MICROSOFT-RHYTHMS CO-MARKETING AGREEMENT
This Microsoft-Rhythms Co-Marketing Agreement (this "Agreement") is made as
of this 16th day of March, 1999 (the "Effective Date") by and between Microsoft
Corporation ("Microsoft"), a Washington corporation with its principal offices
at Xxx Xxxxxxxxx Xxx, Xxxxxxx, XX 00000, and Rhythms NetConnections Inc.
("Rhythms"), a Delaware corporation with its principal offices at 0000 Xx.
Xxxxxx Xxxxxxx, Xxxxxxxxx, XX 00000 (Microsoft and Rhythms collectively, the
"Parties).
RECITALS
Whereas, Microsoft currently owns and operates a network of Web sites
currently titled "MSN", with a home page currently located at
xxxx://xxx.xxx.xxx, which network includes an aggregation of Web-based
properties, and which constitutes an Internet portal;
Whereas, Rhythms provides end-to-end broadband connectivity and solution
services including retailing and provisioning of various xDSL connectivity
services to customer premises over existing local loops which permit its
customers to access the Internet, private IP backbones and the PSTN;
Whereas, as part of its service offering, Rhythms wishes to market to
businesses and business teleworkers, and Microsoft is willing to provide,
portals based on MSN which contain a co-branded start page and for which Rhythms
shall be provided with revenue sharing opportunities;
Whereas the Parties desire to cooperate in joint marketing activities whereby
their direct sales forces and channel sales forces would offer in combination
the Rhythms' broadband connectivity and solution services with portals and
related services based on MSN.
Now therefore, in consideration of the mutual promises set forth hereunder,
Microsoft and Rhythms hereby agree as follows:
AGREEMENT
1. DEFINITIONS
1.1. "Advertising" shall mean advertising, promotions, sponsorships,
e-commerce distribution opportunities and all other revenue generating
placements and services ("Advertising").
1.2. "Small Office Portal" shall have the meaning ascribed in Section 2.1.
1.3. "Microsoft Internet Technologies" shall mean the technologies
described in Section 7.
1.4. "MSN Service" shall mean the aggregation of Web-based properties
controlled by Microsoft which is currently titled "MSN" and located on the
domain xxxx://xxx.xxx.xxx.
1.5. "Portal" shall mean a Web site which contains an aggregation of
Web-based properties (including without limitation Web pages with a variety
of information, advertising, features and functionality (such as e-mail,
search, instant messaging) and hosting of hyperlinks to communications,
entertainment, e-commerce, advertising, and other manner of Web sites), the
home page of which is often, but not always, the start page for users
accessing the Internet.
1.6. "Rhythms/Microsoft Portals" shall mean the Small Office Portal and
the Teleworker Portal, collectively.
1.7. "Rhythms Services" shall mean the various broadband connectivity
services and features marketed and sold by Rhythms.
1.8. "Small Office" shall mean a distinct business facility, whether a
branch office or the entire business facility.
1.9. "Teleworker Portal" shall have the meaning ascribed in Section 3.1.
-1-
2. SMALL OFFICE PORTAL
2.1. Microsoft shall provide, host and maintain a co-branded version of the
MSN Service for Rhythms' Small Office customers ("Small Office Portal")
which shall be essentially the same as the MSN Service as it is now or may
be constituted in the future, except for the inclusion of the features and
functionality described below. Except as specifically set forth below,
Microsoft shall have sole control and discretion over the content of the
Small Office Portal which Microsoft intends to periodically upgrade and
modify.
2.2. The co-branding shall consist of a primary branding on the start page
only, which branding is mutually determined by the Parties prior to
implementation of the Small Office Portal and which shall be "MSN brought
to you by Rhythms" or such other similar branding. The mock-up attached as
Exhibit A illustrates a possible co-branding. There shall be no other
co-branding on the Small Office Portal.
2.3. The Small Office Portal shall be located at the uniform resource
locator ("URL") address XXXXXXX.XXX.XXX. In addition, Rhythms customers
who enter the URL address XXXXXXXX.XXXXXXX.XXX or XXXXX.XXXXXXX.XXX shall
be automatically redirected to the Small Office Portal at XXXXXXX.XXX.XXX.
Rhythms agrees to provide any assistance reasonably needed to facilitate
such redirection.
2.4. The visible user interface for XXXXXXX.XXX.XXX shall be substantially
similar to XXX.XXX, including colors, layout, fonts, etc. Rhythms will
have the ability to use its fonts and colors within the Rhythms Content
Module, if any, on the start page, subject to Section 2.5 below.
2.5. Upon Rhythms' request, Microsoft shall include a module for Rhythms
("Content Module") on the start page of the Small Office Portal, which
Content Module and its content shall be in accordance with any template,
guidelines, tools and procedures provided to Rhythms by Microsoft. The
content in the Content Module may be modified from time to time as
determined by Rhythms in its sole discretion (subject to the
previous-mentioned template, guidelines, tools and procedures) and
Microsoft shall replace any existing Content Module with any such updated
Content Module within a reasonable time following Rhythms' notice of such
modifications. An example of what the Content Module may look like appears
in the mock-up attached hereto as Exhibit A. Notwithstanding the
foregoing, Microsoft has the right, in its sole discretion, to require
Rhythms to remove content from the Content Module.
2.6. The presentation and appearance of the core MSN Service which forms
the basis for the non-co-branded elements of the Small Office Portal may
evolve over time to respond to user preferences. Microsoft will not make
any material changes to co-branded elements (such as the Content Module,
"MSN brought to you by Rhythms," Rhythms support links and URL) within the
Small Office Portal without the mutual consent of Rhythms.
2.7. Back button: On the Small Office Portal, a back button/home button
will be provided such that any user originating in the start page will
always be returned to the start page of the Small Office Portal. In no
event will users originating in the Small Office Portal start page be
re-directed to a non-co-branded page (MSN or Rhythms).
2.8. Microsoft intends to include in the Small Office Portal various
services directed at helping small businesses establish, promote and drive
revenue from their web sites, including, but not limited to, the present
and future offering of MSN LinkExchange. Such services shall be similar to
the types of services currently located in the "Small Business" section of
the MSN Service subject to Microsoft's sole discretion.
2.9. Rhythms shall provide Microsoft with links to Rhythms' customer
service web pages (such as help, customer support and corporate
information), which links shall be included at the bottom of the pages of
the Small Office Portal, the likely location of which is shown in the
mock-up attached hereto as Exhibit A. Rhythms will be able to change these
links at mutually agreeable time intervals.
3. TELEWORKER PORTAL
3.1. Microsoft shall provide, host and maintain a co-branded Internet
Portal for Rhythms' business customers for the use of their teleworkers
(the "Teleworker Portal") which shall be essentially the same as the Small
Office Portal with the exception that it shall not include the services
referenced in Section 2.8 above and shall default to the location(s) noted
in Section 3.2 below.
-2-
3.2. The Teleworker Portal shall be located at XXXX.XXX.XXX (where "CORP"
is the name of the business customer whose teleworkers are being provided
such Portal); provided, however, that if such URL is already in use as a
result of a previously existing relationship between Microsoft and the
business customer, the URL shall be XXXX.XXXXXXX.XXX.XXX.
4. JOINT MARKETING OF MSN AND THE RHYTHMS/MICROSOFT PORTALS WITH RHYTHMS
SERVICES.
4.1. Rhythms shall market the Small Office Portal as its recommended
default Portal to its current and future business customers and shall
market the Teleworker Portal as its recommended default Internet Portal to
its current and future business customers for use by their teleworkers.
For the avoidance of doubt, "recommended default" Portal shall mean that
Rhythms shall recommend the Rhythms/Microsoft Portals, and no other
publicly available Portals, as its default Portal(s) unless a business
customer requests another publicly available Portal or requests that no
publicly available Portal be included.
4.2. Rhythms will use its commercially reasonable efforts to inform,
educate and market the MSN Service and the Rhythms/Microsoft Portals to its
direct sales force and its channel sales force with which it has alliances
or contracts for services, including, but not limited to, Internet Service
Providers, telecommunication companies and customer premises system
integrators as the recommended Portals therefor.
4.3. Microsoft will use its commercially reasonable efforts to inform,
educate and market Rhythms Services to its ICU (Internet Customer Unit) and
ECU (Enterprise Customer Unit) direct sales force and its channel sales
forces including, but not limited to, the ADCU (Application Developer
Customer Unit) channel of Independent Software Vendors, the OCU
(Organization Customer Unit) channel of Solution Providers, and the ICU
channel of Solution Partners who are members of the Microsoft Partner
Solution Center.
4.4. Microsoft and Rhythms agree to develop a joint marketing plan within
ninety (90) days after the Effective Date to specifically define and
implement the goals outlined above in this Section 4.
5. ENHANCEMENT OF PORTALS AND FUTURE JOINT MARKETING.
Concurrently herewith, the Parties are executing a Letter of Intent which sets
forth the Parties' intentions with regard to entering into a definitive
agreement concerning further enhancements to the Rhythms/Microsoft Portals and
further cooperative joint marketing efforts with regard to such Portals and the
Rhythms Services directed to businesses of all sizes and consumers.
6. ADVERTISING SALES.
Microsoft shall be solely responsible for managing and selling all Advertising
inventory on the Rhythms/Microsoft Portals, except for inside the Rhythms
Content Module. Microsoft shall collect and manage all revenue generated from
sales of Advertising on the Rhythms/Microsoft Portals, except for inside the
Rhythms Content Module. Rhythms shall not sell any Advertising for the
Rhythms/Microsoft Portals, except for inside the Rhythms Content Module subject
to Section 2.5. Microsoft agrees that it shall not place any Advertising on the
Rhythms/Microsoft Portals that advertise a direct competitor of Rhythms, the
list of which competitors shall be mutually agreed to in writing by the Parties.
Similarly, Rhythms shall not place any Advertising on the Rhythms Content Module
on the Rhythms/Microsoft Portals that advertise a direct competitor of
Microsoft, the list of which competitors shall be mutually agreed to in writing
by the Parties. Subject to terms to be negotiated between the Parties, Rhythms
will have the opportunity to purchase Advertising space or have its services
promoted on Microsoft's generic small business Portal, if any, or small business
channel of the MSN Service.
7. TECHNICAL SUPPORT FOR THE PORTALS.
7.1. Rhythms shall provide all technical support to its business customers
and their teleworkers (to the extent such technical support is provided to
Rhythms' other business customers which shall be further defined) in
connection with the Rhythms/Microsoft Portals. All help, contact and
support links in the Rhythms/Microsoft Portals shall point to the relevant
pages of Rhythms' Web site at xxxx://xxx.xxxxxxx.xxx.
7.2. In connection therewith, Microsoft shall provide Rhythms with access
to the support resources which shall be further defined but shall include
such resources as:
-3-
7.2.1. Online access to its MSN Service technical support knowledge
base to provide real time support to Rhythms customers.
7.2.2. Online technical support modules for customer self-care, the
nature and choice of such modules shall be at Microsoft's sole
discretion.
7.2.3. A trouble ticket system for escalating technical support
issues, the nature of which system shall be at Microsoft's sole
discretion.
7.2.4. Access by Rhythms' Network Operations Center 24x7 to the
telephone support line at Microsoft's Network Operations Center for
the MSN Service.
8. MICROSOFT INTERNET TECHNOLOGIES.
The Rhythms/Microsoft Portals will contain some or all of the following
technologies/services: Passport (authentication technology for sharing user
credentials with other affiliated content, commerce or applications providers),
MSN Web Search (search engine), Hotmail (e-mail), MSN Personal Web Page and
User-Created Communities (community infrastructure), MSN Messenger Service
(instant messaging and buddy list technology), and other Microsoft Internet
services not otherwise specifically addressed in other Sections of this
Agreement that are available on the MSN Service. Some or all of such
technologies may also be available for distribution separately from the
Rhythms/Microsoft Portals. In addition, Microsoft's Internet-related products
Microsoft Internet Explorer, Outlook Express and Windows Media Technologies are
available for distribution separately from the Rhythms/Microsoft Portals. As
part of the marketing plan referenced in Section 4.4 above, the Parties agree to
develop commitments with regard to Rhythms' distribution of such Internet
technologies. Any such distribution shall be in accordance with Microsoft's
standard license and distribution terms and agreements.
9. IMPLEMENTATION TIMEFRAME
As soon as is reasonably possible after the Effective Date, Microsoft shall
locate initial versions of the Small Office Portal and Teleworker Portal at the
locations set forth in Sections 2.3 and 3.2 above. Such initial versions shall
be essentially identical to the MSN Service, but with the co-branding described
in Section 2.2. Thereafter, Microsoft will use its commercially reasonable best
efforts to deliver the technologies, specifications, licenses, tools and
application programming interfaces required for the Small Office Portal and
Teleworker Portal, as described in Sections 2 and 3, to Rhythms on or before
July 31, 1999. Within ninety (90) days after said delivery by Microsoft,
Rhythms will use its commercially reasonable best efforts to implement its
content, systems, and systems integration required for the Rhythms/Microsoft
Portals' Content Modules.
10. COMPENSATION.
10.1. Rhythms will receive compensation based upon Advertising revenues
generated by pages viewed by Rhythms users on the Rhythms/Microsoft Portals
(including the MSN Service properties/channels such as Carpoint, Hotmail,
MoneyCentral, etc. contained therein.) Compensation shall be based only on
Rhythms users who use the start page of the Small Office Portal or the
Teleworker Portal as the entry point, and will not include navigation that
starts in the Rhythms Content Module. As users click-through to the
channels, Microsoft will share with Rhythms a portion of the revenues
generated by the Rhythms users. If a Rhythms user leaves the
Rhythms/Microsoft Portal(s) and re-enters via other sources such as another
search engine or a third party referral, then those revenues generated by
Advertising viewed after such re-entry shall not apply under this sharing
agreement. Revenues from Advertising viewed through the use of the
Messenger feature or Communities feature also shall not apply. The
compensation methodology is set forth in Section 10.2 below.
10.2. Microsoft will compensate Rhythms for those pages generated by
Rhythms users while on the Rhythms/Microsoft Portals. Page views excluded
from this calculation include page views generated when entering the MSN
Service properties/channels (i) from a source other than the
Rhythms/Microsoft Portal; (ii) via other sources after leaving the
Rhythms/Microsoft Portal and re-entering; (iii) via instant messaging (e.g.
Messenger); (iv) community pages and (v) via the Rhythms Content Module.
Compensation shall be calculated based upon the number of unique users per
month (a user that visits the Rhythms/Microsoft Portal at least once in a
month) and the number of pages viewed, as measured by Microsoft measurement
system. Advertising revenues shall be converted to a cost per thousand
basis ("CPM"); that is Microsoft will calculate the number of
-4-
pages viewed by Rhythms users while on the Rhythms/Microsoft Portals under
the conditions set forth above and divide such number by 1,000. Microsoft
shall then multiply such resulting number by a CPM rate to be negotiated by
the Parties within ninety (90) days after the Effective Date.
10.3. As soon as usage by Rhythms users makes "per subscriber per
month" pricing commercially reasonable, Microsoft shall convert the
compensation to a "per subscriber per month" model if mutually agreeable to
Rhythms.
10.4. Microsoft will provide Rhythms with quarterly reports within
forty-five (45) days following the end of a calendar quarter detailing the
activities of Rhythms customers usage of the Rhythms/Microsoft Portals and
the calculation of the compensation accrued thereby. Microsoft shall pay
such compensation at the same time as the quarterly report is delivered to
Rhythms.
10.5. Such compensation shall not be accrued and payable until the
features set forth in Sections 2 and 3 have been implemented into the Small
Office Portal and the Teleworker Portal, currently anticipated to occur on
or before July 31, 1999.
11. MIGRATION TO WINDOWS 0000
Xxxxxxx shall make reasonable efforts to base all incremental and new network
and facility developments on Windows NT/2000-based solutions provided by
Microsoft and its Solution Partners, based on acceptable price, terms, features
and capabilities.
12. PROVISION OF RHYTHMS SERVICES
12.1. Subject to approval by Microsoft's Internal Technology Group,
availability of Rhythms' teleworker services in the Seattle/Redmond area,
and acceptable price, terms, features and capabilities from Rhythms,
Microsoft shall use its commercially reasonable best efforts to deploy
Rhythms teleworker services for a selected subset of its employees. The
target of this initial deployment is a minimum of 2500 employees.
Microsoft shall provide Rhythms with a contact in the Internal Technology
Group.
12.2. If requested by Microsoft, Rhythms shall provide any one or more
of its Rhythms Services to Microsoft on most favored nation pricing for
similar terms, quantities and scheduling.
13. PROPRIETARY RIGHTS
The Parties agree that Microsoft and/or its suppliers shall retain all right,
title, and interest in any and all content, technology and materials delivered
by Microsoft to Rhythms pursuant to this Agreement. The Parties further agree
that Rhythms shall retain all right, title and interest in and to the content
provided by Rhythms in the Content Module or otherwise delivered by Rhythms
pursuant to this Agreement. Neither Party shall have any rights to any
materials, content or technology provided by the other Party hereunder except as
specifically provided in this Agreement and shall not alter, modify, copy, edit,
format, translate, create derivative works of or otherwise use any materials,
content or technology provided by the other Party except as explicitly provided
herein or approved in advance in writing by the other Party.
14. CONFIDENTIALITY
14.1. The Parties acknowledge and agree that the terms and conditions
of the Microsoft Corporation Non-Disclosure Agreement dated concurrently
herewith ("NDA") entered into by and between the Parties are incorporated
into this Agreement and that all of the terms of this Agreement and all
discussions and negotiations related thereto and all information exchanged
pursuant hereto are considered Confidential Information as defined in the
NDA. In the event that any of the incorporated terms of the NDA are
inconsistent with or conflict with this Agreement, then the terms of this
Agreement shall control.
14.2. Each Party may disclose the terms and conditions of this
Agreement to its employees, affiliates and its immediate legal and
financial consultants on a need to know basis as required in the ordinary
course of that Party's business, provided that such employees, affiliates
and/or legal and/or financial consultants agree in writing in advance of
disclosure to be bound by this Section 14, and may disclose Confidential
Information as required by government or judicial order, provided each
Party gives the other Party prompt notice of such order
-5-
and complies with any protective order (or equivalent) imposed on such
disclosure. Further, the Parties acknowledge that this Agreement, or
portions thereof, may be required under applicable law to be disclosed, as
part of or an exhibit to a Party's required public disclosure documents.
If either Party is advised by its legal counsel that such disclosure is
required, it will notify the other in writing and the Parties will jointly
seek confidential treatment of this Agreement to the maximum extent
reasonably possible, in documents approved by both Parties and filed with
the applicable governmental or regulatory authorities. Notwithstanding the
foregoing, a Party may describe, in a general manner, the business
relationship established in this Agreement as part of financial
presentations to potential investors in the Party.
14.3. Each Party acknowledges that monetary damages may not be a
sufficient remedy for unauthorized disclosure or use of Confidential
Information and that each Party may seek, without waiving any other rights
or remedies, such injunctive or equitable relief as may be deemed proper by
a court of competent jurisdiction.
15. TRADEMARK LICENSE
15.1. Microsoft hereby grants to Rhythms for the term of this Agreement
a non-exclusive, non-transferable, personal worldwide license to use the
MSN logo depicted on Exhibit A attached (the "Microsoft Xxxx"), solely as
part of the Rhythms/Microsoft Portals and in accordance with the terms of
this Agreement. Except as provided in this trademark license, this
Agreement does not grant Rhythms any right, title, interest, or license in
or to any of Microsoft' names, logos, trade dress, designs, or other
trademarks. Use of the Microsoft Xxxx shall be as specified in the
Agreement or as provided by Microsoft from time to time.
15.2. Rhythms acknowledges Microsoft's sole ownership of the Microsoft
Marks worldwide and all associated goodwill. Rhythms' use of the Microsoft
Xxxx shall inure solely to the benefit of Microsoft. Rhythms hereby
assigns and shall assign in the future to Microsoft all rights it may
acquire by operation of law or otherwise in the Microsoft Marks, including
all applications or registrations therefore, along with the goodwill
associated therewith.
15.3. Rhythms is authorized to use the Microsoft Xxxx only as affixed
to the Rhythms/Microsoft Portals in accordance with the terms of this
Agreement and as approved in advance by Microsoft. Rhythms shall fully
correct and remedy any deficiencies in its use of the Microsoft Xxxx, upon
reasonable notice from Microsoft.
15.4. Microsoft shall have the sole right to and in its sole discretion
may commence, prosecute or defend, and control any action concerning the
Microsoft Xxxx. Rhythms shall not during the term of this Agreement contest
the validity of, by act or omission jeopardize, or take any action
inconsistent with, Microsoft' rights or goodwill in the Microsoft Xxxx in
any country, including attempted registration of the Microsoft Xxxx, or use
or attempted registration of any xxxx confusingly similar thereto.
16. TERM/DEFAULT/TERMINATION
16.1. TERM. This Agreement shall commence on the Effective Date and
continue for a period of three (3) years following the Effective Date (the
"Term").
16.2. TERMINATION FOR CAUSE. In addition to any other rights
and/or remedies that either Party may have under the circumstances,
all of which are expressly reserved, either Party may terminate this
Agreement at any time if:
16.2.1. The other Party is in material breach of any warranty,
representation, term, condition or covenant of this Agreement, other
than those contained in Section 14, and fails to cure that breach
within thirty (30) days after written notice thereof; or
16.2.2. The other Party is in material breach of Section 14; or
16.2.3. Either Party becomes insolvent or makes any assignment for
the benefit of creditors or similar transfer evidencing insolvency; or
suffers or permits the commencement of any form of insolvency or
receivership proceeding; or has any petition under any bankruptcy law
filed against it, which petition is not dismissed within sixty (60)
days of such filing; or has a trustee or receiver appointed for its
business or assets or any part thereof.
-6-
16.3. Termination shall be effective immediately upon written notice.
In the event of termination, the following sections shall survive: 13, 14,
16.3, 16.4, 17, 18, 19, and 21.
16.4. EFFECT OF TERMINATION.
16.4.1. Upon termination each Party shall, at the other Party's
direction, return or certify destruction of Confidential Information of
such other Party. Neither Party shall be liable to the other for damages
of any sort resulting solely from terminating this Agreement in accordance
with its terms.
16.4.2. Upon expiration or termination of this Agreement, each Party
shall provide reasonable assistance to the other for such reasonable time
and upon such terms and conditions as shall be mutually agreed upon in
order to assure an orderly transition and wind down in such a manner as
shall minimize disruption to the users of the Rhythms/Microsoft Portals.
The goal of both Parties is to ensure a smooth and seamless transition for
the user to maintain a high level of customer satisfaction.
17. REPRESENTATIONS AND COVENANTS.
17.1. Rhythms represents, warrants and covenants to Microsoft that:
17.1.1. Rhythms has the power and authority to enter into this Agreement
and to fully perform its obligations hereunder.
17.1.2. Rhythms has obtained, and shall maintain in full force during the
term hereof, such federal, state and local authorizations as are necessary
to operate and to otherwise perform its obligations under this Agreement,
and will be in compliance with all applicable laws and regulations
governing such performance.
17.1.3. The content provided by Rhythms for inclusion in the Content
Modules of the Rhythms/Microsoft Portals will not infringe the copyrights,
trademarks, service marks or trade secrets of any third party and is not
factually accurate or contains information, instructions or formulas that
are injurious to a third party's physical well-being, or defame or
disparage a third party.
17.1.4. Rhythms will not make any representations or warranties
concerning Rhythms/Microsoft Portals except as may be specifically
authorized in writing by Microsoft.
17.2. Microsoft represents, warrants and covenants to Rhythms that:
17.2.1. Microsoft has the power and authority to enter into this
Agreement and to fully perform its obligations hereunder.
17.2.2. Microsoft has obtained, and shall maintain in full force during
the term hereof, such federal, state and local authorizations as are
necessary to operate and to otherwise perform its obligations under this
Agreement, and will be in compliance with all applicable laws and
regulations governing such performance.
17.3. PRODUCTS OR SERVICES DELIVERED UNDER THE TERMS OF THIS AGREEMENT
SHALL BE SUBJECT TO THE TERMS OF THE LIMITED WARRANTY STATEMENT, IF ANY,
SPECIFIED BY THE DELIVERING PARTY FOR THE SPECIFIC PRODUCT OR SERVICE.
CERTAIN SOFTWARE PRODUCTS MAY BE PROVIDED TO THE OTHER PARTY "AS IS"
WITHOUT WARRANTY OR CONDITION OF ANY KIND, IF SO DESIGNATED BY THE
LICENSOR. FOR SUCH PRODUCTS, THE ENTIRE RISK AS TO THE RESULTS AND
PERFORMANCE OF SUCH SOFTWARE IS ASSUMED BY THE RECEIVING PARTY AND ITS
CUSTOMERS AND SUBLICENSEES, IF ANY. THE WARRANTIES SET FORTH IN THIS
SECTION 17 ARE THE ONLY WARRANTIES MADE BY THE PARTIES. EACH PARTY
DISCLAIMS ANY AND ALL OTHER WARRANTIES OR REPRESENTATION EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, TITLE, AND FITNESS FOR A PARTICULAR PURPOSE. MICROSOFT
EXPRESSLY DISCLAIMS ANY WARRANTS THAT ACCESS TO OR USE OF THE CO-BRANDED
PORTALS WILL BE UNINTERRUPTED OR ERROR-FREE.
18. INDEMNIFICATION.
-7-
A Party (the "Indemnifying Party") shall, at its expense and the request of
the other Party (the "Indemnified Party"), defend any third-party claim or
action brought against the Indemnified Party, and its affiliates, directors,
officers, employees, licensees, agents and independent contractors, to the
extent it is based upon a claim that, if true, would constitute a breach of a
warranty, representation or covenant of the Indemnifying Party set forth in
this Agreement (collectively, "Indemnified Claims"). The Indemnified Party
shall promptly notify the Indemnifying Party in writing, specifying the
nature of the action and the total monetary amount sought or other such
relief as is sought therein. The Indemnified Party shall cooperate with the
Indemnifying Party at the Indemnifying Party's expense in all reasonable
respects in connection with the defense of any such action. The Indemnifying
Party may upon written notice to the Indemnified Party undertake to control
and conduct all proceedings or negotiations in connection therewith, assume
and control the defense thereof, and if it so undertakes, it shall also
undertake all other required steps or proceedings to settle or defend any
such action, including the employment of counsel which shall be reasonably
satisfactory to the Indemnified Party, and payment of all reasonably incurred
expenses. The Indemnified Party shall have the right to employ separate
counsel to provide input into the defense, at the Indemnified Party's own
cost. The Indemnifying Party shall reimburse the Indemnified Party upon
demand for any payments made or loss suffered by it at any time after the
date of tender, based upon the judgment of any court of competent
jurisdiction or pursuant to a bona fide compromise or settlement of claims,
demands, or actions, in respect to any damages to which the foregoing
relates. The Indemnifying Party shall not settle any claim or action under
this Section 18 on the Indemnified Party's behalf without first obtaining the
Indemnified Party's written permission, which permission shall not be
unreasonably withheld, and the Indemnifying Party shall indemnify and hold
the Indemnified Party harmless from and against any costs, damages and fees
reasonably incurred by the Indemnified Party, including but not limited to
fees of attorneys and other professionals, that are attributable to such
Indemnified Claims.
19. LIMITATION OF LIABILITIES.
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, ARISING OUT OF OR RELATED TO THIS
AGREEMENT INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS,
BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, AND THE LIKE, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS SECTION SHALL
NOT APPLY TO EITHER PARTY'S (A) ABILITY TO OBTAIN INJUNCTIVE OR OTHER EQUITABLE
RELIEF; (B) CONFIDENTIALITY OBLIGATIONS UNDER SECTION 14; AND (C)
INDEMNIFICATION OBLIGATIONS UNDER SECTION 18.
20. PRESS RELEASES.
Neither Party will issue any press release or make any public announcement(s)
relating in any way whatsoever to this Agreement or the relationship established
by this Agreement without the express prior written consent of the other Party,
which consent shall not be unreasonably withheld.
21. GENERAL PROVISIONS
21.1. INDEPENDENT CONTRACTORS. The Parties are independent contractors
with respect to each other, and nothing in this Agreement shall be
construed as creating an employer-employee relationship, a partnership,
agency relationship or a joint venture between the Parties.
21.2. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Washington as though entered into by Washington residents and
to be performed entirely within the State of Washington. In any action or
suit to enforce any right or remedy under this Agreement or to interpret
any provision of this Agreement, the prevailing Party shall be entitled to
recover its costs, including reasonable attorneys' fees.
21.3. ASSIGNMENT. Neither Party may assign this Agreement or any
rights and/or obligations hereunder without the other Party's prior written
approval, provided, however, that either shall have the right to assign its
rights, interests and obligations under this Agreement to a company with
whom it merges or consolidates or who acquires all or substantially all of
the stock or assets of the assigning Party (each such company, a "Permitted
Assignee"), provided that such Permitted Assignee or any of its Affiliates
(i) is not identified on a list provided in writing on or before the
Effective Date, or any entity with whom such listed entity has merged
-8-
or has consolidated, or who has acquired all or substantially all of the
stock or assets of such listed entity and (ii) agrees in writing to be
bound by all of the obligations of the assigning Party under this
Agreement. An "Affiliate", for purposes of this Section, shall mean a
company or legal entity which controls, is controlled by, or is under
common control with, a Party. "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a legally recognizable entity, whether through the
ownership of voting shares, by contract, or otherwise. Any attempted
assignment, sub-license, transfer, encumbrance or other disposal without
such consent shall be void and shall constitute a material default and
breach of this Agreement. This Agreement shall be binding on, and shall
inure to the benefit of, the Parties hereto, and their respective
successors and Permitted Assigns.
21.4. CONSTRUCTION. In the event that any provision of this Agreement
conflicts with governing law or if any provision is held to be null, void
or otherwise ineffective or invalid by a court of competent jurisdiction,
(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. This
Agreement has been negotiated by the Parties and their respective counsel
and will be interpreted fairly in accordance with its terms and without any
strict construction in favor of or against either Party. The section
headings used in this Agreement are intended for convenience only and shall
not be deemed to affect in any manner the meaning or intent of this
Agreement or any provision hereof.
21.5. NOTICES. All notices and requests in connection with this
Agreement shall be given in writing and shall be deemed given as of the day
they are received either by messenger, delivery service, or in the United
States of America mail, postage prepaid, certified or registered, return
receipt requested, and addressed as follows:
TO RHYTHMS: TO MICROSOFT:
Rhythms NetConnections Inc. Microsoft Corporation
6933 So. Revere Parkway Xxx Xxxxxxxxx Xxx
Xxxxxxxxx, XX 00000 Xxxxxxx, XX 00000-0000
Phone: 000-000-0000 Phone: 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000
Attention: Chief Financial Attention: Vice President, Internet
Officer Customer Unit
Copy to:
Law & Corporate Affairs, US Legal
Fax: 000-000-0000
or to such other address as a Party may designate pursuant to this notice
provision.
21.6. ENTIRE AGREEMENT. This Agreement shall not be effective until
signed by both Parties. This Agreement, together with the letter of intent
referenced in Section 5,the NDA and any side letters referenced herein,
constitutes the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous
agreements or communications. This Agreement shall not be modified except
by a written agreement dated subsequent to the date of this Agreement and
signed on behalf of the Parties by their respective duly authorized
representatives. No waiver of any breach of any provision of this
Agreement shall constitute a waiver of any prior, concurrent or subsequent
breach of the same or any other provisions hereof, and no waiver shall be
effective unless made in writing and signed by an authorized representative
of the waiving Party.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
-9-
The Parties have caused this Agreement to be executed by their duly authorized
representatives as of the Effective Date.
MICROSOFT CORPORATION RHYTHMS NETCONNECTIONS INC.
By /s/ Xxxxxx Xxxx By /s/ Xxxxxxxxx X. Xxxxx
------------------------------- ----------------------------------
Name (Print) Xxxxxx Xxxx Name (Print) Xxxxxxxxx X. Xxxxx
---------------------- -------------------------
VICE PRESIDENT
Title INTERNET CONSUMER UNIT Title PRESIDENT AND CEO
---------------------------- --------------------------------
Date 3/16/99 Date 3/16/99
----------------------------- ----------------------------------
-10-
EXHIBIT A
MOCK-UP OF START PAGES FOR RHYTHMS/MICROSOFT PORTALS
SEE ATTACHED
-11-
