Exhibit 10.5
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WHOLESALE SERVICE PROVIDER
AND
DISTRIBUTION AGREEMENT
This Wholesale Service Provider and Distribution Agreement
("Agreement") is entered into effective as of the 1st day of February, 2000 (the
"Execution Date"), by and among Big Planet, Inc., a Delaware corporation ("Big
Planet"), I-Link, Incorporated, a Florida corporation ("I-Link"), and I-Link
Worldwide, LLC, a Delaware limited liability company and wholly owned by I-Link
("I-Link LLC"). I-Link, I-Link LLC and Big Planet together shall be collectively
referred to as the "Parties."
RECITALS
A. Big Planet is a technology-based company that provides Internet
service and sells other products and services, including technology and
communication products. Big Planet markets its products and services to
consumers through a sales force of independent contractors in the Network
Marketing Channel, as hereinafter defined.
B. I-Link provides enhanced communication products and services and has
constructed an expanding Internet Protocol ("IP")-based telecommunications
network within the continental United States. I-Link's products and services are
marketed in part by I-Link LLC to residential and small office/home office
("SOHO") consumers through a network marketing sales force of I-Link LLC
Representatives. I-Link also sells its products and services through other
marketing and sales channels.
C. I-Link desires to enter into an agreement with Big Planet pursuant
to which (i) I-Link will provide products and services to Big Planet for resale
to residential and SOHO consumers in each of the fifty states in the United
States and Puerto Rico (hereafter collectively referred to as the "United
States") through the Network Marketing Channel, (ii) Big Planet will integrate
the I-Link LLC Representatives into its sales force, (iii) Big Planet will
acquire and provide products and services directly to I-Link's existing
customers acquired through I-Link LLC, and (iv) Big Planet will acquire the
exclusive world-wide rights to such products and services subject to the
conditions and terms of this Agreement. Big Planet is willing to act as a
distributor of I-Link's Products and Services and integrate the I-Link LLC
Representatives into its sales force, and I-Link is willing to provide services
and products to Big Planet on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound, the
Parties agree as follows:
Article 1
Definitions
Unless the context otherwise requires, the following terms, when used in this
Agreement, shall have the respective meanings specified below:
"Accounts Receivable" mean all I-Link accounts receivablegenerated from
sales by the I-Link LLC Representatives, both billed and unbilled, as of the
Effective Time, to be assigned to Big Planet at the Effective Time as
contemplated by Section 6.3(a).
"Action" means any claim, action, suit, complaint, arbitration,
inquiry, proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified person, any other
person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
person.
"Big Planet Customers" means any person acquiring any products or
services from or through Big Planet or Big Planet Representatives including all
of the Big Planet Enhanced Service Customers.
"Big Planet Enhanced Service Customer" means any and all customers of
Big Planet, including the Existing Customers, who after the Effective Time
subscribe to or purchase one or more I-Link Products and Services from Big
Planet, which are evidenced by written agreements, letters of authorization,
electronic order, or any other agreement or other arrangements, as evidenced by
such customer's payment for services or any xxxxxxxx made to such customer.
"Big Planet Representatives" means the independent representatives and
distributors of Big Planet and its Affiliates, including any I-Link LLC
Representatives following the Effective Time.
"Billing Software" shall have the meaning set forth in Section 8.3.
"Double-Leg Call" means any call not a Single Leg Call that originates
and terminates within the United States.
"Effective Time" has the meaning set forth in Section 2.2.
"Encumbrances" means any security interest, pledge, mortgage, lien,
charge, adverse claim, preferential arrangement or restriction of any kind.
"Enhanced Service Devices" means (i) the tangible products of I-Link
more fully described on Schedule 4.1 and (ii) Future Products and Services that
are tangible products and that Big Planet elects to market pursuant to the
provisions of this Agreement, that provide connectivity to the I-Link Network or
otherwise provide enhancement to traditional
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telecommunication services, including in each of (i) and (ii) above, any and all
upgrades, modifications, enhancements and replacements thereof.
"Enhanced Services" means (i) all of the products and services of
I-Link more fully described on Schedule 4.1, which represent all of the services
of any type currently marketed by I-Link LLC and provided by I-Link to the
residential and SOHO marketplace, and (ii) any Future Products and Services that
are not Enhanced Service Devices that Big Planet elects to market pursuant to
the provisions of this Agreement, including in each of (i) and (ii) above, any
and all upgrades, modifications, enhancements or replacements thereof.
"Exclusive Products and Services" means the products and services for
which Big Planet has been granted and retains the worldwide exclusive rights in
the Network Marketing Channel pursuant to this Agreement.
"Existing Customers" means all of I-Link's customers who are
subscribed for I-Link's Products and Services through I-Link LLC at the
Effective Time to whom I-Link provides Enhanced Services or any Enhanced Service
Devices pursuant to written agreements, letters of authorization or any other
agreement or arrangement as evidenced by such Existing Customer's payment for
services to I-Link or any xxxxxxxx made to such customer.
"Future Products and Services" shall mean any I-Link Products and
Services which I-Link commences to market and distribute after the Effective
Time, but excluding any and all upgrades, modifications, enhancements and
replacements to Enhanced Services and Enhanced Service Devices.
"Governmental Authority" means any domestic or foreign national,
federal, state, municipal or local or other government, governmental, regulatory
or administrative authority, agency or commission, or any court, tribunal, or
judicial or arbitration body having proper jurisdiction.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"I-Link Costs" means those costs identified on Schedule 1(b) that are
used in determining the pricing of Double-Leg Calls and Single-Leg Calls under
this Agreement.
"I-Link Products and Services" means any products or services of any
type that may be offered, sold or distributed by I-Link to the residential and
SOHO marketplace at anytime during the term of this Agreement, excluding
products and services the rights to which are not wholly-owned by I-Link for
which I-Link does not have the right to grant distribution rights.
"I-Link LLC Representatives" means I-Link LLC's sales force of
independent contractors that have executed I-Link LLC Representative Agreements
with I-Link LLC that are currently in-force.
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"I-Link LLC Representative Agreement" means the standard forms of
written agreement between I-Link LLC and an I-Link LLC Representative.
"I-Link Network" means I-Link's telecommunications network in the
United States, including but not limited to network equipment, high-speed fiber
optic backbone and routing technology, whether I-Link owned or leased, used to
provide Enhanced Services or other services, and within such other territories
as such network may be established in the future.
"I-Link Sales Compensation Plan" means the compensation plan that
details the bonuses and commissions that I-Link LLC Representatives may earn by
selling I-Link Products and Services.
"Law" means any domestic or foreign national, federal, state, municipal
or local or other statute, law, ordinance, regulation, code, rule, order or
other requirement or rule of law.
"Legacy Customers" means those customers purchasing Presubscribed
Services from I-Link.
"Network Marketing Channel" means (i) the multi-level marketing channel
through which products and services are marketed directly to residential and
SOHO end-user consumers through a sales force of independent contractors who
receive rewards or commissions based upon a standardized compensation plan which
contemplates a genealogical sales force of multiple levels, with such
commissions paid for (A) sales of products and services by such contractor, and
(B) sales of products and services by other independent contractors in such
contractor's genealogical downline, and (ii) direct selling organizations that
promote a home-based business opportunity focused on selling products to the
residential and SOHO marketplace (by way of example: Avon, Xxxx Xxx Cosmetics,
Tupperware, etc.).
"Order and Provisioning System" shall have the meaning set forth in
Section 5.1
"person" means any individual, partnership, firm, corporation, joint
venture, association, trust, unincorporated organization or other entity, as
well as any syndicate or group that would be deemed a person under Section 13(d)
of the Securities Exchange Act of 1934.
"Presubscribed Services" means the ordinary presubscribed long distance
telephone services provided by I-Link over the I-Link Network and through other
carriers as of the Execution Date.
"Single-Leg Calls" means any call that originates on a customer premise
device and terminates on the I-Link Network, or any call that originates on the
I-Link Network and terminates on a customer premise device.
"Stand Alone Product" means a product or service that does not include
the features or functionality of any of the Exclusive Products and Services.
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"Subsidiary" means, with respect to any entity, any and all
corporations, partnerships, limited liability companies, joint ventures,
associations and other entities controlled by such entity directly or indirectly
through one or more intermediaries.
"Technical Support" shall mean the technical support that I-Link is
obligated to provide to Big Planet pursuant to Article 10 hereof.
"United States" shall mean the fifty states and Puerto Rico.
Article 2
The Transaction
2.1 The Transaction. At the Effective Time, and upon the terms and
subject to the conditions of this Agreement, I-Link shall commence providing
Enhanced Services and Enhanced Service Devices, to the extent such are
market-ready as provided on Schedule 4.1, to Big Planet as more fully described
in Article 4 and shall assign to Big Planet the I-Link LLC Representatives, the
Existing Customers, and the Accounts Receivable as more fully described in
Article 6.
2.2 Closing and Effective Time. Subject to the satisfaction of the
closing conditions set forth in Sections 2.4 and 2.5 below, I-Link shall
commence the provision of Enhanced Services to Big Planet and the Big Planet
Customers under this Agreement and shall assign and transfer the I-Link LLC
Representatives, the Existing Customers, and the Accounts Receivable to Big
Planet effective as of 12:01 a.m., Mountain Standard Time, on February 15, 2000,
or such other time and date as the Parties may mutually agree upon in writing
(the "Effective Time"). The Effective Time shall not be later than the first day
of the month following the date that the closing conditions set forth in
Sections 2.4 and 2.5 have been satisfied. In the event that the Effective Time
does not take place on or before February15, 2000 then a Party not in default
under this Agreement may terminate this Agreement as set forth in Section 9.6.
The closing shall occur at I-Link's offices at Draper, Utah. It is understood by
the parties that actual marketing activities by the Big Planet Representatives
with respect to the Enhanced Services, and by the I-Link LLC Representatives
with respect to Big Planet products and services, shall not commence at the
Effective Time, but as soon as practicable thereafter as reasonably determined
by Big Planet.
2.3 Closing Obligations. At the Effective Time:
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(a) Deliveries by I-Link. I-Link and I-Link LLC shall deliver to
Big Planet:
(i) A duly executed assignment assigning all of their
rights under the I-Link LLC Representative Agreements to Big
Planet in the form attached hereto as Schedule 2.3(a)(i),
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(ii) An Officer's Certificate duly executed by
authorized officers of I-Link and I-Link LLC certifying to Big
Planet that:
(A) each of the representations and
warranties of I-Link and I-Link LLC set forth in this
Agreement was true, complete and accurate in all
material respects as of the Execution Date and is
true complete, and accurate in all material respects
as of the Effective Time as if made at the Effective
Time; and
(B) I-Link and I-Link LLC have performed or
complied with all of their obligations under the
Agreement which were to be complied with or performed
prior to the Effective Time;
(iii) An opinion of counsel in form satisfactory to
Big Planet covering the matters set forth in Section
2.3(a)(iii).
(iv) A complete and accurate list of all of the
Existing Customers of I-Link being transferred to Big Planet
in I-Link's existing electronic format.
(v) A complete and accurate list of all of the I-Link
LLC Representatives being assigned to Big Planet in I-Link's
existing electronic format, together with copies of all
agreements related thereto;
(vi) A duly executed assignment of the Accounts
Receivable in a form reasonably satisfactory to Big Planet,
together with a complete and accurate list of all Accounts
Receivable and a complete and accurate aging schedule; and a
duly executed UCC-1 Financing Statement filed with the State
of Utah Department of Commerce, Division of Corporations and
Commercial Code and such other filing locations as may be
reasonably requested by Big Planet;
(vii) Copies of any and all legally required
approvals, consents or waivers of any Governmental Authority,
and any and all letters of authorization and state and federal
filings, including any customer notifications or other filing
or notifications necessary to lawfully perform the transfer of
Existing Customers to Big Planet;
(viii) Any and all other material information
reasonably necessary for Big Planet to perform its obligations
hereunder or which would have a material adverse impact on Big
Planet's ability to perform its obligations hereunder.
(b) Deliveries by Big Planet. Big Planet shall deliver to I-Link:
(i) funds in the form of a wire transfer representing
payment for the Accounts Receivable;
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(ii) duly countersigned original copies of the
assignment attached as Schedule 2.3(a)(i) and the assignment
of Accounts Receivable; and
(iii) A certificate duly executed by an officer of
Big Planet certifying that
(A) Each of the representations and warranties
of Big Planet set forth in this Agreement was true, complete
and accurate in all material respects as of the Execution Date
and shall be true, complete, and accurate in all material
respects as of the Effective Time as if made at the Effective
Time; and
(B) Big Planet has performed and complied with
all of its obligations under the Agreement in all material
respects which were to be performed or complied with prior to
the Effective Time.
2.4 Conditions to Obligations of Big Planet. The obligations of Big
Planet to consummate the transactions that are the subject of this Agreement
(the "Transactions") shall be subject to the fulfillment, at or prior to the
Effective Time, of each of the following conditions:
(a) Performance of Obligations. I-Link and I-Link LLC shall have
performed or complied in all material respects with all agreements and
covenants required to be performed by it under this Agreement at or
prior to the Effective Time, including, without limitation, the
delivery of all documents required by Section 2.3.
(b) Accuracy of Representations. All of I-Link's and I-Link LLC's
representations and warranties in this Agreement must have been true,
complete, and accurate in all material respects as of the Execution
Date, and must be true, complete, and accurate in all material respects
as of the Effective Time as if made at the Effective Time.
(c) Governmental and Third Party Consents. All legally required
consents or approvals from any third parties or Governmental
Authorities shall have been obtained in form reasonably satisfactory to
Big Planet, including, without limitation, any necessary approvals or
waivers from the Federal Communications Commission and any state
regulatory bodies allowing for the transfer of the Existing Customers
to Big Planet by notice without obtaining the consent of each
individual Existing Customer.
(d) No Actions. There must not have been commenced or threatened
by giving written notice to I-Link or Big Planet any material Action
(i) involving any challenge to, or seeking damages or other relief in
connection with, any of the transactions contemplated by this
Agreement, or (ii) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the transactions
contemplated hereby or adversely affecting the right of Big Planet to
market and distribute the Enhanced Services and Enhanced Service
Devices.
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(e) No Material Changes. Since the Execution Date, there shall not
have occurred any material adverse change in the business, properties,
assets, or I-Link Products and Services , of I-Link, I-Link LLC and
each of their respective Subsidiaries and Affiliates.
(f) No Prohibition. Neither the consummation nor the performance
of any of the transactions contemplated by this Agreement will,
directly or indirectly (with or without notice of lapse of time),
materially contravene, or conflict with, or result in a material
violation of, or cause Big Planet or any Affiliate of Big Planet to
suffer any material adverse consequences under, (a) any Law or
Governmental Order, (b) any Law that has been published, introduced or
otherwise proposed before any Governmental Authority, or (c) any
agreement Big Planet is a party to.
(f) Completion of Due Diligence. Big Planet shall have completed
their due diligence investigation of I-Link and I-Link LLC and their
Subsidiaries and Affiliates, their related products, services and
support and operating systems, and their distribution force, and the
information gathered in such investigation shall be satisfactory to Big
Planet in its sole judgment and discretion.
2.5 Conditions to Obligations of I-Link and I-Link LLC. The obligations
of I-Link and I-Link LLC to consummate the Transactions that is the subject of
this Agreement shall be subject to the fulfillment, at or prior to the Effective
Time, of each of the following conditions:
(a) Performance of Obligations. Big Planet shall have performed or
complied in all material respects with all agreements and covenants
required to be performed by or complied with by it under this Agreement
at or prior to the Effective Time, including, without limitation, the
delivery of all documents required by Section 2.3.
(b) Accuracy of Representations. All of Big Planet's
representations and warranties in this Agreement must have been true,
complete and accurate in all material respects as of the Execution
Date, and must be accurate in all material respects as of the Effective
Time as if made at the Effective Time.
(c) Governmental Consents. All legally required consents or
approvals from any Governmental Authorities shall have been obtained in
form reasonably satisfactory to I-Link, including, without limitation,
any necessary approvals or waivers from the Federal Communications
Commission and any state regulatory authority.
(d) No Actions. There must not have been commenced or threatened
by giving written notice to I-Link any material Action (i) involving
any challenge to, or seeking damages or other relief in connection
with, any of the transactions contemplated by this Agreement, or (ii)
that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the transactions contemplated hereby
or adversely affecting the ability of Big Planet to perform its
obligations under this Agreement.
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(e) No Material Changes. Since the Execution Date, there shall not
have occurred any material adverse change in the business, properties,
or assets of Big Planet.
(f) No Prohibition. Neither the consummation nor the performance
of any of the transactions contemplated by this Agreement will,
directly or indirectly (with or without notice of lapse of time),
materially contravene, or conflict with, or result in a material
violation of, or cause I-Link or I-Link LLC to suffer any material
adverse consequences under, (a) any Laws or Governmental Order, or (b)
any Law that has been published, introduced or otherwise proposed
before any Governmental Authority, or (c) any agreement I-Link or its
Subsidiaries is a party to.
(g) Completion of Due Diligence. I-Link shall have completed their
due diligence investigation of Big Planet, its related support and
operating systems, and its distribution force, and the information
gathered in such investigation shall be satisfactory to I-Link in its
sole judgment and discretion.
Article 3
Pre-Closing Covenants
The Parties agree as follows with respect to the period between the
Execution Date of this Agreement and the Effective Time or the earlier
termination of this Agreement pursuant to Section 9.6.
3.1 General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver of, the closing conditions set forth in
Article 2).
3.2 Notices, Consents and Regulatory Approvals. Each of I-Link and
I-Link LLC will use its reasonable best efforts to obtain any third-party
consents that are required in order to consummate the transactions contemplated
herein. Not more than ten (10) days after the Execution Date, I-Link, at its own
expense and with prior approval of Big Planet, will give any notices to, make
any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of Governmental Authorities in
connection with the transactions referred to in this Agreement. Without limiting
the generality of the foregoing, each of the Parties agrees to cooperate, in
good faith, with the other Parties in obtaining consents and approvals from
Governmental Authorities, including, without limitation, approvals from state
and federal telecommunications regulatory agencies.
3.3 Operation of Business. I-Link and I-Link LLC will not engage in any
practice, take any action, or enter into any transaction out of the ordinary
course of business with respect to the I-Link LLC Representatives and the
distribution of I-Link Products and Services through such I-Link LLC
Representatives without the prior written approval of Big Planet. Without
limiting the generality of the foregoing, I-Link and I-Link LLC will not,
without the prior written approval of Big Planet: (i) amend or modify the I-Link
Sales Compensation Plan, the I-Link LLC
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Representative Agreements, related policy and procedures, or any customer
agreements or terms; (ii) terminate, cause or facilitate the termination or
dissatisfaction of any I-Link LLC Representatives, Existing Customers or Legacy
Customers; (iii) take any action or engage in any practice which would
discontinue or otherwise impair the technical specifications and/or capabilities
of any of the I-Link Products or Services; (iv) take any action to alter the
pricing for any of the I-Link Products and Services or I-Link Network; or (v)
introduce new retail residential and/or SOHO products or pricing or carry on any
discussion with I-Link LLC Representatives concerning any such new products or
pricing.
3.4 Preservation of Business. Each of the Parties shall use its
reasonable best efforts to maintain its existing customers and sales
representatives intact and to maintain the relations and good will with such
customers and representatives. I-Link and I-Link LLC agree to perform
provisioning, billing, and customer service at service levels consistent with
the service levels required under this Agreement. Neither Party will
misrepresent or disparage the technical specifications and/or capabilities of
the other Party's products and services, the other Party, or the contractual
relationship between the Parties.
3.5 Full Access. The Parties will permit representatives of the other
Party to have full access to all premises, properties, assets, personnel, books,
records, contracts, and documents of or pertaining to its business or operations
that are relevant to the transaction contemplated hereby in order to complete
their due diligence.
3.6 Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of any
of its own representations and warranties in this Agreement or covenants in
Article 3 of this Agreement . No disclosure by any Party pursuant to this
Section 3.6, however, shall be deemed to amend or supplement any schedule to the
Agreement or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
3.7 Exclusivity. I-Link and I-Link LLC will not (i) solicit, initiate,
or encourage the submission of any proposal or offer from any person relating to
the acquisition of the distribution rights to the I-Link Products and Services
in the Network Marketing Channel or any acquisition of the I-Link LLC
Representatives or the Existing or Legacy Customers in any form or manner, or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
foregoing. I-Link will notify Big Planet immediately in writing if any person
makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
Article 4
Wholesale Services and Distribution Agreement
4.1 Wholesale Enhanced Services/Devices within the United States.
Subject to the terms and conditions of this Agreement, commencing at the
Effective Time I-Link shall provide to Big Planet on a wholesale basis in the
United States the Enhanced Services described on
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Schedule 4.1 attached hereto, at the rates and for the fees set forth in this
Agreement. Big Planet shall with assistance from I-Link provide I-Link on a
quarterly basis in the form set forth in Schedule 4.1 written two-year rolling
forecasts of Big Planet Customers and I-Link Network usage requirements by each
NPA-NXX. I-Link shall provide the amount and type of then existing Enhanced
Services and Enhanced Service Devices as may be ordered by Big Planet or its Big
Planet Customers and agrees to maintain sufficient capacity in its I-Link
Network to handle the level and type of actual usage as required by the Big
Planet Customers; provided that such requirements do not exceed Big Planet's
forecasts. It is expressly understood and agreed that Big Planet shall have no
requirement, and shall not be committed expressly or implicitly, to purchase any
minimum amount of Enhanced Services or Enhanced Service Devices or any amount
set forth in a forecast during any period this Agreement is in effect. I-Link
shall provide all I-Link Products and Services in compliance with all applicable
Law.
4.2 Service Level Commitment. The Enhanced Services to be provided by
I-Link and the I-Link Network shall meet the service level requirements set
forth in Section 4.14 and as set forth in the Service Level Agreement attached
hereto as Schedule 4.14.
4.3 Grant of Exclusive Distribution Rights.
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(a) Exclusivity. Subject to the provisions of Section 4.4 and 4.17
below, and to any Pre-Existing Agreement (as defined below), I-Link
grants to Big Planet the world-wide exclusive right to market,
distribute and sell to residential and SOHO users through the Network
Marketing Channel (i) all of the Enhanced Services and Enhanced Service
Devices described on Schedule 4.1, and any future upgrades,
modifications, enhancements or replacements thereto, which Enhanced
Services represent all of the services of any type currently marketed
by I-Link LLC, and (ii) any Future Products and Services subject to the
terms of Section 4.5 below. I-Link and I-Link LLC expressly agree that
so long as the exclusive rights granted under this Section 4.3 have not
terminated pursuant to Section 4.4 below and except as otherwise
provided in Section 4.5 and Section 4.17, and excluding retail sales
directly to individuals pursuant to I-Link's general solicitations via
general advertising efforts, they shall not (i) sell or market, or
grant any right to any other person to sell or market Enhanced Services
or Enhanced Service Devices on a retail basis to any person, or their
independent representatives, that market or distribute any type of
products or services in the Network Marketing Channel, (ii) grant the
right to market, or sell any of the Exclusive Product and Services, or
sell on a wholesale basis, to any person, or their independent
representatives, that markets or distributes products or services of
any type through the Network Marketing Channel . The provisions of this
Section 4.3 shall not apply to the sale by I-Link to and the resale and
distribution of Enhanced Services and Enhanced Service Devices by any
person with whom I-Link has entered into a written agreement for the
sale and distribution of Enhanced Services and Enhanced Service Devices
(other than the I-Link LLC Representative Agreements) with an effective
date prior to the date of this Agreement (a "Pre-Existing Agreement").
A list of the Pre-Existing Agreements is set forth on Schedule 4.3.
I-Link agrees that it shall cause terms prohibiting sales of Enhanced
Services and Enhanced Services Devices into the Network Marketing
Channel to be
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included in any renewal of any Pre-Existing Agreement, and, to the
extent permitted by Law, at any time the other contracting party to any
Pre-Existing Agreement requests of I-Link any modification to or
assignment of the Pre-Existing Agreement to be made. I-Link represents
and warrants that the terms of the Pre-Existing Agreements do not
exceed one year, and that I-Link will immediately move to amend all
Pre-Existing Agreements and all future agency, wholesale and or
reseller agreements to include a specific exclusion for participation
in the Network Marketing Channel. I-Link further agrees that it shall
use reasonable efforts to investigate any claim of breach of this
Section 4.3 regarding Pre-Existing Agreements regardless of whether the
allegation of breach is from Big Planet or any other person.
(b) Refusal of Service. If any party or affiliate, subsidiary,
successor and/or assign thereto to an I-Link Pre-Existing Agreement
markets, distributes, solicits, causes to be solicited, or facilitates
any solicitation of any person to purchase I-Link Products or Services
in contravention of the Network Marketing Channel exclusivity granted
to Big Planet herein, or as more particularly described in Section 4.3
(c) (1) and (3) (exclusive of I-Link's retail sales directly to
individuals in the Network Marketing Channel pursuant to general
solicitations via general advertising efforts, which shall not be
deemed in contravention of Big Planet's exclusivity), then (i) I-Link
shall, to the fullest extent possible under such Pre-Existing
Agreement, refuse to provide its products and services pursuant to the
terms of that specific Pre-Existing Agreement, which refusal shall be
at the earliest date permitted by the Pre-Existing Agreement, and (ii)
I-Link shall indemnify and defend Big Planet from any and all claims
arising from said refusal.
(c) Right to Private Label. Notwithstanding the existence of the
Pre-Existing Agreements, if any of the following events occur during
the term of this Agreement, then Big Planet shall have the right to
privately label the I-Link Products and Services and market them under
a Big Planet label:
(1) I-Link, its agents, Subsidiaries, Affiliates, successors
and or assigns provides I-Link Products and Services under the
Pre-Existing Agreements in contravention of Big Planet's
exclusivity within the Network Marketing Channel as provided in
this Section 4.3 (exclusive of retail sales directly to
individuals in the Network Marketing Channel pursuant to I-Link's
general solicitations via general advertising efforts);
(2) I-Link, its agents, Subsidiaries, Affiliates, successors
and or assigns sell directly to retail customers within the
residential and SOHO market I-Link Products and Services at a
retail sales price less than Big Planet's retail pricing;
(3) I-Link, its agents, Subsidiaries, Affiliates, successors
and or assigns has renewed an existing agreement, including
Pre-Existing Agreements, or executed a new agreement, and said
renewal or new agreement provides for the sale of I-Link Products
and Services at a retail
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price less than Big Planet's retail pricing; or
(4) Big Planet loses its right of exclusivity to market,
distribute and sell to residential and SOHO users through the
Network Marketing Channel.
(d) Private Label Enhancement. Pursuant to Section 4.3 (c), at a
reasonable cost to Big Planet I-Link shall make available to Big Planet
for any privately labeled Big Planet product and/or service an
enhancement as mutually agreed upon by the Parties that distinguishes
said product and/or service from those being marketed directly by
I-Link or pursuant to its Pre-Existing Agreements or other agency
agreements.
(e) Use of I-Link Xxxx with Private Label. In connection with any
right of Big Planet to private label the I-Link Products and Services
under Section 4.3(c), Big Planet shall display an I-Link xxxx such as
"I-Link Enhanced," "Powered by I-Link," or such other identifying xxxx
as shall be designated by I-Link in all promotion and advertising
materials, and on all Enhanced Service Devices, pursuant to the
requirements of Section 4.13 below.
(f) In the event (1), (2), or (3) as set forth in Section 4.3(c)
above occur after that date which is 120 days after the Effective Time,
and as a result thereof Big Planet's ability to achieve the minimum
number of new Big Planet Enhanced Service Customers required to
maintain exclusivity pursuant to Section 4.4(a) below is materially
impeded, then the minimum number of new Big Planet Enhanced Service
Customers required to maintain exclusivity under Section 4.4(a) shall
be reduced by half.
4.4 Termination of Exclusive Distribution Rights.
--------------------------------------------
(a) Enhanced Services. [Sentence Redacted] In such event, I-Link
may terminate the exclusive right to market, distribute and sell the
Enhanced Services and Enhanced Service Devices by providing Big Planet
with 30 days advance written notice of its election to terminate
exclusivity. If the number of Big Planet Enhanced Service Customers
within the United States meets or exceed the targeted number of
customers at the last six-month period set forth on Schedule 4.4(a),
then Big Planet shall maintain exclusivity for the remaining term of
this Agreement. For purposes of determining the number of Big Planet
Enhanced Service Customers utilizing Enhanced Services, a Big Planet
Enhanced Service Customer that is paying a separate monthly recurring
charge for two or more Enhanced Services shall be counted as one Big
Planet Enhance Service Customer. However, if the same Big Planet
Enhanced Service Customer also purchases an Enhanced Service Device,
then he or she shall be counted as two Big Planet Enhanced Service
Customers for purposes of determining the number of customers under
this Section 4.4(a).
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(b) Exceptions to Right to Terminate Exclusivity. Notwithstanding
the provisions of Section 4.4(a) above, in the event that during the
designated six-month periods (i) I-Link fails to provide the Enhanced
Services at the service levels required hereunder, (ii) the I-Link
Network or the Ordering and Provisioning System fails to perform in
accordance with the service levels required hereunder (iii) the Billing
System fails to operate at the service levels required or bills are not
processed in accordance with the service levels required hereunder, or
(iv) I-Link materially breaches any other material term, covenant,
representation or warranty set forth in this Agreement, and such
failure or breach is the primary cause of Big Planet's failure to
achieve the targeted number of Big Planet Enhanced Service Customers
for the designated six-month period, then I-Link shall not have the
right to terminate exclusivity.
(c) Non-exclusive Distribution Rights. If Big Planet's right to
exclusivity is terminated pursuant to Section 4(a) above, then Big
Planet shall (i) retain the nonexclusive right to market then existing
I-Link Products and Services in the United States, (ii) its rights
under this Agreement to any other market it has entered, and (iii)
retain its rights to future markets as provided in Section 4.17.
(d) No Liability. Big Planet shall have no liability of any kind
or nature to I-Link for any failure of Big Planet to meet any forecasts
for any Enhanced Services or any Enhanced Service Devices. The sole
consequence of any such failure shall be the termination of exclusivity
as provided in this Section 4.4 and the right of first option to
exclusivity for Future Products and Services to the extent provided in
this Section 4.4.
4.5 Right of First Option for Future Products. With respect to any
given country, territory or jurisdiction, so long as Big Planet shall retain its
exclusive rights within such country, territory or jurisdiction as provided in
Sections 4.3 and 4.4 above, and Section 4.17 below, I-Link hereby grants Big
Planet a right of first option to exclusively market in the Network Marketing
Channel within any such country, territory or jurisdiction any Future Product or
Service that it releases to market. I-Link shall provide written notice of any
Future Product or Service [Number Redacted] days prior to making such Future
Product or Service available to the market. Such notice shall contain a detailed
description of the Future Product or Service and the anticipated timeline for
introducing such Future Product or Service. I-Link shall make available to Big
Planet such Future Product or Service for testing by Big Planet at such time as
such Future Product or Service is functional and marketable. Within [Number
Redacted] days from the date of receipt of such functional and marketable Future
Product or Service, Big Planet shall provide I-Link with a written response
indicating whether it is interested in marketing and distributing such Future
Product or Service. If Big Planet indicates that it is not interested in
marketing such Future Product or Service, then I-Link may contract with other
parties to market and distribute such Future Product or Service within the
Network Marketing Channel provided such Future Product or Service is a
Stand-Alone Product. If Big Planet indicates that it is interested in marketing
such Future Product or Service, then Big Planet and I-Link shall negotiate in
good faith the terms and pricing on which such Future Products and Services will
be sold or provided to Big Planet for distribution through the Network Marketing
Channel under this Agreement. The parties agree that, where reasonable, I-Link
may require Big Planet to pay additional costs
14
not associated with the existing Enhanced Services and may reserve the right to
terminate the distribution rights with respect to a Future Product or Service
that I-Link in good faith reasonably believes is not suitable for the Network
Marketing Channel because of the complexity of the product if Big Planet fails
to meet agreed upon criteria and conditions in the distribution of such product
or service. In the event Big Planet and I-Link are unable to reach agreement
within [Number Redacted] days from the date the parties commence good faith
negotiations, I-Link shall have the right to contract with another party to
distribute the Future Product or Service in the Network Marketing Channel if (a)
such Future Product or Service is a Stand-Alone Product, and (b) the terms and
conditions are not more favorable than the terms last offered by Big Planet. Big
Planet shall retain the non-exclusive right to distribute such product in the
Network Marketing Channel. With respect to any product or service that may be
offered or sold by or through I-Link or over the I-Link Network, the rights to
which are not wholly-owned by I-Link or for which I-Link does not have the right
to grant distribution rights, I-Link agrees to use its best efforts to obtain
from the owner of such rights the right to grant Big Planet distribution rights
consistent with this Agreement, so long as in doing so I-Link is not required to
expend any monies or agree to any terms or conditions that would in I-Link's
reasonable determination have a material adverse effect on I-Link's business.
Notwithstanding the foregoing, I-Link shall keep Big Planet informed of such
negotiations so that Big Planet may, in its sole discretion, cooperate with
I-Link as needed to facilitate the acquisition of said rights.
4.6 Pricing.
-------
(a) Initial Pricing. The pricing for the Enhanced Services listed
on Schedule 4.1, and all upgrades, modifications, enhancements and
replacements thereof, shall consist of (i) a per minute charge and
billing increment for each Single-Leg Call and each Double Leg Call to
be accrued and billed in [Number Redacted] increments, and [Number
Redacted] increments for international calls, (ii) a monthly recurring
charge for each Big Planet Customer who subscribes for one of the base
packages of Enhanced Services as described on Schedule 4.1, and (iii) a
monthly recurring charge for any additional Enhanced Service added to
the base package for a Big Planet Customer. The initial pricing for the
Enhanced Services and the Enhanced Service Devices are set forth in
Schedule 4.1, which initial pricing shall be modified from time to time
as set forth in this Section 4.6.
(b) Pass Through Charges. Unless otherwise provided for in the
applicable service or product description contained in any attachment
hereto, I-Link will pass through to Big Planet, and Big Planet will be
responsible for the pass through charges identified on Schedule 4.6(b).
Unless required by a Government Authority, except for the fees set
forth in Section 4.1 and the pass through charges identified on
Schedule 4.6(b), no additional fees, charges or expenses may be passed
through or charged to Big Planet. I-Link shall provide as soon as
possible, but in no event less than five (5) days prior, written notice
to Big Planet of any changes to the pass through charges.
15
(c) Adjustment to Per Minute Charge. Subject to the provisions of
Section 4.6(d), during the term of this Agreement the per minute price
to Big Planet of Single-Leg Calls and Double-Leg Calls shall be
adjusted on a six-month basis to equal [Costs and Percentages
Redacted]. Big Planet's and I-Link's representatives agree to meet
within 30 days after the end of each six-month period (the initial
six-month period shall be deemed to end October 31, 2000) to review
I-Link's Costs. The pricing of any product or service for which I-Link
costs have changed since the last review shall be adjusted to equal
[Costs and Percentages Redacted] effective as of the first day of the
next month.
(d) Cap. Notwithstanding the agreement to adjust pricing levels as
set forth in Section 4.6(c) and I-Link's Costs for such service, I-Link
agrees that I-Link's pricing for Double-Leg Calls shall not exceed
[Charges Redacted] per minute and that I-Link's pricing for Single-Leg
Calls shall not exceed [Charges Redacted] per minute during the term of
this Agreement, unless I-Link's Costs are increased due to regulatory
changes or government mandates, or limited circumstances beyond
I-Link's control such as the critical failure of an underlying I-Link
Network carrier requiring off-Network re-routing of I-Link traffic or
similar catastrophic events; provided, however, that such limited
circumstances shall not include business issues such as increases in
operating costs, increases in supply costs, or the general increase of
prices of underlying carriers in the industry. In the event of a
catastrophic limited circumstance, I-Link shall immediately give Big
Planet written notice so that Big Planet may inform its Big Planet
Customers and Big Planet Representatives. Once the event has been
remedied the I-link Costs shall revert back to the then existing cap.
Notwithstanding the foregoing, the cap on pricing for Future Products
and Services shall be negotiated with the right of first option set
forth in Section 4.5. All enhanced service calls originating in a NECA
areas described in Schedule 4.6(d), or originating or terminating
outside the continental United States (Alaska, Hawaii, Puerto Rico or
any international country) are subject to surcharges and/or rates as
outlined in Schedule 4.6(d) and are subject to change upon [Recacted]
days written notice to Big Planet, which charges are not subject to the
cap described.
(e) Recurring Charges. The monthly recurring charge related to the
existing Enhanced Service packages and existing Enhanced Services
described in the current Schedules to this Agreement shall not be
increased without the consent of Big Planet;
(f) Resale Rights. I-Link and Big Planet agree that throughout the
duration of this Agreement Big Planet shall have the right to purchase
or market the Enhanced Services and Enhanced Service Devices listed on
Schedule 4.1, plus any Future Products and Services provided for
hereunder, for resale to its Big Planet Customers, and in its sole
discretion, Big Planet may set any retail price that it desires. During
the period Big Planet uses the Billing System, Big Planet agrees to
notify I-Link 60 days prior to the expected price change of their
request for change in sufficient detail to allow I-Link to make such
changes as required. Any changes Big Planet requests which require more
than an update to the rate tables (i.e. product design, development,
code modifications, testing) shall be mutually agreed to in terms of
feasibility and timing of implementation of such changes along with any
charges I-Link may assess in order to facilitate Big Planet's requested
16
changes. Big Planet assumes liability for any escheat liability under
state or federal law, if any, and shall indemnify I-Link from and
against any such liability.
4.7 Most Favored Customer. For the term of this Agreement, I-Link
agrees to treat Big Planet as its most favored customer, distributor, agent or
reseller in the residential and SOHO market. If during the term of this
Agreement I-Link shall enter into arrangements with any other distributor,
reseller, agent or customer in any form of engagement where I-Link Products or
Services are sold to a residential or SOHO end-user with similar usage volume as
Big Planet and with a similar geographic concentration, and the agreement
provides said distributor, reseller, agent or customer with more favorable
terms, then I-Link shall provide written notice to Big Planet of the terms of
such agreement or arrangement and Big Planet shall have the right to elect to
have this Agreement deemed amended to provide the same pricing and other terms
to Big Planet by providing written notice to I-Link and the Agreement shall be
deemed to be amended effective as of the date of such notice.
4.8 Audit. Big Planet shall have the right to inspect and audit the
books and records of I-Link upon reasonable notice solely to confirm the
accuracy of the reports and information provided to Big Planet concerning
customer usage and other billing information and to confirm the I-Link Costs of
the Double-Leg Calls and Single-Leg Calls in determining the pricing established
under this Article 4, to confirm any other costs or expenses being charged or
passed through to Big Planet and to confirm its rights under Section 4.7 with
respect to agreements or arrangements with other distributors, dealers,
resellers and customers.
4.9 Information/Data to be Provided. I-Link shall provide or make
available to Big Planet the information/data specified in Schedule 4.9 at the
times and in the manner and form specified therein. In addition, I-Link shall
provide Big Planet with access to all contracts with respect to I-Link's Network
capacity and pricing for such capacity, unless prohibited by the terms of an
existing contract, including but not limited to all pricing matrix, discount
matrix and related documentation necessary for Big Planet to determine I-Link's
compliance with Section 4.7 hereof. I-Link agrees to use its reasonable best
efforts to obtain the consent of the other party to any existing contract which
by its terms would otherwise prevent Big Planet from accessing such contract to
allow such access. I-Link shall provide such other existing and available
information as Big Planet may reasonably request and shall work with Big Planet
to establish mutually workable timelines and delivery methods for delivering
such other information.
4.10 Marketing. During the period of exclusivity and in such
territories where Big Planet maintains the exclusive right to distribute
Enhanced Services and Enhanced Service Devices, Big Planet shall use good faith
efforts to market the Exclusive Products and Services and shall promote such
products in all introductory information packs provided to potential or new Big
Planet Representatives. Subject to Section 4.3, all marketing programs and
materials prepared by Big Planet shall include the appropriate trademarks and
service marks of I-Link including the phrase "I-Link Enhanced." Big Planet shall
monitor and control the marketing efforts of the Big Planet Representatives at a
level consistent with the efforts of Big Planet to monitor and control the
marketing of other Big Planet products and services prior to the Effective
17
Time. Big Planet shall have the right to market the Enhanced Services and
Enhanced Service Devices through one or more of its Affiliates and their
independent representatives.
4.11 Network Outages. The Parties agree that if any event occurs
including any default in payment of any supplier agreement or otherwise which is
reasonably likely to cause or result in a service outage, then I-Link shall give
Big Planet immediate notice of such event together with summary of the event
that will result in such service outage. Big Planet shall have the right to step
in and at I-Link's expense cure any default or take necessary action to prevent
such service outage, including but not limited to the procurement of similar
services from other suppliers necessary to obtain Enhanced Services over the
I-Link Network, contacting and working with vendors and suppliers of I-Link, and
shall provide I-Link the reasonable opportunity to participate if possible, and
such other actions as may be necessary. In such event, I-Link shall promptly
reimburse Big Planet for any payments made on behalf of I-Link and any costs or
expenses incurred by Big Planet. Big Planet shall have the right to offset such
amounts against any future xxxxxxxx for Enhance Services and Enhanced Service
Devices provided pursuant to this Agreement.
4.12 Board Seat. So long as this Agreement shall remain in force,
I-Link agrees that it will nominate a person designated by Big Planet to sit on
the Board of Directors of I-Link unless Big Planet declines or requests not to
have a Board member. I-Link shall have the right to approve the person
designated to be nominated, which approval shall not be unreasonably withheld.
In the event I-Link reasonably withholds its approval, it shall notify Big
Planet of its objections and Big Planet shall have the right to designate a
different person. I-Link shall take all reasonable action to have the person
designated by Big Planet elected to serve on the Board. In the event the
designated person is not elected for reasons beyond the control of I-Link, or if
Big Planet declines or request not to have a Board member, then Big Planet shall
have the right to have a representative attend each meeting of the Board of
Directors or committee thereof, and I-Link shall provide copies of all notices,
information and other material it provides to its Board members to Big Planet's
representative. Upon the termination of this Agreement, I-Link shall have the
right to request and obtain the immediate resignation of Big Planet's board
designee.
4.13 Trademarks. I-Link hereby grants to Big Planet and its Affiliates
a royalty-free, non-exclusive, non-transferable. non-sublicenseable license to
use the trade names and trademarks enumerated in Schecule 4.13 ("Marks") in Big
Planet's advertising and promotion of the I-Link Products and Services. Subject
to Section 4.3 above, Big Planet shall use the Marks in all of Big Planet's
advertising and promotion relating to the I-Link Products and Services. Big
Planet acknowledges I-Link's ownership and exclusive rights in the Marks, and
Big Planet's use of the Marks shall accrue to the benefit of I-Link. Big Planet
shall not attempt to register the Marks or adopt, use or attempt to register any
confusingly similar xxxx. Big Planet shall not use any trademark, word, symbol,
letter or design in combination with the Marks in a manner that would create a
combination xxxx. Big Planet shall provide, at its own expense, samples of usage
of the Marks for I-Link to inspect prior to usage. I-Link may reject any sample
if I-Link believes in good faith that the use will damage the recognition value
or reputation for quality associated with the Marks. Big Planet shall either
modify nonconforming uses within thirty (30) days of notice or immediately cease
any further use of the Marks.
18
4.14 Product and Service Warranty. I-Link warrants and covenants that
the Enhanced Services shall have [Percentage Redacted]service availability and
shall continue to perform functionally for the term of this Agreement, as
described in the documentation provided in accordance with this Agreement,
including the service level agreement attached as Schedule 4.14, and with
I-Link's marketing literature, and I-Link's specifications; and that the I-Link
Products and Services and user documentation furnished by I-Link are compatible;
and that the I-Link Products and Services and the Ordering and Provisioning
System and the Billing Service system shall be free of defects in design,
workmanship and materials which prevent them from being used for their intended
purpose. I-Link further represents and warrants that it will not discontinue any
of the Enhanced Services or Enhanced Service Devices unless it shall give Big
Planet at least ninety (90) days prior written notice of such discontinuation
and provides a replacement product on the same terms and pricing. Big Planet
shall make no representations and warranties regarding the I-Link Products and
Services beyond the representations and warranties set forth in this Agreement
or the schedules or exhibits hereto or additional warranties provided by I-Link
at the time Big Planet orders or facilitates the order of said product or
service.
4.15 Carrier Commitment and Capacity Requirements. The Parties
acknowledge that Big Planet has an agreement in place with a telecommunications
carrier ("Carrier Agreement"). I-Link agrees to use good faith efforts to assist
Big Planet in identifying and implementing actions that would facilitate Big
Planet meeting its volume commitment under the Carrier Agreement, so long as
such actions do not cause any material adverse financial impact to I-Link. So
long as this Agreement shall remain in force Big Planet shall not take any
actions to cause any Legacy Customer to be moved from I-Link's Carrier
Information Code (CIC) without the prior written consent of I-Link.
Notwithstanding the foregoing, nothing shall prohibit a Legacy Customers, on an
individual basis, from being moved from I-Link's CIC in the event (i) the Legacy
Customer purchases or subscribes to another I-Link Enhanced Service that
includes as a feature long-distance calling, (ii) Big Planet through general
solicitation or its Big Planet Representatives sells a non-competing product (as
defined in 4.16 below) to a Legacy Customer that requires the Legacy Customer to
be moved from I-Link's CIC; or (iii) a Legacy Customer makes a request in
compliance with applicable Law that he or she be moved from the I-Link CIC.
4.16 Non-Compete. Big Planet agrees that during the period it has
exclusivity for Enhanced Services and Enhanced Service Devices under Section 4.3
above, it shall not market or distribute in any territory where it has
exclusivity and in which the I-Link Product and Services are available any
products of other suppliers that are substantially similar to the Exclusive
Products and Services. Big Planet products listed on Schedule 4.16 shall be
deemed non-competing products, including any and all upgrades, modifications,
enhancements and replacements thereof.
4.17 Wholesale Services Outside the United States.
(a) [Sentence Redacted] I-Link agrees to keep Big Planet generally
informed with respect to developments in the expansion and build-out of
the I-Link Network, including licensing arrangements with third
parties. I-Link also agrees that if Big Planet elects to build out
network capabilities either individually or jointly with a third party
for purposes of providing Enhance
19
Services and Enhanced Service Devices in the Network Marketing Channel,
I-Link will cooperate with Big Planet in such build-out and will
negotiate in good faith the license of any necessary technology;
provided, however, that I-Link shall not be required to so cooperate or
negotiate if in its reasonable discretion I-Link deems that working
with any such third party would materially adversely affect I-Link's
business.
(b) At such time that I-Link first undertakes to establish a
telecommunications network in a country other than the United States,
I-Link shall give Big Planet written notice. The written notice shall
identify the territory, jurisdiction or country in which such network
has been or is being established, the I-Link Products and Services that
will be available in such market, and the estimated date that such
products and services will be available for distribution. The notice
shall be delivered at least six months prior to activating such service
or introducing such product. Within 60 days of receipt of such notice,
the Parties shall commence negotiations in good faith to establish the
pricing to Big Planet of such I-Link Products and Services and the
forecasts of the number of Big Planet Customers that Big Planet will
need to achieve in order to maintain exclusivity in such market in the
Network Marketing Channel. The pricing to Big Planet shall be no less
favorable than that offered to other similarly situated customers of
I-Link consistent with the provisions of Section 4.7 of this Agreement.
The Parties hereby agree that in negotiating the pricing for the
Enhanced Services and Enhanced Services in territories outside of the
United States, that the following shall be considered: the retail price
of the I-Link Products and Services to the end-user must be competitive
as to pricing and service levels within the market for comparable
telecommunication products and services; Big Planet's desire that the
wholesale pricing of the I-Link Products and Services to Big Planet
should provide a sufficient margin to allow Big Planet to pay
commissions to Big Planet Representatives on 100% of the sales price to
end users; variations in I-Link's cost structure and network build out
in a specific country as compared to the United States; and a pricing
structure that would allow both I-Link and Big Planet to achieve
reasonable profit margins. If the Parties are able to reach an
agreement as to the pricing and required customer levels to maintain
exclusivity, the Parties shall execute an addendum to this Agreement to
set forth such terms. The provisions of this Section 4.17 shall remain
intact notwithstanding the loss of exclusivity by Big Planet in the
United States pursuant to Section 4.4 above.
(c) If the parties are unable to reach an agreement with respect
to pricing and the number of customers required to maintain exclusivity
prior to the later of (i) six months after Big Planet receives the
written notice specified in Section 4.17 above, and (ii) the date that
the I-Link commences providing the I-Link Products and Services in such
market, then Big Planet shall have a non-exclusive right to market the
I-Link Products and Services in the Network Marketing Channel in such
market, and I-Link shall be able to contract with one or more other
persons to distribute I-Link Products and Services in the Network
Marketing Channel in such territory, jurisdiction or country on a
non-exclusive basis, provided that the terms and conditions thereof
shall not be more favorable than the terms last offered by Big Planet
or pursuant to which such I-Link Products and Services are sold to Big
Planet on a non-exclusive basis in such market.
4.18 Insurance. I-Link and Big Planet shall maintain insurance coverage
with a carrier rated A or better by the Best Key Rating Guide and list the other
as an additional insured on the
20
policy. Policies shall include statutory workers' compensation, employer's
liability, comprehensive automobile liability with a combined single limit of
$1,000,000 for each occurrence for bodily injury and property damage liability,
and comprehensive commercial general liability in an amount not less than
$1,000,000.00 per occurrence and $2,000,000.00 in the aggregate. The Parties
shall immediately notify each other upon receipt of notice of cancellation of
any policy.
Article 5
Ordering, Customer Services and Billing
5.1 Ordering Services. At no additional charge to Big Planet, I-Link
shall provide and maintain the ordering and provisioning software system
necessary to allow Big Planet Representatives and Big Planet Customers to sign
up and order I-Link Products and Services (the "Order and Provisioning System").
The Parties agree that the Ordering and Provisioning System shall be a web-based
order processing system located on I-Link's premises that is acceptable to Big
Planet and branded as "Big Planet." Big Planet shall provide at its expense the
web server(s) and data connections necessary to support the Order and
Provisioning System. The specifications and performance service level
requirements for the Order and Provisioning System and the required interface to
Big Planet's systems and web page product as described below are set forth in
the Service Level Agreement attached as Schedule 5.1. The Order and Provisioning
System shall be web accessible from Big Planet's Dynamic Web Page product as a
hotlink to I-Link's ordering/provisioning website. I-Link and Big Planet shall
jointly develop and build an interface for the Order and Provisioning System and
each Party shall be responsible for its own costs in the development, build-out
and maintenance of such interface. Any additional modifications to the Order and
Provisioning System beyond the existing functionality of the System (as
specified in Schedule 5.1) that may be requested by Big Planet will be evaluated
by I-Link, and the cost of any such modification will be estimated and provided
to Big Planet. Big Planet will bear the cost of developing and implementing any
such modifications or enhancements. The Order and Provisioning System of I-Link
and Big Planet will be linked by a specific uniform resource locator that is
approved by Big Planet prior to use and that is exclusively dedicated to the
Order and Provisioning System ("Order URL"). All Big Planet Customers shall
remain exclusively within this Order URL while transacting business on the Order
and Provisioning System and at no time shall any banners or links be inserted
into or maintained as part of the Order and Provisioning System that directs a
Big Planet Customer or Big Planet Representative elsewhere. The Parties agree
that web entered orders from Big Planet Customers will go directly to I-Link's
Order and Provisioning System. In the event that Big Planet elects to accept
telephone and paper orders, those orders shall be entered into an order entry
system directly by Big Planet and Big Planet shall be responsible for placing
such orders into the Order and Provisioning System. In the event Big Planet
offers Presubscribed Services utilizing the I-Link Network, Big Planet shall
bear the cost associated with any required third-party verification procedures
and provisioning.
5.2 Customer Service, Billing and Collections. Big Planet acknowledges
and agrees that from and after the Effective Time that it shall be responsible
for providing at its cost all billing, collections, and other customer service
to its Big Planet Enhanced Service Customers
21
with respect to the I-Link Products and Services provided by I-Link hereunder.
This Section 5.2 shall in no way relieve I-Link from providing any customer
service and technical support obligations that it is required to perform for Big
Planet under the terms of this Agreement including those set forth in Article
10. Notwithstanding the foregoing, Big Planet may contract with I-Link to
provide billing services and other services and personnel for the first twelve
months following the Effective Time as more fully described in Article 8.
5.3 Warranty for Tangible Products. With respect to warranties on
Future Products and Services that are tangible products manufactured by I-Link,
I-Link shall remain responsible at its cost for performing any and all warranty
work and providing replacement products for defective tangible products during
the warranty period in accordance with the warranty provisions to be negotiated
in accordance with Section 4.5. With respect to tangible I-Link Products and
Services manufactured by third parties, I-Link shall pass through to Big Planet
and the end users of its tangible I-Link Products and Services all warranties
provided to I-Link by the manufacturers of such tangible Products. I-Link shall
use its good faith and reasonable best efforts to negotiate favorable warranty
terms with its third party manufacturers that are consistent with industry
standards. This Section 5.3 shall not relieve I-Link from providing any customer
service and technical support obligations that it is required to perform for Big
Planet under the terms of this Agreement including those set forth in Article
10.
Article 6
Assignment of Sales Force and Related Business
6.1 Transfer of I-Link LLC Representatives.
(a) Transfer. At the Effective Time, I-Link and I-Link LLC shall
assign and transfer to Big Planet their entire right, title and legal
and equitable interests in the I-Link LLC Representative Agreements and
all associated documentation, including all rights to the names and
other personal information related thereto. A list of the I-Link LLC
Representative Agreements are attached hereto as Schedule 6.1(a). By
this irrevocable assignment, I-Link and I-Link LLC renounce and waive
any and all rights they may have in the I-Link LLC Representative
Agreements and the I-Link LLC Representatives, or to receive any
compensation whatsoever by reason of any use of the I-Link LLC
Representatives or any element thereof by Big Planet. I-Link and I-Link
LLC agree that they will not use or release the names of such I-Link
LLC Representatives or other personal information related thereto to
any other person or otherwise use such information.
(b) Information. I-Link and I-Link LLC further agree that, on
reasonable request and without further consideration, they shall
provide any and all existing information, hard copies of the
agreements, data and business information, financial data,
representative lists, and similar information of I-Link and I-Link LLC
to Big Planet regarding the I-Link LLC Representatives and I-Link LLC
Representative Agreements,
22
and generally do everything reasonably necessary to aid Big Planet with
this assignment and transfer.
(c) Transition. At the Effective Time, Big Planet shall assume
control of the I-Link LLC Representatives and they shall be treated as
Big Planet Representatives. I-Link and I-Link LLC shall be liable for
any and all claims of I-Link LLC Representatives relating to any matter
occurring or accruing prior to the Effective Time. During the first
twelve months following the Effective Time, Big Planet agrees that all
I-Link LLC Representatives shall be transitioned to the Big Planet
Sales Compensation Plan in accordance with the terms and timetable set
forth in Schedule 6.1(c). Except as set forth in this Section 6.1(c),
Big Planet shall have no obligation to make any changes to its Big
Planet Sales Compensation Plan or offer any other exceptions or
inducements to retain the I-Link LLC Representatives. In no event shall
either Party have any liability to the other with respect to any loss
or decline in the number of I-Link LCC Representatives marketing I-Link
Products and Services, as a result of any I-Link LLC Representative
electing not to transition to Big Planet as a result of the Assignment
of this Agreement, or Big Planet's actions in integrating such I-Link
LLC Representatives.
(d) Commissions. I-Link shall be solely responsible for paying all
commissions that relate to sales and usage of I-Link Products and
Services prior to the Effective Time or any other fees or commissions
that result from actions that occur prior to the Effective Time or that
are anything other than the standard commissions on sales of product
and services as described in the I-Link Sales Compensation Plan. Big
Planet shall be responsible for paying all commissions on sales of
I-Link Products and Services marketed and distributed by Big Planet
following the Effective Time.
6.2 Transition of Customer Base.
---------------------------
(a) Assignment of Customers. At the Effective Time, I-Link shall
assign and transfer to Big Planet all its right, title and interest in
the Existing Customers, which are more particularly described on
attached Schedule 6.2(a). I-Link shall update Schedule 6.2(a) as of the
Effective Time. By this irrevocable assignment, I-Link renounces and
waives any and all rights it may have in the Existing Customers, except
as otherwise provided herein. As of the Effective Time, Big Planet
shall receive any and all gross revenues from the Existing Customers.
I-Link further agrees that, on reasonable request and without further
consideration, I-Link shall provide any and all existing information,
hard copies of any contracts, data and business information, financial
data, and similar existing information of I-Link to Big Planet
regarding the Existing Customers, and generally do everything
reasonably necessary to aid Big Planet with this assignment and
transfer. In the event of the termination of this Agreement for any
reason during the first year following the Effective Time, I-Link shall
have the right, at its sole cost and expense, to reacquire all right,
title and interest in the Existing Customers with respect to I-Link
Products and Services, but not the product and services of Big Planet.
Any such reacquisition must be done in accordance with all applicable
laws. I-Link shall have the right to contact and notify the Existing
Customers of such reversion, and Big Planet shall
23
provide I-Link with reasonable assistance in effecting such reversion.
In the event of any such election, I-Link shall be required to pay and
reimburse Big Planet on a monthly basis for all commissions payable by
Big Planet to its Big Planet Representatives with respect to such
customers until Big Planet is no longer obligated to pay commission on
sales to the Existing Customers. Big Planet shall have no obligation to
modify its Big Planet Sales Compensation Plan to eliminate the
commission payable on sales to the Existing Customers. Big Planet shall
invoice I-Link on a monthly basis for the amount of such commissions
and I-Link shall pay the invoice within thirty days. I-Link
acknowledges and agrees that upon termination of this Agreement under
any other circumstance all right, title and interest in the Existing
Customers shall remain with Big Planet. I-Link and I-Link LLC shall
cooperate with Big Planet to migrate Existing Customers to another
provider if so directed by Big Planet subject to any applicable
regulatory requirements. I-Link further acknowledges that it is
providing Big Planet with information concerning its Legacy Customers
so as to enable Big Planet to market its other products and services to
those customers.
6.3 Assignment of Accounts Receivables.
----------------------------------
(a) Assignment. At the Effective Time, I-Link agrees to assign and
transfer to Big Planet all its right, title and interest in the
Accounts Receivable. At the Effective Time, I-Link shall provide Big
Planet with a complete accounts receivable aging schedule of the billed
Accounts Receivable and applicable bad debt reserves as of January 31,
2000 (the "Cutoff Date"). Upon receipt of such schedule, Big Planet
shall have ten days to review such schedule and shall be given access
to I-Link's books and records if it desires to confirm the accuracy of
such schedule. Within twenty (20) days of the Effective Time, I-Link
shall process a final I-Link billing with respect to the sale and usage
of, and payments received from, the I-Link Products and Services from
the Cutoff Date to the Effective Time, and shall provide a report of
this final I-Link billing statement to Big Planet.
(b) Payment. In consideration for the assignment of such Accounts
Receivable, Big Planet hereby agrees to pay to I-Link by wire transfer
(i) at the Effective Time an amount equal to the sum of (a) [Percentage
Redacted] of the Accounts Receivable as reflected on the Cutoff Date
that have been outstanding for less than [Number Redacted] days as of
the Effective Time, plus (b) [Percentage Redacted] of the Accounts
Receivables as reflected on the Cutoff Date that have been outstanding
between thirty and sixty days as of the Effective Time. Big Planet
shall make no payment with respect to any Accounts Receivables that are
outstanding for more [Number Redacted] days, and (ii) within five (5)
days of Big Planet's receipt of the report of final I-Link billing
statement an amount equal to [Percentage Redacted] of the Accounts
Receivable billed after the Cutoff Date for services and products sold
and used up to the Effective Time, less any payments received after the
Cutoff Date and up to the Effective Time.
(c) Collection. From and after the Effective Time, Big Planet
shall assume responsibility for collecting the Accounts Receivables and
shall be entitled to receive any
24
and all proceeds from the Accounts Receivables. I-Link further agrees
that, on reasonable request and without further consideration, I-Link
shall provide any and all existing information, hard copies of any
contracts, data and business information, financial data, and similar
information of I-Link to Big Planet regarding the Accounts Receivables,
and generally do everything reasonably necessary to aid Big Planet with
this assignment and transfer. If I-Link receives any payments of the
Accounts Receivable after the Effective Time, it shall promptly forward
to Big Planet all such payments with sufficient information for Big
Planet to identify the Account Receivable associated with such payment.
(d) Initial True-Up. Within 20 days of the end of each of the
first two calendar months following the month following the Effective
Time (April 20 and May 20), Big Planet shall provide I-Link with a
schedule indicating which of the Accounts Receivables have been
collected and the total sum collected with respect to such Accounts
Receivables (less any finance charges or other fees or charges that
were not included on the balances of the Accounts Receivables used to
determine the initial payment) as of the end of such calendar month
(the "Collected Amount"). If the Collected Amount exceeds the amount of
the Initial Payment plus any additional monthly payments paid pursuant
to this Section 6.3(d) (the "Total Payments"), then Big Planet shall
within 15 days thereafter pay to I-Link a sum equal to the difference
between (a) the Collected Amount and (b) the sum of the Total Payments.
(e) Final True-Up. Within 20 days of the end of the fourth
calendar month following the Effective Time (June 20), Big Planet shall
provide I-Link with a final schedule indicating which of the Accounts
Receivable have been collected and the Collected Amount through the end
of the fourth calendar month. If the Collected Amount is less than the
Initial Payment, I-Link shall within 15 days pay to Big Planet a sum
equal to the difference between (a) [Amounts Redacted], and (b)
[Amounts Redacted]. If the Collected Amount exceeds the amount of the
Total Payments, then Big Planet shall within 15 days thereafter pay to
I-Link a sum equal to the difference between (a) the Collected Amount
and (b) the sum of the Total Payment. Big Planet shall be entitled to
keep all sums collected on the Accounts Receivables after the end of
the fourth calendar month from the Effective Time without any further
payment to I-Link; provided, however, I-Link shall have the right to
require Big Planet to assign back to I-Link all Accounts Receivable
that have not been collected as of the end of the fourth calendar month
for no additional consideration.
6.4 Legacy Customers.
----------------
(a) No Transfer. None of the Legacy Customers shall be transferred
to Big Planet at the Effective Time. All of these Legacy Customers
shall remain customers of I-Link and Big Planet shall provide customer
services to these Legacy Customers at a level consistent with services
provided to Big Planet Enhanced Service Customers. At anytime following
the Effective Time, Big Planet shall have the right to request I-Link
to transfer
25
the Legacy Customers to Big Planet, subject to the provisions of
Section 4.15. In the event of such a request, I-Link shall cooperate in
effecting such transfer including obtaining any regulatory approvals.
Each Party shall be responsible for its own costs in connection with
any transfers of such Legacy Customers.
(b) Representations and Warranties. I-Link represents and warrants
that as of October 1999, approximately [Percentage Redacted] of its
total Presubscribed Services traffic is carried on the Sprint network.
I-Link further represents and warrants that it has notified I-Link LLC
Representatives that the commission value to I-Link LLC Representatives
on Legacy Customer contracts under the Sprint Plus One plan will be
less than or equal to [Percentage Redacted] of retail sales price.
(c) Commission Distribution . I- Link agrees that it shall pay Big
Planet (by way of direct payment or offset, at I-Link's discretion)
[Percentage Redacted] of the gross per minute revenue generated from
the sale of all non-I-Link Network Presubscribed Services traffic, and
[Percentage Redacted] of the monthly recurring charge from the Cascade
product (identified on Schedule 4.1). I-Link also agrees to pay Big
Planet [Percentage Redacted] of the gross per minute revenue generated
from the balance of the Legacy business originating or terminating on
the I-Link Network, and [Percentage Redacted] of the monthly recurring
charge generated from the balance of the Pre-subscribed Services
customers. A list of Legacy Customers is set forth in Schedule 6.4
(which schedule shall be provided within 48 hours of the Execution
Date). The obligations shall continue until all Legacy Customers have
ceased receiving services under such plans. I-Link shall provide Big
Planet with complete and timely information sufficient to direct the
appropriate payments to the appropriate former I-Link LLC
Representative.
6.5 Customer Service Space. For a period of six months commencing at
the Effective Time and ending on the six-month anniversary of the Effective
Time, I-Link shall provide Big Planet with work space on its premises that is
adequate for Big Planet to provide customer support functions for the Big Planet
Enhanced Service Customers as long as space requirements do not exceed I-Link's
current space requirements on existing leases. Big Planet agrees to provide
telephones, headsets, workstations, installation and associated software
licenses required for normal customer care . Big Planet will prepare a customer
care headcount forecast and agrees to hire and manage such customer care
representatives during the 6 month transition period. Big Planet shall Pay
I-Link a monthly amount for this customer care related space allocation based on
the square footage leased equal to [Amount Redacted] per square foot, plus a
corresponding pro rata share of the utilities associated with such space. Big
Planet's employees, agents and subcontractors working on I-Link premises during
the training/transition periods shall fully comply with I-Link's security,
access and safety requirements for the protection of I-Link's facilities and
employees while on I-Link's premises.
6.6 Customer Support Personnel. I-Link shall provide all necessary
instruction and training to enable Big Planet to supply Customer Support for the
I-Link Products and Services, including but not limited to all Customer Support
training manuals and materials. Such training
26
is described on attached Schedule 6.6 and shall be provided at cost plus
[Percentage Redacted] to Big Planet, and Big Planet shall reimburse I-Link for
all out-of-pocket expenses such as costs for reasonable travel, manuals and
materials. In addition, Big Planet may contract with I-Link to use personnel of
I-Link to provide its customer support functions. Such personnel costs shall be
calculated as that percentage of I-Link's total fully-burdened (customary
employee benefits and taxes) customer support personnel costs that equals the
percentage of I-Link's total customers/users that Big Planet Customers
represent, plus [Percentage Redacted]; or, in the event Big Planet opts to
specify to I-Link a definitive number of I-Link personnel who would be dedicated
to handling Big Planet customer support functions, such full-burdened personnel
costs shall be calculated as the actual cost for such dedicated personnel, plus
[Percentage Redacted.
6.7 Notices of Investigation
(a) I-Link and I-Link LLC agree that during the term of this
Agreement it will notify Big Planet within three business days of
I-Link or I-Link LLC (i) becoming aware of any investigation of
I-Link's sales or marketing activities prior to the Effective Time by
any Governmental Authority; or (ii) becoming subject to any
Governmental Order, or being approached as to a settlement relating to
its conduct of business with respect to the I-Link LLC Representatives.
(b) I-Link and I-Link LLC agree that during the term of this
Agreement it will notify Big Planet within three business days of
either of them becoming aware of any notice by any Governmental
Authority that its products and/or services do not comply with any Law.
(c) Big Planet agrees that during the term of this Agreement it
will notify I-Link within three business days of Big Planet (i)
becoming aware of any investigation of Big Planet's sales or marketing
activities of Enhanced Services following the Effective Time by any
Governmental Authority; or (ii) becoming subject to any Governmental
Order, or being approached as to a settlement relating to its conduct
of business with respect to the Big Planet Representatives in
connection with the Enhanced Services, that in either case could
reasonably be expected to have a material adverse affect on its ability
to perform its obligations hereunder and relating to the I-Link
Products and Services.
(d) Big Planet agrees that during the term of this Agreement it
will notify I-Link within three business days of Big Planet becoming
aware of any notice by any Governmental Authority that its sales or
marketing activities do not comply with any Law to the extent it could
be reasonably expected that such alleged violation would have a
material adverse affect on its ability to perform its obligations
hereunder and relating to the I-Link Products and Services.
6.8 Transition Costs. Unless otherwise provided herein, each of the
Parties shall be responsible for their costs incurred prior to the Effective
Time, including but not limited to training of employees, hiring, marketing
materials, and costs of communications to Existing and Legacy Customers.
27
6.9 Non-Solicitation. Each of I-Link and I-Link LLC agree that neither
they nor any of their Subsidiaries or Affiliates, nor any of their respective
directors, officers, or employees shall directly, or indirectly by causing,
assisting or encouraging another party to do so, for their own account or the
account of any other person with which they shall become associated in any
capacity, or in which they shall have any ownership interest, (a) solicit or
cause to be solicited or facilitate any solicitation of any I-Link LLC
Representative or any existing or future Big Planet Representative to become a
distributor, representative or customer of I-Link, I-Link LLC or any other
party, (b) except as otherwise provided in this Agreement, solicit or cause to
be solicited or facilitate any solicitation of any Existing Customer, Legacy
Customer or any current or future Big Planet Customer to become a customer of
I-Link, I-Link LLC or any other party, or (c) provide any information concerning
such I-Link LLC Representatives, Big Planet Representatives, or Big Planet
Customers, including but not limited to the terms of any agreements between
I-Link and such customers, to any other person; provided, however, that the
foregoing (i) shall apply only so long as such I-Link LLC Representative or Big
Planet Representative shall remain an independent representative of Big Planet,
and only so long as such Existing Customer, Legacy Customer, or Big Planet
Customer shall remain a customer of Big Planet, and (ii) shall not prohibit
I-Link or its Subsidiaries, Affiliates, agents, representatives or distributors
from performing general solicitations not targeting Big Planet employees,
representatives or customers via general advertisements and contracting with or
selling to any person who may respond to such general advertising. All
information concerning Big Planet Customers and Big Planet Representatives shall
be considered confidential. Big Planet agrees that neither it nor any of its
Subsidiaries or Affiliates, nor any of their respective directors, officers, or
employees shall directly, or indirectly by causing, assisting or encouraging
another party to do so, for their own account or the account of any other person
with which they shall become associated in any capacity, or in which they shall
have any ownership interest, solicit or cause to be solicited or facilitate any
solicitation of any I-Link or I-Link LLC employee (except I-Link customer
support/service personnel) to become an employee of Big Planet or any of its
Subsidiaries or Affiliates; provided, however, the foregoing shall not prohibit
Big Planet or its Subsidiaries or Affiliates from performing general
solicitations not targeting I-Link employees via general advertisements and
hiring any employee who may respond to such general advertising, or from hiring
any employee who may utilize the services of an employment agency that has not
been retained or a search instigated by Big Planet. The obligations of the
Parties under this Section shall survive for a period of two (2) years after
termination of this Agreement.
Article 7
Payment
7.1 Payment Unless otherwise expressly provided in this Agreement,
I-Link shall invoice Big Planet for those I-Link Products and Services provided
pursuant to this Agreement, and all other amounts payable under this Agreement
in accordance with the prices established pursuant to this Agreement. Except as
provided herein, Big Planet shall pay I-Link by wire transfer the amount due and
payable within thirty (30) days from the invoice date (the "Due Date"). Payment
of the invoice shall not constitute final acceptance of the products and/or
28
services. All properly invoiced amounts not paid within thirty (30) days of the
Due Date shall be subject to an interest charge at the rate of one percent
(1.0%) of the late payment per month.
(a) Big Planet shall notify I-Link in writing within sixty (60)
days of the Due Date of any contested or disputed amount concerning
charges as they appear on the I-Link invoice. Written notification must
include a description of any credit that Big Planet reasonably believes
itself entitled, and I-Link and Big Planet shall promptly address and
attempt to resolve the claim within thirty (30) days of the date of Big
Planet's written notice. If I-Link and Big Planet are unable to resolve
any such claim, the matter may be submitted to arbitration pursuant to
the terms described in Section 8.4 (d).
(b) Regardless of whether the Parties resolve the dispute between
themselves or by arbitration, the following shall apply to the disputed
funds. In the event the disputed invoice is resolved in favor of
I-Link, then I-Link shall retain the monies paid pursuant to the
disputed invoice. If, during the resolution of the matter it is
determined that Big Planet owes I-Link additional funds, then Big
Planet shall pay I-Link said amount plus interest from the Due Date at
the rate of one percent (1.0%) per month on the amount due and payable
within ten (10) days of resolution. In the event that the dispute is
resolved in favor of Big Planet, then I-Link shall either refund or
credit to Big Planet said amount plus interest from the Due Date at the
rate of one percent (1.0%) per month on the amount due and payable. If,
at the election I-Link, said amount plus interest is to be credited
against a future invoice, then it shall be credited by I-Link as
described in Section 7.2. If, at the election I-Link, said amount plus
interest is to be refunded, then I-Link shall pay Big Planet said
amount plus interest from the Due Date at the rate of one percent
(1.0%) per month on the amount due and payable within ten (10) days of
resolution.
7.2 Credits. Any credits due Big Planet as determined in section 7.1
shall be applied by I-Link against its next invoice with the appropriate
information shown thereon or attached. Any credits due Big Planet that are not
applied against I-Link's next invoice shall be paid to Big Planet by I-Link
within thirty (30) days after written request from Big Planet. If Big Planet has
not received such credits within thirty (30) days of the date of the request,
then Big Planet may deduct such credits from any other amounts owed to I-Link.
In the event (i) there occurs a failure or problem in the software/hardware
system (as opposed to the Network) underlying Enhanced Services that results in
an outage of Enhanced Services service to a Big Planet Customer in excess of
10.8 hours in any given billing period (exclusive of Network outages occasioned
by underlying carriers or providers of Network components to I-Link) (an
"Enhanced Services Outage"), (ii) as a result of such Enhanced Services Outage
Big Planet is required by its own currently existing terms and conditions to its
customers to offer a credit to such customer , and (iii) Big Planet shall give
I-Link prior notice of such credit, then I-Link shall be responsible for the
portion of such credit as shall equal the percentage I-Link's wholesale price to
Big Planet is of Big Planet's retail price to the customer. Any such credit
responsibility shall be deducted from any monthly service fees invoiced to Big
Planet during which the Enhanced Services Outage occurred, unless disputed by
I-Link, in which case the dispute shall be handled pursuant to the provisions of
Section 7.1 above.
29
7.3 Legacy Payments. I-Link shall deduct amounts payable to Big Planet
for commissions on the business from Legacy Customers as described in Section
6.4(c) from amounts billed to Big Planet for other business as described in the
pass through charges in Section 4.5(b). In the event I-Link fails to make any
payments for such commissions or deduct such amounts, Big Planet shall have the
right to offset such amounts against amounts owing to I-Link. If I-Link deducts
an amount for amounts billed to Big Planet for other business, it shall clearly
identify the amount of the deduction.
Article 8
Billing Service
8.1 Billing and Accounts Receivable Services. For a period of 12 months
following the Effective Time, unless otherwise agreed upon by the Parties,
I-Link shall provide billing services ("Xxxxxxxx Service") for Big Planet
Enhanced Service Customers according to the standards, terms and conditions, and
service levels set forth on Schedule 8.1. Said customer xxxxxxxx shall be
branded as Big Planet and shall include appropriate I-Link carrier designation
(provided that the Parties acknowledge printing change requirement of up to
eight weeks for xxxx image development and setup). As compensation for providing
these Billing Services, Big Planet shall reimburse I-Link [Amount Redacted] per
customer xxxx. Any decrease or increase in actual costs after the Effective Time
shall be passed on to Big Planet. Big Planet shall be responsible for any
additional one-time or recurring costs for inserts, format changes and
modifications, including but not limited to logo imaging, xxxx stock runs and
other related xxxx customization. In addition to out-of-pocket costs, Big Planet
shall reimburse I-Link for personnel costs. Upon transfer of the billing
function to Big Planet, I-Link agrees to use its best efforts to assist Big
Planet in the transfer of the data and information related to the Billing
Service to either Big Planet or a third party as may be necessary for the
orderly, non-disrupted business continuation of each party. In the event Big
Planet shall desire I-Link to assist in collection efforts and activities, Big
Planet shall reimburse I-Link for its costs in performing such services. These
costs shall include, but not be limited to, personnel costs, external collection
agency fees (one-time and recurring), fulfillment costs for collection letters,
postage, customer cancellation notification, and collection data base
maintenance costs. Personnel costs shall be calculated as that percentage of
I-Link's total, fully-burdened (customary employee benefits and taxes) personnel
costs (for each of the separate billing and collection functions) that equals
the percentage of I-Link's total customers/users that Big Planet Customers
represent, plus 10%. For an initial period of six months I-Link shall provide
Big Planet accounts receivable accounting and processing services, including but
not limited to processing of payments, adjustments, invoices, late and/or
finance charges, reactivation fees, aging, bad debt analysis, and other related
activities necessary for customer account balance management. I-Link shall
provide Big Planet a monthly reconciliation of account balances. For these
services Big Planet shall pay to I-Link the sum of [Amount Redacted] per month.
At the end of the initial six-month period, the parties shall be free to
negotiate any continuance of the accounts receivable services. Big Planet
acknowledges that I-Link does not offer any warranties or guarantees as to the
performance of its accounts receivable system, and that Big Planet's sole remedy
under this Agreement in the event of any problems experienced with the accounts
receivable services shall be the recovery of actual
30
monetary damages limited to the aggregate amount paid by Big Planet in the
monthly accounts receivable services fee. In the event of errors or imbalances,
I-Link shall use its best efforts to rectify such issues in a timely manner. Any
modifications or enhancements to the accounts receivable system beyond the
existing functionality of the system that may be requested by Big Planet will be
evaluated by I-Link, and the cost of any such modification will be estimated and
provided to Big Planet. Big Planet will bear the cost of developing and
implementing any such modifications or enhancements.
8.2 Tax Compliance.
--------------
(a) All charges are exclusive of federal, state, local, and
foreign sales, use, excise, utility, gross receipts, value added taxes
(VAT), other similar tax-like charges and tax-related surcharges as
provided in I-Link's F.C.C. and state tariffs, and other similar
tax-like charges levied by any duly constituted authority.
(b) Big Planet shall provide I-Link with all duly authorized
exemption certificates in all jurisdictions in which they sell I-Link
Products and Services. Upon receipt of these certificates, I-Link
agrees to exempt Big Planet from such taxes if and as provided by
applicable law, effective on the date the exemption certificate is
received by I-Link. Big Planet agrees to indemnify I-Link from and
against any liability arising from any taxing jurisdictions.
(c) Taxes based on I-Link's net income shall be the sole
responsibility of I-Link; provided that, if Big Planet is required by
the laws of any foreign tax jurisdiction to withhold income or profits
taxes from any payment, Big Planet shall, within 90 days of the date of
such withholding, provide to I-Link official tax certificates
documenting remittance of such taxes to the relevant tax authorities.
Such tax certificates shall be in a form sufficient under the U.S.
Internal Revenue Code to document the qualification of such income or
profits tax for the foreign tax credit allowable against I-Link's U.S.
corporation income tax, and shall be accompanied by an English
translation. Upon receipt of such certificates, I-Link will issue Big
Planet a billing credit for the amounts represented thereby.
(d) Big Planet will assume responsibility for city, state, federal
and regulatory tax payments that are required as a result of sales of
the Enhanced Services and Enhanced Service Devices to Big Planet
Enhanced Services Customers (the "Taxes") . Big Planet shall review
I-Link's system and assumptions for billing such taxes to end-users by
Big Planet and shall agree to indemnify and hold harmless I-Link in
regard to the Taxes. I-Link shall agree to maintain taxing systems as
required to be current with the tables provided by Vertex. I-Link will
process tax bills to end-users in conjunction with the billing
activities described in this Agreement. Big Planet shall be responsible
for all required tax compliance/reporting and remittance of the Taxes
owed to various taxing jurisdictions, including notification of tax
changes to end-users, as well as the expense to I-Link of any
additional software licensing from Vertex required to achieve such
compliance. During the period I-Link maintains ownership of the Legacy
Customers, Big
31
Planet shall pay I-Link the sum of [Amount Redacted] per month to
reimburse I-Link for tax compliance with respect to the Legacy
Customers.
8.3 License of Billing Software. At such time as Big Planet shall take
over the billing function, upon ninety (90) days written notice, Big Planet
shall have the right to obtain from I-Link a non-exclusive, non-transferrable,
perpetual license to use I-Link's current billing software solely for use with
products and services sold through the Big Planet Representative sales force. As
consideration for such license, Big Planet shall pay to I-Link a one-time, fully
paid-up license fee of [Amount Redacted] ninety (90) days from the date of the
written notice to license the current billing software. Payment of the license
fee shall grant Big Planet a perpetual license to use the software until
discontinued by Big Planet. I-Link shall also deliver to Big Planet with the
software detailed documentation, including but not limited to, a user's manual,
systems manual, operating manual, programming manual, modification manual and
source code. Such license shall be evidenced by a license agreement mutually
agreeable to the Parties containing terms standard to the industry. Big Planet
shall pay to I-Link an annual maintenance and upgrade fee equal to [Amount
Redacted] payable each anniversary thereafter so long as the software license
agreement shall remain in force.
8.4 Escrow of Source Code
(a) Deposit. Within fifteen (15) days from the Effective Time,
I-Link shall deposit a copy of the current version of the source code
and relevant documentation ("Source Code") for the Billing Software and
Order System in escrow with an escrow agent reasonably acceptable to
both parties ("Escrow Agent"). Escrow Agent shall be required by a
separate agreement to contact I-Link at least annually to notify I-Link
of its continuing obligation to update the escrow as required herein.
This Escrow shall cease to exist (i) in the event Big Planet ceases to
use the Billing Software or Order System, or (ii) upon the termination
of this Agreement for any reason other than termination by Big Planet
for cause under Section 9.2(a).
(b) Warranty of I-Link to Big Planet. I-Link warrants to Big
Planet that (i) the material deposited with the Escrow Agent shall
constitute the source code and all existing documentation for the
Billing Software and the Order System; (ii) the Source Code delivered
to the Escrow Agent will be in a form suitable for reproduction by
computer and/or photocopy equipment, and consists of a full source
language statement of the program or programs comprising the Billing
Software and the Order System and program maintenance documentation,
including existing flow charts, schematics, and annotations which
comprise available pre-coding detailed design specifications, and all
other material necessary to allow a reasonably skilled third-party
programmer or analyst to maintain or enhance the Billing Software and
Order System without the help of any other person or reference to any
other material; and (iii) I-Link will promptly supplement the Source
Code delivered hereunder with all revisions, corrections, enhancements,
or other changes so that the Source Code constitutes a human-readable
program for the current release of the Billing Software and System.
32
(c) Notice of Default.
-----------------
(i) I-Link shall be deemed to be in material default of its
responsibilities to Big Planet if (A) I-Link is unable, at any time
during the term of this Agreement, to correct any material malfunction,
defect or nonconformity in the Billing Software and Order System that
prevents such system from functioning substantially in accordance with
the applicable specifications, documentation, performance criteria and
other warranties and descriptions provided in this Agreement, within
thirty (30) days after Big Planet's written notification to I-Link
specifying in reasonable detail in what respects the Billing Software
and Order System fails to conform; or (B) I-Link is adjudged insolvent,
makes a general assignment for the benefit of creditors, files a
voluntary petition of bankruptcy, suffers or permits the appointment of
a receiver for its business or assets, becomes subject to any
proceeding under any bankruptcy or insolvency law, whether domestic or
foreign, or has wound up or liquidated its business voluntarily or
otherwise and Big Planet has compelling reasons to believe that such
event(s) will cause I-Link to fail to meet its warranty and maintenance
obligations in the foreseeable future. Big Planet shall give written
notice (the "Notice of Default") to the Escrow Agent of any default by
I-Link. The Notice of Default shall, at the minimum (1) be labeled
"Notice of Default"; (2) identify this Agreement and the escrow
agreement; (3) specify the nature of the default; (4) identify the
Source Code with specificity; and (5) demand the delivery of the Source
Code to the Big Planet.
(ii) Upon receipt of the Notice of Default, the Escrow Agent shall
send a copy thereof to I-Link by certified or registered mail, postage
prepaid, return receipt requested. If I-Link desires to dispute the
Notice of Default, I-Link shall, within ten (10) days after the receipt
of the copy of the Notice of Default from the Escrow Agent, deliver to
the Escrow Agent a sworn statement (the "Affidavit") saying that no
default has occurred, whereupon the provisions of Section 8.4(d) hereof
will become applicable. If the Escrow Agent receives the Affidavit
within said ten (10) days, the Escrow Agent shall send a copy thereof
to Big Planet by certified or registered mail, return receipt
requested. If the Escrow Agent does not receive the Affidavit within
said ten (10) days and Big Planet has not terminated this Agreement,
the Escrow Agent shall be authorized and directed to deliver the Source
Code to Big Planet.
(d) Disputes
--------
(i) In the event that I-Link files the Affidavit with the
Escrow Agent in the manner and within the time period set forth
above, or if Big Planet shall fail to agree that this Agreement
has been terminated, the Escrow Agent shall not release the Source
Code to either Party except in accordance with (A) a final
decision of the arbitration panel as hereinafter provided; or (B)
receipt of an agreement with
33
authorized and notarized signatures of both I-Link and Big Planet,
authorizing the release of the Source Code to one of the Parties
hereto.
(ii) Disputes arising under this Section shall be referred
immediately to, and settled by, binding arbitration as set forth
in this Section 8.4 (d)(ii). The arbitration panel shall consist
of three persons. Each of the Parties hereto shall appoint one
arbitrator and the two arbitrators thereby appointed shall select
a third arbitrator. The arbitration shall be conducted in Salt
Lake City, Utah, in accordance with the rules of the American
Arbitration Association. The Escrow Agent shall give prompt effect
to any court having jurisdiction thereof, enforcement or a stay of
any award rendered by the arbitrators. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Utah.
(e) Escrow Agreement. The Parties shall execute an escrow
agreement that incorporates the terms of this Section and provide for
other commercially reasonable provisions.
Article 9
Term
9.1 Term. The provisioning of services under this Agreement shall
become effective at the Effective Time and continue for three (3) years from the
Effective Time or until such earlier date upon which this Agreement may be
terminated in accordance with the provisions of this Article 9. This Agreement
shall automatically renew for continuous one-year periods (an "Extension")
unless I-Link or Big Planet gives the other Party six (6) months prior written
notice of its intent to terminate this Agreement. Except as provided in Section
6.2(a) above, Big Planet shall have no obligation to transfer back to I-Link or
I-Link LLC any of the I-Link LLC Representatives or the Existing Customers or
Legacy Customers following the expiration or termination of this Agreement. Upon
expiration of the initial three year term or termination of any Extension, Big
Planet shall have the non-exclusive right to market, distribute and sell the
Enhanced Services and Enhanced Service Devices, provided, however, that after
expiration of the initial three year term I-Link may adjust its pricing for the
any Enhanced Service or Enhanced Service Device to reflect changes to its cost
structure subject to the provisions of Section 4.7.
9.2 Termination for Cause.
---------------------
(a) Big Planet may terminate this Agreement by giving I-Link
written notice of such termination upon the occurrence of any of the
following events: (i) failure of I-Link to maintain I-Link's system
integrity and/or overall network quality sufficient to provide the
I-Link Product and Services hereunder; (ii) failure to materially
comply with the Service Level Agreements and requirements set forth
herein or to provide within the timelines set forth herein the
information or data required to be delivered to Big Planet hereunder in
accordance with Section 4.9; (iii) any violation of the
non-solicitation
34
provisions of this Agreement; (iv) any other material breach or default
in any of the material terms or conditions of this Agreement if I-Link
has failed to cure such breach or default within thirty (30) days of
receipt of written notice of such breach from Big Planet, (v) I-Link
makes any assignment for the benefit of creditors, is adjudged
insolvent, (v) any proceedings are instituted by or against I-Link in
bankruptcy or under any insolvency laws or for reorganization,
receivership or dissolution, or (vi) any assignment or attempted
assignment of the Agreement in violation of Section 15.6 of this
Agreement; or (vii) as a result of a Law or Governmental Order I-Link
becomes unable to provide or sell the Enhanced Services and Enhanced
Service Devices in one or more of the 48 states in the continental
United States for a period in excess of 30 days.
(b) I-Link may terminate by giving Big Planet written notice of
such termination upon the occurrence of any of the following events:
(i) any breach or default of any payment obligations under Section 7.1
if Big Planet fails to cure such default within ten (10) days of the
date such payment is due; (ii) any other material breach or default in
any of the material terms or conditions of this Agreement if Big Planet
has failed to cure such breach or default within thirty (30) days of
receipt of written notice of such breach from Big Planet, (iii) Big
Planet makes any assignment for the benefit of creditors, is adjudged
insolvent, (iv) any proceedings are instituted by Big Planet in
bankruptcy or under any insolvency laws or for reorganization,
receivership or dissolution, (v) any assignment or attempted assignment
of the Agreement in violation of Section 15.6 of this Agreement, or
(vi) Big Planet becomes unable by reason of injunction or order by any
states or jurisdictions to market and sell the Enhanced Services in
geographic areas representing more than 33% of the United States
population for a period in excess of 30 days.
9.3 Big Planet's Right to Terminate Exclusivity. If Big Planet, in its
good faith judgment, determines that pricing and/or service levels for I-Link
Products and Services are no longer competitive, then Big Planet may elect to be
a non-exclusive distributor of any or all I-Link Products and Services,
provided, however, that Big Planet has given I-Link six months written notice of
such election and that the date to become a non-exclusive distributor is after
the first anniversary date of this Agreement.
9.4 Termination Assistance. I-Link agrees to make available to Big
Planet all services necessary for an orderly transition of Big Planet Enhanced
Service Customers at the time of termination of the contract, unless the
Existing and Legacy Customers revert to I-Link under the provisions of Section
6.2(a) above, in which case Big Planet shall make such services and assistance
available to I-Link. Such services include, but are not limited to: (i)
providing all relevant and existing files in their existing format; (ii)
providing all relevant and existing intermediate materials in existing format;
(iii) providing all supplies and other property of Big Planet, and any other
reasonable data or documentation existing and necessary for an orderly transfer;
providing all existing information regarding changes to I-Link's Products and
Services, including but not limited to, pricing, service product quality, and
service delivery process. Big Planet agrees to reimburse I-Link for any
reasonable out-of -pocket expenditures incurred by I-
35
Link in connection with the assistance provided hereunder if the Agreement is
terminated by Big Planet other than for cause.
9.5 Transfer of 800 Numbers. Upon termination all 800 numbers and local
toll free numbers in use by Big PlanetEnhanced Services Customers shall be
assigned to Big Planet and transferred in a manner complying with applicable Law
so that the Big PlanetEnhanced Services Customers may continue to use such 800
numbers and local toll free numbers following the termination of this Agreement.
I-Link agrees to cooperate and to take such actions as are necessary to
facilitate such assignment and transfer without any interruption of service. Big
Planet agrees to reimburse I-Link for any reasonable out-of-pocket expenditures
incurred by I-Link in connection with the foregoing if the Agreement is
terminated by Big Planet other than for cause.
9.6 Termination Prior to Effective Time.
-----------------------------------
This Agreement may be terminated prior to the Effective Time
(a) by either Big Planet or I-Link if a material breach of any
provision of this Agreement has been committed by the other Party and
such breach has not been waived;
(b) by Big Planet if any of the conditions in Section 2.4 has not
been satisfied as of February 15, 2000, or such earlier date as the
satisfaction of such condition is or becomes impossible (other than
through the failure of Big Planet to comply with its obligations
hereunder) and such condition has not been waived by Big Planet;
(c) by I-Link if any of the conditions in Section 2.5 have not
been satisfied as of February 15, 2000, or such earlier date as the
satisfaction of such condition is or becomes impossible (other than
through the failure of I-Link or I-Link LLC to comply with their
obligations under this Agreement) and such condition has not been
waived by I-Link;
(d) by mutual consent of I-Link and Big Planet; or
(e) by either Big Planet or I-Link if the Effective Time has not
occurred prior to February 15, 2000 (other than through a failure of
any Party seeking to terminate this Agreement to fully comply with its
obligations under this Agreement), or such later date as the Parties
may mutually agree.
Article 10
Technical Support and Customer Support
10.1 Technical Support for Big Planet. I-Link will maintain a 24-hour a
day, 7 day a week, including holidays, on-call technical staff for the purpose
of handling emergency technical situations. I-Link will provide to Big Planet,
within ten (10) days of execution of this
36
Agreement, a current `escalation procedure' for handling technical emergencies
reasonably acceptable to Big Planet.
10.2 Customer Support. I-Link shall maintain second-line customer
service call center operations for all Big Planet Enhanced Service Customers
consisting of support to Big Planet's customer service operation. I-Link shall
cooperate with Big Planet to resolve any customer related problems consistent
with the terms of the relevant service level agreements; provided, however, that
I-Link shall not be authorized to establish, modify, or resolve any customer
related problems directly with a Big Planet Enhanced Service Customer unless,
and only to the extent, authorized by Big Planet. Should a Big Planet Enhanced
Service Customer inadvertently contact I-Link directly, I-Link will politely
direct them to Big Planet for support. I-Link shall within five (5) business
days of the Execution Date designate a corporate operations manager to represent
I-Link in all of I-Link's contacts or dealings with Big Planet.
10.3 Training for Big Planet. I-Link will provide to select members of
Big Planet management, at no cost, `sales' and `customer care' training,
including but not limited to all customer care and sales manuals and materials
reasonably necessary to enable such Big Planet management to train its staff to
competently sell and support I-Link Products and Services; provided however,
that I-Link shall be reimbursed for any directly related out-of-pocket expenses.
Article 11
Representations and Warranties of I-Link and I-Link LLC
As a material inducement to Big Planet to enter into this Agreement and
with the acknowledgement and understanding that Big Planet is relying on the
accuracy of these representations and warranties in determining the feasibility
of entering into this Agreement, I-Link and I-Link LLC hereby jointly and
severally represent and warrant as follows:
11.1 Organization, Authority and Qualification. I-Link is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida, and has all necessary corporate power and authority to enter
into this Agreement, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. I-Link LLC is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all necessary power and authority to enter into this
Agreement, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. Each of I-Link and I-Link LLC is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the properties owned or leased by it or the operation of its business
makes such licensing or qualification necessary. The execution and delivery by
I-Link and I-Link LLC of this Agreement, the performance by I-Link and I-Link
LLC of their obligations hereunder, and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate or
limited liability company action. This Agreement has been duly executed by an
authorized officer of each of I-Link and I-Link LLC, and constitutes a legal,
valid and binding obligation of such party, enforceable against such party in
accordance with its terms;
37
11.2 No Conflict. The execution, delivery and performance of this
Agreement by I-Link and I-Link LLC do not and will not (i) violate, conflict
with or result in the breach of any provision of the charter or bylaws (or
similar organizational documents) of I-Link or I-Link LLC, (ii) conflict with or
violate any law, regulation, statute, ordinance or other requirement of law of
any foreign national, federal, state, municipal or local government, any
governmental or court order of any jurisdiction applicable to I-Link, I-Link
LLC, any of their respective Subsidiaries, or the assets properties or business
of I-Link, I-Link LLC and each of their Subsidiaries, or (iii) conflict with,
result in any breach of, constitute a default, or require any consent or
approval (or an event which with the giving of notice or lapse of time or both
would become a default) under any note, bond, mortgage, deed of trust,
indenture, contract, agreement lease, sublease, license, sublicense, permit,
franchise or other instrument or agreement, lease, sublease, license,
sublicense, permit, or other instrument or arrangement to which I-Link, I-Link
LLC, or any of their Subsidiaries are a party relevant to, or which would have
an adverse effect on I-Link's ability to perform, its obligations hereunder.
11.3 No Litigation. Except as identified on Schedule 11.3, there are no
Actions by or against either I-Link, I-Link LLC, or any Subsidiary or Affiliate
of either I-Link or I-Link LLC (or, to the knowledge of I-Link or I-Link LLC,
any Affiliate thereof and relating to the business or distribution channel of
I-Link or I-Link LLC or any entity controlled, directly or indirectly, by them)
or the I-Link Products or Services, or in any way affecting the business or
distribution channel of I-Link or I-Link LLC or the I-Link Products or Services,
pending before or threatened to be brought by or before any Governmental
Authority other than collection of customer accounts carried out in the ordinary
course of business.
11.4 Payment of Bonuses. As of the Execution Date, all commissions and
bonuses payable to the I-Link LLC Representatives, Xxxxxx Xxxxxxxx and Xxxxxxxx
Communications LLC pursuant to the I-Link Sales Compensation Plan or any other
agreement for sales and revenue generated through January 10, 2000, have been
paid and there are no other monies or obligations of any kind due and owing the
I-Link LLC Representatives, Xxxxxx X. Xxxxxxxx or Xxxxxxxx Communications LLC,
except for commissions due and payable for sales and revenue generated from
January 11, 2000, through the Effective Time, which shall be paid by I-Link in
accordance with the provisions of Article 6 hereof.
11.5 Coverage Area. The Enhanced Services enumerated in Schedule 4.1 is
available in each of the fifty states of the United States and Puerto Rico.
11.6 Contracts.
---------
(a) Schedule of Contracts. Schedule 11.6(a) contains a true,
complete and correct list of each of the following contracts,
agreements and commitments (including, without limitation, oral and
informal arrangements to the extent necessary to conduct of the
business) to which I-Link, I-Link LLC or any Subsidiary or Affiliate is
a party:
38
(i) Each form of contract with any I-Link LLC Representative
and copies of all policies and procedures, sales compensation
plans and any other agreement or document setting forth or
establishing the rights and obligations of I-Link LLC, I-Link and
the I-Link LLC Representatives or in any way provides any benefits
to any I-Link LLC Representative.
(ii) Each form of contract, agreement or commitment with any
Existing or Legacy Customer of I-Link, I-Link LLC or any
Subsidiary or Affiliate that is being assigned or shifted to Big
Planet following the Effective Time pursuant to the terms of this
Agreement.
(iii) Each contract related to the I-Link Costs.
(b) No Other Contracts. Except as set forth in Schedule 11.6(a),
there is no contract, agreement or other commitment granting any I-Link
LLC Representative or any Existing or Legacy Customer any rights or
benefits, or under which I-Link, I-Link LLC or any of their
Subsidiaries or Affiliates may have any obligation or liability to any
I-Link LLC Representative or Existing or Legacy Customer.
(c) Assignability. Except as otherwise provided in Schedule
11.6(a), each of the I-Link LLC Representative Agreements and each
customer agreement may be assigned to Big Planet without the consent of
the I-Link LLC Representative or Existing or Legacy Customer and in
connection with such assignment, no I-Link LLC Representative or
Existing or Legacy Customer shall be entitled to any additional
compensation, fee or other payment or have any cause of action against
I-Link, I-Link LLC or Big Planet.
(d) Amendment of I-Link Sales Compensation Plan. The I-Link Sales
Compensation Plan may be amended at anytime by I-Link LLC, or their
assignee, Big Planet, without the consent of any I-Link LLC
Representative, and upon any such amendment no I-Link LLC
Representative shall have any rights under the I-Link Sales
Compensation Plan as it existed prior to such amendment, other than for
the payment of commissions on sales generated through the date of such
amendment. Each I-Link LLC Representative shall be bound by the terms
of any such amendment and shall not have, or be entitled to, any
rights, claims, and causes of action as a result of such amendment.
Neither I-Link, I-Link LLC nor any of their Subsidiaries or Affiliates
has made any representations to any I-Link LLC Representative or any
Existing Customer or Legacy Customer concerning any promise or
commitment (i) not to amend or change the I-Link Sales Compensation
Plan, the policies and procedures, the customer contracts, or the
I-Link Representative Agreements, (ii) to make any payment or make
exceptions with respect to any amendment, or (iii) to keep intact any
portion or term of the foregoing.
(e) Xxxxxxxx Agreement. On or before the Effective Time, any and
all rights of Xxxxxx X. Xxxxxxxx and/or Xxxxxxxx Communications LLC to
market any I-Link
39
Products and Services has been terminated and any such agreement, if
any, is of no further force or effect.
(f) Independent Contractors. All I-Link LLC Representatives have
represented and agreed that they are independent contractors in the
written agreements they have with I-Link LLC, and I-Link LLC has
consistently treated them as such.
11.7 Product and Services.
--------------------
(a) Description of Products. Schedule 11.7(a) contains a correct
and accurate summary of information provided by I-Link of certain
I-Link Products and Services that are currently being provided to
I-Link customers including: (i) a partial historical review and
projected forecast of total and percentage revenue derived from those
certain product and services; (ii) the average breakage costs for full
minute rounding and Single Leg Calls and Double Legs Calls; and (iii)
other key information that Big Planet has relied upon in formulating
proforma financial statements for the I-Link Products and Services.
(b) Functionality of I-Link Products and Services. All of the
I-Link Products and Services described in Schedule 11.7(b) are ready
for market and will perform functionally as described in the
documentation attached to Schedule 11.7(b) and any and all marketing
literature. The user documentation furnished by I-Link is compatible
with the I-Link Products and Services.
(c) Customer Complaints. I-Link has made available for review by
Big Planet any and all complaints from Existing or Legacy Customers or
I-Link LLC Representatives concerning I-Link, I-Link LLC, the I-Link
Products and Services, or the I-Link LLC Representatives.
(d) Pre-Existing Agreements. As of the Effective Time, none of the
Pre-Existing Agreements provide for billing increments less than
[Number Redacted] seconds, or pricing for single-leg calls, and I-Link
has not granted any specific affirmative right under the Pre-Existing
Agreements to market to or through the Network Marketing Channel.
11.8 Customer Support. Schedule 11.8 sets forth and complete and
accurate summary concerning the customer support and service functions provided
by I-Link, I-Link LLC or their Subsidiaries or Affiliates including: (i) a
breakdown of the different types of support and service functions (i.e.,
billing/collection, customer billing support) and the number of full-time
equivalent employees engaged in such service function and the average salary for
such employees; and (ii) a description of any outside vendors or consultants
providing any such services and the average cost per month thereof, including
any and all agreements for services in connection with billing and compliance
with regulatory and tax requirements.
11.9 Receivables. The Accounts Receivable, net of the [Percentage
Redacted] allowance for disputes and bad debt represent or will represent valid
obligations arising from
40
sales actually made or services actually performed in the ordinary course of
business. All of the Accounts Receivable are owned entirely by I-Link free and
clear from any Encumbrance. All of the Accounts Receivable will be as of the
Effective Time current and collectible net of the respective reserves shown on
the balance sheet or accounting records of I-Link.
11.10 Compliance with Laws. Except as disclosed on Schedule 11.10,
I-Link and its Subsidiaries and Affiliates have conducted and continue to
conduct their business in compliance with all Laws and Governmental Orders, and
neither I-Link nor any of its Subsidiaries or Affiliates is in material
violation of any Law or Governmental Order, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply. Except
as disclosed in Schedule 11.10, I-Link has obtained and currently possesses all
material licenses, permits, certificates, authorities and approvals necessary to
operate its business as currently conducted including, without limitation, all
required domestic and international telecommunications and electronic commerce
licenses, permits, certificates, approvals and authorities.
11.11 Assets/Intellectual Property.
(a) Title to Properties. I-Link owns, leases or has the legal
right to use all of the properties and assets forming a part of or used
or held for use in connection with, necessary for, or otherwise
material to the conduct of the business conducted or operated by I-Link
or to be provided hereunder, and with respect to any contract rights,
is a party to and enjoys the rights to the benefits of all such
contracts, agreements and other arrangements belonging to or used, held
for use or intended to be used by I-Link or necessary for, or otherwise
material to the conduct of the business or the I-Link Services and
Products to be provided hereunder.
(b) Intellectual Property. All copyrights, trademarks, service
marks, trade names, patents, trade secrets and other intellectual and
proprietary rights necessary to conduct I-Link's business as presently
operated and the I-Link Products and Services to be provided hereunder,
including, without limitation, all intellectual and other proprietary
rights to its products, services and ordering and billing systems, is
owned by I-Link, properly licensed by I-Link pursuant to a valid
license or in the public domain, and no such license will expire during
the term of this Agreement or is of such a nature that it can be
readily obtained from another source. Neither I-Link, I-Link LLC nor
any of their Subsidiaries or Affiliates is infringing upon the
intellectual and proprietary rights of any other party, and, except as
identified on Schedule 11.11(b), there is no claim or action by any
person, pending or threatened, alleging any such infringement. The core
technology used to provide the I-Link Products and Services offered by
I-Link is proprietary to I-Link, and no other person has the right to
use such technology.
(c) No Encumberances. All of the property and assets, including
the intellectual property, necessary to conduct I-Link's business is
owned or validly licensed by I-Link free and clear of any Encumbrances
except as otherwise set forth on Schedule 11.11 (c).
41
11.12 Network Capacity. I-Link's Network facilities currently have
sufficient capacity to handle the traffic currently generated by the Existing
and Legacy Customers plus all other existing traffic from other existing
customers. I-Link's e-mail and Internet access is sufficient to meet the
existing requirements of the Existing and Legacy Customers and currently meets
the communication and Web requirements of the I-Link LLC Representative sales
force.
11.13 Year 2000. All I-Link Products and Services provided by I-Link,
including without limitation, any and all enhancements, upgrades,
customizations, modifications, maintenance and alike, deliverable by I-Link
hereunder, containing or calling on a calendar function including, without
limitation, any function indexed to the CPU clock, and any function providing
specific dates or days, or calculating spans of dates or days shall record,
store, process, provide and, where appropriate, insert true and accurate dates
and calculations for dates and spans including and following January 1, 2000.
11.14 Full Disclosure. Neither I-Link nor I-Link LLC is aware of any
facts which pertain specifically to them, any Subsidiary or any Affiliate, their
business, the Enhanced Services and Enhanced Service Devices, the I-Link LLC
Representatives or any other matter affecting them which could reasonably be
expected to have a material adverse affect on (i) the ability of Big Planet to
provide the products or services or to maintain the Existing or Legacy Customers
or I-Link LLC Representatives, (ii) the I-Link LLC Representatives, (iii) the
Existing Customers being transferred to Big Planet or the Legacy Customers, (iv)
the business of I-Link and I-Link LLC or its ability to provide the services and
products hereunder at the service levels contemplated hereunder. No
representation or warranty of I-Link or I-Link LLC set forth in this Agreement,
nor any written statement or certificate furnished or to be furnished to Big
Planet contains or will contain any untrue statement of fact, or omit or will
omit to state a material fact necessary to make the statements contained herein
or therein, taken as whole and light of the circumstances under which they were
made, not misleading.
11.15 Existing Customers. I-Link has the full and complete and sole
authority to assign and transfer such Existing Customers and Legacy Customers
together with any and all accounts receivable associated therewith and any
revenue stream free and clear of any Encumbrance.
11.16 I-Link LLC Representatives. As of the Execution Date and to the
best of I-Link's knowledge based upon a full review of its records and files,
the number of I-Link LLC Representatives currently receiving commission checks
was approximately [Amount Redacted]. Except for the general state of unrest and
uncertainty among the I-Link LLC Representatives occasioned by I-Link's
discussions with Big Planet as publicly announced, I-Link is not aware of any
material adverse change in the number of active I-Link LLC Representatives since
that date set forth above, nor is it aware of any facts or circumstances that
would result in a material adverse change in the number of such active I-Link
LLC Representatives aside from the general unrest and uncertainty referenced
above.
11.17 Subsidiaries. Schedule 11.17 sets forth a true, complete and
accurate list of each Subsidiary and Affiliate of I-Link and I-Link LLC.
42
11.18 Financial Statements. Since the date of the most recent financial
statements of I-Link filed with the Securities Exchange Commission, there have
been no material adverse change in the financial condition or results of
operations of I-Link.
Article 12
Representations and Warranties of Big Planet
As a material inducement to I-Link to enter into this Agreement and
with the acknowledgement and understanding that I-Link is relying on the
accuracy of these representations and warranties in determining the feasibility
of entering into this Agreement, Big Planet hereby represents and warrants as
follows:
12.1 Organization, Authority and Qualification. Big Planet is a
corporation duly organized, validly existing and in good standing under the laws
of the Delaware, and has all necessary corporate power and authority to enter
into this Agreement, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. Big Planet is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary. The execution and delivery by Big Planet
of this Agreement, the performance by Big Planet of its obligations hereunder,
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action. This Agreement has been duly
executed by an authorized officer of Big Planet, and constitutes a legal, valid
and binding obligation of Big Planet, enforceable against such party in
accordance with its terms{;}[.]
12.2 No Conflict. The execution, delivery and performance of this
Agreement by Big Planet do not and will not (i) violate, conflict with or result
in the breach of any provision of the charter or bylaws (or similar
organizational documents) of Big Planet, (ii) conflict with or violate any law,
regulation, statute, ordinance or other requirement of law of any foreign
national, federal, state, municipal or local government, or any governmental or
court order of any jurisdiction applicable to Big Planet, its Affiliates or its
assets properties or business, including without limitation to the business to
be performed under this Agreement and the business to be transferred to Big
Planet hereunder in such a manner which would have a material adverse affect on
its business or assets, or (iii) conflict with, result in any breach of,
constitute a default, or require any consent or approval (or an event which with
the giving of notice or lapse of time or both would become a default) under any
note, bond, mortgage, deed of trust, indenture, contract, agreement lease,
sublease, license, sublicense, permit, franchise or other instrument or
agreement, lease, sublease, license, sublicense, permit, or other instrument or
arrangement to which Big Planet or any of its Affiliates is a party that would
materially affect Big Planet's ability to perform under this Agreement.
12.3 No Litigation. Except as identified on Schedule 12.3, there are no
Actions by or against either Big Planet or Affiliate of it which poses a
material adverse threat to the business or distribution channel of Big Planet
pending before or threatened to brought by or before any Governmental Authority.
43
12.4 Compliance with Laws. Except as disclosed on Schedule 12.4, Big
Planet and its Subsidiaries and Affiliates have conducted and continue to
conduct their business in compliance with all Laws and Governmental Orders, and
neither Big Planet nor any of its Subsidiaries or Affiliates is in material
violation of any Law or Governmental Order, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply. Except
as disclosed in Schedule 12.4, Big Planet has obtained and currently possesses
all material licenses, permits, certificates, authorities and approvals
necessary to operate its business as currently conducted including, without
limitation, all required domestic and international telecommunications and
electronic commerce licenses, permits, certificates, approvals and authorities.
12.5 Assets/Intellectual Property.
(a) Title to Properties. Big Planet owns, leases or has the legal
right to use all of the properties and assets that are material to the
conduct of the business conducted or operated by Big Planet or to be
provided hereunder, and with respect to any contract rights, is a party
to and enjoys the rights to the benefits of all such contracts,
agreements and other arrangements material to the conduct of its
business.
(b) Intellectual Property. All copyrights, trademarks, service
marks, trade names, patents, trade secrets and other intellectual and
proprietary rights material to Big Planet's business as presently
conducted is owned by Big Planet, properly licensed by Big Planet or in
the public domain. Neither Big Planet nor Affiliates is infringing upon
the copyrights of any third party which could reasonably be expected to
have a material adverse affect on the business of Big Planet. As of the
Execution Date and the Effective Time Big Planet has not received any
notice or claim from any third party alleging that any of its property
infringes any copyrights of such third party.
12.6 Full Disclosure. Big Planet is not aware of any facts which
pertain specifically to it, any Subsidiary or any Affiliate, their business or
any other matter affecting them which could reasonably be expected to have a
material adverse affect on (i) the ability of Big Planet to market the Products
and Services or to maintain the Existing or Legacy Customers or I-Link LLC
Representatives, (ii) either the Big Planet Representatives or the I-Link LLC
Representatives after the Effective Time, (iii) the Existing Customers being
transferred to Big Planet or the Legacy Customers, (iv) the business of Big
Planet or its ability to perform its obligations under the Agreement. No
representation or warranty of Big Planet set forth in this Agreement, nor any
written statement or certificate furnished or to be furnished to I-Link or
I-Link LLC contains or will contain any untrue statement of fact, or omit or
will omit to state a material fact necessary to make the statements contained
herein or therein, taken as whole and light of the circumstances under which
they were made, not misleading.
12.7 [Deleted]
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12.8 Big Planet Independent Representatives. As of the Execution Date
and to the best of Big Planet's knowledge based upon a full review of its
records and files, the total number of Big Planet Representatives currently
receiving commission checks is approximately [Number Redacted]. Of that total
number all are located in the United States with the remaining number located
outside of the United States . Big Planet is not aware of any material adverse
change in the number of active Big Planet Representatives since that date set
forth above, nor is it aware of any facts or circumstances that would result in
a material adverse change in the number of such active Big Planet
Representatives.
12.9 Subsidiaries. Big Planet has no Subsidiaries.
------------
12.10 Year 2000. Big Planet's network relating to the sale of I-Link's
Products and Services containing or calling on a calendar function including,
without limitation, any function indexed to the CPU clock, and any function
providing specific dates or days, or calculating spans of dates or days shall
record, store, process, provide and, where appropriate, insert true and accurate
dates and calculations for dates and spans including and following January 1,
2000.
Article 13
Indemnification
13.1 Big Planet General Indemnity. Subject to Section 15.9, Big Planet
shall defend, indemnify and hold I-Link, I-Link LLC and each of their
Subsidiaries and Affiliates, and each of their respective directors, employees,
stockholders and agents and affiliates harmless from and against any and all
liabilities, losses, damages, claims, costs expenses, interest, awards and
judgments (including, but not limited to, costs and attorneys' fees but
excluding any amounts recovered by an indemnified party from any third-party
insurer for such liability), arising out of , resulting from or relating to:
(a) Any breach of any representation or warranty made by Big
Planet under this Agreement;
(b) Any breach of any covenant, agreement or other provision set
forth in this Agreement by Big Planet or any schedule or agreement
entered into pursuant to this Agreement; and
(c) Any claims or actions for commissions to the I-Link LLC
Representatives arising from sales of I-Link Products and Services by
Big Planet after the Effective Time and any other liability or claims
of any I-Link LLC Representative arising under the I-Link Sales
Compensation Plan, following its amendment to become part of the Big
Planet Compensation Plan, with respect obligations of Big Planet to be
performed following the Effective Time including, without limitation,
any commissions payable by Big Planet thereunder that relate to sales
occurring after the Effective Time, provided, however, that (i) this
right of indemnification does not relieve I-Link of its obligations to
pay Big Planet
45
commissions on the Legacy customers as more fully described in Section
6.4; and (ii) the right to indemnification shall not apply to any
claims that relate to events, actions or omissions occurring prior to
the Effective Time.
(d) any claims or actions by I-Link LLC Representatives or any
Existing Customers or Legacy Customers that relate to conduct, actions
or omissions by Big Planet, its Subsidiaries or Affiliates, or any of
their respective officers, directors, employees, stockholders, agents,
representatives or contractors after the Effective Time; provided,
however, such indemnification shall not apply to any claims or actions
resulting from the transactions contemplated hereby or any change in
the I-Link Compensation Plan, policy and procedures or I-Link LLC
Representative Agreements, customer agreements in connection with the
transition of such customers and I-Link LLC Representatives to Big
Planet.
(e) Any and all third party or Governmental Authority Actions
related to actions of the I-Link LLC Representatives occurring after
the Effective Time including, without limitation any violation of any
applicable Laws, unless any such action arises out of the I-Link LLC
Representatives' relationship with I-Link and I-Link LLC prior to the
Effective Time or the acts or omissions of such I-Link LLC
Representatives occurring prior to the Effective Time; or
(f) Any failure of Big Planet or any of its respective
Subsidiaries or Affiliates, to fully comply with all regulatory
requirements in connection with the performance of its obligations
under this Agreement.
13.2 I-Link and I-Link LLC General Indemnity. Subject to Section 15.9,
I-Link and I-Link LLC shall jointly and severally defend, indemnify and hold Big
Planet and each of its Subsidiaries and Affiliates, and each of their respective
directors, employees, stockholders, agents and affiliates harmless from and
against any and all liabilities, losses, damages, claims, costs, expenses,
interest, awards and judgments (including, but not limited to, costs and
attorneys' fees but excluding any amounts recovered by an indemnified party from
any third-party insurer for such liability), arising out of, resulting from or
relating to:
(a) Any breach of any representation or warranty made by I-Link or
I-Link LLC under this Agreement;
(b) Any breach of any covenant, agreement or other provision set
forth in this Agreement by I-Link or I-Link LLC or any schedule or
agreement entered into pursuant to this Agreement, including but not
limited to any and all service level agreements (and including any
deemed breach pursuant to Section 15.1);
(c) Any claims or actions for commissions to the I-Link LLC
Representatives arising from sales of I-Link Products and Services
prior to the Effective Time and any other liability or claims of any
I-Link LLC Representative arising under the I-Link Sales
46
Compensation Plan, including, without limitation, any commissions paid
by Big Planet that relate to sales occurring prior to the Effective
Time;
(d) Any claims or actions by I-Link LLC Representatives based on,
related to, or arising from the transactions contemplated by this
Agreement including any claims or actions or any liability resulting,
related to or arising from the changes to the existing I-Link LLC Sales
Compensation Plan, the existing I-Link LLC Representative Agreements,
or the existing policies and procedures made by Big Planet or I-Link or
I-Link LLC in connection with or following the transaction or the
assignment by I-Link LLC of the I-Link LLC Representative Agreements to
Big Planet;
(e) Any claims or actions by I-Link LLC Representatives or any
Existing Customers or Legacy Customers that relate to conduct, actions
or omissions by I-Link, I-Link LLC, their Subsidiaries or Affiliates,
or any of their respective officers, directors, employees,
stockholders, agents, representatives or contractors prior to the
Effective Time;
(f) Any and all actions of the I-Link LLC Representatives
occurring prior to the Effective Time including, without limitation any
violation of any applicable Laws;
(g) Any failure of I-Link or I-Link LLC, or any of their
respective Subsidiaries or Affiliates, to fully comply with all
regulatory requirements in connection with the I-Link Products and
Services to be provided hereunder; or
(h) Any infringement or alleged or claimed infringement by the
products, services or and other intellectual property provided
hereunder, including any software, of any patent, copyright, trademark,
trade secrets or other proprietary right of any third party; or
(i) Any claim, action, damages, expenses or other liabilities,
including attorney's fees, arising out of I-Link's, I-Link LLC's, or
any of their respective Subsidiary's or Affiliate's, or any of their
respective officer's, director's, employees', stockholder's, agent's,
representative's or contractor's, acts, omissions or
misrepresentations, prior to the Effective Time, regardless of the form
of that action.
13.3 I-Link Patent and other Proprietary Rights Indemnity. I-Link
warrants that the I-Link Products and Services and/or Marks furnished by I-Link
will not infringe upon or violate any patent, copyright, trademark, trade
secret, or any other proprietary right of any third party. In the event of any
claim by a third party against Big Planet asserting or involving a patent,
copyright, trademark, trade secret, or other proprietary rights violation which
concerns any products or services and/or Marks provided to Big Planet hereunder,
I-Link and I-Link will defend, at its expense, and will indemnify and hold the
Big Planet indemnified parties harmless with respect to such action in
accordance with this Article 13. In the event an injunction or order shall be
obtained against Big Planet's use of any products or services and/or Marks by
reason of the allegations, or, if in Big Planet's opinion, the products or
services and/or Marks are
47
likely to become the subject of a claim of infringement or violation of patent,
copyright, trademark, trade secret, or other proprietary right of a third party,
I-Link will, without in any way limiting the foregoing, and at its expense: (a)
Procure for Big Planet the right to continue using the products or services
and/or Marks, or (b) Replace or modify the products or services and/or Marks so
that it becomes non-infringing but only if the modification or replacement does
not adversely affect the specifications for the products or services and/or
Marks or its use by Big Planet. In the event the foregoing options are not
available then I-Link shall be liable for its inability to provide such I-Link
Products and Services as breach of this Agreement. In no event shall Big Planet
be liable to I-Link for any charges after the date that Big Planet no longer
uses the products or services and/or Marks because of actual or claimed
infringement.
13.4 I-Link Equipment Indemnity. I-Link shall indemnify and hold
harmless Big Planet, its agents, contractors and employees from and against any
and all claims, liability, damage, loss, or expense (including reasonable
attorney's fees) including injury or death to persons, or damages to property,
both real and personal, which may arise out of: (a) the presence of I-Link's
equipment, at any location; (b) the installation, operation maintenance or
removal of I-Link's equipment from any location; and (c) the negligence or
willful misconduct of I-Link, its agents, employees or contractors. I-Link shall
pay all damages, costs, fees and other charges incurred by Big Planet in any
such third-party action which are attributable to the aforementioned issues.
Furthermore, I-Link shall have the exclusive right to defend, countersue or
settle any of the foregoing actions and to collect all damages, costs, fees and
other charges awarded from such action. Big Planet shall provide to I-Link, at
I-Link's expense all information and assistance reasonably requested by I-Link
to settle, defend or being a countersuit in conjunction with the foregoing third
party actions. Big Planet shall immediately inform I-Link of any such third
party action upon learning of such action.
13.5 Big Planet Equipment Indemnity. Big Planet shall indemnify and
hold harmless I-Link, its agents, contractors and employees from and against any
and all claims, liability, damage, loss, or expense (including reasonable
attorney's fees) including injury or death to persons, or damages to property,
both real and personal, which may arise out of: (a) the presence of Big Planet's
equipment, at any location; (b) the installation, operation maintenance or
removal of Big Planet's equipment from any location; and (c) the negligence or
willful misconduct of Big Planet, its agents, employees or contractors. Big
Planet shall pay all damages, costs, fees and other charges incurred by I-Link
in any such third-party action which are attributable to the aforementioned
issues. Furthermore, Big Planet shall have the exclusive right to defend,
countersue or settle any of the foregoing actions and to collect all damages,
costs, fees and other charges awarded from such action. I-Link shall provide to
Big Planet, at Big Planet's expense all information and assistance reasonably
requested by Big Planet to settle, defend or being a countersuit in conjunction
with the foregoing third party actions. I-Link shall immediately inform Big
Planet of any such third party action upon learning of such action.
13.6 Notice; Conflict; Assumption of Defense.
---------------------------------------
(a) Notice of Claims. A party entitled to indemnification
hereunder (the "Indemnified Party") shall promptly notify in writing
the party obligated to provide such
48
indemnification (the "Indemnifying Party") of any matter which an
Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement; provided that any
failure by the Indemnified Party to give such notice shall not relieve
the Indemnifying Party from the obligation to indemnify the Indemnified
Party except to the extent actually prejudiced thereby.
(b) Third Party Claims. The obligations of an Indemnifying Party
with respect to claims for indemnification arising from claims or
actions by third parties (the "Third Party Claims") shall be governed
by and subject the following additional terms and conditions: if an
Indemnified Party shall receive notice of any Third Party Claim, the
Indemnified Party shall give the Indemnifying Party notice of such
Third Party Claim within 30 calendar days of the receipt of such notice
by the Indemnified Party; provided, however, failure to provide such
notice shall not release the Indemnifying Party from any of its
obligations under this Article 13 except to the extent the Indemnifying
Party is materially prejudiced by such failure. If the Indemnifying
Party acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any liability that may arise under
such Third Party Claim, the Indemnifying Party shall be entitled to
assume and control the defense thereof at their expense and with
counsel selected by the Indemnifying Party (which counsel shall be
reasonably satisfactory to the Indemnified Party) provided that the
Indemnifying Party gives written notice of its intention to do so
within five calendar days after receipt of the notice from the
Indemnified Party. After written notice from the Indemnifying Party to
the Indemnified Party of its election to assume the defense thereof,
the Indemnifying Party will not be liable to the Indemnified Party
hereunder for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation and such other expenses as have been
approved in advance; provided, however, that (i) if counsel for the
Indemnified Party determines in good faith that there is a conflict
that requires separate representation for the Indemnifying Party and
the Indemnified Party, or (ii) the Indemnifying Party fails to assume
or proceed in a timely and reasonable manner with the defense of such
action or fails to employ counsel reasonably satisfactory to the
Indemnified Party in any such action, then in either such event the
Indemnified Party shall be entitled to select its own counsel and, if
necessary, local counsel of its own choice to represent the Indemnified
Party. If the Indemnified Party makes such election, then the
Indemnifying Party shall not, or no longer, be entitled to assume the
defense thereof on behalf of such Indemnified Party and such
Indemnified Party shall be entitled to indemnification under this
Article 13 (including, without limitation, reasonable fees and expenses
of such counsel) to the extent provided in this Indemnity provision.
Such counsel shall, to the fullest extent consistent with its
professional responsibilities, cooperate with the Indemnifying Party
and any counsel designated by the Indemnifying Party. Nothing contained
herein shall preclude the Indemnified Party, at its own expense, from
retaining its own counsel to represent the Indemnified Party in any
action with respect to which indemnity may be sought from the
Indemnifying Party hereunder and for which the Indemnified Party is not
entitled to engage its own counsel at the expense of the Indemnifying
Party as provided for hereunder. If the Indemnifying Party has assumed
the defense and is proceeding with the defense in a timely manner, then
the Indemnifying
49
Party shall not be liable under this Agreement for any settlement made
by an Indemnified Party without Indemnifying Party's prior written
consent, which shall not be unreasonably withheld, and the Indemnifying
Party agrees to indemnify and hold harmless the Indemnified Party from
and against any loss or liability by reason of the settlement of any
claim or action with the consent of the Indemnifying Party. The
Indemnifying Party shall not settle any such claim or action without
prior written consent of the Indemnified Party, which shall not be
unreasonably withheld.
13.7 Payment of Claims; Enforcement. The Indemnifying Party shall
promptly pay to the Indemnified Party any amounts such party claims for
indemnity under such notice unless the Indemnified Party disputes the claim for
indemnification in which case it shall provide written notice to the other party
within 30 days of its objection to the claim for indemnification. In the event
the parties are not able to reach an agreement with respect to any disputed
claim for indemnity within 30 days or the Indemnifying Party fails to pay an
undisputed indemnity claim within 30 days, the Indemnified Party may thereafter
bring an Action to enforce the indemnity obligations hereunder. The rights of
the parties under this Article 13 are in addition to any other legal remedies
they may have including, without limitation, any claims for a breach of contract
or fraud.
Article 14
Confidentiality
14.1 Confidential Information. A Party's "Confidential Information" is
defined as any confidential or proprietary information of a Party that is
disclosed to the other Party in a writing marked confidential or, if disclosed
orally, is identified as confidential at the time of disclosure and is
subsequently reduced to a writing marked "Confidential" and delivered to the
other Party within 30 days of disclosure. Big Planet's "Confidential
Information" shall also mean Big Planet Representative lists and/or lists of Big
Planet Customers (including their name, address and telephone number), business
plans, financial data, product development plans, marketing plans, strategies,
subscriber lists, sales compensation plans, manufacturing techniques and
methods, research data and similar information of Big Planet that are valuable,
special, unique and proprietary assets of Big Planet.
14.2 Duty of Confidentiality. Each Party shall hold the other Party's
Confidential Information in confidence and shall not disclose such Confidential
Information to third parties nor use the other Party's Confidential Information
for any purpose other than the purposes of this Agreement. Such restrictions
shall not apply to Confidential Information that: (a) is already known by the
recipient, (b) becomes, through no act or fault of the recipient, publicly
known, (c) is received by recipient from a third party without a restriction on
disclosure or use, (d) is independently developed by recipient without reference
to the Confidential Information, (e) is furnished to any third party by the
discloser without similar restriction on such third party; or (f) is approved
for release by the written authorization of the discloser. The foregoing
exception shall not apply to any information concerning the Existing Customers,
the Legacy Customers, the I-Link LLC Representatives and any Big Planet
Representatives or Big Planet Customers.
50
14.3 Information Generated by this Agreement. Except as otherwise
herein stipulated, it is hereby agreed to by the Parties that the information
generated by virtue of this Agreement is and will remain Confidential
Information and is therefore proprietary to the Parties. The Parties further
agree that they shall keep the Confidential Information secure and shall not use
the Confidential Information for any other purpose other than to fulfill its
obligations as herein set forth.
14.4 Disclosures Required by Law. Notwithstanding anything in this
Agreement to the contrary, in the event that a Party is required by Law or a
valid Governmental Order issued in connection with any Action to disclose any
Confidential Information, such Party shall promptly notify the other Party of
such Governmental Order or other Law so that the other Party may seek a
protective order or other remedy or waive compliance with this Agreement, or
both. Each Party agrees to cooperate, and shall cause its representatives to
cooperate, with the other Party on a reasonable basis in a Party's efforts to
obtain a protective order or other remedy. It is further agreed that, if in the
absence of a protective order or receipt of a waiver hereunder, a Party or its
representative is nonetheless, in the reasonable opinion of its counsel,
compelled to disclose the Confidential Information to any tribunal or else stand
liable for contempt or suffer any censure or penalty, such Party may disclose
such information without liability hereunder so long as the Party discloses such
Confidential Information only to the extent legally compelled to disclose such
information based on advise from its counsel.
14.5 Injunctive Relief. The Parties agree that unauthorized disclosure
or use of Confidential Information will cause substantial and irreparable injury
to the other party, that money damages will not adequately compensate for such
injury and that said party, therefore, is entitled to among other remedies,
immediate injunctive and other equitable relief for any breach of this
Agreement.
Article 15
Miscellaneous
15.1 Affiliates and Subsidiaries. Each Party shall take such actions as
are necessary to cause its Subsidiaries and Affiliates to comply with the
obligations, restrictions and conditions set forth in this Agreement. Any action
taken by a Subsidiary or Affiliate of a Party that would be a breach of this
Agreement if it were an action of such Party shall be deemed a breach of this
Agreement by such Party and they shall be liable for such breach as if they were
the breaching Party.
15.2 Exhibits and Schedules. Any reference to a Schedule or Exhibit
shall refer to a Schedule or Exhibit to this Agreement unless the context
clearly provides otherwise. All Schedules and Exhibits are incorporated by
reference into this Agreement and shall be binding upon the Parties except as
otherwise expressly provided in this Agreement or the Schedule or Exhibit. No
Schedule or Exhibit may be amended without the written consent of the other
Parties.
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15.3 Notice. Any such notice or demand, required or permitted by law,
or by provision in this Agreement, shall be made in writing, and shall be served
either by personal delivery, by certified mail, by overnight delivery, or by
electronic or facsimile communication with a confirming copy sent by mail,
return receipt requested. When served by certified mail, service shall be deemed
to have been made when three business days after deposit in the regular
receptacle of the United States Postal Service and addressed to the Parties at
the addresses set forth above. When serviced by personal delivery or overnight
delivery, service shall be deemed to have been made on the date of such
delivery. When served by electronic communication, the notice shall be effective
on the date sent. Any Party may, upon written notice to the other, change its
address for such mailing. The addresses and telephone numbers for purposes of
this paragraph are as follows:
Big Planet, Inc. I-Link, Inc. and I-Link Worldwide LLC
00 Xxxx Xxxxxx Xxxxxx 00000 Xx. Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000 Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx Attn: Chief Financial Officer
With a copy to the attention of the With a copy to the attention of the
General Counsel at the same address General Counsel at the same address
15.4 Counterparts. This Agreement may be executed in several
counterparts each of which so executed shall be deemed to be an original, and in
each case such counterpart shall constitute but one and the same instrument.
This Agreement may also be executed in several facsimile counterparts each of
which so executed shall be deemed to be an original, and in each case such
facsimile counterpart shall constitute but one and the same instrument; however,
at the request of Big Planet, the Parties agree to execute an original hard copy
of the same date after the facsimile counterparts have been executed.
15.5 Publicity. None of the Parties shall publicize the existence of
this Agreement, including any sales promotions, advertising, and use of each
other's name, logos or trademarks, without the prior written consent of the
other Parties. Neither party shall issue any press release pertaining to the
subject matter of this Agreement without obtaining the prior written approval of
the other party, which approval shall not be unreasonably withheld; provided,
however, that any of the Parties, in its sole discretion, may withhold its
consent with respect to any forward looking statement as to its business or
operation. The Parties agree that no party to this Agreement or any person
acting for or on its behalf, including their attorneys, shall directly or
indirectly disclose to any person the terms and conditions of this Agreement,
both during the term of this Agreement or after its termination, without the
prior written consent of the other Parties, unless and to the extent such
disclosure is required under Law. This provision shall survive the termination
of this Agreement.
15.6 Assignment. None of the Parties may, without the other Parties'
prior written consent, which shall not be unreasonably withheld, assign or
transfer this Agreement, or any of its rights or obligations under this
Agreement to any person ("Assignee") except to an Affiliate wholly-owned by, or
that wholly owns, or that is under common control with, such Party, or as
52
part of the sale of all or substantially all of the assets of the; provided,
however, that the Assignee agrees to fully perform and be bound by the
provisions of this Agreement. In addition, Big Planet shall have the right to
sublicense its rights hereunder to an Affiliate or a Subsidiary or Nu Skin
Enterprises, Inc. provided that such sublicensee agrees in writing to be bound
by the terms of this Agreement.
15.7 Entire Agreement; Modifications. This Agreement constitutes the
entire agreement and understanding of the Parties with respect to the subject
matter hereof, and supercedes all prior written or oral negotiations,
commitments, arrangements, agreements or understandings with respect to such
matters. This Agreement can not be modified or amended except in a writing
signed by all the Parties.
15.8 Waiver. No failure or delay on the part of any Party in exercising
any right under this Agreement shall operate as a waiver of such right, or shall
any single or partial exercise of any such right preclude any other or future
exercise of such right or the exercise of any such right. No waiver of any right
or obligation hereunder shall be enforceable against any Party unless made in a
writing, specifying such waiver, and executed by such Party.
15.9 Severability. If any provision in this Agreement is found to be
unenforceable in a court of competent jurisdiction, the remaining provisions
shall nevertheless remain in full force and effect.
15.10 Governing Laws; Waiver of Jury Trial. This Agreement shall be
governed by the laws of the State of Utah, regardless of the laws that might
otherwise be applicable under principles of conflicts of law, as to all matters,
including, without limitation, matters of validity, construction, effect, and
performance. Any action brought to enforce this Agreement must be brought in
either Utah County or Salt Lake County, Utah. The Parties consent to the
personal jurisdiction of said courts within the State of Utah and waive any
objection to improper venue. Each of the Parties hereby waives any right to a
trial by jury.
15.11 Plural Terms. Feminine or neuter pronouns shall be substituted
for those of masculine form or vice versa and the plural shall be substituted
for the single number or vice versa in any place or places in which the context
may require such substitution.
15.12 Incorporation of Recitals. The Recitals set forth above are
incorporated herein by this reference.
15.13 Authorship. This Agreement has been reviewed by attorneys
representing the respective Parties and therefore shall not be construed in
favor of or against any Party hereto based on the sole or primary authorship of
this Agreement being the work of one Party hereto.
15.14 No Further Relationships. This Agreement shall not constitute,
give effect to or otherwise imply a joint venture, pooling arrangement,
partnership or formal or informal business organization of any kind.
Accordingly, no Party shall be liable for any debts, accounts,
53
obligations or other liabilities or torts of the other Party, or its agents or
employees, except as this Agreement may otherwise expressly provide.
15.15 Survival. The applicable provisions of Articles 6.9, 9.1, 11, 12,
13, 14, and 15 shall survive the cancellation, termination or expiration of this
Agreement. Any other provisions, or parts thereof, which, by their nature,
should survive cancellation, termination, or expiration shall also survive.
15.16 Force Majeure. If performance of this Agreement, or any technical
obligation hereunder (other than the obligation to pay and/or representations
and warranties and obligations to use best efforts to effect the closing of the
transactions), is delayed, interrupted or prevented by reason of an act of God,
fire, flood, war, public disaster, strikes or labor difficulties, government
enactment, regulation or order, or any other act or condition beyond the control
of the affected Party (provided that the Party shall use its best efforts to
remedy the same), the Party so affected, upon giving prompt notice to the other
Party, will be excused from such performance to the extent of such delay,
interruption or prevention for a period equal to the duration of the contingency
that occasioned the delay, interruption or prevention.
15.17 Headings. Headings are for reference purposes only and in no way
define, limit, construe or describe the scope or extent of such section or in
any way affect this Agreement.
15.18 Compliance with Laws. At their sole expense, each of the Parties
shall comply with all applicable laws and regulations regarding its activities
related to this Agreement.
15.19 Limitation on Liability. Neither Big Planet its Affiliates or
Subsidiaries nor I-Link, I-Link LL or their Affiliates or Subsidiaries shall be
liable to the other for any consequential, punitive or special loss or damages
of any kind, such as but not limited to lost business revenue, lost profits or
lost sales, however caused, whether based on contract, tort (including
negligence) or any other theory.
15.20 Parties Benefitted. Nothing in this Agreement whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties hereto and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provisions give any third persons any right of
subrogation or action over or against any party to this Agreement.
54
IN WITNESS WHEREOF, the Parties to this Agreement have caused it to be
executed on the date first above written.
Big Planet, Inc. I-Link, Incorporated
By: By:
---------------------------- ---------------------------------
Printed Name: Printed Name:
Title: Title:
I-Link Worldwide LLC
By:
---------------------------------
Printed Name:
Title:
55
