotiate in good faith a fee for such services, which
compensation shall be covered by the final sentence of Section 2(a) hereof;
provided, however, that the fee payable by
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Net2Phone for such services shall be no less favorable to Net2Phone than the
charges for comparable services from unaffiliated third parties. In the event
that the parties agree to additional services, the scope and duration of such
services, and any termination provisions with respect thereto, shall be
described in an addendum to Exhibit 1 and thereafter such services shall be
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considered Services hereunder. If and to the extent the parties agree to cancel
or terminate any of the Services, such services shall be deemed deleted from
Exhibit 1, with the remaining services thereafter constituting the Services
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hereunder.
Section 2. Compensation.
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(a) Net2Phone shall pay to IDT a fee for each of the Services equal to
the amount set forth in Exhibit 1 corresponding to such service. In the event
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Net2Phone terminates any Service in accordance with the final sentence of
Section 3 hereof, the fee for such Service shall no longer be payable for any
period subsequent to the effective date of such termination. In the event the
parties agree to additional services, such fee shall be payable as provided
herein.
(b) Within 15 days following the end of each calendar month, IDT shall
submit to Net2Phone for payment a billing invoice setting forth the amount of
fees payable by Net2Phone to IDT for Services rendered during such calendar
month. Net2Phone shall pay the invoiced amount to IDT within thirty (30) days
following receipt of such invoice by Net2Phone.
Section 3. Term.
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The term of this Agreement shall commence on the date hereof and shall
continue for a period of one (1) year (the "Initial Term") and, at the end of
the Initial Term and of each year thereafter, shall automatically renew for an
additional one (1) year period unless one party has given the other party thirty
(30) days' prior written notice terminating this Agreement. Following the
Initial Term, this Agreement may be terminated at any time at the option of
either IDT or Net2Phone upon thirty (30) days' prior written notice. Specific
categories of Services may be cancelled as set forth in Exhibit 1.
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Section 4. Records and Accounts.
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IDT shall maintain accurate records and accounts of all transactions
relating to the Services performed by it pursuant to this Agreement. Such
records and accounts shall be maintained separately from IDT's own records and
accounts and shall reflect such information as would normally be examined by an
independent accountant in performing a complete audit pursuant to United States
generally accepted auditing standards for the purpose of certifying financial
statements, and to permit verification thereof by
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governmental agencies. Net2Phone shall have the right to inspect and copy, upon
reasonable notice and at reasonable intervals during IDT's regular office hours,
the separate records and accounts maintained by IDT relating to the Services.
Section 5. Directors and Officers of Net2Phone and IDT.
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(a) Nothing contained in this Agreement shall be deemed to relieve the
officers and directors of Net2Phone from the performance of their duties or
limit the exercise of their powers in accordance with Net2Phone's Certificate of
Incorporation or the laws of the State of Delaware. The services of IDT's
officers and employees which are rendered to Net2Phone under this Agreement
shall at all times be in accordance with the reasonable instructions of
Net2Phone's officers and in accordance with IDT's historical business practice.
(b) Nothing in this Agreement shall limit or restrict the right of any
of IDT's directors, officers or employees to engage in any other business or
devote their time and attention in part to the management or other aspects of
any other business, whether of a similar nature, or to limit or restrict the
right of IDT to engage in any other business or to render services of any kind
to any corporation, firm, individual, trust or association; provided, however,
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that the foregoing shall in no way modify or limit IDT's agreement not to
compete with Net2Phone as set forth in Section 6.3 of the Separation Agreement
between IDT and Net2Phone, dated the date hereof (the "Separation Agreement"),
and IDT hereby confirms its agreement to be bound by the terms thereof..
Section 6. Liability; Indemnification.
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(a) IDT shall have no liability whatsoever to Net2Phone for any error,
act or omission in connection with the services to be rendered by IDT to
Net2Phone hereunder unless any such error, act or omission derives from willful
misconduct or gross negligence. The parties acknowledge that Article VIII of the
Separation Agreement provides for indemnification obligations relating to this
Agreement and confirm their agreement to be bound by the terms thereof. IN NO
EVENT SHALL IDT BE LIABLE TO NET2PHONE FOR ANY SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, REVENUES
OR DATA), WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR
OTHERWISE, WHETHER OR NOT IDT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGE. THE LIABILITY OF IDT FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER, WHETHER
IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED,
NET2PHONE'S DIRECT DAMAGES.
(b) IDT is an independent contractor and when its employees act under
the terms of this Agreement, they shall be deemed at all times to be under the
supervision and responsibility of IDT; and, notwithstanding any reimbursement of
labor costs as provided
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herein or otherwise, no person employed by IDT and acting under the terms of
this Agreement shall be deemed to be acting as agent or employee of Net2Phone or
any customer of Net2Phone for any purpose whatsoever.
Section 7. Other Agreements.
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From time to time, Net2Phone may find it necessary or desirable either to
enter into agreements covering services of the type contemplated by this
Agreement to be provided by parties other than IDT or to enter into other
agreements covering functions to be performed by IDT hereunder. Nothing in this
Agreement shall be deemed to limit in any way the right of Net2Phone to acquire
such services from others or to enter into such other agreements; provided that
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in no such event shall the compensation to be paid to IDT pursuant to Section 2
hereof be reduced on account thereof unless and until this Agreement is
terminated, or the applicable category of Services set forth in Exhibit 1, is
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cancelled in accordance with Section 3 hereof and Exhibit 1 hereto.
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Section 8. Confidentiality.
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IDT agrees to hold in strict confidence, and to use reasonable efforts to
cause its employees and representatives to hold in strict confidence, all
confidential information concerning Net2Phone furnished to or obtained by IDT in
the course of providing the Services (except to the extent that such information
has been (a) in the public domain through no fault of IDT or (b) lawfully
acquired by IDT from sources other than Net2Phone); and IDT shall not disclose
or release any such confidential information to any person, except its
employees, representatives and agents who have a need to know such information
in connection with IDT's performance under this Agreement, unless (i) such
disclosure or release is compelled by the judicial or administrative process, or
(ii) in the opinion of counsel to IDT, such disclosure or release is necessary
pursuant to requirements of law or the requirements of any governmental entity
including, without limitation, disclosure requirements under the Securities Act
of 1933 or the Securities Exchange Act of 1934, in each case as amended.
Section 9. Miscellaneous.
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(a) This Agreement may not be transferred or assigned by either party,
whether voluntarily or by operation of law, without the prior written consent of
the other which consent may be withheld in such party's sole discretion. This
Agreement shall inure to the benefit of and be binding upon all permitted
successors and assigns.
(b) This Agreement shall be governed by the laws of the State of New
York (regardless of the laws that might otherwise govern under applicable
principles of conflicts of law) as to all matters, including, but not limited
to, matters of validity, construction, effect, performance and remedies.
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(c) This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which together shall be deemed to be one and
the same instrument.
(d) All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or by facsimile
transmission or mailed (certified or registered mail, postage prepaid, return
receipt requested):
If to IDT, to: IDT Corporation
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
If to Net2Phone, to: Net2Phone, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which hand
delivered, upon transmission of the facsimile transmission by the sender and
issuance by the transmitting machine of a confirmation slip confirming that the
number of pages constituting the notice have been transmitted without error, or
on the third business day following the date on which so mailed, except for a
notice of change of address, which shall be effective only upon receipt thereof.
In the case of a notice sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided for above. However, such mailing shall in no way alter the time at
which the facsimile notice is deemed received. In no event shall the provision
of notice pursuant to this Section 9(d) constitute notice for service of
process.
(e) This Agreement and those provisions of the Separation Agreement
specifically referred to herein contain the entire understanding of the parties
hereto with respect to the subject matter of this Agreement. This Agreement and
such referenced provisions of the Separation Agreement supersede all prior
agreements and understandings, oral or written, with respect to the subject
matter of this Agreement.
(f) The provisions of Sections 6 and 8 hereof shall survive any
termination of this Agreement.
(g) In the event that any one or more of the provisions contained herein
is held invalid or unenforceable in any respect, the parties shall negotiate in
good faith with a
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view toward substituting therefor a suitable and equitable solution in order to
carry out the intent and purpose of such invalid provision; provided, however,
that the validity and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
(h) The Section headings contained in this Agreement are for reference
only and shall not affect the meaning or interpretation of this Agreement.
(i) Any dispute, controversy or claim arising out of or relating to this
Agreement or the breach, termination or validity hereof, or any transaction
contemplated hereby shall be settled in accordance with the procedures set forth
in Article VIII of the Separation Agreement as if such Article VIII were set
forth herein in its entirety.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.
IDT CORPORATION
By: /s/ Xxx Xxxxxxx
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Name: Xxx Xxxxxxx
Title: Chief Operating Officer
NET2PHONE, INC.
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
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