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** Indicates that information has been omitted herein pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission
simultaneously herewith.
Exhibit 10.6
JOINT DEVELOPMENT AGREEMENT
This Joint Development Agreement dated as of April 27, 1998 (this
"Agreement") is between Lotus Development Corporation, a Delaware corporation
with offices at 00 Xxxxxxxxx Xxxxxxx, Xxxxxxxxx, XX 00000 ("Lotus") and
Interliant, Inc., a Texas corporation with a place of business at 0000 Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000 ("Interliant").
Background
Lotus has developed certain technology to be included in Louts Domino
Instant! Host ("Instant! Host") as a service provider hosting platform for
Lotus' Instant! Applications. The initial code implementing such technology is
currently included in Lotus Instant!TEAMROOM. Interliant, as a network service
provider of Lotus Notes and Lotus Domino services, is interested in developing a
set of service offerings based on Instant! Host technology that implements
Lotus' "Instant!" products and related strategies. Lotus and Interliant share a
common interest in reducing time to market for Lotus Instant! applications, and
in producing an Instant! Host platform that benefits from each party's knowledge
and expertise in producing quality Notes/Domino-based application hosting
platforms. Lotus and Interliant now wish jointly to develop commercial versions
of instant! Host on the terms and conditions set forth herein. Therefore, the
parties agree as follows:
1. Development.
(a) Joint Responsibility. Lotus and Interliant shall have joint
architectural design, product management and product development responsibility
for Lotus instant! Host, and have agreed on resources to be contributed,
timelines, project plans and contingencies. Each party agrees in good faith to
use diligent efforts to undertake and complete the development of a version of
Lotus Instant! Host as contemplated hereunder and in accordance with functional
specifications developed and agreed to by Lotus and Interliant (the "Work").
(b) Lotus Instant! Host Software Developer Kit, version 1.1. As agreed by
the parties, the first phase of development is the development of the Lotus
Instant! Host Developer Kit, version 1.x. This development kit will be made
available by Lotus or Interliant, as the case may be, to Lotus and Interliant
business partners at no charge. The parties acknowledge that version 1.0 of such
development kit is complete and was made available for shipment on or about July
20, 1997 and that version 1.1 is complete and was made available for shipment on
or about December 15, 1997.
(c) Functional Specifications and the Development Schedules. During the
course of development, Interliant shall implement changes to the functional
specifications made by Lotus from time to time. Lotus shall, in consultation
with Interliant and based on reasonable work estimates supplied by Interliant,
revise any relevant development schedules as reasonably necessary in Lotus'
reasonable judgment, to accommodate changes made in the functional
specification. Nothing herein shall require Lotus to revise development
schedules based on delays attributable to Interliant or on Interliant's failure
to meet the development schedules once revised to accommodate the changes to the
functional specification.
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(d) Product Development Review. Lotus shall appoint an employee to serve
as project manager ("Lotus Project Manager") and Interliant shall appoint an
employee to serve as development liaison ("Interliant Liaison") throughout the
course of development contemplated by this Agreement. Initially the Lotus
Project Manager shall be Xxxxxxx Xxxxxxx and the Interliant Liaison shall be
Xxxxx Xxxxxxx. The parties may, at their own option, each appoint other
employees to serve in such or other formal capacities during the term of this
Agreement. The Lotus Project Manager and the Interliant Liaison shall meet at
mutually agreed times and locations in order to discuss the status and progress
of the development work on Instant! Host.
(e) Lotus Personnel. Lotus will provide non-dedicated architectural and
product management assistance for Instant! Host, as well as qualified dedicated
development personnel to complete Instant! Host product development, pursuant to
the agreed upon development schedules.
(f) Interliant Personnel. Interliant will provide non-dedicated
architectural and product management assistance to Lotus for Instant! Host.
Interliant will provide qualified dedicated development personnel to work with
the Instant! Host product development team, pursuant to the agreed upon
development schedules.
(g) Documentation. The parties shall jointly write and produce any
necessary written end-user documentation and shall create the text for the
"op-screen" help and documentation for Instant! Host.
(h) Testing. The joint Lotus/Interliant development team shall conduct
interim evaluation and testing of Instant! Host on agreed upon dates. Upon
completion of the development of Instant! Host, such joint development team
shall deliver to Lotus and Interliant a final commercial release of Instant!
Host, in both source and object code form, as well as all programmer's notes and
technical documentation used or developed in performing the Work.
(i) Acceptance. Within ten (10) business days after the delivery by the
joint Lotus/Interliant development team to both Interliant and Lotus of each
development version and of the final release version of Instant! Host, each
party shall review and test the Instant! Host product and Lotus shall either
accept or reject the delivery. In the event of rejection, Lotus shall specify
the manner in which the version fails to meet the requirements of the agreed
upon functional specifications. After such notification, the joint development
team shall correct the aforesaid problems or deficiencies within ten (10)
business days (if practicable). Upon any redelivery, Lotus shall, in its
reasonable judgment, determine whether or not to accept such redelivered version
of Instant! Host or to require another iteration of the process.
2. Ownership; Licenses. (a) Lotus acknowledges that all code contributed or
developed by Interliant hereunder and identified as "Interliant Code" on
Schedule 1 attached hereto (the "Interliant Code") remains the sole property of
Interliant, and Interliant acknowledges that all code contributed or developed
by Lotus hereunder and identified as "Lotus Code" on Schedule 2 attached hereto
(the "Lotus Code") remains the sole property of Lotus. For the term of this
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Agreement, Interliant may update Schedule 1 and Lotus may update Schedule 2 at
any time in a writing and by mutual agreement of the other Party. With respect
to any source code proprietary to the other party (to the extent such other
party supplies such source code), each party agrees to maintain such source code
in confidence, and to protect such source code using the same degree of care it
uses to protect its own proprietary and confidential information of like
importance.
(b) Subject to acceptance of Instant! Host by Lotus pursuant to Section
1(i) above, Lotus hereby grants Interliant a royalty-free license to use and
modify the Lotus Code for the sole purpose of enhancing its Domino-based hosting
services, provided that if Interliant ceases jointly developing new versions of
Instant! Host. Interliant will receive updates to the source code for new
versions developed by Lotus only so long as Interliant is actively hosting the
complete Lotus family of Domino Instant! Applications and offering them to the
marketplace.
(c) Subject to acceptance of Instant! Host by Lotus pursuant to Section
1(i) above, Interliant hereby grants Lotus a perpetual, irrevocable license to
use, copy and modify, distribute, and sublicense the Interliant Code (as defined
in Section 2(a) hereof) as part of Instant! Host (or any successor product, or
product in which the Instant! Host code is incorporated), subject to the
nondisclosure requirements with respect the source code contained in said
Section 2(a). Additionally, Lotus shall have the irrevocable right to assign the
licenses granted hereunder in connection with any sale or transfer of the
Instant! Host product or the Louts Code or any exclusive licensing arrangement
with respect thereto.
(d) Subject to acceptance of Instant! Host by Lotus pursuant to Section 1,
Lotus will have the right, without payment of any royalties other than those set
forth in Section 3 thereof, independently to develop and market successor
versions of Instant! Host (whether or not such versions constitute derivative
works) and extensions to Instant! Host which add additional features and
functionality, so long as such extension do not constitute derivative works.
Interliant agrees that it shall not create either extensions or derivative works
(within the meaning of the U.S. Copyright Act of 1976, as amended) of Instant!
Host or the Interliant Code which offer similar functionality as Instant! Host
as it applies to Domino applications. Except as expressly permitted in Section
2(b), Interliant may not create derivative works of the Lotus Code.
(e) As long as Instant! Host contains the Interliant Code, all derivative
works of the Interliant Code created by Interliant that apply to Lotus Domino
shall be deemed for all purposes to be subject to the licenses and other rights
granted to Lotus in Section 2(c) hereof herein with respect to Instant! Host.
(f) Interliant may host other service providers using Instant! Host.
Interliant shall not otherwise have the right to resell the Instant! Host
product, except as expressly provided in this Agreement. Interliant will
compensate Lotus for all such service provider hosting and related services or
sales of instant! Host at Lotus' published Instant! Host rates.
(g) Interliant has the right to make pre-release versions of Instant! Host
available to its business partners in connection with their application
development efforts with the prior written approval of Lotus, pursuant to the
terms and conditions of Lotus' standard beta agreement.
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(h) If, so long as Lotus is obligated to pay royalties to Interliant
hereunder, Lotus desires, or is required, to sell or transfer all or
substantially all of the Instant! Host product or Lotus Code to an unaffiliated
third party or to IBM Global Services, Lotus shall first offer to sell such
Lotus Code to Interliant at the same price and upon the same terms (or terms as
similar as reasonably possible). Such right of first refusal shall be provided
to Interliant by written notice (the "Notice of Offer") given to Interliant of
the proposed sale or transfer. The Notice of Offer shall set forth with
reasonable specificity the price and other terms and conditions of the proposed
sale or transfer. Interliant shall then have the right, exercisable by written
notice to Lotus (the "Notice of Acceptance") delivered within fifteen (15) days
following the receipt of the Notice of Offer, to elect to purchase the Lotus
Code at the price and on the terms set forth in the Notice of Offer. Such
purchase by Interliant shall be consummated within ninety (90) days following
delivery of the Notice of Acceptance unless otherwise agreed by the parties. If
Interliant elects not to purchase the Lotus Code, then Lotus shall be free to
sell or transfer such Lotus Code to such third party.
(i) Interliant agrees that, during the Term hereof, it will not sell or
transfer the Interliant Code to any unaffiliated third party, except in
connection with an acquisition by a third party of a majority of the voting
securities of Interliant or all or substantially all of Interliant's assets.
3. Royalties. (a) As full consideration for the satisfaction of Interliant's
development obligations in Section 1 hereof and for the licenses granted by
Interliant to Lotus in Section 2 hereof Lotus agrees to pay Interliant a
royalty equal to ** of the net revenue (determined in accordance with generally
accepted accounting principles, consistently applied) received in connection
with the licensing of Instant! Host (or any successor product) by Lotus. The
foregoing percentage may be adjusted by Lotus in good faith based on the value
of Interliant's overall contribution to the Instant! Host development effort
(including intellectual property and expertise) as reflected in the then-current
versions of Instant! Host and the Domino Instant! Host software developers kit,
provided that (i) there shall be not more than one (1) such adjustment during
the first year of the Term hereof, (ii) such adjustment may only occur ** with
respect to each new major release of Instant! Host, (iii) any such adjustment
which results in a reduction of the royalty percentage payable to Interliant
shall not reduce such royalty percentage by more than ** of the royalty
percentage that was payable with respect to the immediately preceding major
release of Instant! Host, and (iv) prior to any adjustment, Lotus informs
Interliant of its decision and engages in good faith discussions with regarding
Lotus' justification for such adjustment.
(b) Lotus will establish standard rates under which it will license
Instant! Host to third parties. Lotus reserves the right to modify its standard
rates and/or licensing model as it sees fit.
(c) Interliant will be required to pay Lotus for Instant! Host licenses at
Lotus' then applicable standard service provider rates for non-Lotus developed
Instant! applications offered for subscription to users via Instant! Host.
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(d) Interliant will host all Domino Instant! Applications that Lotus
offers to the market on Lotus' then-standard terms and conditions.
(e) The royalties set forth in Section 3(a) hereof shall be due and
payable forty-five (45) days after each calendar quarter during the Term hereof.
(f) The royalties payable hereunder do not include sales, use,
withholding, excise or other taxes, fees, duties or tariffs now or hereafter
imposed on the production, storage, transportation, import, export, licensing
or use of Instant! Host.
(g) Payments shall be sent to:
If to Interliant:
Interliant
Accounts Receivable Department
0000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
If to Lotus:
Lotus Development Corporation
Accounts Receivable Department
00 Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
(h) During the Term hereof, each party shall keep accurate records which
are sufficient for the computation of payments due to the other party under this
Agreement and, with reasonable advance notice and not more than once per
calendar year, shall make such records reasonably available to such other party
and its independent auditors and other representatives at the place or places
where such records are customarily kept, for inspection during normal business
hours, subject to appropriate nondisclosure obligations. Each party shall
reimburse the other for any reasonable, documented, out-of-pocket expenses if
such inspection reveals that the payments made by such party during the period
reviewed aggregated less than 90% of the payments required to be made by such
party during such period.
4. Marketing.
(a) Lotus will have sole worldwide sales, promotional and marketing rights
and responsibilities for Instant! Host, provided that, at the reasonable request
of Lotus, Interliant will reasonably participate in Lotus' promotional and
marketing efforts through participation in industry events, trade shows, press
releases and like events, as appropriate.
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(b) During the Term hereof, Lotus will provide a commercially reasonable
level of promotional and marketing resources for Instant! Host.
5. Support. Reference is made to the Support Services Agreement dated as of
November 1, 1997 between Lotus and Interliant (the "Support Agreement"). Support
for Interliant with respect to Instant! Host will be provided by Lotus in
accordance with the terms and conditions of the Support Agreement.
6. Representations and Warranties. Each party hereby represents and warrants to
the other party that (i) such party has full right, power and authority to enter
into this Agreement and to Carry out its obligations hereunder, (ii) all source
code, object code and other materials developed or written by such party or such
party's employees who are members of the joint development team are the original
work of such party, validly licensed from third parties for the purposes
contemplated by this Agreement or in the public domain; (iii) the Work will be
delivered free and clear of all liens, security interests, charges or
encumbrances by third parties; and (iv) the Work shall not infringe any U.S., EU
or Japanese patent, copyright, trademark, trade secret or other proprietary
rights, provided that neither party makes any representations or warranties with
respect to code supplied or developed by the other party. THE FOREGOING
WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
7. Indemnities. (a) Lotus shall indemnify and hold Interliant harmless from, and
defend any claim, suit or proceeding, and pay any settlement amounts or damages
awarded by a court of competent jurisdiction, arising out of claims by third
parties that any code contributed or developed by Lotus in Instant! Host
infringes any United States, Canadian, EU or Japanese copyright, patent, trade
secret or trademark of such third party or parties.
(b) Interliant shall indemnify and hold Lotus harmless from and defend any
claim, suit or proceeding, and pay any settlement amounts or damages awarded by
a court of competent jurisdiction, arising out of claims by third parties that
any code contributed or developed by Interliant in Instant! Host (including the
Interliant Code) infringes any United States, Canadian, EU or Japanese
copyright, parent, trade secret or trademark of such third party or parties.
(c) The obligations to defend and to provide indemnification under this
Section 7 are subject to the following conditions:
(i) The party claiming indemnification shall promptly notify the party
having the duty of indemnification in writing of any indemnifiable
claim or action for which indemnification is sought (provided that
any failure to so notify shall not limit the indemnifying party's
indemnification obligation except if and to the extent such failure
materially prejudiced the indemnifying party's ability to defend
against any claim, suit or other proceeding).
(ii) The indemnifying party shall, at its option, have sole control of
the defense of any such claim or action and all negotiations for any
settlement or compromise, provided that the party seeking
indemnification shall have the right to provide for its own,
separate defense at its own cost and expense.
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(iii) Following notice of any action against the indemnified party based
on a claim that a indemnifying party's code is infringing, the
indemnifying party may at its option (A) procure for the indemnified
parry the right to continue using such indemnifying party's code,
(B) replace such code with non-infringing code of substantially
equivalent functionality, (C) modify such code to make it
non-infringing, or (D) terminate this Agreement and pay to the
indemnified party all amounts received from the indemnified party by
the indemnifying party under this Agreement.
(d) Neither party shall be liable for any claim of infringement based on
the other party's modification to its Software, the combination or use of its
software with any product, program or data not provided by it, if and to the
extent such claim would not have arisen absent such modification or combination;
or any claim would have been avoided by use of the most recent version of the
party's Software then licensed for use and distribution by the other party
8. LIMITATION OF LIABILITY. EXCEPT WITH RESPECT TO THIRD PARTY CLAIMS
INDEMNIFIED AGAINST PURSUANT TO SECTION 7 HEREOF. NEITHER PARTY SHALL BE LIABLE
FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR TORT DAMAGES, INCLUDING, WITHOUT
LIMITATION, DAMAGES RESULTING FROM A DELAY OR FROM LOSS OF PROFITS, BUSINESS OR
GOODWILL, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OR IS AWARE OF THE
POSSIBILITY OF SUCH DAMAGES.
9. Term and Termination. (a) The initial term of this Agreement shall be two
years, commencing on the date first above written. Thereafter, this Agreement
shall automatically renew for successive one-year renewal terms, unless either
party terminates the agreement by giving the other party written notice thereof
at least ninety (90) days prior to the end of the then-current term. Such
initial term and each such renewal term are referred to collectively herein as
the "Term".
(b) Either party may terminate this Agreement by giving written notice to
the other party if such other party fails to perform or comply with this
Agreement or any provision hereof. Such termination shall be effective thirty
(30) days after written notice from the non-breaching party unless the
occurrence giving rise to the right of termination and its adverse effects have
been cured to the reasonable satisfaction of the non-breaching party prior to
the expiration of such thirty (30) day period.
(c) This Agreement shall terminate automatically if (i) a party files or
has filed against it a petition under the U.S. Bankruptcy Code or any other law
relating to insolvency or the protection of creditors, (ii) a party makes an
assignment for the benefit of creditors or (iii) a receiver or similar official
is appointed for all or a substantial portion of a party's assets.
(d) Notwithstanding anything contained herein, the expiration or earlier
termination of this Agreement shall have no effect on the licenses granted in
this Agreement or rights of licensees who have purchased the right to use
Instant! Host from Lotus prior to the effective date of such termination,
subject to payment of any applicable license fees and to the other provisions
of this Agreement.
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10.6
(e) If, so long as Lotus is obligated to pay royalties to Interliant
hereunder, Lotus incorporates all or substantially all of the Interliant Code in
Lotus Domino or in another Lotus product at no additional charge to Lotus Domino
licensees (excluding such beta, evaluation and promotional programs of limited
duration, which, in the case of evaluation and promotional programs, shall not
exceed three (3) months, as are customary in the software industry), this
Agreement shall automatically terminate, provided that in such event Lotus
agrees to pay Interliant an amount equal to ** multiplied by the royalty
percentage (expressed as a decimal) set forth in Section 3 hereof, less the
aggregate royalties paid to Interliant pursuant to Section 3 hereof through the
effective date of such termination. For purposes of this provision, a
promotional program shall not include bundling the Instant! Host product or
licenses with another product or products at no additional charge. Should Lotus
choose to bundle the Instant! Host product or licenses in such a manner, then
Lotus shall pay Interliant royalties pursuant to Section 3(a) of this Agreement
for each copy of Instant! Host or each license thereof so bundled following the
end of any permitted three-month evaluation or promotional period, based on
Lotus' then published rates or license fees. If, so long as Lotus is obligated
to pay royalties to Interliant hereunder, Lotus releases one or more additional
major versions of Instant! Host, Lotus agrees to pay an additional amount equal
to ** multiplied by the royalty percentage (expressed as a decimal) applicable
to each such additional major version less aggregate royalties paid by Lotus. In
the event that Lotus elects to discontinue Instant! Host entirely, the
provisions of the second sentence of Section 2(d) of this agreement shall no
longer apply, and Lotus will notify Interliant and will offer to either license
or assign the Lotus Code contained in Instant! Host to Interliant on terms and
conditions to be negotiated in good faith, so that Interliant may continue to
offer Instant! Host as an Interliant product following any such discontinuation.
(f) Termination shall not limit or restrict any of the remedies otherwise
available to the parties hereunder.
10. Survival. In addition to the survival of the licenses as described in
Section 9(d) above, the provisions of Sections 2, 3 (but only so long as
Instant! Host contains the Interliant Code), 7, 8, 9(e), and 11 hereof shall
survive the expiration or earlier termination of this Agreement in accordance
with their respective terms.
11. Miscellaneous.
(a) Enforceability. It is the desire and intent of the parties hereto that
the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision to this
Agreement shall be adjudicated to be invalid or unenforceable, such provision
shall be deemed amended to delete therefrom the portion thus adjudicated to be
invalid or unenforceable and shall otherwise remain in full force and effect.
(b) Parties Independent. In making and performing this Agreement, the
parties act and shall act at all times as independent contractors and nothing
contained in this Agreement shall be construed or implied to create an agency,
partnership or employer and employee relationship
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between Lotus and Interliant or between any party hereto and any officer or
employee of the other party.
(c) Publicity. Subject to any applicable public disclosure obligations
imposed by securities laws, Lotus and Interliant agree that each of them shall
not, without the prior written consent of the others, disclose the contents of
this Agreement or make any public announcement concerning the subject matter
hereof without the prior written consent of the other party.
(d) Assignment. Except as otherwise expressly provided herein, neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned, in whole or in part, by either party hereto without the prior written
consent of the other party hereto, which consent shall not be unreasonably
withheld
(e) Entire Agreement, Amendments. This Agreement and the Exhibits attached
thereto contain the entire agreement among the parties hereto with respect to
the subject matter hereof and supersede all prior agreements or understandings
among the parties hereto with respect thereto. This Agreement may be amended
only by an agreement in writing signed by the parties hereto.
(f) Notices. Any notice required or permitted to be given pursuant to this
Agreement shall be in writing and shall be personally delivered, delivered by
next-day air courier or mailed by registered or certified mail, return receipt
requested and postage prepaid or delivered by facsimile as follows:
if to Lotus:
Lotus Development Corporation
00 Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
with a copy to:
Lotus Development Corporation
00 Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
if to Interliant:
Interliant, Inc.
0000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Jun Lidestri
with a copy to:
Interliant, Inc.
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0000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
or to such other addresses as the party to whom notice is given may have
furnished to the other parties hereto in writing, in accordance herewith. Any
communication shall be deemed to have been given, in the case of personal
delivery, on the date of delivery; in the case of delivery by air courier, on
the business day after delivery to the applicable air-courier service; and in
the case of mailing, on the third business day following the day on which the
piece of mail containing such communication is posted.
(g) Waiver. No terms or provisions hereof shall be deemed waived and no
breach consented to or excused, unless such waiver, excuse or consent shall be
in writing and signed by the party claimed to have waived or consented. The
consent, waiver or excuse by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such other party.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with, the laws of The Commonwealth of Massachusetts, excluding its
conflicts of laws rules.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
LOTUS DEVELOPMENT CORPORATION INTERLIANT
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------- -----------------------
Title: General Manager Title: President and C.E.O.
---------------------- --------------------
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Schedule 1
Interliant Code
**
12
Schedule 2
Lotus Code
All files in the Instant! Host product excluding those listed in, added to, and
to be added, in good faith, to Schedule 1.
