EXHIBIT 10.1
INTELLECTUAL PROPERTY
LEGAL SERVICES AGREEMENT
THIS AGREEMENT is dated as of the 1st day of January 2004.
BETWEEN: Net2Phone, Inc., a corporation existing under the laws of the State of
Delaware USA, having its principal place of business at 000 Xxxxx
Xxxxxx Xxxxxx, XX 00000, XXX; and
AND: IDT Corporation (the "SERVICE PROVIDER") a corporation existing under
the laws of the State of Delaware USA, having its principal place of
business at 000 Xxxxx Xxxxxx Xxxxxx, XX 00000, XXX; and
WHEREAS: The Customer and the Service Provider have agreed that the Service
Provider will provide the Customer with certain legal, corporate
support and administration services to assist the development and
growth of the Customer's internet telephony services business.
IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement the following terms shall have the following
meanings:
"Customer" means Net2Phone, Inc. and each of its consolidated
subsidiaries, including but not limited to Net2Phone Global Services,
LLC and Net2Phone Cable Telephony, LLC;
"Effective Date" means the first day of January 2004;
"Services" means the services as set out in Schedule One; and
"Service Fee" means the fees that the Service Provider receives from
the Customer for providing the Services as set out in Schedule Two.
1.2 Construction of Certain References
In this Agreement where the context admits:
(a) references to "this Agreement" or to any other agreement or
document referred to in this Agreement mean this agreement or such
other agreement or document as amended, varied, supplemented, modified
or novated from time to time, and include the schedules;
(b) reference to clause(s) and schedule(s) are references to
clause(s) and schedule(s) of and to this Agreement, references to
paragraphs are, unless otherwise stated, references to paragraphs of
the schedule in which the reference appears; and
(c) any reference to "writing" shall include typewriting,
printing, lithography, photography, telex, facsimile and the printed
out version of a communication by electronic mail and other modes of
representing or reproducing words in a legible form.
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1.3 Headings
The headings and sub-headings are inserted for convenience only and
shall not affect the construction of this Agreement.
1.4 Schedules
Each of the schedules shall have effect as if set out in this
Agreement.
2. COMMENCEMENT AND DURATION
2.1 This Agreement shall be valid, unless or until terminated by either
party in accordance with clause 5 below, for a period of two years
commencing on the Effective Date and shall be extended automatically
for periods of one year on an annual basis, unless either party shall
give notice of non-renewal at least 3 months prior to the automatic
renewal date.
3. THE SERVICES
3.1 In consideration of the payment of the Service Fee, the Service
Provider shall for the duration of this Agreement provide the Services
to the Customer in accordance with the provisions of this Agreement.
3.2 The Service Provider shall, and where appropriate shall ensure that
any officer, employee, agent or sub-contractor providing the Services
shall use reasonable care, skill and diligence in providing the
Services.
3.3 Service Provider shall maintain accurate records and accounts of all
transactions relating to the Services performed by it pursuant to this
Agreement using the Legal System database software currently used by
Customer. Such records and accounts shall be maintained separately
from Service Provider'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
governmental agencies. Customer shall have the right to inspect and
copy, upon reasonable notice and at reasonable intervals during
Service Provider's regular office hours, the separate records and
accounts maintained by Service Provider relating to the Services.
3.4 (a) Service Provider agrees to hold in confidence, and to use
reasonable efforts to cause its employees and representatives to hold
in confidence (at least to the extent that Service Provider keeps its
own confidential information in confidence, but in no event less than
commercially reasonable given the nature of the confidential
information), all confidential information concerning Customer
furnished to or obtained by Service Provider 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 Service Provider or
(b) lawfully acquired by Service Provider from sources other than
Customer); and Service Provider 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 Service Provider's performance under this Agreement,
unless (i) such disclosure or release is compelled by the judicial or
administrative process, or (ii) in the written opinion of counsel to
Service Provider, 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, in which event Service Provider shall provide
Customer with a true copy of such legal opinion and reasonable notice
prior to disclosing such Customer information. Customer shall at all
times retain all rights, title and interest to Customer's Confidential
Information.
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(b) Service Provider shall supervise its personnel and establish
systems to assure that Customer information is made available to
Service Provider's employees on an "as needed" basis only. Service
Provider shall use such information only for purposes of providing the
Services and for no other purpose. In particular, the department of
Service Provider providing the Services to Customer shall in no way
make any information concerning Customer available to any other
management or operational department or division of Service Provider
or to personnel associated with such divisions or departments except
to the extent approved in advance in writing by Customer.
(c) Customer does not grant any license or ownership interest to
Service Provider under any intellectual property right, including but
not limited to, trademark, trade secret, patent or copyright, or
application for the same which is now or thereafter obtained by
Customer. All licenses, rights and interest in, under and with respect
to Customer's intellectual property, and the elements, parts and
derivations thereof (including without limitation the writings,
images, displays, electronic reproductions, sounds, data, information
and other works embodied therein, derived therefrom or ancillary
thereto, and the media of reproduction, performance or exhibition
thereof), shall be and are expressly and entirely reserved by
Customer.
3.5 Subject to the terms and conditions set forth in the attached Schedule
Two, Service Provider shall be responsible for engaging and retaining
outside counsel to the extent reasonably required to represent
Customer.
3.6 All payments and recoveries from third parties with respect to the
Customer's intellectual property shall be directed directly to
Customer and not to Service Provider.
3.7 (a) Service Provider will indemnify and save Customer harmless
from any and all claims, costs, judgments, penalties, losses, damages,
liabilities, charges and expenses (including reasonable attorneys'
fees) incurred or suffered by Customer or imposed upon Customer to the
extent the same arise out of, in whole or in part, the gross
negligence or wilful misconduct of Service Provider in providing its
Services hereunder.
(b) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER 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 SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
THE LIABILITY OF BOTH PARTIES FOR DAMAGES OR ALLEGED DAMAGES
HEREUNDER, WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, IS
LIMITED TO, AND WILL NOT EXCEED, DIRECT DAMAGES.
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(c) Service Provider 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 Service
Provider; and no person employed by Service Provider and acting under
the terms of this Agreement shall be deemed to be acting as agent or
employee of Customer or any customer of Customer for any purpose
whatsoever.
3.8 Service Provider shall act in the best interest of Customer. If, in
the course of providing services hereunder, Service Provider
identifies a conflict of interest which would lead a reasonable person
to conclude that Service Provider cannot act in the best of interest
of Customer while also acting in the best interest of Service
Provider, such conflict shall immediately be reported to Customer so
that it may be addressed without prejudice to either Customer or
Service Provider.
3.9 Nothing in this Agreement shall limit or restrict the right of any of
either Parties' 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 either Party to
engage in any other business or to render services of any kind to any
corporation, firm, individual, trust or association; provided,
however, that the foregoing shall in no way modify or limit other
non-compete agreements between the Parties, including Service
Provider's agreement not to compete with Customer as set forth in
Section 6.3 of the Separation Agreement between IDT and Net2Phone,
dated May 7, 1999, as set forth in the MOU between the Parties dated
October 24, 2003 relating to the cable telephony business and Service
Provider hereby confirms its agreement to be bound by the terms
thereof.
4. PAYMENT TERMS
4.1 The Customer shall pay for the Services (and any Additional Services)
performed during each month in arrears within 45 days of receipt of an
invoice (the "Payment Date"). Service Provider and Customer
acknowledge that they have developed customary practices for the
payments of funds between them related to the many service, lease and
other business arrangements between Service Provider and Customer, and
it is understood that the payment of fees and other monies pursuant to
this Agreement will most likely become a part of that reconciliation
process, so long as payments are still made within the time periods
set forth in this Agreement.
4.2 Payment of the Service Fee by the Customer to the Service Provider is
subject to the Service Provider performing its obligations under the
terms of this Agreement.
4.3 Failure by the Customer to make a payment by the Payment Date of any
amount due and owing to Service Provider shall result in the amount
then owing being increased to include four percent interest per annum,
compounded daily, on such sum from the Payment Date until the date of
actual payment.
5. TERMINATION
5.1 Either party may terminate this Agreement at any time by giving at
least three month's prior written notice to the other party.
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5.2 Either party may terminate this Agreement immediately by giving
written notice to the other party if such other party:
(a) becomes insolvent, is adjudicated bankrupt or compounds with
or makes any arrangement with or makes a general assignment
for the benefit of its creditors;
(b) compulsorily or voluntarily enters into liquidation, except
for the purposes of a bona fide reorganization and with the
prior written approval of the other party;
(c) has a receiver, manager or trustee appointed over the whole
or a substantial part of its business or assets;
(d) suffers any analogous process, as those listed in (a), (b)
and (c) above, under any foreign law;
(e) commits any material breach of any of the terms of this
Agreement and fails to remedy that breach (if capable of
remedy) within one month after written notice from the other
party giving full particulars of the breach and requiring it
to be remedied.
5.3 In the event of termination, all outstanding sums due to the Service
Provider shall be paid by the Customer within 45 days from the date of
termination and any rights or obligations to which any of the parties
to this Agreement may be entitled or be subject before its termination
shall remain in full force and effect.
5.4 In the event of termination, Service Provider shall, upon payment by
Customer of all outstanding invoices, deliver to Customer, or a
recipient designated by Customer, all books, records, correspondence,
memoranda, forms and any other materials in any form or medium in its
possession relating to the Services -past, present or anticipated in
the future. It is the understanding of the parties, that Service
Provider shall have no lien or any other possessory claim on account
of non-payment by Customer with respect to materials relating in any
way to the affairs of Customer that may be in Service Provider's
possession or recoveries or other payments belonging to Customer that
may come into the possession of Service Provider related to this
agreement. In addition, Service Provider shall complete and file all
pending filings and otherwise cooperate fully in the transition back
to Customer or its designee of any and all matters pending on the date
of termination to the end that Customer shall not be prejudiced by the
termination of this agreement. Notwithstanding the termination of the
Agreement, for any reason, Service Provider shall be entitled to such
Service Fees and Additional Fees as set forth in the attached Schedule
Two for any Assertion or Litigation initiated during the initial or
any renewal term of this Agreement irrespective of whether the
recovery resulting from the Assertion or Litigation occurs during or
after any such term. Further, Provider shall remain engaged in those
matters if and as requested by Customer in which there would be a
reasonably likelihood of material damage to Customer's position if
Service Provider were to cease taking an active role. Customer shall
pay to Service Provider a reasonable hourly fee determined by mutual
agreement between the Parties for such continuing services.
6. MISCELLANEOUS
6.1 Assignment
This Agreement shall not be assigned or novated by either party
without the prior written consent of the other party to this
Agreement, except that, notwithstanding the foregoing, Customer shall
have the right to assign this Agreement 1) in connection with a sale
of all or substantially all of its business and assets, and 2) to a
subsidiary of Customer.
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6.2 Entire Agreement
This Agreement constitutes the whole agreement between the parties and
supersedes and extinguishes any prior drafts, agreements,
representations, warranties and arrangements of any nature, whether in
writing or oral, relating to the subject matter herein and only the
subject matter herein. Any amendments or alterations to this Agreement
shall be made only in writing agreed and signed by both parties
hereto.
6.3 No Waiver
No failure to exercise nor any delay in exercising by any party to
this Agreement of any right, power, privilege or remedy under this
Agreement shall impair or operate as a waiver thereof in whole or in
part.
6.4 No Partnership or Authority
Nothing in this Agreement shall constitute or be deemed to constitute
a partnership between the parties nor shall it constitute, or be
deemed to constitute, any party the agent of any other party for any
purpose.
6.5 Variation
No variation of this Agreement shall be effective unless made in
writing and signed by each of the parties.
6.6 Invalidity
If any provision of this Agreement shall be held to be illegal, void,
invalid or unenforceable under the laws of any jurisdiction, the
legality, validity and enforceability of the remainder of this
Agreement in that jurisdiction shall not be affected, and the
legality, validity and enforceability of the whole of this Agreement
shall not be affected in any other jurisdiction.
6.7 Notices
Any notices required to be given under this Agreement or in connection
with the matters contemplated by it shall, except where otherwise
specifically provided, be in writing personally delivered, in which
case it shall be deemed to have been given upon delivery at the
relevant address, or sent by first class pre-paid post, in which case
it shall be deemed to have been given two days after the date of
posting, or sent by facsimile, in which case it shall be deemed to
have been given when dispatched, subject to confirmation of
uninterrupted transmission by a transmission report to the General
Counsel of either Service Provider or Customer, as the case may be.
6.8 Governing law
This Agreement shall be governed by, and construed in accordance with,
New Jersey Law and each of the parties irrevocably submits to the
exclusive jurisdiction of the courts of the State of New Jersey.
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6.9 No Benefit to Others
The representations, warranties, covenants and agreements contained in
this Agreement are for the sole benefit of the parties hereto and
successors and assigns, and they shall not be construed as conferring
any rights on any other persons.
6.10 Dispute Resolution
Service Provider and Customer agree that any disputes that arise with
respect to this Agreement shall be resolved by the Dispute Resolution
provisions set forth in Article 8 of the Separation Agreement, dated
May 7, 1999, between IDT Corporation and Net2Phone, Inc.
In Witness Whereof, the parties have caused this Agreement to be executed and
delivered as of the date first above written
SIGNED by /s/ Xxxxx Xxxxxxx SIGNEDED by /s/ Xxxxxxx X. Xxxxxxxxx
For and on behalf of For and on behalf of
IDT Corporation Net2Phone, Inc.
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LIST OF SCHEDULES TO
INTELLECTUAL PROPERTY LEGAL SERVICES
AGREEMENT
SCHEDULE ONE - SERVICES
SCHEDULE TWO - SERVICE FEES AND EXPENSES
SCHEDULE THREE - PATENTS
