<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED JULY 31, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-27898
IDT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-3415036
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation and organization)
294 State Street
Hackensack, New Jersey 07601
(Address of principal executive offices, including zip code)
(201) 928-1000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value (Title of class)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No __
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based on the closing price of the Common Stock on October 25,
1996 of $12.25, as reported on the Nasdaq National Market, was approximately
$99.4 million. Shares of Common Stock held by each officer and director and by
each person who owns 5% or more of the outstanding Common Stock have been
excluded from this computation in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of October 25, 1996 the Registrant had outstanding 9,666,900 shares of
Common Stock, $.01 par value, and 11,174,330 shares of Class A Common Stock,
$.01 par value.
<PAGE>
Explanatory Note
----------------
The undersigned Registrant hereby files this Amendment No. 2 to Item
14 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K of Part IV
of its Annual Report on Form 10-K for the fiscal year ended July 31, 1996
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
1
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Report:
1. Financial Statements.
2. Financial Statement Schedules.
Schedule No. Description
------------ -----------
II Valuation and Qualifying Accounts
3. Exhibits.
Exhibit
No. Description
--- -----------
2.01## Merger Agreement relating to the reincorporation of the
Registrant in Delaware.
3.01## Restated Certificate of Incorporation of the Registrant.
3.02## By-laws of the Registrant.
4.01### Specimen Certificates for shares of the Registrant's Common
Stock and Class A Stock.
4.02## Description of Capital Stock (contained in the Certificate
of Incorporation of the Registrant, filed as Exhibit 3.01).
10.01**@ Form of Employment Agreement between the Registrant and
Howard S. Jonas.
10.02**@ Form of Employment Agreement between the Registrant and
Howard S. Balter.
10.03**@ Form of Employment Agreement between the Registrant and Eric
L. Raab.
10.04##@ Form of 1996 Stock Option and Incentive Plan.
10.05*+ Network Service Provider Agreement between Netscape
Communications Corporation and the Registrant.
10.06** Marketing Services and Independent Contractor Services
Agreement between Lermer Overseas Telecommunications, Inc.
and the Registrant.
10.07# Rebiller Service Agreement between WorldCom, Inc. (formerly
LDDS Communications, Inc.) and the Registrant.
10.08### Form of Registration Rights Agreement between the Company's
stockholders and the Company
10.09## Lease of 294 State Street.
10.11o Form of Registration Rights Agreement between Howard S.
Jonas and the Registrant.
10.14*+ Access Agreement between PSINet Inc. and the Registrant.
10.15*+ Restated Sales Agreement between International Computer
Systems, Inc. and the Registrant.
21.01* Subsidiaries of the Registrant.
27.01* Financial Data Schedule.
- ----------
* filed herewith
+ confidential treatment requested
** incorporated by reference to Form S-1 filed January 9, 1996, file No.
333-00204
# incorporated by reference to Form S-1 filed January 22, 1996, file No.
333-00204
## incorporated by reference to Form S-1 filed February 21, 1996, file No.
333-00204
### incorporated by reference to Form S-1 filed March 8, 1996, file No.
333-00204
o incorporated by reference to Form S-1 filed March 14, 1996, file No.
333-00204
@ compensation plans and arrangements for executives and others.
2
<PAGE>
(b) Reports on Form 8-K. The Registrant did not file any reports on Form 8-K
during the fiscal year ended July 31, 1996.
3
<PAGE>
IDT Corporation
Index to Consolidated Financial Statements
Report of Independent Auditors............................................F-2
Consolidated Balance Sheets as of July 31, 1995 and 1996..................F-3
Consolidated Statements of Operations for the years ended
July 31, 1994, 1995 and 1996............................................F-4
Consolidated Statements of Stockholders' Equity for the years ended
July 31, 1994, 1995 and 1996............................................F-5
Consolidated Statements of Cash Flows for the years ended
July 31, 1994, 1995 and 1996............................................F-6
Notes to Consolidated Financial Statements................................F-7
Financial Statement Schedule - Valuation and Qualifying Accounts..........F-20
F-1
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
IDT Corporation
We have audited the accompanying consolidated balance sheets of IDT Corporation
as of July 31, 1995 and 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended July 31, 1996. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These consolidated financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at July 31, 1995 and 1996 and the results of its operations and its cash
flows for each of the three years in the period ended July 31, 1996, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
September 30, 1996
F-2
<PAGE>
IDT Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
July 31
1995 1996
-------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 231,592 $14,893,756
Trade accounts and commissions receivable, net of allowance
for doubtful accounts of $250,000 at July 31, 1995 2,029,518 11,497,565
and $2,100,000 at July 31, 1996
Advances receivable -- 925,000
Due from Yovelle -- 1,200,000
Other current assets 141,034 1,985,090
-------------------------
Total current assets 2,402,144 30,501,411
Property and equipment, at cost, net 1,770,113 12,453,330
Advances receivable -- 325,000
Other assets 25,000 517,630
-------------------------
Total assets $ 4,197,257 $43,797,371
=========================
Liabilities and stockholders' equity Current liabilities:
Trade accounts payable $ 798,587 $ 7,778,860
Accrued expenses 2,028,753 7,770,334
Deferred revenue 266,584 983,496
Notes payable to former stockholder 5,001 --
Other current liabilities 187,357 422,005
-------------------------
Total current liabilities 3,286,282 16,954,695
-------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized shares--
10,000,000; -- --
no shares issued
Common stock, $.01 par value; authorized shares--
100,000,000; 4,491,900 and 9,666,900 shares issued and 44,919 96,669
outstanding in 1995 and 1996, respectively
Class A stock, $.01 par value; authorized shares--
35,000,000; 11,174,330 shares issued and outstanding 111,743 111,743
Additional paid-in capital 3,223,598 44,746,841
Accumulated deficit (2,469,285) (18,112,577)
-------------------------
Total stockholders' equity 910,975 26,842,676
-------------------------
Total liabilities and stockholders' equity $ 4,197,257 $43,797,371
=========================
</TABLE>
F-3
<PAGE>
See accompanying notes.
F-4
<PAGE>
IDT Corporation
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year ended July 31
1994 1995 1996
--------------------------------------------
<S> <C> <C> <C>
Revenues $ 3,169,013 $ 11,664,434 $ 57,693,880
Costs and expenses:
Direct cost of revenues 989,886 7,543,923 36,437,583
Selling, general and administrative 2,402,556 5,991,520 35,799,158
Depreciation and amortization 105,853 303,619 1,212,235
--------------------------------------------
Total costs and expenses 3,498,295 13,839,062 73,448,976
--------------------------------------------
Loss from operations (329,282) (2,174,628) (15,755,096)
Interest expense (3,167) -- (113,160)
Interest income 26,376 15,129 458,464
Other 7,684 14,950 --
--------------------------------------------
Loss before income taxes and extraordinary item (298,389) (2,144,549) (15,409,792)
Income taxes -- -- --
--------------------------------------------
Loss before extraordinary item (298,389) (2,144,549) (15,409,792)
Extraordinary loss on retirement of debt -- -- (233,500)
--------------------------------------------
Net loss $ (298,389) $ (2,144,549) $(15,643,292)
============================================
Loss per share:
Loss before extraordinary item $ (0.02) $ (0.13) $ (0.85)
Extraordinary loss on retirement of debt -- -- (0.01)
--------------------------------------------
Net loss $ (0.02) $ (0.13) $ (0.86)
============================================
Weighted average number of shares used in
calculation of loss per share 16,569,292 16,569,292 18,180,023
============================================
</TABLE>
See accompanying notes.
F-5
<PAGE>
IDT Corporation
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock Class A Stock Additional Stock
--------------------- --------------------- Paid-In Subscription (Accumulated
Shares Amount Shares Amount Capital Receivable Deficit)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at July 31, 1993 4,491,900 $ 44,919 11,174,330 $ 111,743 $ 939,938 $ (25,000) $ (26,347)
Contribution and sale of common stock -- -- -- -- 1,315,000 -- --
Net loss for the year ended July 31, 1994 -- -- -- -- -- -- (298,389)
-----------------------------------------------------------------------------------------
Balance at July 31, 1994 4,491,900 44,919 11,174,330 111,743 2,254,938 (25,000) (324,736)
Stock options -- -- -- -- 968,660 -- --
Services rendered in exchange for
subscription receivable -- -- -- -- -- 25,000 --
Net loss for the year ended July 31, 1995 -- -- -- -- -- -- (2,144,549)
-----------------------------------------------------------------------------------------
Balance at July 31, 1995 4,491,900 44,919 11,174,330 111,743 3,223,598 -- (2,469,285)
Stock options -- -- -- -- 70,000 -- --
Sale of common stock 4,600,000 46,000 -- -- 41,458,993 -- --
Exercise of warrants 575,000 5,750 -- -- (5,750 -- --
Net loss for the year ended July 31, 1996 -- -- -- -- -- -- (15,643,292)
-----------------------------------------------------------------------------------------
Balance at July 31, 1996 9,666,900 $ 96,669 11,174,330 $ 111,743 $ 44,746,841 $ -- $(18,112,577)
=========================================================================================
</TABLE>
See accompanying notes.
F-6
<PAGE>
IDT Corporation
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended July 31
1994 1995 1996
-----------------------------------------------------------
Operating activities
<S> <C> <C> <C>
Net loss $ (298,389) $ (2,144,549) $(15,643,292)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Stock option expense -- 968,660 70,000
Depreciation and amortization 105,853 303,619 1,212,235
Write-off of abandoned equipment 82,000 -- --
Services rendered in exchange for subscription
receivable -- 25,000 --
Gain on sale of short-term investments (7,284) -- --
Changes in assets and liabilities:
Accounts receivable (648,928) (1,104,087) (9,468,047)
Due from Yovelle -- -- (1,200,000)
Other current assets (9,896) (97,357) (1,844,056)
Other assets (25,000) -- (492,630)
Advances receivable -- -- (1,250,000)
Trade accounts payable 321,873 417,662 6,980,273
Accrued expenses 260,557 1,731,696 5,741,581
Deferred revenue -- 242,921 716,912
Other current liabilities (15,488) 177,810 234,648
-----------------------------------------------------------
Net cash provided by (used in) operating activities (234,702) 521,375 (14,942,376)
Investing activities
Purchase of equipment (716,623) (1,325,518) (11,895,452)
Purchase of short-term investments (1,490,413) -- --
Proceeds from the sale of short-term investments 1,669,355 297,974 --
-----------------------------------------------------------
Net cash used in investing activities (537,681) (1,027,544) (11,895,452)
Financing activities
Payments on notes due to former shareholder (13,334) (16,669) (5,001)
Proceeds from notes payable from shareholders,
affiliates and outside investors -- -- 4,237,000
Repayments of notes payable from shareholders,
affiliates and outside investors -- -- (4,237,000)
Payments of stockholder loans (77,500) -- --
Proceeds from sale of common stock 1,315,000 -- 41,504,993
-----------------------------------------------------------
Net cash provided by (used in) financing activities 1,224,166 (16,669) 41,499,992
-----------------------------------------------------------
Net increase (decrease) in cash 451,783 (522,838) 14,662,164
Cash and cash equivalents at beginning of period 302,647 754,430 231,592
----------------------------------------------------------
Cash and cash equivalents at end of period $ 754,430 $ 231,592 $ 14,893,756
==========================================================
</TABLE>
See accompanying notes.
F-7
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements
July 31, 1996
1. Summary of Significant Accounting Policies
Organization
IDT Corporation (the "Company") was incorporated in Delaware in December 1995 as
a wholly-owned subsidiary of International Discount Telecommunications, Corp.
("IDT New York"). IDT New York was incorporated under the laws of the state of
New York in August 1990. In March 1996, in order to effect IDT New York's
Reincorporation in Delaware, IDT New York was merged into the Company ("the
Reincorporation"). As part of the Reincorporation, the stockholders of IDT New
York exchanged their shares of common stock of IDT New York for an aggregate of
4,491,900 shares of Common Stock and 11,174,330 shares of Class A Stock of the
Company. The accompanying financial statements give retroactive effect to the
Reincorporation.
The Company provides Internet connectivity and certain telecommunication
services to subscribers in the United States and abroad. In August 1996, the
Company also began providing Internet telephony services with the introduction
of Net2Phone.
Principles of Consolidation
The accompanying consolidated financial statements include accounts of the
Company and its majority-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results inevitably will differ from those estimates.
Revenue Recognition
Monthly subscription service revenue is recognized over the period services are
provided. Telecommunication revenues are recognized as they are incurred.
Equipment sales are recognized when installation is completed. Deferred revenue
consists primarily of semi-annual and annual Internet services billed in
advance.
F-8
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Direct Cost of Revenues
Direct cost of revenues consists primarily of telecommunication costs,
connectivity costs, and the cost of equipment sold to customers.
Property and Equipment
Equipment, software, and furniture and fixtures are depreciation using the
straight-line method over the estimated useful lives of the assets, which range
from five to seven years. Leasehold improvements are depreciated using the
straight-line method over the term of the lease or estimated useful life of the
assets, whichever is shorter.
Subscriber Acquisition Costs and Advertising
Subscriber acquisition costs including sales commissions, license fees and
production and shipment of starter packages are expensed as incurred.
The Company expenses the costs of advertising as incurred. For the years ended
July 31, 1994, 1995 and 1996, advertising expense totaled $10,000, $581,000 and
$8,520,000, respectively.
Software Development Costs
Costs for the internal development of new software products and substantial
enhancements to existing software products are expensed as incurred until
technological feasibility has been established, at which time any additional
costs would be capitalized. To date, the Company has essentially completed its
software development concurrently with the establishment of technological
feasibility and, accordingly, no such costs have been capitalized to date.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. Cash and cash equivalents
are carried at cost which approximates market value.
F-9
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Income Taxes
The Company accounts for income taxes on the liability method as required by
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes. Under this method, deferred tax assets and liabilities are determined
based on differences between the financial reporting and tax bases of assets and
liabilities.
Net Income (Loss) Per Share
Except as noted below, net income (loss) per common share is computed using the
weighted average number of common and Class A shares outstanding and dilutive
common stock equivalent shares from stock options. Stock options and warrants
are included as share equivalents using the treasury stock method. For all
periods prior to the Company's initial public offering the net income (loss) per
share amounts were computed in accordance with rules and practices of the
Securities and Exchange Commission that require common stock, common stock
options and common stock warrants issued at a price substantially below the
proposed public offering price and within a twelve-month period prior to an
initial public offering of common stock to be treated as common stock
equivalents outstanding for all periods prior to the initial public offering.
Current Vulnerability Due to Certain Concentrations
The Company is dependent upon certain suppliers for the provision of
telecommunication and Internet services to its customers. The Company has not
experienced and does not expect any disruption of such services. Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash, cash equivalents and trade receivables.
Concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Company's customer base.
However, international customers account for a significant amount of the
Company's total revenues. Therefore, the Company is subject to risks associated
with international operations, including changes in exchange rates, difficulty
in accounts receivable collection and longer payment cycles.
Management regularly monitors the creditworthiness of its domestic and
international customers and believes that it has adequately provided for any
exposure to potential credit losses.
F-10
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Impact of Recently Issued Accounting Standards
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. Statement 121 also addresses
the accounting for long-lived assets that are expected to be disposed of. The
Company will adopt Statement 121 in the first quarter of fiscal 1997 and, based
on current circumstances, does not believe the effect of adoption will be
material.
Stock Based Compensation
The Company grants stock options for a fixed number of shares to employees with
an exercise price equal to or less than the fair value of the shares at the date
of grant. In October 1995, the FASB issued of Statement No. 123, Accounting for
Stock Based Compensation, which is effective for fiscal years beginning after
December 15, 1995. In accordance with the provisions of Statement 123, the
Company has elected to continue to account for stock option grants in accordance
with APB Opinion No. 25, Accounting for Stock Issued to Employees, and,
accordingly, recognizes compensation expense for stock option grants only when
the exercise price is less than the fair value of the shares at the date of
grant. However, Statement 123 requires additional pro forma disclosures
regardless of whether a company elects to continue to apply APB 25 for its stock
option grants. The Company will include such disclosures in its fiscal 1997
annual financial statements.
2. Advances Receivable
Prior to July 31, 1996, the Company advanced $1,250,000 to one of its carriers.
The Company also had trade receivables of approximately $1,600,000 due from the
carrier at July 31, 1996. Subsequent to July 31, 1996, the Company converted the
advance and trade receivables, plus accrued interest thereon, into a promissory
note bearing interest at a rate of 13% per annum and payable in 12 monthly
installments commencing on November 15, 1996. The promissory note is secured by
the carrier's equipment.
F-11
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
3. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<CAPTION>
July 31
1995 1996
----------------------------
<S> <C> <C>
Equipment $ 1,906,622 $ 10,661,941
Computer software 140,319 1,971,018
Leasehold improvements 48,249 296,718
Furniture and fixtures 115,902 1,176,867
----------------------------
2,211,092 14,106,544
Less accumulated depreciation and
amortization (440,979) (1,653,214)
============================
Net property and equipment $ 1,770,113 $ 12,453,330
============================
</TABLE>
4. Note Payable to Former Stockholder
In May 1991, the Company repurchased 1,035,000 shares of its Common for $80,000
payable $20,000 on execution of the agreement and 36 monthly principal payments
of $1,667 beginning May 1, 1992. The note bore interest at 2% above the prime
rate as defined. In connection with the aforementioned stock repurchase, the
former stockholder received a warrant permitting him, in the event of certain
sales of the Company's Common stock, as defined, to purchase shares of the
Company's stock at a discount to the sale price. On January 1, 1996, in full
satisfaction of the previous agreement, the former stockholder was granted a
warrant to purchase 575,000 shares of the Company's Common stock for an
aggregate purchase price of $1.00. This warrant was exercised in March 1996.
5. Related Party Transactions
The Company currently leases office space from a corporation which is
wholly-owned by an officer stockholder. Aggregate lease payments under such
lease, which expires on June 30, 1997, were $24,000 for each of the years ended
July 31, 1994, 1995 and 1996. The Company provided a portion of such space to
corporations owned by an officer/stockholder without compensation.
The Company has been provided professional services by directors and/or
relatives of officers/directors. The Company incurred approximately $9,000,
$37,000 and $197,000 for such services for the years ended July 31, 1994, 1995
and 1996, respectively.
F-12
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
5. Related Party Transactions (continued)
During 1996, the Company received $760,000 in non-interest bearing advances from
a company which is wholly-owned by an officer/shareholder of the Company. Such
advances were repaid during 1996.
The Company supplied telecommunications services to its customers under an
agreement wherein Lermer Overseas Telecommunications, Inc. ("Lermer") was the
carrier. Simon L. Lermer, who served as a director of the Company from December
1992 to December 1995, is the sole shareholder of Lermer. Mr. Lermer and Marc
Knoller, a director of the Company, are the two directors of Lermer. Under an
agreement between Lermer and the Company, the Company provides Lermer with
marketing, technical support, billing and collection and rate procurement
services. Payments made to Lermer in Fiscal 1994 (from the inception of Lermer
in April 1994 until July 31, 1994), 1995 and 1996 equal $181,160, $2,416,534 and
$2,142,718, respectively. The Company's revenues for such services amounted to
approximately $298,000, $6,016,000 and $13,024,259 for the years ended July 31,
1994, 1995 and 1996, respectively.
During fiscal 1996, the Company obtained a license to supply telecommunications
services directly to its customers and the agreement with Mr. Lermer was
terminated.
6. Income Taxes
Significant components of the Company's deferred tax assets and liabilities are
as follows:
<TABLE>
<CAPTION>
July 31
1995 1996
----------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 570,000 $ 7,257,000
Bad debt reserve -- 844,000
Employee benefits 330,000 418,000
----------------------------
Deferred tax assets 900,000 8,519,000
Deferred tax liability - depreciation 60,000 759,000
----------------------------
Net deferred tax assets 840,000 7,760,000
Valuation allowance (840,000) (7,760,000)
----------------------------
Total deferred tax assets $ -- $ --
===========================
</TABLE>
F-13
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
6. Income Taxes (continued)
The Company has provided a full valuation allowance on net deferred tax assets
since realization of these benefit cannot be reasonably assured. The valuation
allowance increased by $6,920,000 during 1996.
At July 31, 1996, based upon tax returns filed and to be filed, the Company had
net operating loss carryforwards for federal income tax purposes of
approximately $18,100,000 expiring in the years 2009 through 2011. These net
operating loss carryforwards may be limited in their use in the event of
significant changes in the Company's ownership. In addition, their use is
limited to future taxable earnings of the Company.
7. Stockholders' Equity
Common Stock and Class A Stock
The rights of holders of Common stock and holders of Class A stock are identical
except for voting and conversion rights and restrictions on transferability. The
holders of Class A stock are entitled to three votes per share and the holders
of Common stock are entitled to one vote per share. Class A stock is subject to
certain limitations on transferability that do not apply to the Common stock.
Each share of Class A stock may be converted into one share of Common stock, at
any time at the option of the holder.
Stock Options
In August 1994, the Company granted options to purchase 1,783,530 shares of
common stock at exercise prices ranging from $0.21 to $0.83 per share. In April
1995, the Company granted options to purchase 356,840 shares of common stock at
exercise prices ranging from $0.41 to $1.66 per share. In November 1995, the
Company granted options to purchase 18,400 shares of common stock at exercise
prices ranging from $2.54 to $10.16 per share. The options granted include
various vesting provisions and expire ten years from the date of grant. In
connection with the granting of these options, the Company recorded compensation
expense of approximately $969,000 and $70,000 during the years ended July 31,
1995 and 1996, respectively.
At July 31, 1996, options to purchase 3,503,520 shares of the Company's Common
Stock were outstanding of which 2,446,512 were then exercisable.
F-14
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
7. Stockholders' Equity (continued)
Initial Public Offering
On March 15, 1996, the Company completed an initial public offering of 4,600,000
shares of its common stock for $10 per share. The Company realized net proceeds
of approximately $41.5 million from this offering. A portion of the proceeds
from this offering was used to repay $3,477,000 of short-term notes previously
issued during fiscal 1996.
8. Commitments and Contingencies
Legal Proceedings
On August 2, 1995, in a suit entitled Fisher, Herbst & Kimble, P.C. et al v.
International Discount Telecommunications Corporation, pending in the U.S.
District Court of Dallas County, Texas, two plaintiffs alleged violation of the
Telephone Consumer Protection Act of 1991, 47 U.S.C. (beta)227(b)(1)(C) ("TCPA).
In general, the TCPA prohibits certain kinds of, but not all, unauthorized
advertising by way of facsimile. The named Plaintiffs filed suit individually
and as a class action certification contending that the Company transmitted
advertisements proscribed by the TCPA and should be liable for damages permitted
by law. The statute provides a private right of action (if otherwise permitted
by the laws or rules of a court of a state) and allows recovery of up to $500 or
actual damages, if greater, for each individual violation. The Company has
entered into a settlement agreement with such plaintiffs which has received
final court approval.
In October 1995, an investigation was instituted by the Attorneys General of
Iowa, New Jersey, New York, Tennessee and Texas (collectively, the "A.G.") into
certain business practices of the Company as a result of complaints by residents
of those states. Michigan, thereafter entered the investigation on or about
September 1996. The focus of the A.G.'s investigation concerns advertising
practices that the Company voluntarily terminated prior to the notice of
investigation from the A.G. The majority of the advertising in question concerns
the sale of a product that the Company now sells only in limited circumstances.
The A.G. has indicated its desire to settle the matter with a consent order, the
content of which is being presently negotiated with the Company. The Company
believes that the outcome will not have a material effect on the Company's
results of operations or financial condition.
F-15
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
8. Commitments and Contingencies (continued)
On December 29, 1995, DRTV, Inc. a/k/a Surfers ("Surfers") filed a breach of
contract action in court. The suit names the Company as defendant and seeks
damages for licensing the sale of a product in the retail market to a third
party allegedly in violation of the agreement between the Company and Surfers.
The Company has filed a counterclaim. The Company and Surfers have reached a
settlement agreement and are in the process of finalizing it.
The Company is subject to other legal proceedings and claims which have arisen
in the ordinary course of its business and have not been finally adjudicated. In
the opinion of management, settlement of these and the aforementioned actions
when ultimately concluded will not have a material adverse effect on results of
operations, cash flows or the financial condition of the Company.
Employment Agreements
The Company has entered into employment agreements with four senior executives
and two other employees of the Company which extend through December 1999. The
employment agreements provide, among other things, minimum annual compensation
aggregating $835,000 and for the issuance of stock options and common stock.
Operating Leases
The Company has operating leases for its premises and certain equipment. Rental
expense under such leases was approximately $25,000, $30,000 and $178,000 for
the years ended July 31, 1994, 1995 and 1996, respectively. Future minimum lease
payments under such leases for the years ending July 31 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 392,000
1998 351,000
1999 203,000
2000 4,000
============
Total minimum lease payments $ 950,000
============
</TABLE>
F-16
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
8. Commitments and Contingencies (continued)
License Fees
In connection with the provision of Internet access, the Company provides
certain customers with Internet software licensed from a third party. In the
prior year, the Company agreed to pay royalties based upon end users. In May
1996, such agreement was amended, except for monies due under the original
agreement. Under the terms of the amended agreement, which expires in May 1998,
the Company has agreed to pay minimum royalties based upon end users and annual
service fees of approximately $1,850,000 and $300,000, respectively. For the
years ended July 31, 1994, 1995 and 1996, total licensing fees amounted to $0,
$30,000 and $1,098,000, respectively.
Communications Services
The Company has an agreement with a supplier of telecommunications services
("Vendor") which began in August 1994 and continues monthly unless terminated by
one of the parties. Under such agreement, the Vendor bills and collects, on
behalf of the Company, for long distance telephone services provided to the
Company's customers. The Company is responsible for all uncollected receivables.
For the year ended July 31, 1995 and 1996, the Company purchased approximately
$1,723,000 and $3,900,000 respectively, of services from the Vendor.
The Company has entered into agreements with certain carriers to buy and sell
communications services. As of July 31, 1996, the Company has approximately
$1,475,000 in minimum purchase commitments related to such agreements.
Distribution Agreements
The Company has entered into distribution agreements under which it has agreed
to pay its agents commissions for obtaining new Internet and discount
telecommunications customers. The agreements require commissions upon activation
of the customers.
9. Customer, Geographical Area and Segment Information
During the year ended July 31, 1996, one customer accounted for approximately
19% of revenues. No customer accounted for more than 10% of revenues during the
years ended July 31, 1994 and 1995.
F-17
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
9. Customer, Geographical Area and Segment Information (continued)
Revenues from customers outside the United States represented approximately 59%,
56% and 23% of total revenues during the years ended July 31, 1994, 1995 and
1996, respectively. No single geographic area accounted for more than 10% of
total revenues.
Operating results and other financial data are presented for the principal
business segments of the Company for the years ended July 31, 1995 and 1996.
Prior to August 1, 1994, the Company operated principally in one segment
telecommunications.
<TABLE>
<CAPTION>
Internet Tele-
Access communications Net2Phone Total
-------------------------------------------------------
($ in thousands)
<S> <C> <C> <C> <C>
Year ended July 31, 1995
Revenues $ 875 $ 10,789 $ - $ 11,664
Income (loss) from operations (3,005) 830 - (2,175)
Depreciation and amortization 187 117 - 304
Total assets 869 3,328 - 4,197
Capital expenditures 893 433 - 1,326
Year ended July 31, 1996
Revenues 21,986 35,708 - 57,694
Income (loss) from operations (17,851) 2,756 (660) (15,755)
Depreciation and amortization 930 258 24 1,212
Total assets 20,570 22,907 320 43,797
Capital expenditures 10,335 1,358 202 11,895
</TABLE>
10. Notes and Advances Payable
During fiscal 1996, the Company borrowed an aggregate of $3,477,000 from
shareholders, affiliates and outside investors. The notes bore interest at 12%
per annum. The notes were repaid with the proceeds of the Company's initial
public offering. In connection with the repayment of such notes, the Company
incurred a prepayment penalty of $233,500. Such prepayment penalty has been
classified as an extraordinary loss on retirement of debt in the accompanying
statement of operations.
F-18
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
11. Additional Financial Information
Additional financial information with respect to cash flows is as follows:
<TABLE>
<CAPTION>
Year ended July 31,
----------------------------------
1994 1995 1996
----------------------------------
<S> <C> <C> <C>
Cash payments made for interest $ 4,574 $ - $ 113,000
Cash payments made for income taxes -- 56,000 --
</TABLE>
Other current assets include advances from carriers of $1,498,502 at July 31,
1996. Accrued expenses includes $1,791,587 and $5,839,706 due to
telecommunication carriers at July 31, 1995 and 1996, respectively.
12. Consulting and Licensing Agreement
The Company possesses the exclusive right to make the services of Genie,
including its multi-player games and information services, accessible over the
Internet and the World Wide Web, pursuant to its agreement with Yovelle
Renaissance Corporation ("Yovelle," and such agreement, the "Yovelle
Agreement"). Yovelle, a recently formed entity, purchased the Genie service from
GE Information Services, Inc. in January 1996. Pursuant to the Yovelle
Agreement, the Company provided certain management consulting and other services
to Yovelle and paid Yovelle certain online content product costs and licensing
fees, in exchange for the right to make Genie's online offerings available over
the Internet (including the World Wide Web) exclusively through the Company. The
Yovelle Agreement was to expire in February 1998, and was renewable thereafter.
The Company's Chief Executive Officer and Chairman of the Board of Directors,
loaned $500,000 to Yovelle and received a promissory note in consideration
therefor which bore interest at a rate of 12% per annum and was due in June
1996.
During the year ended July 31, 1996, revenue under the Yovelle Agreement
amounted to $1,200,000.
In August 1996, the Company purchased all of the issued and outstanding stock of
Yovelle for $200,000. The purchase price is comprised of $100,000 in cash and a
non-interest bearing promissory note for $100,000, payable on or before December
31, 1996.
F-19
<PAGE>
IDT Corporation
Notes to Consolidated Financial Statements (continued)
13. Joint Venture
In May 1996, the Company entered into an agreement with Internet Consulting
Group Limited to make the Company's Internet services available throughout
Europe by providing marketing and customer support services. Under the terms of
the agreement, the Company has agreed to an initial capital investment of
$1,400,000 for 70% of the shares of the new joint venture, of which the Company
has invested $90,000 as of July 31, 1996. Operations of the joint venture are
expected to commence in 1997.
14. Subsequent Events
Acquisition of PCIX, Inc.
On August 16, 1996, the Company completed the acquisition of the assets of PCIX,
Inc. ("PCIX"), a former alliance partner of the Company. The acquisition price
included a $690,000 promissory note, cash payments totaling $260,000,
forgiveness of $162,300 owed to the Company from PCIX, and the assumption of
$95,400 of other PCIX liabilities. The acquisition price is subject to
adjustment based on PCIX's operating activity during the period from May 1, 1996
to August 16, 1996. The promissory note bears interest at 8.25% per annum and
matures on August 16, 1998.
Capital Lease
In August 1996, the Company entered into a $1,000,000 capital lease arrangement
to acquire computer and communications related equipment. The lease which
expires in July 1999, requires monthly payments of $31,270, including interest
at 8.4% and is collateralized by the equipment.
Note Payable
On August 8, 1996, the Company borrowed $2,500,000 from a financing company
under an interest bearing note. Such note will be repaid in 34 installments of
$77,330 per month commencing in October 1996 and includes a balloon payment of
$312,500 in September 1999. The note is collateralized by certain equipment
owned by the Company.
F-20
<PAGE>
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance
Beginning Costs and at End
Description of Period Expenses Deductions(1) of Period
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994:
Reserves deducted from accounts receivable:
Allowance for doubtful accounts $ -- $ 5,000 $ -- $ 5,000
1995:
Reserves deducted from accounts receivable:
Allowance for doubtful accounts 5,000 439,891 (194,891) 250,000
1996:
Reserves deducted from accounts receivable:
Allowance for doubtful accounts 250,000 4,042,070 (2,192,070) 2,100,000
</TABLE>
- ----------
(1) Uncollectible accounts written off, net of recoveries.
F-21
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 2 on
Form 10/K-A to the Annual Report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized.
IDT Corporation
January 3, 1997 By: /s/ Stephen R. Brown
- --------------- -----------------------
Date Stephen R. Brown
Chief Financial Officer
<PAGE>
Exhibit 10.05:
Network Service Provider Agreement between
Netscape Communications Corporation and the Registrant
Pages where confidential treatment has been requested are stamped
'Confidential Treatment Requested and Redacted Material has been separately
filed with the Commission,' and the appropriate section has been marked in
the margin with a star(*).
<PAGE>
NETSCAPE COMMUNICATIONS CORPORATION
NETWORK SERVICE PROVIDER DISTRIBUTION AGREEMENT
COVER SHEET
IDT Internet Services INC.
Full legal name of Network Service Provider (IDT)
294 State Street
Address of Principal Place of Business
Hackensack NJ 07601
City State Zip
Telephone 201-928-1000 Fax 201-928-1057
IDT is incorporated in the state/county of Del.
If IDT is not a corporation, please specify form
of organization
---------------------------------
Non Disclosure Agreement Signed [X] Yes
If yes, date March 9, 1995
----------------------
Name and Description of Internet Access
and/or Intranet Access service/software
(IDT's Product): IDT's Internet Access Services
Check Applicable: [X] Netscape Navigator LAN [X] Netscape Dial-Up Kit
IMPORTANT NOTICE: THIS NETSCAPE COMMUNICATIONS CORPORATION NETWORK SERVICE
PROVIDER DISTRIBUTION AGREEMENT GIVES YOU THE RIGHT TO MAKE AND DISTRIBUTE
COPIES OF THE NAVIGATOR SOFTWARE CHECKED ABOVE AT THE PRICING SET FORTH IN
ATTACHMENT B HERETO. THE NAVIGATOR SOFTWARE MUST BE OFFERED TO END USERS AS A
PACKAGED PRODUCT WITH IDT'S PRODUCT AND MAY NOT BE OFFERED AS A STAND-ALONE
PRODUCT. THE NAVIGATOR SOFTWARE IS ONLY TO BE OFFERED TO END USERS IN THE
TERRITORY NOTED BELOW. YOU MUST PROVIDE QUARTERLY POINT OF SALE REPORTS TO
NETSCAPE. CAREFULLY REVIEW THE REST OF THIS AGREEMENT FOR OTHER IMPORTANT TERMS.
FAILURE TO COMPLY WITH THIS AGREEMENT MAY RESULT IN TERMINATION AS SET FORTH IN
THIS AGREEMENT.
TERRITORY Worldwide, subject to compliance with all applicable US
(Country): and foreign laws.
NETWORK SERVICE PROVIDER
By: /s/ Howard Balter
-----------------
Name: Howard Balter
Title: COO
Date: 5/16/96
IDT Technical Contact
Primary: Eric Raab
Phone: 201-928-4487
Fax: 201-928-1057 e-mail: [email protected]
NETSCAPE COMMUNICATIONS
CORPORATION
By: /s/ Conway (Todd) Rulon-Miller
-----------------------------
Name: Conway (Todd) Rulon-Miller
Title: VP, Sales
Date of Acceptance: 5/23/96
Alternate: Howard Balter
Phone: 201-928-4480
Fax: same e-mail: [email protected]
REVIEWED BY
NETSCAPE LEGAL
Initial [illigible]
IDT pa-69366.2 Rev 030496
CONFIDENTIAL
<PAGE>
AMENDMENT No. ONE TO THE
NETSCAPE COMMUNICATIONS CORPORATION
NETWORK SERVICE PROVIDER DISTRIBUTION AGREEMENT
This Amendment No. One (the "1st Amendment") is entered into, as of June 25,
1996, by and between IDT Internet Services, Inc., a Delaware corporation with
principal offices at 294 State Street, Hackensack, New Jersey 07601 ("IDT") and
Netscape Communications Corporation, a Delaware corporation, with principal
offices at 501 E. Middlefield Road, Mountain View, California 94043
("Netscape").
WHEREAS, the parties have entered into a Network Service Provider Distribution
Agreement executed by IDT on May 16, 1996 (the "Agreement"); and
WHEREAS, the parties wish to modify and supplement the provisions of such
Agreement;
NOW, THEREFORE, the parties, in consideration of the terms and conditions
herein, agree as follows:
1.
2. Attachments A and B are replaced with Attachments A and B to this 1st
Amendment.
3. Capitalized terms defined in the Agreement shall have the same meaning in
this 1st Amendment as in the Agreement.
4. Except as expicitly modified, all terms, conditions and provisions of the
Agreement shall continue in full force and effect.
5. In the event of any inconsistency or conflict between the Agreement and
this 1st Amendment, the terms, conditions, and provisions of this Amendment
shall govern and control.
6. This 1st Amendment and the Agreement constitute the entire and exclusive
agreement between the parties with respect to this subject matter. All
previous discussions and agreements with respect to this subject matter are
superseded by the Agreement and this 1st Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this 1st Amendment to be
executed by their duly authorized representatives, effective as of the date of
signature by Netscape ("Effective Date").
IDT INTERNET SERVICES INC. NETSCAPE COMMUNICATIONS CORPORATION
By: /s/ Howard Balter By: /s/ Conway (Todd) Rulon-Miller
- ----------------------------- -----------------------------------
Name: Howard Balter Name: Conway (Todd) Rulon-Miller
- ----------------------------- -----------------------------------
Title: C.O.O. Title: V.P. Sales
- ----------------------------- -----------------------------------
Date: 6/20/96 Date: 6/25/96
- ----------------------------- -----------------------------------
6/20/95
FRT
CONFIDENTIAL
IDT NSP Amdmt 106-25-96 A11:06 OUT
06-25-96 A10:05 RCVD
REVIEWED BY NETSCAPE LEGAL
Initial: [ILLEGIBLE TEXT]
----------------
<PAGE>
AMENDMENT No. TWO TO THE
NETSCAPE COMMUNICATIONS CORPORATION
NETWORK SERVICE PROVIDER DISTRIBUTION AGREEMENT
This Amendment No. Two (the "2nd Amendment") is entered into, as of August 28,
1996, by and between IDT Internet Services, Inc., a Delaware corporation with
principal offices at 294 State Street, Hackensack, New Jersey 07601 ("IDT") and
Netscape Communications Corporation, a Delaware corporation, with principal
offices at 501 E. Middlefield Road, Mountain View, California 94043
("Netscape").
WHEREAS, the parties have entered into a Network Service Provider Distribution
Agreement executed by IDT on May 16, 1996 (the "Agreement"); and
WHEREAS, the parties wish to modify and supplement the provisions of such
Agreement;
NOW, THEREFORE, the parties, in consideration of the terms and conditions
herein, agree as follows:
1. Added as a new language to the end of Section 2.1.1 is: "IDT may also
distribute in the Territory by sublicense the initial copy of the Navigator
to End Users, electronically, by on-line distribution from IDT's FTP site
provided, however, that such electronic distribution is only permitted if
such distribution meets all of the following conditions. Electronic on-line
distribution must be directly from IDT and not through Distributors, and
there shall be no electronic distribution to an End User unless: (a) and
until after such End User subscribes to IDT's Product; (b) addressed
specifically to such End User; (c) such distribution is password protected
and subject to acceptance of an electronic version of the End User License
Agreement; (d) such distribution is only made after successful completion
of such protection by the End User and acceptance by the End User of the
End User License Agreement; and (e) such distribution is solely from IDT's
FTP site.
2. Notwithstanding anything to the contrary in Section 4.1 of the Agreement,
per copy license fees for each copy of the Navigator that is distributed
electronically by on-line distribution shall accrue immediately upon
distribution/transmission of each copy from IDT's FTP site.
3. Capitalized terms defined in the Agreement shall have the same meaning in
this 1st Amendment as the Agreement.
4. Except as explicitly modified, all terms, conditions, and provisions of the
Agreement shall continue in full force and effect.
5. In the event of any inconsistency or conflict between the Agreement and
this 2nd Amendment, the terms, conditions and provisions of this 2nd
Amendment shall govern and control.
6. This 2nd Amendment, the 1st Amendment and the Agreement constitute the
entire and exclusive agreement between the parties with respect to this
subject matter. All previous discussions and agreements with respect to
this subject matter are superseded by the Agreement, the 1st Amendment and
this 2nd Amendment.
CONFIDENTIAL 8/22/96
IDT NSP Amdmt 2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this 2nd Amendment to be
executed by their duly authorized representatives, effective as of the date of
signature by Netscape ("Effective Date").
IDT INTERNET SERVICES INC. NETSCAPE COMMUNICATIONS
CORPORATION
By: /s/ Howard Balter By: /s/ Noreen G. Bergin
-------------------------- ------------------------------
Name: HOWARD BALTER Name: Noreen G. Bergin
-------------------------- ------------------------------
Title: COO Title: VP & Corp. Controller
-------------------------- ------------------------------
Date: 9/24/96 Date: 9/30/96
-------------------------- ------------------------------
REVIEWED BY
NETSCAPE LEGAL
Initial /s/ [Illegible]
---------------
CONFIDENTIAL
IDT NST Amdmt 2 8/22/96
<PAGE>
NETSCAPE COMMUNICATIONS CORPORATION
NETWORK SERVICE PROVIDER DISTRIBUTION AGREEMENT
This Network Service Provider Distribution Agreement ("Agreement") is
entered into by and between Netscape Communications Corporation, a
Delaware corporation ("Netscape"), with principal offices at 501 East
Middlefield Road, Mountain View, CA 94043, U.S.A. and the Network
Service Provider listed and identified on the cover sheet to this
Agreement ("Cover Sheet") as of the date of acceptance by Netscape
("Effective Date") listed on the Cover Sheet.
WHEREAS, IDT markets and provides Internet Access services and/or
Intranet Access services.
WHEREAS, IDT desires to obtain rights to use and distribute Netscape's
Navigator selected on the Cover Sheet and other Netscape products in
accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, the parties agree to the following terms and
conditions:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 "Active User" means a Registered User for which Internet Access or Intranet
Access through IDT's Product has not been terminated.
1.2 "Attachment(s) means the attachments to this Agreement which are attached
hereto and incorporated herein:
1.2.1 Attachment A (Description of Netscape Products) which sets forth a
description of each Netscape Product licensed hereunder.
1.2.2 Attachment B (Pricing, Payment Schedules, Deliverables and Territory)
which sets forth pricing for IDT, payment schedules and specific
items to be delivered to IDT.
1.2.3 Attachment C (Netscape's End User License Agreements) which sets
forth Netscape's terms and conditions of licensing applicable to an
end user customer. Attachment C-1 sets forth Netscape's End User
License Agreement for the Navigator and Attachment C-2 set forth
Netscape's End User License Agreement for the Server Products.
1.2.4 Attachment D (Quarterly Point of Sale Report) which sets forth the
form and information IDT must provide to Netscape each quarter.
1.2.5 Attachment E (Maintenance and Technical Support) which sets forth
Netscape's and IDT's maintenance and support obligations.
1.2.6 Attachment F (Navigator Custom Program Request Form) which sets forth
the elements of the user interface of the Navigator that are
available to be customized.
1.3 "Configuration Guide" means the configuration guide for the Netscape
Dial-Up Kit to be provided by Netscape to IDT pursuant to this Agreement.
1.4 "Derivative Work(s)" means a revision, modification, translation,
abridgment, condensation or expansion of the Navigator or Documentation or
any form in which the Netscape Products or Documentation may be recast,
transferred, or adapted, which, if prepared without the consent of
Netscape, would be a copyright infringement.
1.5 "Distributor" means any third party appointed pursuant to this Agreement by
IDT or any Distributor properly appointed hereunder to distribute the
Netscape Products to End Users in accordance with the terms hereof.
<PAGE>
1.6 "Documentation" means Netscape's standard user manuals, reference manuals
and installation guides, or portions thereof, which are distributed as of
the Effective Date generally by Netscape to its other licensees of the
Navigator either in hard copy or electronic copy, as may be updated by
Netscape from time to time and provided to IDT hereunder.
1.7 "End User" means any third party licensed by IDT or a Distributor pursuant
to this Agreement to use, but not to further distribute, the Netscape
Products except that if such third party is a corporation or other entity,
then "End User" means each individual within such corporation or entity
licensed by IDT or a Distributor pursuant to this Agreement to use, but
not to further distribute, the Netscape Products.
1.8 "Enterprise Kit" means the executable version (but not the source code
version) of Netscape's proprietary utility tool software program currently
being developed by, and, when released by Netscape, The Enterprise Kit is
intended to include functionality that would permit licensees thereof to
customize the elements of the user interface of the Netscape Navigator LAN
as set forth in Attachment F.
1.9 "Internet Access" means connecting, through any medium now known or
hereafter developed or discovered, to the Internet in order to permit data
flow between the Internet and the connected End User.
1.10 "Intranet Access" means connecting, through any medium now known or
hereafter developed or discovered, to a private network operated by IDT in
order to permit data flow between such network and the connected End User.
1.11 "Navigator" means the Netscape Dial-Up Kit and/or Netscape Navigator LAN as
selected on the Cover Sheet.
1.12 "Netscape Dial-Up Kit" means, to the extent selected on the Cover Sheet,
the executable version (but not the source code version) of the web client
software Netscape markets under the name "Netscape Dial-Up Kit", and any
Updates that Netscape may provide to IDT hereunder from time to time.
1.13 "Netscape Navigator LAN" means, to the extent selected on the Cover Sheet,
the executable version (but not the source code version) of the web client
software Netscape markets under the name "Netscape Dial-Up Kit", and any
Update that Newscape may provide to IDT hereunder from time to time.
1.14 "Navigator Gold" means the executable version (but not the source code
version) of the web client software Netscape markets under the name
"Netscape Navigator Gold", and any Updates that Netscape may provide to IDT
hereunder from time to time.
1.15 "Server Products" means the executable version (but not the source code
version) of the products listed in Section 3 of Attachment A, and any
Updates that Netscape may provide to IDT hereunder from time to time.
1.16 "Netscape Products" means the Navigator, Navigator Gold and Server
Products.
1.17 "IDT's Product" means IDT's Internet Access and/or Intranet Access
services/software, as described on the Cover Sheet, with which the Netscape
Products are required to be bundled and distributed.
1.18 "Program Errors" means one or more reproducible deviations in the Netscape
Products from the applicable functional specifications set forth in the
Documentation.
1.19 "Registered User" means (a) an End User of the Navigator that is provided
Intranet Access only or Internet Access and Intranet Access through IDT's
Product as of the date such access is provided or (b) an End User of the
Navigator that has been provided Internet Access and not Intranet Access
<PAGE>
through IDT's Product and who continues to use IDT's Product for Internet
Access for at least thirty (30) days from the date that such End User is
first provided Internet Access through IDT's Product.
1.20 "Territory" shall mean that geographic area set forth on the Cover Sheet.
1.21 "Updates" mean updates, if any, to the Netscape Products including any
error correction, modification, enhancement, or improvement. Major Updates
involve additions of substantial functionality while Minor Updates do not.
Major Updates are designated by a change in the number to the left of the
decimal point of the number appearing after the product name while Minor
Updates are designated by a change in such number to the right of the
decimal point. Netscape is the sole determiner of the availability and
designation of an Update as a Major or Minor Update. Major Updates exclude
software releases which are reasonably designated by Netscape as new
products. Where used herein "Updates" shall mean Major Updates and Minor
Updates.
2. GRANT OF LICENSES AND RIGHTS
2.1 Licenses
2.1.1 Navigator License. Subject to the terms and conditions of this
Agreement, Netscape hereby grants to IDT and IDT hereby accepts, a
nonexclusive and nontransferable right and license to (i) use in the
Territory the Navigator for IDT's internal business purposes,
(including, without limitation, for purposes of testing, development,
establishment of accounts, provision of technical support to End
Users, sales, marketing and promotional activity) (ii) reproduce,
without change (except as expressly permitted or required herein),
the Navigator (in executable form only) on any tangible media or as
expressly permitted in this Section 2.1.1(iv), (iii) distribute in
the Teritory by sublicense such Navigator copies to End Users,
directly or indirectly through Distributors, solely for use in
conjunction with IDT's Product and (iv) directly distribute from
IDT's FTP (file transfer protocol) site to Active Users located in
the Territory and Updates to the Navigator provided to IDT by
Netscape pursuant to this Agreement; provided, that such FTP site
shall not permit any person or entity, other than Active Users, to
download or otherwise access any Update. In the event Netscape adopts
a policy of making generally available to its network service
providers distribution of the intial copy of the Navigator from the
network service providers FTP site, then Netscape shall grant IDT
such distribution rights.
2.1.2 Navigator Gold and Service Product License. Subject to the terms and
conditions of this Agreement, Netscape hereby grants to IDT and IDT
hereby accepts, a nonexclusive and nontransferable right and license
to (i) use in the Territory the Navigator Gold and Server Products
for IDT's internal business purposes, (including, without limitation,
for purposes of testing, development, establishment of account,
provision of technical support to End Users, sales, marketing and
promotional activity) (ii) reproduce, without change (except as
expressly permitted or required herein), the Navigator Gold and
Server Products (in executable form only) on any tangible media,
(iii) distribute in the Territory by sublicense such Navigator Gold
and Server Products copies to End Users, directly or indirectly
through Distributors, solely for use in conjunction with IDT's
Product and (iv) distribute to End Users located in the Territory
directly or indirectly through Distributors any Updates to the
Navigator Gold and Server Products provided to IDT by Netscape
pursuant to this Agreement.
2.1.3 Enterprise Kit License. Subject to the terms and conditions of this
Agreement, Netscape hereby grants and IDT hereby accepts, a
nonexclusive and nontransferable right and license to use the
Enterprise Kit, when commercially released, to customize the Netscape
Navigator LAN.
2.1.4 Distributors. Subject to the terms and conditions of this Agreement,
IDT may (i) sublicense to Distributors and such Distributors may
sublicense to other Distributors the right and
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license to reproduce, without change (except for changes IDT is
permitted to make pursuant to this Agreement, which Distributor is
allowed to reproduce), the Navigator (in executable form only) on any
tangible media solely as an incorporated part of IDT's Product and to
distribute in the Territory by sublicense such Navigator copies to
End Users, directly or indirectly through other Distributors, solely
for use in conjunction with IDT's Product; and (ii) appoint
Distributors to distribute in the Territory directly to End Users the
Navigator Gold and Server Products solely in conjunction with IDT's
Product. IDT shall not be entitled to grant to any distributor the
right to reproduce all or any portion of the Navigator Gold or Server
Products or to indirectly sell, sublicense or otherwise distribute
the Navigator Gold or Server Products, and no Distributor shall
appoint any distributor, reseller or other third party or agent in
connection therewith.
2.1.5 License Restrictions. IDT agrees not to copy (except as expressly
permitted herein), modify (except as expressly permitted or required
herein), translate, decompile, reverse engineer, disassemble, or
otherwise determine or attempt to determine source code from the
executable code of the Netscape Products or to create any Derivative
Works based upon the Netscape Products or Documentation, and agrees
not to permit or authorize anyone else, including, without
limitation, any Distributor, to do so. IDT and each Distributor are
expressly prohibited from any marketing and/or distribution of the
Netscape Products (a) unless each copy of the Netscape Products is
bundled with IDT's Product and (b) outside of the Territory. IDT
shall not be entitled to grant to any Distributor and no Distributor
shall be entitled to grant to any other Distributor the right or
license to electronically distribute the Netscape Products,
including, without limitation, any Update.
2.1.6 Limited Modification License. Subject to the terms and conditions of
this Agreement, Netscape hereby grants and IDT hereby accepts a
nonexclusive and nontransferable right and license to modify (i) the
Navigator solely as necessary to bundle the Navigator with IDT's
Product, and (ii) the Documentation for the Navigator, solely to
reflect accurately the operation of the Navigator as combined with
IDT's Product; provided, however, that all such modifications shall
be subject to Netscape's reasonable approval, not to be unreasonably
withheld or delayed.
2.1.7 Documentation License. Subject to the terms and conditions of this
Agreement, Netscape hereby grants and IDT hereby accepts a
nonexclusive and nontransferable right and license to use and
reproduce, without change (except as expressly permitted or required
herein), the Documentation, and to distribute in the Territory by
sublicense the Documentation to End Users, directly or indirectly
through Distributors, solely in conjunction with the Netscape
Products. Subject to the terms and conditions contained in this
Agreement, IDT may sublicense to Distributors and such Distributors
may sublicense to other Distributors the right and license to use the
Documentation for the Netscape Products, and reproduce, without
change, the Documentation for the Navigator, and to distribute in the
Territory by sublicense the Documentation to End Users, directly or
indirectly through other Distributors, solely in conjunction with the
Netscape Products.
2.1.8 Licenses Dependent on Bundling and Accounting. The licenses granted
in this Section 2.1 are conditional upon (i) IDT bundling each copy
of the Netscape Products with IDT's Product and IDT and each
Distributor marketing and distributing each copy of the Netscape
Products only as so bundled with IDT's Product and only in the
Territory and (ii) IDT establishing and maintaining controls and
procedures sufficient to timely and accurately determine the number
of End Users that become Registered Users and the number of then-
current Active Users. Without limiting the generality of the
foregoing, IDT agrees to implement a user agent or other process that
shall accurately deterime and record the version number of each
Netscape Products used by an Active User such that IDT can
distinguish a new Registered User from an Active User that first uses
an Update. If (a) IDT fails to so bundle the Netscape Products, (b)
IDT or any Distributor markets or distributes the Netscape Products
without IDT's Product bundled therewith or outside of the Territory
or (c) IDT fails to account for all Registered Users and all then-
current Active Users in accordance with this
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Section 2.1.8, such default shall give rise to Netscape's right of
termination pursuant to Section 14.1 hereof, provided that the period
for cure shall be ten (10) working days and not sixty (60) days.
2.1.9 Configuration Guide. In the event that the Netscape Dial-Up Kit is
selected on the Cover Sheet, Netscape hereby grants to IDT, and IDT
hereby accepts, a nonexclusive and nontransferable right and license,
in the Territory, to (a) use (with no right to sublicense) the
Configuration Guide to preconfigure the dial-up parameters and
Netscape preferences specified therein solely for IDT's Product and
for no other network service and (b) modify the Getting Started
pofrtion of the Documentation for the Netscape Dial-Up Kit solely to
the extent necessary to reflect the preconfigured parameters and
dial-up preferences made by IDT to the Netscape Dial-Up Kit in
accordance with this Section 2.1.6. Prior to distribution of any
Netscape Dial-Up Kit to a Distributor or End User, IDT shall use the
Configuration Guide to preconfigure the dial-up parameters and
Netscape preferences of each such Netscape Dial-Up Kit to: (i)
provide Internet Access and/or Internet Access to End Users solely
through IDT's Product and (ii) prevent access to any public network
other than the Internet; and to any private network not operated by
IDT. IDT is granted no right or license to (x) distribute or
sublicense the Configuration Guide to any third party, including,
without limitation, Distributors, (y) sublicense to any Distributor
the right or license to modify or change all or any portion of the
Navigator or Documentation, and (z) except as provided in this
Section 2.1.9, modify or change all or any portion of the Navigator
or Documentation.
2.1.10 Stack and Dialer. Prior to distribution of any Netscape Navigator LAN
to a Distribuitor or End User, IDT shall bundle, in accordance with
this Section 2.1.10, each copy of the Netscape Navigator LAN with
IDT's or a third party's stack and dialer. IDT agrees to bundle each
copy of the Netscape Navigator LAN with such stack and dialer so that
such copy of the Netscape Navigator LAN: (i) provides Internet Access
and/or Intranet Access to End Users solely through IDT's Product and
(ii) prevents access to any public network, other than the Internet,
and to any private network not operated by IDT.
2.1.11 IDT Program Guidelines. When if Netscape makes available the Netscape
Navigator Flexible Program Outline, IDT and Netscape shall negotiate
in good faith the inclusion of the provisions of such Outline into an
amendment to this Agreement.
2.1.12 Promotion of Navigators. IDT agrees to treat all Navigators at least
as favorably as it treats any other products distributed by IDT that
are competitive with any Navigator. Specifically, IDT agrees that it
will not market or promote any Navigator or any other product in a
manner that states or could reasonably be interpreted to imply that
the Navigator is inferior or secondary to the other product. For
example, IDT will not market or promote any other product as
preferred, premier, primary or the like as compared to any Navigator
for the general Internet browser market.
2.2. Export. IDT shall comply fully with all then current applicable laws, rules
and regulations relating to the export of technical data, including, but
not limted to any regulations of the United States Office of Export
Administration and other applicable governmental agencies and IDT
acknowledges that by virtue to certain security technology embedded in the
Netscape Products, that export of such software may not be legal. IDT shall
conspicuously mark all packaging containing Netscape Products identified by
Netscape in writing as not for export with a Not for Export notice.
Netscape shall advise IDT of any changes to such laws, rules and
regulations of which it has actual knowledge as they may apply to the
Netscape Products. Netscape agrees to cooperate in providing information
requested by IDT as necessary to obtain any required licenses and
approvals. When distributing the Netscape Products and Documentation in
countries where an enforceable copyright law covering the same does not
exist, IDT shall obtain a written agreement signed by the End User
prohibiting the End User from making unauthorized copies of the same.
2.3 Compliance and Laws
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2.3.1 At is own expense, IDT shall make, obtain, and maintain in force at
all times during the term of this Agreement, all applicable filings,
registrations, reports, licenses, permits and authorizations
(collectively Authorizations) in the portions of the Territory in
which IDT is distributing the Netscape Products pursuant to this
Agreement in order for IDT to perform its obligations under this
Agreement. Netscape shall provide IDT with such assistance and
cooperation as IDT may reasonably request in making or obtaining any
such Authorizations, including without limitation, the execution of
appropriate documents. In the event that the issuance of any
Authorization is conditioned upon an amendment or modification to
this Agreement which is unacceptable to Netscape, Netscape shall have
the right to terminate this Agreement without liability or further
obligation whatsoever to IDT with respect to the affected portion of
the Territory.
2.3.2 IDT shall comply with all laws, regulations and other legal
requirements that apply to this Agreement, including tax and foreign
exchange legislation; advise Netscape of any legislation, rule,
regulation or other law (including but not limited to any customs,
tax, trade, intellectual property or tariff law) which is in effect
or which may come into effect in the Territory after the Effective
Date of this Agreement and which to IDT's knowledge affects the
importation of the Netscape Products into, or the use and the
protection of the Netscape Products and the intellectual property of
rights within, the Territory, or which has a material effect on any
provision of this Agreement, IDT will provide Netscape with the
assurances and official documents that Netscape periodically may
request to verify IDT's compliance with this subsection.
2.3.3 Neither IDT or Netscape shall, together with their respective
employees and agents, in conformity with the United States Foreign
Corrupt Practices Act and with Netscape's established corporate
policies regarding foreign business practices which have been
disclosed by Netscape to IDT in writing, directly or indirectly make
and offer payment, promise to pay, or authorize payment, or offer a
gift, promise to give, or authorize the giving of anything of value
for the purpose of influencing an act or decision of an official of
any government within the Territory or of the United States
Government (including a decision not to act) or inducing such a
person to use his influence to affect any such governmental act or
decision in order to assist Netscape in obtaining, retaining or
directing any such business.
2.4 Third Party Licenses. If all or any part of the Netscape Products delivered
to IDT has been licensed to Netscape by a third party software supplier
then, notwithstanding anything to the contrary contained in this Agreement,
IDT is granted a sublicense to the third party softward subject to the same
terms and conditions to those contained in the agreement between Netscape
and such third party software supplier. In addition, Netscape reserves the
right to substitute any third party software in the Netscape Products so
long as the new third party software does not materially affect the
functionality of the Netscape Products. If such substitution affects the
operation or use of the Netscape Products in a manner: (a) that is obvious
to the average End User; or (b) which Netscape knows would generally
require its network service providers to make technical changes to their
Internet access services to incorporate; then Netscape shall provide IDT
with reasonable prior notice of such substitution. Netscape represents that
current releases of the Netscape Products contain no third party software
which would require IDT to agree to any terms and conditions in addtion to
those set forth in this Agreement.
2.5 European Union. In the event that any provision of this Agreement prohibits
any activity of Licensee or any Distributor in violation of Article 6 of
the Council Directive of 14 May 1991 on the legal protection of computer
programs, and implementing legislation thereunder (the Directive), then,
such activity shall be permitted solely to the extent, if any, that such
activity is (i) subject to the jurisdiction of a Member State of the
European Union and (ii) expressly permitted by the Directive.
3. MARKETING AND DISTRIBUTION
3.1 Nonexclusivity. IDT understands that Netscape may enter into arrangements
similar to this Agreement with third parties. Netscape understands that IDT
may enter into arrangements for
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bundling and/or distribution of products similar to, or in competition with
the Netscape Products, subject to the express provisions of Section 2.1.12
herein.
3.2 Terms Relating to Distribution.
3.2.1 Distribution to Government Agencies. IDT agrees to comply with all
applicable laws, rules and regulations to preclude the acquistion of
unlimited rights to technical data, softweare and documentation
provided with the Netscape Products to a governmental agency, and
ensure the inclusion of the appropriate Restricted Rights or Limited
Rights notices required by the U.S. Government agencies or other
applicable agencies.
3.2.2 Distributor Agreements. Prior to the distribution of any Netscape
Products to a Distributor, IDT or a then-current Distributor shall
enter into an enforceable written agreement with such Distributor
(Distributor Agreement) that (i) is sufficient to ensure that such
Distributor is required to comply with the relevant terms of this
Agreement and (ii) in all Distributor Agreements entered into after
the Effective Date, expressly names Netscape as an intended third
party beneficiary with the right to rely on and directly enforce the
terms thereof. Without limiting the generality of the foregoing, each
Distributor Agreement shall include terms no less restrictive than
those contained in Sections 2.1.1(iii), 2.1.5, 2.1.11, 2.2, 2.3,
3.2.1, 3.2.3, 3.3, 7, 8 and 9.1 of this Agreement.
3.2.3 End User License Agreements. Neither IDT nor any Distributor shall
sublicense or otherwise distribute any copy of the Netscape Products
or Documentation to End Users except pursuant to a written sublicense
agreement ("End User License Agreement") that (i) contains terms and
conditions not inconsistent with and no less restrictive than the
terms and conditions set forth in Netscape's then-current standard
end user license agreement for the Netscape Products and
Documentation (with IDT or such Distributor as the Licensor
thereunder) and (ii) provides, in 12 point, bold, upper-case type, at
the top of each such agreement and prior to any other text (other
than introductory text regarding acceptance of the agreement), a
legend in substantially the following form:
THE NETSCAPE PRODUCTS AND DOCUMENTATION ARE PROVIDED FOR USE ONLY
(I) WITH THE INTERNET ACCESS OR INTRANET ACCESS SERVICE INITIALLY
OFFERED BY [IDT/DISTRIBUTOR] IN CONJUNCTION WITH THE DISTRIBUTION
OF THE NETSCAPE PRODUCTS AND DOCUMENTATION AND (II) IN ACCORDANCE
WITH THE TERMS OF THIS AGREEMENT. NO RIGHT OR LICENSE IS GRANTED
TO USE THE NETSCAPE PRODUCTS OR DOCUMENTATION WITH ANY OTHER
INTERNET ACCESS OR INTRANET ACCESS SERVICE.
Copies of Netscape's current standard end user license agreement for
the Netscape Products are attached hereto as Attachment C. Upon
delivery by Netscape to IDT of any revised end user license
agreement, IDT and each Distributor shall, as soon as reasonably
practicable, but in any event within ninety (90) days after receipt
thereof from Netscape, use only such End User License Agreements that
have been revised to conform to the terms of this Agreement and such
revised end user license agreement provided by Netscape to IDT;
provided, in the event that the revised end user license agreement is
provided by Netscape to IDT is necessary to comply with or conform to
a modification to or implementation of a governmental law, regulation
or policy or other third party requirement, IDT and each Distributor
will use only such revised End User License Agreement within thirty
(30) days after receipt by IDT of Netscape's revised end user license
agreement.
3.3 Enforcement of Ancillary Agreements. IDT shall use commercially reasonable
efforts to enforce each Distributor Agreement and End User License
Agreement and IDT shall require each Distributor to use commercially
reasonable efforts to enforce each Distributor Agreement and each End User
License Agreement to which such Distributor is a party, in each case, with
at lease the same degree of diligence used by IDT in enforcing similar
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agreements governing others, which in any event shall be that sufficient to
adequately enforce such agreements. IDT shall, and shall require each
Distributor to, use commercially reasonable efforts to protect Netscape's
copyright rights, and IDT shall notify Netscape, and shall require each
Distributor to notify IDT, of any breach of a material obligation under a
Distributor Agreement or an End User License Agreement affecting the
Netscape Products or Documentation. In addition, IDT will cooperate, and
will require each Distributor to cooperate, with any reasonable requests of
Netscape in any legal action to prevent or stop unauthorized use,
reporduction or distribution of the Netscape Products or Documentation.
3.4 Third Party Requirements. In the event that Netscape is required by a third
party software supplier to cease and to cause its licensees to cease
reproduction and distribution of a particular revision of the Netscape
Products, IDT agrees to comply herewith provided Netscape provides IDT with
thirty (30) days prior written notice and further provided Netscape
replaces such affected Netscape Product with a functionally equivalent
Netscape Product as soon as commercially practicable. If Netscape is
unable to provide a functionally equivalent Netscape Product within thirty
(30) days, IDT may continue to distribute the affected Netscape Product
without the code from the third party supplier that required Netscape to
cease reproduction and distribution of such code.
4. FEES AND PAYMENT
4.1 License, Subscription and Major Update Fees. IDT shall pay to Netscape
within thirty (30) days of the Effective Date, the non-refundable prepaid
license and subscription fee for the Navigator shown on Attachment B
(Prepaid Navigator License and Subscription Fee). The Prepaid Navigator
License and Subscription Fee shall be credited against the applicable per
copy license and subscription fees for the Navigator accruing under this
Agreement. Upon exhaustion of the Prepaid Navigator License and
Subscription Fee, IDT shall pay to Netscape, within thirty (30) days of the
date of Netscape's invoice, the applicable per copy license fee,
subscription fee and Major Update fee for the Navigator set forth in
Attachment B for each license granted by IDT to End Users in connection
with the distribution of all or any portion of the Navigator and Major
Updates thereto. IDT shall pay to Netscape, within thirty (30) days of the
date of Netscape's invoice, the applicable per copy license fee,
subscription fee and Major Update fee for the Navigator Gold and Server
Products set forth in Attachment B for each license granted by IDT to End
Users in connection with the distribution of all or any portion of the
Navigator Gold and Server Products, and Major Updates therto. Netscape will
invoice IDT on a quarterly basis (based upon IDT's fiscal quarters) for
accrued but unpaid fees based on IDT's Quarterly Point of Sales Reports
submitted in accordance with Section 4.5 below. Per copy license fees will
accrue in the applicable corresponding quantity upon: (a) the initial date
of IDT's internal use of a Netscape Products; (b) distribution of Navigator
Gold or Server Product to a Distributor or End User; or (c) the date that
an End User of the Navigator first becomes a Registered User, provided that
such Registered User is an Active User on such date. Per copy subscription
fees will accrue in the applicable corresponding quantity upon: (d) the
initial date of IDT's internal use of a Netscape Product if IDT will
provide subscription services for such Netscape Product; (e) distribution
of a Navigator Gold or Server Product to a Distributor or End User if IDT
will provide subscription services for such Navigator Gold or Server
Product; and (f) the date that an End User of the Navigator first becomes a
Registered User, provided that such Registered User is an Active User on
such date if IDT will provide subscription services for such Navigator
product. Per copy Major Update fees will accrue in the applicable
corresponding quantity upon: (g) the initial date of IDT's internal use of
a Major Update of a Netscape Product if IDT has not paid Netscape the
subscription fee for such Netscape Product; (h) the initial date of IDT's
use of a Major Update of a Netscape Product if more than twelve (12) months
have elapsed since the subscription fee for such Netscape Product accrued
hereunder; (i) distribution of a Major Update to a Distributor or End User
if IDT has not paid Netscape the subscription fee for such Netscape
Product; and (i) distribution of a Major Update to a Distributor or End
User if more than twelve (12) months have elapsed since the subscription
fee for such Netscape Product accrued hereunder.
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4.2 Support Fees. IDT shall pay to Netscape the support fees set forth in
Attachment B for the technical support described in Attachment E.
4.3 Enterprise Kit License or Customization Fee. IDT shall pay to Netscape the
amount set forth in Attachment B for either a license to use the Enterprise
Kit, or for Netscape to customize one (1) version of the Navigator LAN.
4.4 Payment and Taxes. All payments shall be made in United States dollars at
Netscape's address as indicated in this Agreement or at such other address
as Netscape may from time to time indicate by proper notice hereunder or by
wire transfer to a bank and account number designated by Netscape. All fees
are exclusive of all taxes, duties or levies, however designated or
computed. IDT shall be responsible for and pay all taxes based upon the
transfer, use or distribution of the Netscape Products, or the program
storage media, or upon payments due under this Agreement including, but not
limited to sales, use, or value-added taxes, duties, withholding taxes and
other assessments now or hereafter imposed on or in connection with this
Agreement or with any sublicense granted hereunder, exclusive of taxes
based upon Netscape's net income. In lieu thereof, IDT shall provide to
Netscape a tax or other levy exemption certificate acceptable to the taxing
or other levying authority. If IDT is required by law to make any deduction
or to withhold from any sum payable to Netscape by IDT hereunder, (i) IDT
shall effect such deduction, or withholding, remit such amounts to the
appropriate taxing authorities and promptly furnish Netscape with tax
receipts evidencing the payments of such amounts, and (ii) the sum payable
by IDT upon which the deduction or withholding is based shall be increased
to the extent necessary to ensure that, after such deduction or
withholding, Netscape receives and retains, free from liability for such
deduction or withholding, a net amount equal to the amount Netscape would
have received and retained in the absence of such required deduction or
withholding. Any past due amount shall bear interest at the rate of one
percent (1%) per month or the maximum rate allowed by applicable law,
whichever is less, until paid in full.
4.5 Quarterly Point of Sale Reports. IDT shall maintain accurate records of End
Users, Registered Users and Active Users, including the information (broken
down by month, Netscape Products type, whether subscription services will
be provided for such Netscape Product and Major Update distributed)
required in the Quarterly Point of Sale Report attached hereto as
Attachment B, and any further relevant information as Netscape may from
time to time reasonably request. Irrespective of the Effective Date, IDT
shall submit Quarterly Point of Sale Reports electronically in ASCII tab or
comma delimited fields format to Netscape on February 10, May 10, August
10, and November 10 of each year for the quarters November through January,
February through April, May through July, and August through October,
respectively.
4.6 Audit of Records. IDT shall maintain, and shall require its Distributors to
maintain, accurate records containing the information (broken down by
month, Netscape Products type, whether subscription services will be
provided for such Netscape Product and Major Updates distributed) required
in the Quarterly Point of Sale Report attached hereto as Attachment B, all
data reasonably required for verification of IDT's and each Distributor's
compliance with the terms of this Agreement, amounts to be paid, the
quantity of Netscape Products and Major Updates distributed by IDT and each
Distributor and the number of End Users, Registered Users and Active Users,
including, without limitation, the version number of each Netscape Product
and Major Update being used by each Registered User and Active User as
determined in accordance with Section 2.1.8, and any further information as
Netscape may from time to time reasonably request. Netscape shall have the
right, during normal business hours, at the location where IDT normally
maintains such records, upon at least five (5) business days prior notice,
to direct its independent auditors, who shall execute an appropriate
nondisclosure agreement mutually acceptable to the parties, to audit and
analyze the relevant records of IDT and its Distributors to verify
compliance with the provisions of this Agreement, but such audit shall
occur no more than twice in any IDT fiscal year. The audit shall be
conducted at Netscape's expense unless there is inadequate record keeping
or the results of such audit establish that inaccuracies in the Quarterly
Point of Sale Reports have resulted in underpayment to Netscape of more
than seven percent (7%) of the amount actually due in any quarter, in which
case IDT shall pay any additional license fees resulting from the audit and
bear the expenses of the audit.
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5. DELIVERABLES
5.1 Navigator Deliverables. Upon receipt by Netscape of the Prepaid License and
Subscription Fee, Netscape shall provide IDT with one (1) gold master of
the release of the Navigator as of the Effective Date (as selected on the
Cover Sheet) and the applicable Documentation as of the Effective Date. If
IDT has selected the Netscape Dial-Up Kit on the Cover Sheet, IDT will also
receive the Configuration Guide. All deliveries under this Agreement shall
be F.C.A. Netscape, California, U.S.A. F.C.A. means Free Carrier Alongside
and shall have the definition set forth in INCOTERMS 1990.
5.2 Navigator Gold, Server Product and Update Deliverables. Netscape shall
provide one (1) gold master and applicable Documentation of the release of
the Navigator Gold and/or Server Product(s) upon receipt of a purchase
order from IDT for same. Netscape shall provide one (1) gold master of each
Update and applicable Documentation to IDT no later than the earliest date
such Update made generally available to other network service providers.
6. SUPPORT
See Attachment D.
7. TRADEMARKS AND TRADE NAMES
IDT shall use, and is hereby granted a non-transferable, non-exclusive and
restricted license, during the term of this Agreement, to use in the Territory
the trademark "Netscape Navigator Included" and those Netscape trademarks and
tradenames relating to the Navigator, Navigator Gold and Server Products in any
advertising, marketing, technical, packaging or other materials related to the
Navigator, Navigator Gold and Server Products which are distributed by IDT in
connection with this Agreement in accordance with Netscape's then current
trademark usage guidelines to be provided and updated by Netscape from time to
time (the "Guidelines"). IDT shall be entitled to sublicense to Distributors the
right to use in the Territory, and shall require each Distributor to use in the
Territory, "Netscape Navigator Included" and those Netscape trademarks and
tradenames relating to the Navigator Gold and Server Products in any
advertising, marketing, technical, packaging or other materials related to the
Navigator, Navigator Gold and Server Products, respectively, which are
distributed by such Distributor hereunder in accordance with the Guidelines.
Other than the use of "Netscape Navigator Included," and those Netscape
trademarks and tradenames relating to the Navigator Gold and Server Products
neither IDT nor any Distributor shall use "Netscape or "Netscape Navigator" or
"Personal Edition" and those Netscape trademarks and tradenames relating to the
Navigator Gold and Server Products in any advertising, marketing collateral
and/or packaging relating to IDT's Product. Neither IDT nor any Distributor
shall use Netscape's trademarks and trade names in any context in which their
connotation is offensive, indecent or inappropriate. IDT will consult with
Netscape as to the placement, context and use of Netscape trademarks and trade
names so that Netscape can help ensure uniformity with their use by Netscape or
third parties. IDT and each Distributor shall clearly indicate Netscape's
ownership of such trademarks or trade names. All such usage shall inure to
Netscape's benefit. IDT agrees not to register and agrees not to permit any
Distributor to register any Netscape trademarks or trade names without
Netscape's express prior written consent. Upon Netscape's request from time to
time IDT agrees to provide Netscape with copies of goods bearing Netscape's
trademarks and trade names so that Netscape can verify that the use and quality
of IDT's and each Distributor's use and quality of such trademarks are
comparable to that of Netscape's use and quality thereof. IDT shall suspend and
shall require each Distributor to suspend use of Netscape trademarks and trade
names if such use or quality is reasonably deemed offensive, indecent,
inappropriate of inferior by Netscape until IDT and any such Distributor has
taken such steps as Netscape may reasonably require to solve to quality
deficiencies.
8. PROPRIETARY RIGHTS
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8.1 Proprietary Rights. Title to and ownership of all copies of the Netscape
Products and Documentation whether in machine-readable or printed form, and
including, without limitation, Derivative Works, compilations, or
collective works thereof and all related technical know-how and all rights
therein (including without limitation rights in patents, copyrights, and
trade secrets applicable thereto), are and shall remain the exclusive
property of Netscape and/or its suppliers. IDT shall not take any action to
jeopardize, limit or interfere in any manner with Netscape's ownership of
and rights with respect to the Netscape Products and Documentation. IDT
shall have only those rights in or to the Netscape Products and
Documentation granted to it pursuant to this Agreement.
8.2 Proprietary Notices
8.2.1 No Alteration of Notices. IDT and its employees and agents shall not,
and IDT shall not allow any Distributor to, remove or alter any
trademark, trade name, copyright, or other proprietary notices,
legends, symbols, or labels appearing on or in copies of the Netscape
Products and Documentation delivered to IDT by Netscape and IDT shall
use and shall require each Distributor to use the same notices,
legends, symbols, or labels, in and on copies of the Netscape
Products and Documentation made pursuant to this Agreement as are
contained in and on the master copy. Notwithstanding the inclusion of
Netscape and its suppliers' trademarks, trade names, copyright or
other proprietary rights notices, legends, symbols or labels
appearing on or in the Netscape Products and/or Documentation, IDT
and its Distributors shall have the right to have their notices,
legends, symbols or logos appear in conjunction with Netscape's
notices, legends, symbols or logos (provided the use and placement of
same are not in conflict with Netscape's logo and trademark
guidelines) when IDT and its distributors distribute the Netscape
Products with IDT Products.
8.2.2 Notice. Each portion of the Netscape Products and Documentation
reproduced by IDT or any Distributor shall include the intellectual
property notice or notices appearing in or on the corresponding
portion of such materials as delivered by Netscape hereunder. IDT
shall ensure that all copies of the Netscape Products made by IDT or
any Distributor pursuant to this Agreement conspicuously display a
notice substantially in the following form:
Copyright (c) 1994 (or other appropriate year) Netscape
Communications Corporation. All Rights Reserved.
If IDT is unsure of the appropriate year(s), it shall consult
Netscape to obtain the correct designation. Such notice shall be on
labels on all media containing the Netscape Products. If the
copyright symbol "(c)" cannot technically be reproduced, IDT or any
Distributor shall use the work "Copyright" followed by the notation
"(c)" in its place.
9. CONFIDENTIAL INFORMATION AND DISCLOSURE
9.1 Confidential Information. The parties agree that all disclosure of
confidential and/or proprietary information relating to this Agreement
shall be governed by the Nondisclosure Agreement identified on the Cover
Sheet.
9.2 Confidentiality of Agreement. Unless required by law, and except to assert
its rights hereunder or for disclosure to its own employees and
Distributors on a need to know basis, IDT agrees not to disclose the terms
of this Agreement or matters relating hereto without the prior written
consent of Netscape, which consent shall not be unreasonably withheld.
10. WARRANTIES
10.1 Limited Warranty. Subject to the limitations set forth in this Agreement,
Netscape warrants only IDT that the Netscape Products when properly
adapted, installed, and used will substantially
IDT pa-693662 -13- Rev. 030496
CONFIDENTIAL
<PAGE>
conform to the functional specifications set forth in the Documentation in
effect when the Netscape Products are shipped to IDT. Netscape's warranty
and obligation shall extend for a period of ninety (90) days ("Warranty
Period") from the date that Netscape first delivers the Netscape Products
to IDT. All warranty claims not made in writing or not received by Netscape
within the Warranty Period shall be deemed waived. Netscape's warranty and
obligation is solely for the benefit of IDT, who has no authority to extend
this warranty to any other person or entity. NETSCAPE MAKES NO WARRANTY
THAT ALL ERRORS OR FAILURES WILL BE CORRECTED.
10.2 EXCLUSIVE WARRANTY. THE EXPRESS WARRANTY SET FORTH IN SECTION 10.1
CONSTITUTES THE ONLY WARRANTY MADE BY NETSCAPE. NETSCAPE MAKES NO OTHER
REPRESENTATION OR WARRANTY, OF ANY KIND WHETHER EXPRESS OR IMPLIED (EITHER
IN FACT OR BY OPERATION OF LAW) WITH RESPECT TO THE NETSCAPE PRODUCTS OR
DOCUMENTATION. NETSCAPE EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY, NONINFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.
NETSCAPE DOES NOT WARRANT THAT THE NETSCAPE PRODUCTS OR DOCUMENTATION ARE
ERROR-FREE OR THAT OPERATION OF THE NETSCAPE PRODUCTS WILL BE SECURE OR
UNINTERRUPTED AND HEREBY DISCLAIMS ANY AND ALL LIABILITY ON ACCOUNT
THEREOF. THE ABOVE LIMITATION SHALL APPLY TO THE EXTENT ALLOWED BY
APPLICABLE LAW.
10.3 Defects Not Covered by Warranties. Netscape shall have no obligations under
the warranty provisions set forth in Section 10.1 if any nonconformance is
caused by: (a) the incorporation, attachment or otherwise engagement of any
attachment, feature, program, or device, other than by Netscape, to the
Netscape Products, or any part thereof; or (b) accident; transportation;
neglect or misuse; alteration, modification, or enhancement of the Netscape
Products other than by, or at the express written direction or with the
prior written consent of, Netscape; failure to provide a suitable
installation environment; use of supplies or materials not meeting
specifications; use of the Netscape Products for other than the specific
purpose for which the Netscape Products is designed; use of the Netscape
Products on any systems other than the specified hardware platform for such
Netscape Products; or IDT's use of defective media or defective duplication
of the Netscape Products; or IDT's failure to incorporate any Update
previously released by Netscape, and made available to IDT under the
provisions of this Agreement which remedies such nonconformance.
10.4 Exclusive Remedy. If IDT finds what it believes to be errors in or a
failure of the Netscape Products that prevents that Netscape Products from
conforming in a material respects to the functional specifications set
forth in the Documentation, and provides Netscape with a written report
thereof during the Warranty Period, Netscape will use reasonable efforts to
correct promptly, at no charge to IDT, any such errors or failures. This is
IDT's sole and exclusive remedy, for breach of any express or implied
warranties hereunder.
11. IMDEMNIFICATION
11.1 Netscape shall defend any action brought against IDT to the extent it is
based on a claim that reproduction or distribution by IDT of the Netscape
Products furnished hereunder within the scope of a license granted
hereunder directly infringes[
]*
Netscape will pay resulting costs, damages and legal fees finally awarded
against IDT in such action which are attributable to such claim provided
that IDT (a) promptly (within twenty (20) days) notifies Netscape in
writing of any such claim and Netscape has sole control of the defense and
all related settlement negotiations, and (b) cooperates with Netscape, at
Netscape's expense, in defending or settling such claim.
11.2 Should a Netscape Products become, or be likely to become in Netscape's
opinion, the subject of infringement of such copyright, patent, trademark
or trade secret, Netscape shall procure for IDT (i) the right to continue
using the same or (ii) replace or modify it to make it non-infringing. In
the event that Netscape shall determine that neither (i) nor (ii) above is
commercially reasonable.
IDT pa-69366.2 -14- Rev. 030496
CONFIDENTIAL
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
Netscape may terminate the licenses for the affected Netscape Product upon
thirty (30) days prior written notice and credit IDT the license fees and
any subscription and/or Major Update fees paid for such affected Netscape
Product as depreciated on a three year straight line basis. Netscape shall
have no liability for any claim based upon: (a) use of other than the then
current, unaltered version of the Netscape Products, unless the infringing
portion is also in the then current, unaltered release, other than
alterations made at the express written direction of Netscape; (b) use,
operation or combination of the Netscape Products with non-Netscape
programs, data, equipment or documentation if such infringement would have
been avoided but for such use, operation or combination; (c) IDT's or its
agents activities after Netscape has notified IDT that Netscape believes
such activities are likely to result in such infringement; (d) compliance
with IDT's specific designs, specifications or instructions, if the
Netscape Products without such designs, specifications or instructions
would be noninfringing; (e) any modifications or marking of the Netscape
Products not specifically authorized in writing by Netscape; (f) IDT's use
of any trademarks other than the Netscape trademarks pursuant to Section 7;
or (g) third party software. The foregoing states the entire liability of
Netscape and the exclusive remedy of IDT with respect to infringement of
any intellectual property rights whether under theory of warranty,
indemnity or otherwise.
11.3 General Indemnification by IDT. IDT agrees to indemnify and hold harmless
Netscape and its suppliers from and against any and all claims, damages,
and costs relating to defective reproduction of or the use of defective
media in the reproduction of Netscape Products.
12. LIMITATION OF LIABILITY
12.1 EXCEPT AS PROVIDED IN SECTION 11, OR FOR A BREACH OF SECTION 2.1.5 OR 8.1,
IN NO EVENT SHALL IDT BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS,
LOSS OF USE OR DATA, INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF NETSCAPE HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE
OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
12.2 EXCEPT AS PROVIDED IN SECTION 11, IN NO EVENT SHALL NETSCAPE OR ITS
SUPPLIERS BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS, LOSS OF USE
OR DATA, INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF NETSCAPE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY. NEITHER NETSCAPE NOT ITS SUPPLIERS SHALL BE
LIABLE FOR ANY CLAIM AGAINST IDT BY ANY END USER OR THIRD PARTY. IN NO
EVENT WILL NETSCAPE OR ITS SUPPLIER BE LIABLE FOR (a) ANY REPRESENTATION OR
WARRANTY MADE TO ANY END USER OR OTHER THIRD PARTY BY IDT, ANY DISTRIBUTOR
OR ANY OF THEIR RESPECTIVE AGENTS; (b) FAILURE OF THE NETSCAPE PRODUCTS TO
PERFORM EXCEPT AS, AND TO THE EXTENT, OTHERWISE EXPRESSLY PROVIDED HEREIN;
(c) FAILURE OF THE NETSCAPE PRODUCTS TO PROVIDE SECURITY; (d) ANY USE OF
THE NETSCAPE PRODUCTS OR THE DOCUMENTATION; OR (e) THE RESULTS OR
INFORMATION OBTAINED OR DECISIONS MADE BY END USERS OF THE NETSCAPE
PRODUCTS OR THE DOCUMENTATION. THE REMEDIES PROVIDED IN THIS AGREEMENT ARE
IDT'S SOLE AND EXCLUSIVE REMEDIES. NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY; NETSCAPE'S ENTIRE LIABILITY TO IDT FOR DAMAGES
CONCERNING PERFORMANCE OR NONPERFORMANCE BY NETSCAPE OR IN ANY WAY RELATED
TO THE SUBJECT MATTER OF THIS AGREEMENT, AND REGARDLESS OF WHETHER THE
CLAIM FOR SUCH DAMAGES IS BASED IN CONTRACT OR IN TORT, SHALL NOT EXCEED
THE AMOUNT RECEIVED BY NETSCAPE FROM IDT DURING THE TWELVE (12) MONTHS
PRIOR TO SUCH CLAIM. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR
LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION
OR EXCLUSION MAY NOT APPLY TO IDT.
IDT pa-69366.2 -15- Rev. 030496
CONFIDENTIAL
<PAGE>
13. TERM OF AGREEMENT
Unless sooner terminated under the provisions of Section 14, or otherwise
rightfully terminated this Agreement shall remain in effect for a period of two
(2) years from the Effective Date.
14. DEFAULT AND TERMINATION
14.1 Termination for Default. If either party defaults in any of its obligations
under this Agreement, the non-defaulting party, at its option shall have
the right to terminate this Agreement by written notice unless, within
sixty (60) calendar days after written notice of such default, the
defaulting party remedies the default, or, in the case of a default which
cannot with due diligence be cured within a period of sixty (60) calendar
days, the defaulting party institutes within the sixty (60) calendar days
steps necessary to remedy the default and thereafter diligently prosecutes
the same to completion. This Agreement may be terminated immediately by
Netscape in the event of any breach of Sections 2.1.5 or 9 hereof.
14.2 Bankruptcy. Either party shall have the right to terminate this Agreement
if the other party ceases to do business in the normal course, becomes or
is declared insolvent or bankrupt, is the subject of any proceeding
relating to its liquidation or insolvency which is not dismissed within
ninety (90) calendar days, or makes an assignment for the benefit of its
creditors.
14.3 Effect on Rights
14.3.1 Termination of this Agreement by either party shall not act as a
waiver of any breach of this Agreement and shall not act as a
release of either party from any liability for breach of such
party's obligations under this Agreement.
14.3.2 Except as specified in Sections 14.4. and 14.5 below, upon
termination or expiration of this Agreement, all licenses for the
Netscape Products and Documentation granted under this Agreement
shall terminate.
14.3.3 Except where otherwise specified, the rights and remedies granted to
a party under this Agreement are cumulative and in addition to, and
not in lieu of, any other rights or remedies which the party may
possess at law or in equity, including without limitation rights or
remedies under applicable patent, copyright, trade secrets, or
proprietary rights laws, rules, or regulations.
14.4 Return or Destruction of Netscape Products. Within thirty (30) calendar
days after termination of this Agreement, IDT shall either deliver to
Netscape or destroy all copies of the Netscape Products and Documentation
(except as provided in Section 14.5) and any other materials provided by
Netscape to IDT hereunder in its possession or under its control, and shall
furnish to Netscape an affidavit signed by an officer of IDT certifying
that to the best of its knowledge, such delivery or destruction has been
fully effected. For purposes of this Section 14.4, copies of the Netscape
Productions, Documentation and other materials in the possession or under
the control of a Distributor shall be deemed to be under the control of
IDT. Notwithstanding the foregoing, in the event that this Agreement is
terminated for any reason other than by Netscape pursuant to Section 14.1
and provided IDT fulfills its obligations specified in this Agreement with
respect to such items, IDT may continue to use and retain copies of the
Netscape Products and Documentation to the extent, but only to the extent,
necessary to support Netscape Products rightfully distributed to End Users
by IDT, directly or indirectly through Distributors, prior to termination
of this Agreement.
14.5 Continuing Obligations
14.5.1 Payment of Accrued Fees. Within thirty (30) calendar days of
termination of this Agreement, IDT shall pay to Netscape all sums
then due and owing. Any other such sums shall subsequently be
promptly paid as they become due and owing.
-16-
<PAGE>
14.5.2 Continuance of Sublicenses. Notwithstanding the termination of this
Agreement, all End User sublicenses which have been properly granted
by IDT or any Distributor pursuant to this Agreement prior to its
termination shall survive.
14.5.3 Other Continuing Obligations. Any termination of this Agreement will
be without prejudice to any other rights or remedies of the parties
under this Agreement or at law or in equity and will not affect any
accrued rights or liabilities of either party at the date of
termination, and the following sections of this Agreement shall
survive any expiration or termination of this Agreement: Sections
2.1.5, 3.3, 4, 8, 9, 10.2, 10.4, 11, 12, 14, and 15.
15. NOVATION
15.1 Prior Agreement. Netscape and IDT, as successor in interest to
International Discount Telecommunications Corporation, a New York
Corporation, are parties to that certain OEM Reseller Agreement dated as of
March 30, 1995 (the "Prior Agreement"), pursuant to which IDT has
distributed certain versions of the Navigator to end user customers.
15.2 Novation. Netscape and IDT each desires to be released and discharged from
the obligations contained in the Prior Agreement, and each has agreed to
release and discharge the other therefrom (except for monies due) on the
condition that each promise the other that it will undertake to perform and
be bound by the terms of this Agreement if the other agrees to release and
discharge such party from the obligations (except for monies due) contained
in the Prior Agreement. At the time of payment of the first invoice based
on IDT's Quarterly Point of Sale Report submitted in accordance with
Section 4.5, IDT covenants that it will have paid a license fee for each
End User under the Prior Agreement.
15.3 End Users and Distributors. All validly licensed End Users and Distributors
under the Prior Agreement shall be deemed End Users and Distributors under
this Agreement, such that there is no interruption in the rights validly
sublicensed by IDT pursuant to the Prior Agreement. Netscape hereby agrees
not to make any claim against any such End User of Distributor resulting
solely from this novation.
15.4 In the first Quarterly Point of Sale Report to be delivered by IDT pursuant
to Section 4.5 hereof, IDT shall include all Registered Users not
previously included in a quarterly royalty report under the Prior
Agreement.
16. GENERAL PROVISIONS
16.1 Notices. Any notice, request, demand, or other communication required or
permitted hereunder shall be in writing and shall be deemed to be properly given
upon the earlier of (a) actual receipt by the addressee or (b) five (5) business
days after deposit in the mail, postage prepaid, when mailed by registered or
certified airmail, return receipt requested, or two (2) business days after
being sent via private industry courier to the respective parties at the
addresses set forth in the Cover Sheet or to such other person or address as the
parties may from time to time designate in a writing delivered pursuant to this
Section 16.1. Notices to Netscape shall be to the attention of: Legal
Department.
16.2 Waiver and Amendment. The waiver by either party of a breach of or a
default under any provision of this Agreement shall not be construed as a waiver
of any subsequent breach of the same or any other provision of the Agreement,
nor shall any delay or omission on the part of either party to exercise or avail
itself of any right or remedy that it has or may have hereunder operate as a
waiver of any right or remedy. No amendment or modification of any provision of
this Agreement shall be effective unless in writing and signed by a duly
authorized signatory of Netscape and IDT.
-17-
<PAGE>
16.3 Assignment. This Agreement and the licenses granted hereunder are to a
specific legal entity or legal person, not including corporate subsidiaries or
affiliates of IDT, and are not assignable by IDT, nor are the obligations
imposed on IDT delegable without the prior written consent of Netscape, which
shall not be unreasonably withheld. Any attempt to sublicense (except as
expressly permitted herein) assign or transfer any of the rights, duties or
obligations under this Agreement in derogation hereof shall be null and void.
16.4 Governing Law. This Agreement is entered into in the State of California
U.S.A., and shall be governed by and construed in accordance with the laws of
the State of California, U.S.A., without reference to its conflicts of law
provisions. Any dispute regarding this Agreement shall be subject to the
exclusive jurisdiction of the California state courts in and for Santa Clara
County, California, U.S.A. (or, if there is exclusive federal jurisdiction, the
United States District Court for the Northern District of California), and the
parties agree to submit to the personal and exclusive jurisdiction and venue of
these courts. This Agreement will not be governed by the United Nations
Convention of Contracts for the International Sale of Goods, the application of
which is hereby expressly excluded.
16.5 Relationship of the Parties. No agency, partnership, joint venture, or
employment is created as a result of this Agreement and neither IDT nor its
agents have any authority of any kind to bind Netscape in any respect
whatsoever.
16.6 Captions and Section Heading. The captions and section and paragraph
headings used in this Agreement are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement.
16.7 Severability. If the application of any provision or provisions of this
Agreement to any particular facts of circumstances shall be held to be invalid
or unenforceable by any court of competent jurisdiction, then (a) the validity
and enforceability of such provision or provisions as applied to any other
particular facts or circumstances and the validity of other provisions of this
Agreement shall not in any way be affected or impaired thereby and (b) such
provision or provisions shall be reformed without further action by the parties
hereto and only to the extent necessary to make such provision or provisions
valid and enforceable when applied to such particular facts and circumstances.
16.8 Force Majeure. Either party shall be excused from any delay or failure in
performance hereunder, except the payment of monies by IDT to Netscape, caused
by reason of any occurrence or contingency beyond its reasonable control,
including but not limited to, acts of God, earthquake, labor disputes and
strikes, riots, war, novelty of product manufacture or other unanticipated
product development problems, and governmental requirements. The obligations and
rights of the party so excused shall be extended on a day-to-day basis for the
period of time equal to that of the underlying cause of the delay.
16.9 Entire Agreement. This Agreement, including the Attachments hereto and any
Nondisclosure Agreement referenced on the Cover Sheet, constitutes the entire
agreement between the parties concerning the subject matter hereof and
supersedes all proposals or prior agreements whether oral or written, and all
communications between the parties relating to the subject matter of this
Agreement and all past courses of dealing or industry custom. The terms and
conditions of this Agreement shall prevail, notwithstanding any variance with
any purchase order or other written instrument submitted by IDT, whether
formally rejected by Netscape.
16.10 English. This Agreement is in the English language only, which language
shall be controlling in all respects, and all versions hereof in any other
language shall not be binding on the parties hereto. All communications and
notices to be made or given pursuant to this Agreement shall be in the English
language. Les parties aux presentes confirment leur volonte que cette convention
de meme que tous les documents y compris tout avis qui siy rattache, solent
rediges en langue anglaise.
16.11 France. If the Territory includes France, IDT acknowledges that under
French law as of the Effective Date, the importation, distribution and/or use in
France of certain Netscape products may not be permitted, and IDT is not relying
upon any such importation, distribution or use in entering into this Agreement
or in fulfillment of its obligations herein.
IDT pa-69366.2 -18- Rev. 030496
CONFIDENTIAL
<PAGE>
16.12 Customer Reference. IDT agrees that Netscape shall have the right to use
IDT's name as a customer reference provided that any Netscape press release
concerning IDT other than as a customer reference shall be subject to IDT's
prior review and approval.
16.13 High Risk Activities. The Netscape Products are not fault-tolerant and are
not designed, manufactured or intended for use or resale as on-line control
equipment in hazardous environments requiring fail-safe performance such as in
the operation of nuclear facilities, aircraft navigation or communication
systems, air traffic control, direct life support machines, or weapons systems,
in which the failure of the Netscape Products could lead directly to death,
personal injury, or severe physical or environmental damage ("High Risk
Activities"). Netscape and its suppliers specifically disclaim any express or
implied warranty of fitness for High Risk Activities.
AUTHORIZED SIGNATURES. In order to bind the parties to this Agreement, their
duly authorized representatives have executed the Cover Sheet to this Agreement.
Ship To Address for Deliverables: Bill to Address:
--------------------------------- ----------------
294 State Street 294 State Street
- ------------------------------------- -------------------------------
Hackensack, NJ 07601 Hackensack, NJ
- ------------------------------------- -------------------------------
Attention: Eric Raab Attention: Howard Balter
- ------------------------------------- -------------------------------
Telephone: 201-928-4487 Telephone: 201-928-4480
- ------------------------------------- -------------------------------
Fax: 201-928-1057
-------------------------------
Netscape Sales Rep: David Rudnitsky
Office Telephone Number: 908-356-4885
or
William C. Ackermann
212-836-4886
IDT pa-69366.2 -19- Rev. 030496
CONFIDENTIAL
<PAGE>
ATTACHMENT A
NETSCAPE PRODUCT DESCRIPTIONS
1. Navigator Products
Netscape Navigator Dial-Up Kit 2.0 for Windows, Win 95 - English and all
available localized versions
Netscape Navigator LAN 2.0 for Windows, Win 95 and Macintosh - English and all
available localized versions.
2. Netscape Navigator Gold 2.0 for Windows, Win 95
3. Server Products
FastTrack 2.0 for Windows NT and UNIX
Enterprise 2.0 for Windows NT and UNIX
Proxy 1.1 for Windows NT and UNIX
News 1.1 for Windows NT and UNIX
Mail 1.1 for Windows NT and UNIX
Catalog 1.1 for Windows NT and UNIX
SuiteSpot 2.0 for Windows NT and UNIX
-20-
IDT pa-69366.2
CONFIDENTIAL
<PAGE>
ATTACHMENT B
PRICING, PAYMENT SCHEDULES AND DELIVERABLES
1. Prepayment for Netscape Products
IDT agrees to pay to Netscape a nonrefundable prepayment against future-owed
license fees and subscription fees for the Navigator equal to One Million Eight
Hundred Thousand dollars ($1,800,000) ("Prepaid Navigator License and
Subscription Fees") due and payable as follows:
[ ]*
All Prepaid Navigator License and Subscription Fees are recoverable at a One
Hundred percent (100%) rate, meaning that for each One dollar ($1.00) of license
and subscription fees due for the Navigator, up to the total of [the One Million
Eight Hundred Thousand dollar ($1,800,000) Prepaid Navigator, License and
Subscription Fees, One dollar ($1.00) is credited to IDT's Prepaid Navigator
License and Subscription Fees.]* After the Prepaid Navigator License and
Subscription Fees are fully depleted, license and subscription fees for the
Navigator will be paid net thirty (30) days in accordance with Section 2 of this
Attachment B and Section 4 of this Agreement.
2. Pricing for Netscape Products. The per copy price is as follows:
<TABLE>
<CAPTION>
OEM Total Per
Volume Qty Per Copy Per Copy Per Copy Maint & Copy Minimum Minimum
Splits License Fee Subscrptn Major Quantity LIC + Initial Order Initial Order
Fee Update Subscrptn Subscrptn Quantity Fee Due
Fee Fee
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Navigator [ ]*
Netscape
Gold 2.0
Server
Prodcuts
- -FastTrack
- -Enterprise
w/
LiveWire
- -Proxy
- -News
- -Mail
- -Catalog
(SuiteSpot
(Any 5
Server
Prodcuts) ]*
</TABLE>
3. Standard Maintenance and Technical Support. IDT agrees to pay to Netscape, in
addition to any license, subscription and Major Update fees set forth above, the
following fee for the standard maintenance
- ----------
(1) The fee in Section 3 below includes support for the first 25 Server
Products. After the 1st 25 Server Products the fee is TBD
-21-
IDT pa-69366.2
CONFIDENTIAL
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
and technical support described in Attachment E for the [
]*. This payment shall be due on the Effective Date and on
the anniversary of the Effective Date. Annual maintenance fees after the first
[ ]*.
4. Subscription Fee. The Subscription fee entitles the End User the right
-----------------
to install any Update that Netscape releases for the applicable Netscape Product
for which a subscription fee has been paid, for 12 months from the date the
license fee for such Netscape Product accrues. Software subscription includes
the Major Update to 3.0 for the Navigator. It also allows End Users to switch
operating system platforms at no additional charge. The subscription fee must be
purchased in conjunction with the license of the Netscape Product. IDT may
license and bundle Netscape Products for use by End Users in conjunction with
IDT's Internet service subscription fee program.
5. Deliverables. One (1) master reproduction copy of each of the Navigator
-------------
and one (1) copy of the applicable Documentation, in any format generally
available from Netscape.
6. Customization or Enterprise Kit License Fee. For the license to use the
--------------------------------------------
Enterprise Kit or the customization described in Attachment F to the Netscape
Navigator LAN version 2.0, IDT shall pay Netscape a license fee of
[ ]*, due and payable on the Effective Date.
7. Ship To Address for Deliverables.
---------------------------------
International Discount Telecommunications Corporation
294 State Street
Hackensack, NJ 07652
Attention: Howard Balter, CFO
Telephone: 201-928-4480
Bill To Address for Deliverables.
---------------------------------
International Discount Telecommunications Corporation
294 State Street
Hackensack, NJ 07652
Attention: Howard Balter, CFO
Telephone: 201-928-4480
8. Technical Contact.
------------------
International Discount Telecommunications Corporation
294 State Street
Hackensack, NJ 07652
Attention: Eric Raab, EVP Technology
Telephone: 201-928-4487
Netscape Sales Rep of Record: David Rudnitsky
Office Telephone Number: 908-356-4885
-23-
IDT pa-69366.2
CONFIDENTIAL
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
or
William C. Ackermann
212-836-4886
-24-
IDT pa-69366.2
CONFIDENTIAL
<PAGE>
ATTACHMENT C
END USER LICENSE AGREEMENTS
ATTACHMENT C-1
NAVIGATOR END USER LICENSE AGREEMENT
BY CLICKING ON THE "ACCEPT" BUTTON, USING THE INTERNET OR CORPORATE (INTRANET)
ACCESS OFFERED BY LICENSOR, OR OPENING THE PACKAGE, YOU ARE CONSENTING TO BE
BOUND BY THIS AGREEMENT. IF YOU DO NOT AGREE TO ALL OF THE TERMS OF THIS
AGREEMENT, CLICK THE "DO NOT ACCEPT" BUTTON AND THE INSTALLATION PROCESS WILL
NOT CONTINUE, DO NOT USE THE INTERNET OR INTRANET ACCESS OFFERED BY LICENSOR, OR
RETURN THE PRODUCT TO THE PLACE OF PURCHASE FOR A FULL REFUND.
THE SOFTWARE AND DOCUMENTATION ARE PROVIDED FOR USE ONLY (I) WITH THE INTERNET
ACCESS OR INTRANET ACCESS SERVICE INITIALLY OFFERED BY LICENSOR IN CONJUNCTION
WITH THE DISTRIBUTION OF THE SOFTWARE AND DOCUMENTATION AND (II) IN ACCORDANCE
WITH THE TERMS OF THIS AGREEMENT. NO RIGHT OR LICENSE IS GRANTED TO USE THE
SOFTWARE OR DOCUMENTATION WITH ANY OTHER INTERNET OR INTRANET ACCESS.
END USER LICENSE AGREEMENT
REDISTRIBUTION NOT PERMITTED
GRANT._____________ ("Licensor") hereby grants to you a non-exclusive license to
use its accompanying software product ("Software") and accompanying
documentation ("Documentation") on the following terms:
You may:
o use the Software only with the Internet service initially offered by
Licensor in conjunction with the distribution of the Software and
Documentation ("Licensor's Internet Services") which it is bundled;
o use the Software on any single computer;
o use the Software on a second computer so long as the first and second
computers are not used simultaneously; or
o copy the Software for archival purposes, provided any copy must
contain all of the original Software's proprietary notices.
You may not:
o use the Software or Documentation in conjunction with any Internet
access or other network service, other than Licensor's Internet
Services;
o permit other individuals to use the Software except under the terms
listed above; modify, translate, reverse engineer, decompile,
disassemble (except to the extent applicable laws specifically
prohibit such restriction), or create derivative works based on the
Software or Documentation;
o copy the Software or Documentation (except for back-up purposes);
o rent, lease, transfer or otherwise transfer rights to the Software or
Documentation; or
o remove any proprietary notices or labels on the Software or
Documentation.
-25-
IDT pa-69366.2
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<PAGE>
SOFTWARE. If you receive your first copy of the Software electronically, and a
second copy on media, the second copy may be used for archival purposes only.
This license does not grant you any right to any enhancement or update.
TITLE. Title, ownership rights, and intellectual property rights in and to the
Software and Documentation shall remain in Licensor and/or its suppliers. The
Software is protected by the copyright laws of the United States and
international copyright treaties. Title, ownership rights, and intellectual
property rights in and to the content accessed through the Software is the
property of the applicable content owner and may be protected by applicable
copyright or other law. This License gives you no rights to such content.
LIMITED WARRANTY. Licensor warrants that for a period of ninety (90) days from
the date of acquisition, the Software, if operated as directed, will
substantially achieve the functionality described in the Documentation. Licensor
does not warrant, however, that your use of the Software will be uninterrupted
or that the operation of the Software will be error free or secure and hereby
disclaims any and all liability on account thereof. In addition, the security
mechanism implemented by the Software has inherent limitations, and you must
determine that the Software sufficiently meets your requirements. Licensor also
warrants that the media containing the Software, if provided by Licensor, is
free from defects in material and workmanship and will so remain for ninety (90)
days from the date you acquired the Software. Licensor's sole liability for any
breach of this warranty shall be, in Licensor's sole discretion: (i) to replace
your defective media; or (ii) to advise you how to achieve substantially the
same functionality with the Software as described in the Documentation through a
procedure different from that set forth in the Documentation; or (iii) if the
above remedies are impracticable, to refund the license fee you paid for the
Software. Repaired, corrected or replaced Software and Documentation shall be
covered by this limited warranty for the period remaining under the warranty
that covered the original Software, or if longer, for thirty (30) days after the
date (a) of shipment to you of the repaired or replaced Software, or (b)
Licensor advised you how to operate the Software so as to achieve the
functionality described in the Documentation. Only if you inform Licensor of
your problem with the Software during the applicable warranty period and provide
evidence of the date you acquired the Software will Licensor be obligated to
honor this warranty. Licensor will use reasonable commercial efforts to repair,
replace, advise or refund pursuant to the foregoing warranty within 30 days of
being so notified.
THIS IS A LIMITED WARRANTY AND IT IS THE ONLY WARRANTY OR CONDITION MADE BY
LICENSOR. LICENSOR MAKES NO OTHER EXPRESS WARRANTY OR CONDITION AND THERE IS NO
WARRANTY OR CONDITION OF NONINFRINGEMENT OF THIRD PARTIES' RIGHTS. THE DURATION
OF IMPLIED WARRANTIES OR CONDITIONS, INCLUDING WITHOUT LIMITATION, WARRANTIES OR
CONDITIONS OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE IS LIMITED
TO THE ABOVE LIMITED WARRANTY PERIOD; SOME STATES DO NOT ALLOW LIMITATIONS ON
HOW LONG AN IMPLIED WARRANTY LASTS, SO LIMITATIONS MAY NOT APPLY TO YOU. NO
DEALER, AGENT OR EMPLOYEE OF LICENSOR IS AUTHORIZED TO MAKE ANY MODIFICATIONS,
EXTENSIONS, OR ADDITIONS TO THIS WARRANTY. NO WARRANTY IS MADE BY OR ON BEHALF
OF ANY SUPPLIER OF LICENSOR. If any modifications are made to the Software by
you during the warranty period; if the media is subjected to accident, abuse, or
improper use; or if you violate the terms of this Agreement, then this warranty
shall immediately be terminated. This warranty shall not apply if the Software
is used on or in conjunction with hardware or Software other than the unmodified
version of hardware and Software with which the Software was designed to be used
as described in the Documentation.
THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS, AND YOU MAY HAVE OTHER LEGAL
RIGHTS THAT VARY FROM STATE TO STATE OR BY JURISDICTION.
LIMITATION OF LIABILITY. UNDER NO CIRCUMSTANCES AND UNDER NO LEGAL THEORY, TORT,
CONTRACT OR OTHERWISE, SHALL LICENSOR OR ITS SUPPLIERS OR RESELLERS BE LIABLE TO
YOU OR ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES OF ANY CHARACTER INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF
GOODWILL, WORK STOPPAGE, COMPUTER FAILURE OR
-26-
IDT pa-69366.2
CONFIDENTIAL
<PAGE>
MALFUNCTION, OR ANY AND ALL OTHER COMMERCIAL DAMAGES OR LOSSES, OF FOR ANY
DAMAGE IN EXCESS OF LICENSOR'S LIST PRICE FOR A LICENSE TO THE SOFTWARE AND
DOCUMENTATION, EVEN IF LICENSOR SHALL HAVE BEEN INFORMED OF THE POSSIBILITY OF
SUCH DAMAGES, OR FOR ANY CLAIM BY ANY OTHER PARTY. THIS LIMITATION OF LIABILITY
SHALL NOT APPLY TO LIABILITY FOR DEATH OR PERSONAL INJURY TO THE EXTENT
APPLICABLE LAW PROHIBITS SUCH LIMITATION. FURTHERMORE, SOME STATES DO NOT ALLOW
THE EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THIS
LIMITATION AND EXCLUSION MAY NOT APPLY TO YOU.
TERMINATION. This license will terminate automatically if you fail to comply
with the limitations described above. On termination, you must destroy all
copies of the Software and Documentation.
EXPORT CONTROLS. None of the Software or underlying information or technology
may be downloaded or otherwise exported or reexported (i) into (or to a national
or resident of) Cuba, Iraq, Libya, North Korea, Yugoslavia, Iran, Syria or any
other country to which the U.S. has embargoed goods; or (ii) to anyone on the
U.S. Treasury Department's list of Specially Designated Nationals or the U.S.
Commerce Department's Table of Denial Orders. By downloading or using the
Software you are agreeing to the foregoing and you are representing and
warranting that you are not located in, under the control of, or a national or
resident of any such country or on any such list.
In addition, if the licensed Software is identified as a not-for-export product
(for example, on the box, media or in the installation process), then the
following applies: EXCEPT FOR EXPORT TO CANADA FOR USE IN CANADA BY CANADIAN
CITIZENS, THE SOFTWARE AND ANY UNDERLYING TECHNOLOGY MAY NOT BE EXPORTED OUTSIDE
THE UNITED STATES OR TO ANY FOREIGN ENTITY OR "FOREIGN PERSON" AS DEFINED BY
U.S. GOVERNMENT REGULATIONS, INCLUDING WITHOUT LIMITATION, ANYONE WHO IS NOT A
CITIZEN, NATIONAL OR LAWFUL PERMANENT RESIDENT OF THE UNITED STATES. BY
DOWNLOADING OR USING THE SOFTWARE, YOU ARE AGREEING TO THE FOREGOING AND YOU ARE
WARRANTING THAT YOU ARE NOT A "FOREIGN PERSON" OR UNDER THE CONTROL OF A FOREIGN
PERSON.
HIGH RISK ACTIVITIES. The Software is not fault-tolerant and is not designed,
manufactured or intended for use or resale as on-line control equipment in
hazardous environments requiring fail-safe performance, such as in the operation
of nuclear facilities, aircraft navigation or communication systems, air traffic
control, direct life support machines, or weapons systems, in which the failure
of the Software could lead directly to death, personal injury, or severe
physical or environmental damage ("High Risk Activities"). Netscape and its
suppliers specifically disclaim any express or implied warranty of fitness for
High Risk Activities.
MISCELLANEOUS. This Agreement represents the complete agreement concerning this
license between the parties and supersedes all prior agreements and
representations between them. It may be amended only by a writing executed by
both parties. THE ACCEPTANCE OF ANY PURCHASE ORDER PLACED BY YOU IS EXPRESSLY
MADE CONDITIONAL ON YOUR ASSENT TO THE TERMS SET FORTH HEREIN, AND NOT THOSE
CONTAINED IN YOUR PURCHASE ORDER. If any provision of this Agreement is held to
be unenforceable for any reason, such provision shall be reformed only to the
extent necessary to make it enforceable. This Agreement shall be governed by and
construed under California law as such law applies to agreements between
California residents entered into and to be performed within California, except
as governed by Federal law. The application of the United Nations Convention of
Contracts for the International Sale of Goods is expressly excluded.
Third Party Beneficiary. Licensor and you each agree that Netscape
Communications Corporation shall, as an intended third party beneficiary of this
Agreement, have the right to rely upon and directly enforce the terms set forth
herein.
-27-
IDT pa-69366.2
CONFIDENTIAL
<PAGE>
U.S. GOVERNMENT RESTRICTED RIGHTS. Use, duplication or disclosure by the
Government is subject to restrictions set forth in subparagraphs (a) through (d)
of the Commercial Computer-Restricted Rights clause at FAR 52.227-19 when
applicable, or in subparagraph (c)(1)(ii) of the Rights in Technical Data and
Computer Software clause at DFARS 252.227-7013, or at 252.211-7015, and in
similar clauses in the NASA FAR Supplement. Contractor/manufacturer is Netscape
Communications Corporation, 501 East Middlefield Road, Mountain View, CA 94043.
-28-
IDT pa-69366.2
CONFIDENTIAL
<PAGE>
ATTACHMENT C-2
SERVER PRODUCT END USER LICENSE AGREEMENT
SEE ATTACHED
-29-
IDT pa-69366.2
CONFIDENTIAL
<PAGE>
AMENDMENT No. ONE TO THE
NETSCAPE COMMUNICATIONS CORPORATION
NETWORK SERVICE PROVIDER DISTRIBUTION AGREEMENT
This Amendment No. One (the "1st Amendment") is entered into, as of June 25,
1996, by and between IDT Internet Services, Inc., a Delaware corporation with
principal offices at 294 State Street, Hackensack, New Jersey 07601 ("IDT") and
Netscape Communications Corporation, a Delaware corporation, with principal
offices at 501 E. Middlefield Road, Mountain View, California 94043
("Netscape").
WHEREAS, the parties have entered into a Network Service Provider Distribution
Agreement executed by IDT on May 16, 1996 (the "Agreement"); and
WHEREAS, the parties wish to modify and supplement the provisions of such
Agreement;
NOW, THEREFORE, the parties in consideration of the terms and conditions herein,
agree as follows:
1.
2. Attachments A and B are replaced with Attachments A and B to this 1st
Amendment.
3. Capitalized terms defined in the Agreement shall have the same meaning in
this 1st Amendment as in the Agreement.
4. Except as expicitly modified, all terms, conditions and provisions of the
Agreement shall continue in full force and effect.
5. In the event of any inconsistency or conflict between the Agreement and
this 1st Amendment, the terms, conditions, and provisions of this Amendment
shall govern and control.
6. This 1st Amendment and the Agreement constitute the entire and exclusive
agreement between the parties with respect to this subject matter. All
previous discussions and agreements with respect to this subject matter are
superseded by the Agreement and this 1st Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this 1st Amendment to be
executed by their duly authorized representatives, effective as of the date of
signature by Netscape ("Effective Date").
IDT INTERNET SERVICES INC. NETSCAPE COMMUNICATIONS CORPORATION
By: /s/ Howard Balter By: /s/ Conway (Todd) Rulon-Miller
- ----------------------------- -----------------------------
Name: Howard Balter Name: Conway (Todd) Rulon-Miller
- ----------------------------- -----------------------------
Title: C.O.O. Title: V.P. Sales
- ----------------------------- -----------------------------
Date: 6/20/96 Date: 6/25/96
- ----------------------------- -----------------------------
6/20/96
CONFIDENTIAL REVIEWED BY NETSCAPE LEGAL
[illegible]
06-25-96A10:11 RCVD Initial: [ILLEGIBLE TEXT]
1
<PAGE>
ATTACHMENT A
NETSCAPE PRODUCT DESCRIPTIONS
1. Navigator Products
Netscape Navigator Dial-Up Kit 2.0 for Windows, Win 95, English and all
currently available localized versions as of the Effective Date.
Netscape Navigator LAN 2.0 for Windows, Win 95 and Macintosh - English and all
currently available localized versions as of the Effective date.
2. Netscape Navigator Gold 2.0 for Windows, Win 95
3. Server Products
FastTrack 2.0 for Windows NT and UNIX
Enterprise 2.0 for Windows NT and UNIX
Proxy 1.1 for Windows NT and UNIX
News 1.1 for Windows NT and UNIX
Mail 1.1 for Windows NT and UNIX
Catalog 1.1 for Windows NT and UNIX
SuiteSpot 1.1 for Windows NT and UNIX
* End Users can switch to any localized versions available during the term of
this Agreement at no additional charge.
2
<PAGE>
ATTACHMENT B
PRICING, PAYMENT SCHEDULES AND DELIVERABLES
1. Payment for Netscape Products
IDT agrees to pay to Netscape a nonrefundable prepayment against future-owed
license fees and subscription fees for the Navigator equal to One Million Eight
Hundred Thousand dollars ($1,800,000) ("Prepaid Navigator License and
Subscription Fees") due and payable as follows:
[
]*
All Prepaid Navigator License and Subscription Fees are recoverable at a One
Hundred percent (100%) rate, meaning that for each One dollar ($1.00) of license
and subscription fees due for Navigator, up to the total of [
]* after
the Prepaid Navigator License and Subscription Fees are fully depleted, license
and subscription fees for the Navigator will be paid net thrity (30) days in
accordance with Section 2 of this Attachment B and Section 4 of this Agreement.
2. Pricing for Netscape Products. The per copy price is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Navigator Volume Qty. Per Copy Per Per OEM Total Minimum Minimum
Splits License Fee Copy Copy Maint Per Copy Initial Order Initial
Subscrp Major &Supt Lic + Quantity Order
tn Fee Update Fee Subscrpt Fee Due
Fee n Fee
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------
Nav. Gold 2.0 [
- ------------------------------
Server Products
---------------
- FastTrack
- Enterprise w/
LiveWire
- Proxy
- News
- Mail
- Catalog
SuiteSpot (any 5
Server Products) ]*
</TABLE>
3. Standard Maintenance and Technical Support. IDT agrees to pay to Netscape, in
addition to any license, subscription and Major Update fees set forth above,
the following fee for the standard
- ----------
1. The fee in Section 3 below includes support for the first 25 Server Products.
After the 1st 25 Server Products the fee is TBD
3
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
maintenance and technical support described in Attachment E for the [
]*
This payment shall be due on the Effective Date and on the anniversary of the
Effective Date. Annual maintenance fees after the first [
]*
4. Subscription Fee. The Subscription fee entitles the End User the right to
install any Update that Netscape releases for the applicable Netscape Product
for which a subscription fee has been paid, for 12 months from the date the
license fee for such Netscape Product accrues. Software subscription includes
all Major Updates released by Netscape during the 12 month subscription period.
It also allows End Users to switch operating system platforms and to switch to
different localized versions available in production at no additional charge.
The subscription fee must be purchased in conjunction with the license of the
Netscape Product. IDT may license and bundles Netscape Products for use by End
Users in conjunction with IDT's Internet service subscription fee program.
5. Deliverables. One (1) master reproduction copy of each of the Navigator and
one (1) copy of the applicable Documentation, in any format generally available
from Netscape.
6. Customization or Enterprise Kit License Fee. For the license to use the
Enterprise Kit or the customization described in Attachment F to the Netscape
Navigator LAN version 2.0, IDT shall pay Netscape a license fee of [ ]* due
and payable on the Effective Date.
7. Ship To Address for Deliverables
International Discount Telecommunications Corporation
294 State Street
Hackensack, NJ 07652
Attention: Howard Balter, CFO
Telephone: 201-928-4480
Bill To Address for Deliverables.
International Discount Telecommunications Corporation
294 State Street
Hackensack, NJ 07652
Attention: Howard Balter, CFO
Telephone: 201-928-4480
8. Technical Contact.
International Discount Telecommunications Corporation
294 State Street
Hackensack, NJ 07652
Attention: Eric Raab, EVP Technology
Telephone: 201-928-4487
4
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
AMENDMENT No. TWO TO THE
NETSCAPE COMMUNICATIONS CORPORATION
NETWORK SERVICE PROVIDER DISTRIBUTION AGREEMENT
This Amendment No. Two (the "2nd Amendment") is entered into, as of June _____,
1996, by and between IDT Internet Services, Inc., a Delaware corporation with
principal offices at 294 State Street, Hackensack, New Jersey 07601 ("IDT") and
Netscape Communications Corporation, a Delaware corporation, with principal
offices at 501 E. Middlefield Road, Mountain View, California 94043
("Netscape").
WHEREAS, the parties have entered into a Network Service provider Distribution
Agreement executed by IDT on May 16, 1996 (the "Agreement"); and
WHEREAS, the parties wish to modify and supplement the provisions of such
Agreement;
NOW, THEREFORE, the parties, in consideration of the terms and conditions
herein, agree as follows:
1. Added as a new language to the end of Section 2.1.1 is: "IDT may also
distribute in the Territory by sublicense the initial copy of the Navigator
to End Users electronically, by on-line distribution from IDT's FTP site
provided, however, that such electronic distribution is only permitted if
such distribution meets all of the following conditions. Electronic on-line
distribution must be directly from IDT and not through Distributors, and
there shall be no electronic distribution to an End User unless; (a) and
until after such End User subscribes to IDT's Product through IDT's
registration server; (b) addressed specifically to such End User; (c) such
distribution is password protected and subject to acceptance of an
electronic version of the End User License Agreement: such distribution is
only made after successful completion of such protection by the End User
and acceptance by the End User of the End User License Agreement; and (e)
such distribution is solely from IDT's FTP site.
2. Notwithstanding anything to the contrary in Section 4.1 of the Agreement,
per copy license fees for each copy of the Navigator that is distributed
electronically by on-line distribution shall accrue immediately upon
distribution/transmission of each copy from IDT's FTP site.
3. Capitalized terms defined in the Agreement shall have the same meaning in
this 1st Amendment as in the Agreement.
4. Except as explicitly modified, all terms, conditions and provisions of the
Agreement shall continue in full force and effect.
5. In the event of any inconsistency or conflict between the Agreement and
this 2nd Amendment, the terms, conditions and provisions of this 2nd
Amendment shall govern and control.
6. This 2nd Amendment, the 1st Amendment and the Agreement constitute the
entire and exclusive agreement between the parties with respect to this
subject matter. All previous discussions and agreements with respect to
this subject matter are superseded by the Agreement, the 1st Amendment and
this 2nd Amendment.
CONFIDENTIAL 1 6/26/96
IDT NSP Amdmt 2 FRT
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this 2nd Amendment to be
executed by their duly authorized representatives, effective as of the date of
signature by Netscape ("Effective Date").
IDT INTERNET SERVICES INC. NETSCAPE COMMUNICATIONS
CORPORATION
By: ___________________________ By: ___________________________
Name: _________________________ Name: _________________________
Title: ________________________ Title: ________________________
Date: _________________________ Date: _________________________
CONFIDENTIAL 6/26/96
IDT NSP Amdmt 2 FRT
<PAGE>
BY OPENING THE PACKAGE OR CLICKING ON THE "ACCEPT" BUTTON, YOU ARE CONSENTING TO
BE BOUND BY AND ARE BECOMING A PARTY TO THIS AGREEMENT. IF YOU DO NOT AGREE TO
ALL OF THE TERMS OF THIS AGREEMENT, CLICK THE "DO NOT ACCEPT" BUTTON OR RETURN
THIS PRODUCT TO THE PLACE OF PURCHASE FOR A FULL REFUND.
SERVER END USER LICENSE AGREEMENT
GRANT. Subject to the provisions contained herein and payment of applicable
license fees, Netscape Communications Corporation ("Netscape") hereby grants to
you a non-exclusive license to use the version(s) of the accompanying
proprietary software product ("Software") and related documentation
("Documentation") for which you have paid Netscape. You may run multiple
instances of the Software on a single computer system. If the Software contains
header files, then Netscape also grants you a license to copy and use the header
files solely to create and distribute programs to interface with the Netscape
Server Application Program Interface. You may not modify the header files.
FEES. A license fee is required for each central processing unit ("CPU")
contained in your computer system. If your computer system contains a
multiprocessor configuration or, if after you have received a single CPU
Software license, you decide to add CPUs to your computer system, you must
upgrade your Software license to a multiple CPU Software license, and pay the
applicable license fee(s) associated with such upgrade. If the Software is
transferred from one computer system to another, additional fees may be due.
ELECTRONIC DISTRIBUTION, ENCRYPTION. If the Software is the Netscape Commerce
Server or the Netscape News Server, then you must obtain a signed digital
certificate from a certification authority in order to utilize their
cryptographic features. A certification authority may charge additional fees for
certification services. Following successful installation of a digital
certificate, your use of the Software's cryptographic features will be enabled.
You are responsible for maintaining the security of the environment in which the
Software is used and the integrity of the private key file used with the
Software.
RESTRICTED USE. The Software is protected by the copyright laws of the United
States and international copyright treaties. You may not copy the Software,
except for backup or archival purposes. Any such copy shall be subject to this
Agreement and shall contain all of Netscape's notices regarding proprietary
rights as contained in the Software Netscape originally provided to you. If you
receive your first copy of the Software electronically and a second copy on
media, the second copy may be used only for backup and archive purposes. This
license does not grant you any right to any enhancement or update to the
Software. Enhancements and updates, if available, may be obtained at Netscape's
then current standard pricing, terms, and conditions. You may not lend, rent,
lease or otherwise transfer the Software.
TITLE. Title, ownership rights, and intellectual property rights in and to the
Software and Documentation shall remain in Netscape and/or its suppliers. This
Agreement does not include the right to sublicense the Software and may not by
assigned (by operation of law of otherwise) or transferred without the prior
written consent of Netscape. You agree not to attempt to decipher, decompile or
disassemble the Software or develop derivative works of the Software or
knowingly allow others to do so, except to the extent applicable laws
specifically prohibit such restriction. You may not modify or create derivative
works of the Software.
CONTENT. Title, ownership rights, and intellectual property rights in and to the
content accessed through the Software is the property of the applicable content
owner and may be protected by applicable copyright or other law. This License
gives you no rights to such content.
LIMITED WARRANTY. Netscape warrants that for a period of ninety (90) days from
the date of acquisition, the Software, if operated as directed, will
substantially achieve the functionality
Commerce/Communication/Proxy/News1.1 1 Rev. 100995
<PAGE>
described in the Documentation. Netscape does not warrant, however, that your
use of the Software will be uninterrupted or that the operation of the Software
will be error-free or secure and hereby disclaims any and all liability on
account thereof. In addition, the security mechanism implemented by the Software
has inherent limitations and you must determine that the software sufficiently
meets your needs. Netscape also warrants that the media containing the Software,
if provided by Netscape, is free from defects in material and workmanship and
will so remain for ninety (90) days from the date you acquire the Software.
Netscape's sole liability for any breach of this warranty shall be, in
Netscape's sole discretion: (i) to replace your defective media; or (ii) to
advise you how to achieve substantially the same functionality with the Software
as described in the Documentation through a procedure different from that set
forth in the Documentation; or (iii) if the above remedies are impracticable, to
refund the license fee you paid for the Software. Repaired, corrected, or
replaced Software and Documentation shall be covered by this limited warranty
for the period remaining under the warranty that covered the original Software,
or if longer, for thirty (30) days after the date (a) of shipment to you of the
repaired or replaced Software, or (b) Netscape advised you how to operate the
Software so as to achieve the functionality described in the Documentation. Only
if you inform Netscape of your problem with the Software during the applicable
warranty period and provide evidence of the date you acquired the Software will
Netscape be obligated to honor this warranty. THIS IS A LIMITED WARRANTY AND IT
IS THE ONLY WARRANTY MADE BY NETSCAPE. NETSCAPE MAKES NO OTHER EXPRESS OR
IMPLIED WARRANTY AND EXPRESSLY DISCLAIMS ALL WARRANTIES OR CONDITIONS OF
NONINFRINGEMENT OF THIRD PARTIES' RIGHTS, OF MERCHANTABILITY AND OF FITNESS FOR
A PARTICULAR PURPOSE. NO NETSCAPE DEALER, AGENT, OR EMPLOYEE IS AUTHORIZED TO
MAKE ANY MODIFICATIONS, EXTENSIONS, OR ADDITIONS TO THIS WARRANTY. If any
modifications are made to the Software by you during the warranty period; if the
media is subjected to accident, abuse, or improper use; or if you violate the
terms of this Agreement, then this warranty shall immediately be terminated.
This warranty shall not apply if the Software is used on or in conjunction with
hardware or programs other than the unmodified version of hardware and programs
with which the Software was designed to be used as described in the
Documentation.
SOME STATES OR JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES,
SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU. THIS WARRANTY GIVES YOU SPECIFIC
LEGAL RIGHTS, AND YOU MAY HAVE OTHER LEGAL RIGHTS THAT VARY FROM STATE TO STATE
OR BY JURISDICTION.
LIMITATION OF LIABILITY. UNDER NO CIRCUMSTANCES AND UNDER NO LEGAL THEORY, TORT,
CONTRACT, OR OTHERWISE, SHALL NETSCAPE OR ITS SUPPLIERS OR RESELLERS BE LIABLE
TO YOU OR ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY CHARACTER INCLUDING, WITHOUT LIMITATION, DAMAGES
FOR LOSS OF GOODWILL, WORK STOPPAGE, COMPUTER FAILURE OR MALFUNCTION, OR ANY AND
ALL OTHER COMMERCIAL DAMAGES OR LOSSES, OR FOR ANY DAMAGES IN EXCESS OF
NETSCAPE'S LIST PRICE FOR A LICENSE TO THE SOFTWARE AND DOCUMENTATION, EVEN IF
NETSCAPE SHALL HAVE BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES, OR FOR ANY
CLAIM BY ANY OTHER PARTY. THIS LIMITATION OF LIABILITY SHALL NOT APPLY TO
LIABILITY FOR DEATH OR PERSONAL INJURY TO THE EXTENT APPLICABLE LAW PROHIBITS
SUCH LIMITATION. FURTHERMORE, SOME STATES AND JURISDICTIONS DO NOT ALLOW THE
LIMITATION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES SO THE ABOVE
LIMITATIONS MAY NOT APPLY TO YOU.
EXPORT. You may not download or otherwise export or reexport the Software or any
underlying information or technology except in full compliance with all United
States and other applicable laws and regulations as follows:
None of the Software or underlying information or technology may be downloaded
or otherwise exported or reexported (i) into (or to a national resident of)
Cuba, Iraq, Libya, Yugoslavia, North
Commerce/Communication/Proxy/News1.1 2 Rev. 100995
<PAGE>
Korea, Iran, Syria or any other country to which the U.S. has embargoed goods;
or (ii) to anyone on the U.S. Treasury Department's list of Specially Designated
Nationals or the U.S. Commerce Department's Table of Denial Orders. By
downloading or using the Software, you are agreeing to the foregoing and you are
representing and warranting that you are not located in, under the control of,
or a national or resident of any such country or on any such list.
In addition, if the licensed Software is identified as a not-for-export product
(for example, on the box, media or in the installation process), then the
following applies: EXCEPT FOR EXPORT TO CANADA FOR USE IN CANADA BY CANADIAN
CITIZENS, THE SOFTWARE AND ANY UNDERLYING TECHNOLOGY MAY NOT BE EXPORTED OUTSIDE
THE UNITED STATES OR TO ANY FOREIGN ENTITY OR "FOREIGN PERSON," AS DEFINED BY
U.S. GOVERNMENT REGULATIONS, INCLUDING WITHOUT LIMITATION, ANYONE WHO IS NOT A
CITIZEN, NATIONAL OR LAWFUL PERMANENT RESIDENT OF THE UNITED STATES. BY
DOWNLOADING OR USING THE SOFTWARE, YOU ARE AGREEING TO THE FOREGOING AND YOU ARE
WARRANTING THAT YOU ARE NOT A "FOREIGN PERSON" OR UNDER THE CONTROL OF A FOREIGN
PERSON.
TERMINATION. Either party may terminate this Agreement immediately in the event
of default by the other party. Upon any termination of this Agreement, you shall
immediately discontinue the use of the Software and shall within ten (10) days
return to Netscape all copies of the Software and Documentation. You may also
terminate the Agreement at any time by destroying the Software and Documentation
and all copies thereof. Your obligations to pay accrued charges and fees shall
survive any termination of this Agreement.
MISCELLANEOUS. This Agreement represents the complete and exclusive statement of
the agreements concerning this license between the parties and supersedes all
prior agreements and representations between them. It may be amended only by a
writing executed by both parties. THE ACCEPTANCE OF ANY PURCHASE ORDER PLACED BY
YOU FOR THE SOFTWARE AND/OR DOCUMENTATION IS EXPRESSLY MADE CONDITIONAL ON YOUR
ASSENT TO THE TERMS AND CONDITIONS SET FORTH HEREIN, AND NOT THOSE CONTAINED IN
YOUR PURCHASE ORDER. If any provision of this Agreement is held to be
unenforceable for any reason, such provision shall be reformed only to the
extent necessary to make it enforceable, and such decision shall not affect the
enforceability (I) of such provision under other circumstances of (ii) of the
remaining provisions hereof under all circumstances. Headings shall not be
considered in interpreting this Agreement. This Agreement shall be governed by
and construed under California law as such law applies to agreements between
California residents entered into and to be performed entirely within
California, except as governed by Federal law. This Agreement will not be
governed by the United Nations Convention of Contracts for the International
Sale of Goods, the application of which is hereby expressly excluded.
U.S. GOVERNMENT RESTRICTED RIGHTS. Use, duplication or disclosure by the
Government is subject to restrictions set forth in subparagraphs (a) through (d)
of the Commercial Computer-Restricted Rights clause at FAR 52.227-19 when
applicable, or in subparagraph (c)(1)(ii) of the Rights in Technical Data and
Computer Software clause at DFARS 252.227-7013, and in similar clauses in the
NASDA FAR Supplement. Contractor/manufacturer is Netscape Communications
Corporation, 501 East Middlefield Road, Mountain View, CA 94043.
Commerce/Communication/Proxy/News1.1 3 Rev. 100995
<PAGE>
ATTACHMENT D
QUARTERLY POINT OF SALE REPORT
Network Service Provider Name and address:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
POS Report Contact Name:
----------------------------------------
POS Report Contact Phone:
----------------------------------------
POS Report Contact e:mail:
----------------------------------------
Report for (check one):
November through January (due February 10)
- -----
February through April (due May 10)
- -----
May through July (due August 10)
- -----
August through October (due November 10)
- -----
<TABLE>
<CAPTION>
Number of Number of
New Registered Products
Users Initially
that have been used Number of
Netscape Quantity/Mo Price/Uni Active Users for internally by Active Users
Month/Year Product# nth t 30 days/Month IDT/Month End of Month
- ---------- -------- ---- - ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
[First ------------ ------------ ------------ ------------ ------------ ------------
Month] ---- ---- ---- ---- ---- ----
[Second ------------ ------------ ------------ ------------ ------------ ------------
Month] ---- ---- ---- ---- ---- ----
[Third ------------ ------------ ------------ ------------ ------------ ------------
Month] ---- ---- ---- ---- ---- ----
</TABLE>
Add columns for: Subscription and No Subscription (must equal total quantity of
Netscape Products licensed) for each Netscape Product and Major Updates
distributed for each Netscape Product
-29-
<PAGE>
ATTACHMENT E
MAINTENANCE AND SUPPORT
1. Maintenance/Minor Updates. In consideration of the maintenance and support
fee set forth in Section 3 of Attachment B, Netscape will provide to IDT any
Minor Updates made generally available during the one (1) year term for which
maintenance and support fees have been paid. IDT and not Netscape will be
responsible for providing Minor Updates to its Distributors and End Users. The
expenses of any such distribution will be paid by IDT [
]* to the extent consistent with policies of both companies. IDT and Netscape
agree to discuss monthly support issues and processes.
2. Technical Support. In consideration of the maintenance and support fee set
forth in Section 3 of Attachment B, Netscape will provide IDT for the one (1)
year term for which maintenance and support fees have been paid with Netscape's
backend technical support services, as further described herein.
a. Back-end Support. Netscape will provide back-end support to IDT for
Program Errors not resolved by IDT pursuant to IDT's support policies and
in accordance with subsection (b) below. This support includes efforts to
identify defective source code and to provide corrections, workarounds
and/or patches to correct Program Errors. Netscape will provide IDT with a
telephone number and an e-mail address which IDT may use to report Program
Errors during Netscape's local California business hours (5am - 5pm Pacific
Standard Time). Netscape will designate one (1) primary and one (1)
alternate technical support representative for IDT. For priority 1 or 2
failures, IDT agrees to notify Netscape via both telephone and e-mail. IDT
will identify two (2) members of its customer support staff and an
alternate to act as the primary technical liaisons responsible for all
communications with Netscape's technical support representatives. Such
liaisons will have sufficient technical expertise, training and/or
experience for IDT to perform its obligations hereunder. Within one (1)
week after the Effective Date, IDT will designate its liaisons.
Notification will be in writing and/or e-mail to Netscape. IDT may
substitute contacts at any time by providing to Netscape one (1) week's
prior written and/or electronic notice thereof.
Netscape will make reasonable efforts to correct significant Program Errors
that IDT identifies, classifies and reports to Netscape and that Netscape
substantiates. Netscape may reclassify Program Errors if it reasonably
believes that IDT's classification is incorrect. IDT will provide
sufficient information to enable Netscape to duplicate the Program Error
before Netscape's response obligations will commence. Netscape will not be
required to correct any Program Error caused by (a) IDT's incorporation or
attachment of a feature, program, or device to the Netscape Products, or
any part thereof; (b) any nonconformance cause by accident, transportation,
neglect, or misuse, or an alteration, modification, or enhancement (except
as permitted by and in accordance with the Enterprise Kit), or the Netscape
Products; (c) the failure to provide a suitable installation environment;
(d) use of the Netscape Products for other than the specific purpose for
which the Netscape Products are designed; (e) use of the Netscape Products
on any systems other than the specified hardware platform for such Netscape
Products; (f) IDT's use of defective media or defective duplication of the
Netscape Products; or (g) IDT's failure to incorporate any Minor Update
previously released by Netscape which corrects such Program Error.
Provided Program Error reports are received by Netscape during Netscape's
local California business hours (5am - 5pm Pacific Standard Time), Netscape
will use its best commercial efforts to communicate with IDT about the
Program Error via telephone or e-mail within the following targeted
response times:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Priority Failure Description Response Time
1 Fatal (no useful work can be done) 10 working hours
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
IDT pa-69666.2 -30- Rev. 030496
CONFIDENTIAL
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
2 Severe Impact (functionally disabled): errors 1 working day
which result in a lack of application functionality or
causes intermittent system failure
- ------------------------------------------------------------------------------------------------------------------------------------
3 Degraded Operations: errors causing malfunction 3 working days
on non-critical functions
- ------------------------------------------------------------------------------------------------------------------------------------
4 Minimal Impact: attributes and/or options to utility Futures release, on
programs do not operate as stated business justifiable basis
- ------------------------------------------------------------------------------------------------------------------------------------
5 Enhancement Request When applicable
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Netscape will use reasonable commercial efforts to resolve each significant
Program Error by providing either a reasonable workaround, and object code
patch, or a specific action plan for how Netscape will address the problem and
an estimate of how long it will take to rectify the defect. Netscape reserves
the right to charge IDT additional fees at its then-standard rates for services
performed in connection with reported Program Errors which are later determined
to have been due to hardware or software not supplied by Netscape.
Notwithstanding the foregoing, Netscape has no obligation to perform services in
connection with Program Errors (i) resulting from hardware or software not
supplied by Netscape; or (ii) which occur in the Netscape Product release which
is not the then-current release.
b. Front-line Support. IDT, and not Netscape, will provide front-line, or first
and second level, technical support to its Distributors and End Users. IDT shall
employ at least two (2) fully trained full time support personnel and provide
support five days a week between 8:00AM to 5:00pm local time. Such support
includes call receipt, entitlement verification, call screening, installation
assistance, problem identification and diagnosis, product defect determination,
efforts to create a repeatable demonstration of the Program Error and, if
applicable, the replacement of any defective media. IDT agrees that any
documentation or packaging distributed by IDT will clearly and conspicuously
state that End Users should call IDT for technical support for the Netscape
Products and shall not reference Netscape in any manner with respect to support.
Netscape will have no obligation to furnish any assistance, information or
documentation with respect to the Netscape Products, to any Distributor or End
User. If Netscape customer support representatives are being contacted by a
significant number of IDT's Distributors or End Users then, upon Netscape's
request, IDT and Netscape will cooperate to minimize such contact. In the event
Netscape is able to identify any End User obtaining front-line support from
Netscape as a customer of IDT, IDT hereby agrees to pay Netscape the then
current charges for such support as set forth in Netscape's price list for End
User support. Netscape shall promptly notify IDT of such charges.
IDT pa-69666.2 -31- Rev. 030496
CONFIDENTIAL
<PAGE>
ATTACHMENT F
NETSCAPE NAVIGATOR CUSTOM PROGRAM REQUEST FORM
See attached
IDT pa-693662 REV 030496
CONFIDENTIAL
<PAGE>
Netscape Confidential
Netscape Navigator Custom Program Request Form
This document is intended to provide a template of what can be customized in
Netscape Navigator 2.0 for Windows.
Please electronically complete this template and return to Catherine Evans for
acceptance and scheduling at [email protected]
Due to differing specification requirements, duration of each customization will
vary. Please contact Cat for an delivery target date.
This document is not a formal contract between the customer and Netscape
Communications Corporation. Netscape Communications Corporation is under no
obligation to complete the requested changes until a contract has been signed by
the customer and Netscape Communications.
Customer Name: __________________________________________________
Customer Address: _______________________________________________
_______________________________________________
_______________________________________________
Customer Phone number: __________________________________________
Customer e-mail address: ________________________________________
Netscape Employee Representing Customer: ________________________
Representatives e-mail: ___________ phone number: _______________
Navigator Version(s) to be customized:
r 2.0 LAN - 16 bit - domestic r 2.0 LAN - 16 bit - export
r 2.0 LAN - 32 bit - domestic r 2.0 LAN - 32 bit - export
Each version customized will be assessed a separate customization fee. Please
speak to your Netscape Representative to discuss fee schedule and contract
details.
****No customization work will begin until a contract is signed****
2.0 Windows v1.4 3/20/96
<PAGE>
Netscape Confidential
[GRAPHIC OF NETSCAPE PREFERENCES MENU SCREEN OMITTED]
Preferences
User Agent: limited to 10 alpha numeric characters "_" and "-" (underscore and
hyphen)
r Netscape to choose
r Customize _ _ _ _ _ _ _ _ _ _
Homepage:
r Leave pointing to Netscape
r Customize
URL: ____________________________________
Auto load Home page?
r Yes (default) r No
Services: specify server name if you'd like it to be locked.
Outgoing Mail (SMTP) Server: _______________________
Incoming Mail (POP) Server: ________________________
News (NNTP) Server: ________________________________
Leave Mail on Server: r Yes (default) r No
User Organization: _______________________________________
This information is used to identify you in email messages and news articles.
Proxy Information:
A network proxy is a conduit between your computer and the internet and is used
to access the internet through a firewall. If you have a direct connection to
the internet you do not need to configure proxies.
r No Proxies
r Manual Proxy Configuration (see below if you'd like to lock-in proxies)
r Automatic Proxy Configuration
Configuration Location (URL): __________________________
Manual Proxy Configuration:
You may configure a proxy and port number for each of the internet protocols
that Netscape supports.
FTP Proxy: ______________________ Port: ______
Gopher Proxy: ___________________ Port: ______
2.0 Windows v1.4 3/20/96
<PAGE>
Netscape Confidential
HTTP Proxy: ________________________ Port: ______
Security Proxy: ____________________ Port: ______
WAIS Proxy: ________________________ Port: ______
SOCKS Host: ________________________ Port: ______
No Proxy for: ______________________
Animation:
[GRAPHIC OF NETSCAPE ANIMATION MENU SCREEN OMITTED]
r Leave Netscape's animation
r Customize (Netscape logo moves to toolbar for co-branding)
-URL: _____________________________________
-A Windows .BMP file of both small AND large version.
Small version is 30x30 pixels
Large version is 48x48 pixels
-Frames stored continuously for each, small and large
(e.g. small, 20 frame = 30x600 pixel BMP file)
-Number of Frames (maximum is 25): _____________
-Use standard Windows 16-color palette, RGB values below
Color 1: 0,0,0 Color 9: 128,128,128
Color 2: 128,0,0 Color 10: 255,0,0
Color 3: 0,128,0 Color 11: 0,255,0
Color 4: 128,128,0 Color 12: 255,255,0
Color 5: 0,0,128 Color 13: 0,0,255
Color 6: 128,0,128 Color 14: 255,0,255
Color 7: 0,128,128 Color 15: 0,255,255
Color 8: 192,192,192 Color 16: 255,255,255
USE MAXIMUM 16 COLORS AND SAVE ANIMATION BMP FILES IN 16 COLORS
2.0 Windows v1.4 3/20/96
<PAGE>
[GRAPHIC OF NETSCAPE DIRECTORY BUTTONS SCREEN OMITTED]
Directory Buttons:
Button1
r Leave pointing to Netscape item: ________________________
r Customize
Label: _________________
URL: ________________________________________________
Button2
r Leave pointing to Netscape item: ________________________
r Customize
Label: _________________
URL: ________________________________________________
Button3
r Leave pointing to Netscape item: ________________________
r Customize
Label: _________________
URL: ________________________________________________
Button4
r Leave pointing to Netscape item: ________________________
r Customize
Label: _________________
URL: ________________________________________________
Button5
r Leave pointing to Netscape item: ________________________
r Customize
Label: _________________
URL: ________________________________________________
Button6
r Leave pointing to Netscape item: ________________________
r Customize
Label: _________________
URL: ________________________________________________
2.0 Windows v1.4 3/20/96
<PAGE>
[GRAPHIC OF NETSCAPE DIRECTORY MENU SCREEN OMITTED]
Directory Menu:
Item1
r Same as Netscape item: ______________________________________
r Separator
r Custom
Label: ___________________ Keyboard Accelerator: ________
URL: ____________________________________________________
Status Bar Text: ________________________________________
Item2
r Same as Netscape item: ______________________________________
r Separator
r Custom
Label: ___________________ Keyboard Accelerator: ________
URL: ____________________________________________________
Status Bar Text: ________________________________________
Item3
r Same as Netscape item: ______________________________________
r Separator
r Custom
Label: ___________________ Keyboard Accelerator: ________
URL: ____________________________________________________
Status Bar Text: ________________________________________
Item4
r Same as Netscape item: ______________________________________
r Separator
r Custom
Label: ___________________ Keyboard Accelerator: ________
URL: ____________________________________________________
Status Bar Text: ________________________________________
2.0 Windows v1.4 3/20/96
<PAGE>
Netscape Confidential Page 6
Item5
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item6
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item7
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item8
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item9
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item10
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item11
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
3/20/96
<PAGE>
Netscape Confidential Page 7
Item12
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item13
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item14
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item15
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Limited to 25 items (item count includes separator bars)
3/20/96
<PAGE>
Netscape Confidential Page 8
[MENU]
Help Menu:
- ----------
Item1: About Netscape... Keyboard Accelerator: A
Item2
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item3
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item4
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
<PAGE>
Netscape Confidential Page 9
Item5
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item6
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item7
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item8
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item9
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item10
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item11
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
3/20/96
<PAGE>
Netscape Confidential Page 10
Item12
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item13
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item14
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Item15
r Same as Netscape item: _____________________________________
r Separator
r Custom
Label: ______________________ Keyboard Accelerator: ____________
URL: ___________________________________________________________
Status Bar Text: _______________________________________________
Limited to 25 items (item count includes separator bars)
3/20/96
<PAGE>
Exhibit 10.14
Access Agreement between PSINet Inc. and the Registrant
Pages where confidential treatment has been requested are stamped 'Confidential
Treatment Requested and the Redacted Material has been separately filed with the
Commission,' and the appropriate section has been marked in the margin with a
star(*).
<PAGE>
ACCESS AGREEMENT
THIS AGREEMENT is made as of June 28, 1996, between PSINet Inc., a corporation
incorporated under the laws of the State of New York and having its principal
place of business at 510 Huntmar Park Drive, Herndon, Virginia 22070 ("PSI"),
and IDT Corporation ("IDT"), a corporation incorporated under the laws of the
State of Delaware and having its principal place of business at 294 State
Street, Hackensack, New Jersey 07601.
W I T N E S S E T H:
WHEREAS, IDT desires to obtain from PSI network access for the benefit of IDT's
individual customers desiring access at speeds up to 28.8 Kbps (hereinafter,
"Customers"); and
WHEREAS, PSI is willing and able to provide such access;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree, intending to be legally bound, as follows:
1. Definitions. The following terms shall have the following meanings for
purposes of this Agreement and for purposes of the Exhibits hereto:
1.1 "Authorized User" shall mean any person authorized by an IDT Customer to
have an account on a Host.
1.2 "Backdoor Connection" shall mean a connection over the Network to any person
who is not an Authorized User.
1.3 "Host" shall mean a computer with a Network address.
1.4 "Network" shall mean the combination of computer hardware, computer software
programs and data transmission facilities operated by PSI which will permit
computers operated by IDT Customers to communicate with computers at remote
locations which are operated by others and to provide access to Internet.
2. Access.
2.1 Provision of Access. Throughout the term of this Agreement, PSI shall
provide IDT's Customers with the right to access at speeds up to 28.8 Kbps and
use its Network at the levels then provided and supported by PSI ("Access"), as
more specifically defined in paragraph 3.1 hereof. A list of points of presence
("POPs") currently maintained by PSI is annexed hereto as Exhibit A. PSI
reserves the right to install new POPs and/or to close existing POPs as it, in
its sole discretion, deems appropriate. In the event PSI deems it necessary to
close an existing POP, PSI shall provide IDT with sixty (60) days written notice
thereof. IDT may order such Access on behalf of its present or future Customers
and there shall be no limit on the number of Customers who may use the Network;
provided, however, that upon 30 days written notice to IDT PSI may refuse
service to a proposed
<PAGE>
IDT Customer because there is insufficient capacity on the Network or in the POP
to provide the Services to such proposed Customer.
2.2 Termination of Access. PSI shall terminate the Access rights of any IDT
Customer as soon as is reasonably practical upon written notice from IDT to do
so or upon mutually agreed upon electronic process with receipt confirmed, but
shall have no liability in connection therewith.
2.3 Authorized Users. IDT may not permit any person or entity other than an
Authorized User to have access to the Network, except with the consent of PSI.
No person may be authorized to use the Network by means of a connection between
a Host owned or leased by a Customer and a Host owned or leased by a person
other than a Customer.
2.4 Local Loop Facilities. Local Loop to PSI's Network shall be the sole
responsibility of IDT and its Customers and PSI shall have no responsibility in
connection therewith.
2.5 Primary Access Provider. During the initial term of this Agreement and any
and all renewal terms, PSI shall be the primary alliance provider of Access for
IDT's Customers, excluding access provided by other providers pursuant to
alliance agreements to which IDT is a party and which are in force prior to the
date of this Agreement. Additionally, IDT may enter into similar alliance
agreements in areas which are not covered by PSI's Network or areas PSI chooses
not to service due to a lack of capacity in accordance with the provisions of
paragraph 2.1 hereof.
2.6 Additional Users. IDT will use its best efforts to increase the number of
users of PSI's Network. Additional Users obtained by IDT shall be entitled to
use the Network through IDT in the same manner and to the same extent as other
IDT Customers.
3. Term. The initial term of this Agreement shall be one (1) year from the date
hereof. This Agreement shall be automatically renewed for successive one-year
terms, unless terminated by either party upon at least ninety (90) days prior
written notice to the expiration of the initial or any renewal term. Either
party may terminate this Agreement at any time during the term of this Agreement
with at least one-hundred eighty (180) days written notice to the other;
provided, however, that neither party may terminate this Agreement during its
initial term except in the event of a material breach by the other party.
4. Charges.
4.1 Base Charge. On the execution of this Agreement, and on the first day of
each month thereafter throughout the term of this Agreement, IDT agrees to pay
PSI for each of IDT's Customers who is then or was at any time during the
immediately preceding month authorized to use PSI's Network a base charge
pursuant to the following schedule:
2
<PAGE>
[ ]*
The applicable base charges above are to be applied to all IDT Customers
irrespective of the rate that previously was applied to each group of
Customers. For example, if there are [ ]* IDT Customers on PSI's Network,
the applicable base charge of [ ]* shall apply to the entire Customer base.
Should the amount of Customers subsequently fall below the threshold, the
applicable base charge shall adjust to the base charge indicated in the above
schedule for such number of Customers. The payment to be made for the initial
month of Access for any IDT Customer shall include (i) an amount equal to the
applicable base charge for such initial month, prorated in the case of a partial
month, and
[Initialed KB]
4.2 Taxes. IDT shall be liable for and shall reimburse PSI for all taxes and
related charges however designated resulting from the transactions contemplated
hereby, including state or local sales or use taxes and excise taxes, imposed in
connection with or arising from the provision of Access. IDT will pay all
surcharges levied in connection with the local loops.
4.3 Invoices. PSI shall invoice IDT monthly in advance for all charges under
this Agreement. All invoices will be payable within seven (7) days of receipt of
invoice. Delinquent payments are subject to a late payment charge at the rate of
prime plus four percent (4%) per month, or portion thereof, of the amount due
(but not to exceed the maximum lawful rate). In the event IDT shall fail to pay
PSI any amount due under this Agreement for a period of 14 days, PSI, in
addition to charging applicable delinquency fees, may discontinue providing
Access to IDT and its Customers upon twenty-four (24) hours prior written notice
to IDT. PSI shall resume providing Access immediately upon receipt of such
payment, and in such event IDT shall pay PSI a reasonable reconnection fee.
4.4 Minimum Commitment. Commencing six (6) months from the date PSI begins to
service IDT Customers on PSI's Network, the minimum monthly revenue to PSI from
IDT for Access provided pursuant to the terms of this Agreement shall be
[ ]* In the event PSI's gross revenues from IDT in any month thereafter
shall be less than the required minimum, IDT, at its discretion, shall either:
(a) remit to PSI an amount equal to the difference between the aforesaid
minimum monthly revenue amount and such gross revenues; or
(b) give PSI the right of first refusal to purchase from IDT all IDT
Customers who receive Access to PSI's Network pursuant to the
3
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
terms of this Agreement at the lower of [ ]*
and (ii) the rate of [ ]* per Customer.
In the event that PSI chooses not to purchase the IDT Customers and IDT chooses
not to remit to PSI the amount stated above in subparagraph (a), PSI shall
continue to service the Customers [ ]* specified in paragraph 4.1 hereof
for a period of sixty (60) days following such failure by IDT to provide the
minimum monthly revenue payment, in order to assure a smooth transition for said
customers.
5. Maintenance Services
5.1 Maintanence of Network. PSI shall keep and maintain its Network in good
condition and repair with a minimum uptime of [ ]*. In the event that PSI fails
to maintain said minimum uptime in any given month, the monthy base charges for
customers affected shall decrease by [ ]* for each full percentage point below
the [ ]* threshold. Additionally, any downtime of [ ]* hours or greater during
any given day, shall result in the same adjustment of the applicable monthly
base charge. The Network shall be properly maintained, serviced and upgraded by
PSI as it, in its sole discretion, shall determine is necessary in order to
ensure connectivity to IDT Customers. PSI shall maintain a user to modem ratio
of no greater that [ ]* for its Network.
5.2 Customer Equipment. PSI shall not be responsible for the installation,
operation or maintenance of any computer equipment or computer software programs
provided by an IDT Customer.
6. WARRANTIES EXCLUDED. PSI MAKES NO WARRANTIES IN CONNECTION WITH ITS NETWORK
OR THE PROVISION OF ACCESS AS CONTEMPLATED HEREIN, WHETHER WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTY OF
MERCHANTIBILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR USE.
IDT'S SOLE AND EXCLUSIVE REMEDY SHALL BE PSI'S OBLIGATION TO GIVE A CREDIT OR
REFUND, AT PSI'S SOLE DISCRETION, BASED ON THE ORIGINAL CHARGE FOR THE SERVICES.
7. LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT
TO THE CONTRARY, THE PARTIES AGREE THAT PSI SHALL IN NO EVENT BE LIABLE TO IDT
OR ANY OTHER PERSON FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL,
RELIANCE, PUNITIVE OR ANY OTHER DAMAGES, OR FOR ANY LOST PROFITS OF ANY KIND OR
NATURE WHATSOEVER, REGARDLESS OF THE FORESEEABILITY THEREOF, ARISING OUT OF THE
PROVISION OF ACCESS OR IN ANY WAY ARISING OUT OF THIS AGREEMENT, WHETHER IN
ACTION ARISING OUT OF BREACH OF CONTRACT, BREACH OF WARRANTY, DELAY, NEGLIGENCE,
STRICT TORT LIABILITY FOR ANY CLAIM OR LOSS, DAMAGE OR EXPENSE FROM ANY CAUSE
WHATSOEVER, EXCEPT FOR PSI'S GROSS NEGLIGENCE, SHALL IN NOT EVENT EXCEED THE
MONIES ACTUALLY PAID TO PSI
4
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
UNDER THIS AGREEMENT BY IDT FOR THE SPECIFIC SERVICES THAT GIVE RISE TO THE
CLAIM. NO ACTION OR PROCEEDING AGAINST PSI MAY BE COMMENCED MORE THAN TWO YEARS
AFTER THE SERVICES ARE RENDERED. THIS CLAUSE SHALL SURVIVE FAILURE OF AN
EXCLUSIVE REMEDY. PSI'S TOTAL LAIBILITY FOR GROSS NEGLIGENCE DURING THE LIFETIME
OF THIS AGREEMENT SHALL IN NO EVENT EXCEED [ ]*
IN THE AGGREGATE.
8. Force Majeure. To the extent provided in this Section 8, PSI shall not be
liable for failure to fulfill its obligations hereunder if such failure is due
to causes beyond its reasonable control, including, without limitation, actions
or failures to act of IDT or any IDT Customer, acts of God, fire, catastrophe,
governmental prohibitions or regulations, viruses which did not result from the
acts or omissions of PSI, its employes or agents, national emergencies,
insurrections, riots or wars, or strikes, lockouts, work stoppages or other
labor difficulties. The time for any performance required hereunder shall be
extended by the delay incurred as a result of such act of force majeure, and PSI
shall act with diligence to correct such force majeure.
9. Indemnification of PSI. IDT shall idemnify and hold harmless PSI and PSI's
directors, officers, employees, agents and advisors from and against any and all
claims of other persons or entities arising out of material, data, information
or other content transmitted by IDT Customers or other acts or omissions IDT
and/or its Customers.
10. Confidential Information.
10.1 Nondisclosure. If either party acquires Confidential Information of the
other, such receiving party shall maintain the confidentiality of the disclosing
party's Confidential Information shall use such Confidential Information only
for the purposes for which it is furnished and shall not reproduce or copy it in
whole or in part, except for use as authorized in the Agreement. Confidential
Information shall mean all information of the disclosing party which it treats
as confidential or proprietary. Confidential Information shall not include
information which is or hereafter becomes generally available to others without
restriction or which is obtained by the receiving party without violating the
disclosing party's rights under this Article 10 or any other obligation of
confidentiality. The terms and conditions of this Agreement shall constitute
Confidential Information.
10.2 Duration. With respect to all Confidential Information, the parties' rights
and obligation under this Article shall remain in full force and effect
following the termination of this Agreement.
10.3 Ownership. All materials and records which consititute Confidential
Information, other than service orders and copies of this Agreement, shall be
and remain the property of, and belong exclusively to, the disclosing Party, and
the receiving party agrees either to surrender possession of and turn over or to
destroy all such Confidential Information which it may possess or control upon
request of the disclosing party or upon the termination of this Agreement.
10.4 Injunctive Relief The parties acknowledge and agree that, in the event of a
breach or threatened breach by any party of any provision of this Article,
5
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission.
<PAGE>
the other party will have no adequate remedy in money or damages and
accordingly, shall be entitled to an injunction against such breach. However, no
specification in this Section of a specific legal or equitable remedy shall be
construed as a waiver or prohibition against any other legal or equitable
remedies in the event of a breach of this Article of this Agreement.
10.5 Legal Obligation to Disclose. Each party shall be released from its
obligations under this Article 10 with respect to information which such party
is required to disclose to others pursuant to obligations imposed by law, rule
or regulation; provided, however, that prior to any such required disclosure,
such party provide written notice and consult with the other party.
11. Miscellaneous.
11.1 No Agency. Except as otherwise expressly provided in this Agreement, this
Agreement does not constitute either party as the agent or legal representative
of the other party and does not create a partnership or joint venture between
the parties. Except as otherwise expressly provided in this Agreement, neither
party shall have any authority to contract for or bind any other party in any
manner whatsoever. This Agreement confers no rights of any kind upon any third
party.
11.2 Governing Law. This Agreement shal be governed in all respects by the laws
of the State of New York without reference to its principles of conflicts of
laws.
11.3 Successors and Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors and assigns of the parties hereto; provided, however, that neither
party may assign its rights hereunder without the prior written consent of the
other, which consent shall not be unreasonably withheld.
11.4 Entire Agreement; Amendment. This Agreement (including all Exhibits)
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by the parties hereto.
11.5 Notices, etc. (a) All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by certified or
registered mail (return receipt requested), express air courier, charges prepaid
or facsimile addressed as follows:
To IDT:
IDT Corporation
294 State Street
Hackensack, New Jersey 07601
Facsimile: (201)928-1057
Attn: Howard Balter, Chief Operating Officer
To PSI:
PSINet Inc.
510 Huntmar Park Drive
Herndon, Virginia 22070
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the
date first above written, and the persons signing warrant that they are duly
authorized to sign for and on behalf of the respective parties.
PSINET INC.
By: /s/ Harold S. Willis
------------------------------
Name: Harold S. Willis
Title: Chief Operating Officer
IDT CORPORATION
By: /s/ Howard Balter
------------------------------
Name: Howard Balter
Title: Chief Operating Officer
8
<PAGE>
Exhibit 10.15:
RESTATED SALES AGREEMENT BETWEEN INTERNATIONAL COMPUTER SYSTEMS, INC. AND THE
REGISTRANT.
PAGES WHERE CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE STAMPED 'CONFIDENTIAL
TREATMENT REQUESTED AND THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE
COMMISSION,' AND THE APPROPRIATE SECTION HAS BEEN MARKED IN THE MARGIN WITH A
STAR (/*/).
<PAGE>
RESTATED SALE AGREEMENT BETWEEN
INTERNATIONAL COMPUTER SYSTEMS, INC.
AND
IDT CORPORATION
This Sale Agreement (the "Agreement") is entered into as of the 29th day of
July, 1996 by and between INTERNATIONAL COMPUTER SYSTEMS, INC., a Louisiana
corporation (hereinafter referred to as "Seller"), represented herein by Gordon
E. Kime, who has been duly authorized by the Board of Directors of Seller, and
IDT CORPORATION, a Delaware corporation (hereinafter referred to as
"Purchaser"), represented herein by Howard Balter, who has been duly authorized
by the Board of Directors of Buyer
WITNESSETH
WHEREAS, the parties hereto entered into an Agreement styled Sale Agreement,
dated July 29, 1996, and desire to restate in its entirety that Agreement; and
WHEREAS, Seller is an Internet service provider doing business under the
trade name of "Linknet" and provides Internet access to customers, including
management of the Internet for its customers and customer support for all
customers of Linknet, throughout the State of Louisiana; and
WHEREAS, Purchaser is an Internet service provider throughout the United
States providing Internet services to its customers, management of the network
and customer support for the customers on its network; and
WHEREAS, Purchaser desires to purchase and seller desires to sell all of
Seller's equipment and other assets comprising the Linknet network; which
equipment is more fully described on Exhibit A attached hereto and incorporated
herein by reference (the "Equipment")
1
<PAGE>
and
NOW THEREFORE, it is mutually agreed as follows:
1.
SALE OF ASSETS
For and in consideration of the Purchase Price, defined below, Seller does
hereby grant, bargain, sell, convey, assign, set over and deliver unto Purchaser
who does hereby accept and purchase for itself, its successors and assigns, and
does hereby acknowledge delivery and possession thereof, all of Seller's
interests in the Equipment and other assets of the seller referenced in Exhibit
A, and all interests, rights and privileges of ownership of the Equipment, to
have and to hold unto said Purchaser, its successors and assigns forever.
2.
CONSIDERATION
As used herein, the term "Purchase Price" shall mean [ ]/*/ Purchaser
shall pay the Purchase Price to Seller follows: [ ]/*/ has already been
paid, with respect to which Seller acknowledges receipt; [ ]/*/ is hereby
paid in cash with respect to which Seller hereby acknowledges receipt, the
balance, to wit [ ]/*/ shall be paid in [ ]/*/ payments due on the
first date of each month commencing October 1, 1996. The [ ]/*/ balance
of the Purchase Price shall bear interest at the rate of [ ]/*/ per annum,
commencing August 1, 1996. The first 6 payments shall be [ ]/*/ in
the following amounts: October 1, 1996 - [ ]/*/; November 1, 1996 -
[ ]/*/; December 1, 1996 - [ ]/*/; January 1, 1997 - [ ]/*/;
February 1, 1997 - [ ]/*/; March 1, 1997 - [ ]/*/. The next
[ ]/*/ payments shall be of interest and principal, each in the amount of
[ ]/*/. The final payment, due on September 1, 2000, shall be in an
amount equal to the sum of all accrued and
2
CONFIDENTIAL TREATMENT REQUESTED AND THE REDACTED MATERIAL
HAS BEEN SEPARATELY FILED WITH THE COMMISSION
<PAGE>
unpaid interest due under this note, all principal due under this note and all
other amounts due under this note. All payments due under the Note shall be made
to Hibernia National Bank in satisfaction of Seller's indebtedness to such bank
until fully repaid and until any security interest Hibernia National Bank may
have in the Equipment is satisfied. ICS directs that the [ ]/*/ be paid
as follows: (i) [ ]/*/ to Bank One Equity Investors, Inc. ("Bank One")
for the purchase by ICS of Bank One's preferred stock in ICS [
]/*/ and (iii) [ ]/*/ to Sullivan, Stolier & Daigle, APLC, as Escrow
Agent, pursuant to the terms of the Escrow Agreement attached hereto as Exhibit
D, and will pay all of the liabilities listed as an attachment to Exhibit D. ICS
will have no other remaining material liabilities except as set forth as Exhibit
E. Except as set forth in Exhibit F, ICS has incurred no other liabilities since
July 29, 1996 which IDT shall assume pursuant to this agreement.
3.
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Seller makes the following representations, warranties and covenants:
i) The Equipment is in good condition and in proper working order, and
is fit for the intended use by Purchaser, to wit: Internet access and service
for its customers, management of the network by Purchaser and customer support
by Purchaser and other uses normally made of such Equipment by a company in the
business of the Seller.
3
CONFIDENTIAL TREATMENT REQUESTED AND THE REDACTED MATERIAL
HAS BEEN SEPARATELY FILED WITH THE COMMISSION
<PAGE>
ii) Other than as set forth on Exhibit B, the Seller has good, clear and
absolute record and marketable title to all of the Equipment sold free and
clear of any and all liens, pledges, encumbrances, charges, rights of first
refusal; transfer restrictions, options, or any similar claim or right,
legal or equitable, or any other such restriction which could interfere with
the possession, use and enjoyment of anything sold pursuant to this
Agreement, and interests of any other person or entity, including without
limitation, tax liens, mortgages, security interests and interests of co-
owners, and that Seller has the ability to transfer good title free of
interests of any person or entity.
iii) The Seller has paid all applicable federal, state, local and other
taxes as of the date of the closing of this transaction and that no taxes are
due and payable as of the date of the closing of this transaction, and that the
Seller has properly filed all required Federal, State or local tax returns. The
property tax on the Equipment due after the date hereof shall be paid by
Purchaser.
iv) The Seller is not involved in any controversy, including without
limitation, lawsuits and settlement negotiations, wherein the Seller's
ownership, right of use, or right of sale of the Equipment and other assets sold
in this transaction are in any doubt whatsoever.
v) The Seller has fully disclosed to the Purchaser the scope of any and
all manufacturers' warranties on the Equipment, which are hereby assigned to
the Purchaser.
vi) The Seller has taken no action to cause the manufacturer warranties
on the equipment to be questioned or eliminated, including without limitation
repairs in a manner other than that authorized by the warranty, and has taken
all actions necessary to cause all
4
<PAGE>
warranties on the Equipment to remain in full force and effect.
vii) The Seller may sell the Equipment and other assets sold in this
transaction without conflicting with, constituting a default under, or breaching
any provision of any agreement, contract, whether oral or written, commitment,
binding arrangement, deed, lease or other instrument to which Seller is a party.
viii) The Seller may sell the Equipment and other assets sold in this
transaction consistent with all applicable Federal, State and local law,
including without limitation, statutes, regulations and court orders.
ix) Other than as set forth on Exhibit B, the Equipment sold in this
transaction are not subject as of the date of the signing of this agreement
nor will they become subject to any material liabilities except those
voluntarily incurred by the Purchaser after the completion of transfer of
title, nor will Purchaser's entering into this agreement give rise to any
liabilities on the part of the Purchaser other than those expressly accepted
by Purchaser under this agreement.
x) Seller is a corporation duly incorporated and in good standing under
the laws of Louisiana and has all requisite power, capacity and authority to
enter into this Agreement. Attached hereto as exhibit C is a copy of a duly
adopted Board resolution authorizing Seller's entering into this Agreement and
acknowledging that this Agreement is a binding and enforceable obligation of
Seller. Seller has full right and authority to enter into this Agreement without
any other governmental or private consent or approval.
xi) Other than as set forth on Exhibit B, neither Purchaser nor the
Equipment are subject, nor will become subject, to any material liabilities
other than those expressly
5
<PAGE>
disclosed herein. This provision applies to liabilities accruing before or
after closing which relate to the period prior to closing.
xiii) No representations or warranties of Seller made in any document,
certificate, exhibit or omit to state a material fact necessary to make any
statement of fact contained herein or therein not misleading. All documents and
other papers delivered in connection hereto are true, complete and authentic.
The foregoing representations, warranties and covenants shall survive
the closing of the transaction hereunder.
Notwithstanding any other provision of this agreement, or any provision of
any other agreement or contract between Purchaser and Seller, the Purchaser
shall have the right to deduct from payments due to the seller under the
promissory note any damages caused by a breach of the above representations,
covenants or warranties, or any other provision of this agreement, and any
representations covenants or warranties provided by applicable state or federal
law; including without limitation UCC Article 2. The Purchaser shall have the
right to withhold sufficient payments to satisify any and all damages suffered
by it including without limitation costs of repair, costs of unpaid taxes, costs
to clear encumbrances, lost profits and attorneys fees, until such time and in
such amount that purchaser's damages have been fully redressed by withheld
funds.
The above right of deduction shall be without prejudice to the right of the
Purchaser to pursue any other remedies, including without limitation, a lawsuit
for breach of contract.
4.
ADDITIONAL UNDERTAKINGS
6
<PAGE>
Seller agrees (i) that Purchaser shall be and hereby is subrogated to all
claims and rights of Seller under any insurance coverage maintained by Seller
against casualty or other damage to any properties or assets of Seller sold to
Purchaser, even if the loss with respect to such properties or assets arises
after the date of this Agreement; (ii) to remit promptly to Purchaser any
insurance proceeds which it may receive on account of any such claim or right;
and (iii) to cooperate with Purchaser in obtaining payment with respect to any
such claim or right.
5.
ASSIGNMENT OF LINES
Effective as of July 29, 1996, Purchaser shall assume all financial
responsibility for all dial up access telephone lines (Bell South) and all
Internet access lines (MCI) used by customers of Seller/Purchaser to access the
Internet. Seller hereby represents that all of its access and telephone lines
are fully assignable without limitation, and hereby assigns and agrees to do all
other acts necessary to assign all access telephone lines.
Seller also warrants that the leases of all premises where such lines are
installed are assignable and will be assigned to Purchaser as of the closing of
this agreement.
6.
COVENANT NOT TO COMPETE
Seller covenants that for three years following the closing date, neither
it nor any of its officers, agents or employees will solicit any of Purchaser's
current or former customers, clients or employees as of the date of this
Agreement. Seller further covenants that, except as provided in paragraph l of
the Royalty Agreement, for three years following the closing of this agreement
7
<PAGE>
it will not attempt to solicit potential Internet service customers in the
state of Louisiana. Seller's undersigned officers and directors personally
accept the obligation imposed by this paragraph as evidenced by their signatures
at the end of this Agreement. Any breach of this paragraph by Seller or any of
its officers or directors, whether material or not, shall be considered a breach
of all agreements between the parties.
7.
INDEMNIFICATION
Without limiting its obligations and liabilities to Purchaser under this
agreement and applicable laws, Seller and the undersigned officers and directors
of Seller agree to jointly and severally indemnify Purchaser against and to hold
Purchaser harmless from any and all losses, liabilities, damages, demands,
claims, assertions, actions and suits, whether groundless or otherwise, and all
costs and expenses, including reasonable attorneys fees, from or in connection
with:
(a) Any claim made against Purchaser in respect of liabilities of
Seller not
(b) Any breach of representations, covenant or warranty or incorrect
or this or other agreements between Seller and Purchaser.
8.
GOVERNING LAW
This Agreement shall be governed by the laws of the State of Louisiana. Any
dispute arising out of this agreement shall be resolved by binding arbitration
before the American Arbitration Association, to be held in New York City.
8
<PAGE>
9.
MISCELLANEOUS
This Agreement may be executed in any number of counterparts, each of which
shall be an original and all of which shall together constitute one agreement.
If any covenant, warranty or representation made by the Seller in this
Agreement is not correct, the Seller will be deemed to have defaulted under this
Agreement, granting to the Purchaser all the rights and remedies provided
herein.
To the extent that this Agreement conflicts with any agreement entered into
prior to the signing of this Agreement, this Agreement shall control with
respect to matters covered herein.
Purchaser shall not be obligated to assume or become liable for any
liabilities, obligations, debts, contracts, or commitments of Seller, including
any future liability relating to the period prior to closing, of any kind
whatsoever, including, without limitation, liabilities of Seller under express
or implied warranties for the replacement, repair or reworking of products or
services sold by Seller, except as otherwise provided for in this Agreement.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
Each of the parties hereto shall pay its own expenses incident to the
preparation and carrying out of this Agreement and the transactions contemplated
hereby. No provision of this Agreement shall be construed against or interpreted
to the disadvantage of any party by reason of such party having or being deemed
to have drafted such provision.
9
<PAGE>
IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement on
October 14, 1996 effective as of the day and year first written above.
WITNESSES: INTERNATIONAL COMPUTER SYSTEMS, INC.
BY:
- -------------------------- -----------------------------------
- --------------------------
IDT CORPORATION
BY:
- -------------------------- -----------------------------------
- --------------------------
APPROVED AND ACCEPTED BY:
/s/ Gordon Kime
-----------------------------------
Gordon Kime
/s/
-----------------------------------
[Linknet Officer]
/s/
-----------------------------------
[Linknet Officer]
/s/
-----------------------------------
[Linknet Officer]
10
<PAGE>
ADDENDUM TO SALE AND ROYALTY AGREEMENTS BETWEEN
ICS AND IDT, DATED AS OF 7/31/96
ICS hereby acknowledges that it is liable to hold IDT harmless and
to indemnify IDT with respect to any and all of ICS' indebtedness to Hibernia
National Bank, which indebtedness encumbers the Equipment purchased by IDT.
Accordingly, ICS agrees that IDT may pay directly to Hibernia revenues otherwise
payable to ICS pursuant to the Royalty Agreement in sufficient amounts so that
by the termination date of the Royalty Agreement, the scheduled payments due
under the Note by IDT to ICS dated October 14, 1996, will be sufficient to
satisfy all remaining scheduled payments due at that time to Hibernia.
Notwithstanding the law applicable to the other agreements among the
parties, this Addendum shall be governed pursuant to the laws of the State of
New York.
Dated: October 14, 1996
Accepted:
International Computer Systems, Inc.
By: Gordon E. Kime
/s/ Gordon E. Kime
11
<PAGE>
Exhibit A to Sale Agreement
Current Network Equipment Cost
Description Type Units Retail Deprec Selling
- --------------------------------------------------------------------------------
Alpha 2100 System 1 [
Alpha 1000 System 1
Alpha 1000 System 1
Alpha 200/166 System 1
Alpha 150 System 1
DEC Dual P120 System 1
Alpha 266 System 2
Pentium 100 System 1
Pentium 100 System 1
DEC P75 System 5
DEC 486/66 System 2
DEC P133 System 2
DEC P100 System 1
SUBTOTAL
Cisco 2501 Router 3
Cisco 4000M Router 2
Cisco 4000M Router 5
Vanguard Router 2
Vanguard 300 Router 2
Livingston Route Router 1
Cisco FDDI Router 5
Cisco Cables Router 9
SUBTOTAL
Micom 10K CSU 5
Micom 5K CSU 7
Micom 10K CSU 1
TSU 600 CSU 2
TSU 100 CSU 5
Motorola CSU CSU 8
Datacom 56K CSU 1
Motorola FDP CSU 13
SUBTOTAL
Pipeline 400 ISDN 6
NT1 ACE ISDN 29
Pipeline 50 ISDN 1
Pipeline 25 ISDN 1
Bitsurfer Pro ISDN 2
Bitsurfer Central ISDN 2
Xircom ISDN ISDN 1
SUBTOTAL
925 Modem Modem 495
925 LIU Modem 15
925 SMC Modem 20
925 Power Sup Modem 15
Multitech 2834M Modem 11 ]/*/
Page 1
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
Current Network Equipment Cost
Description Type Units Retail Deprec Selling
- --------------------------------------------------------------------------------
SUBTOTAL
925 Shiva Term Serv 52 [
900 GM Term Serv 9
Digiboard EISA Term Serv 1
Liv Portmaster Term Serv 2
Liv Portmaster2E Term Serv 1
SUBTOTAL
DEC 900MX Networking 8
DEC 900MS Networking 9
DEC 900EF Networking 1
DEC 900TX Networking 1
DEC 900TM Networking 1
DEC 90T Networking 12
DEChub PS Networking 23
DEChub 1 Networking 3
Asante Hub Networking 1
Asante Hub Networking 1
DEC FDDI Networking 2
DEC FDDI Mods Networking 9
SUBTOTAL
VT420 TERM Misc. 2
Toshiba NB Misc. 2
APC 900 Misc. 9
APC 1400 Misc. 11
APC 2000 Misc. 2
DecLaser 1152 Misc. 1
Tool Kits Misc. 2
Blue Racks Misc. 8
Black Racks Misc. 9
Grey Racks Misc. 1
Patch Panels Misc. 7
SUBTOTAL
Net Comm Srv Software 1
Dec Mailwrk Software 1
Net Comm Srv Software 2
Net Comm Srv Software 1
OSF Unlim Software 3
OSF Docs Software 3
OSF Libs Software 3
SNMP Manag Software 1
PM2 Src Software 1
QR Bbinet Software 1
SysDraw Software 2
Post Office Software 1 ]/*/
Page 2
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
Current Network Equipment Cost
Description Type Units Retail Deprec Selling
- --------------------------------------------------------------------------------
SUBTOTAL
Salaries/Labor Labor 1 [
Salaries/Prog Labor 1
Salaries/Train Labor 1
SUBTOTAL
DEC AlphaSrv Consulting 1
DEC Remote Mg Consulting 1
DEC Kerberos Consulting 1
DEC Tech Supp Consulting 1
DEC Tech Supp Consulting 1
Oth Tech Supp Consulting 1
Oth Tech Supp Consulting 1
Oth Tech Supp Consulting 1
Oth Tech Supp Consulting 1
Oth Tech Supp Consulting 1
SUBTOTAL
Phone Install Install 1
Cable Install Install 1
T1 Install Install 1
Oth Install Install 1
Bell Backbone Install 1
Bell Backbone Install 1
Bell Phone Liines Install 1
MCI Install Install 1
SUBTOTAL
Cisco Smartnet Warranty 7
DEC Uplift Warranty 1
DEC Uplift Warranty 1 ]/*/
SUBTOTAL
GRAND TOTAL
Page 3
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
Exhibit B to Sale Agreement
Exceptions to Warranties
Hibernia National Bank loans to ICS in the original amount of approximately
$900,000, with a current balance of approximately $825,000, which loans are
secured, in part, by a security interest in the Equipment, the financing
statements for which were filed on April 27, 1995 (file #40-020753) and October
16, 1995 (file #40-022836).
<PAGE>
Exhibit C to Sale Agreement
CERTIFIED RESOLUTIONS OF
THE BOARD OF DIRECTORS OF
INTERNATIONAL COMPUTER SYSTEMS, INC.
------------------------------------
RESOLVED, that this corporation, through Gordon Kime, its President and
Chief Technical Officer, enter into the following agreements (and/or issue the
following documents):
1. Sale Agreement between this corporation and IDT Corporation ("IDT") dated
July 29, 1996, a copy of which is attached hereto.
2. Restated Sale Agreement between this corporation and IDT dated July 29,
1996, a copy of which is attached hereto.
3. Usage Agreement between this corporation and IDT dated July 29,
1996, a copy of which is attached hereto.
4. Royalty Agreement between this corporation and IDT dated July 29,
1996, a copy of which is attached hereto.
5. Consultant and Customer Support Agreement between this corporation and
IDT dated July 29, 1996, a copy of which is attached hereto.
6. Restated Consultant and Customer Support Agreement between this corporation
and IDT dated July 29, 1996, a copy of which is attached hereto.
7. Escrow Agreement between this corporation and IDT.
(hereinafter referred to as the "IDT Documents")
on such terms and conditions as Gordon Kime, President and Chief Technical
Officer of this corporation, deems desirable or beneficial to this corporation.
FURTHER RESOLVED, that Gordon Kime, President and Chief Technical Officer
of this corporation, is authorized to execute (and/or issue) the IDT Documents
on behalf of this corporation and to take any and all such further action and
execute any and all such additional documents to effectuate the purposes of the
IDT Documents as Gordon Kime, President and Chief Technical Officer of this
corporation, may determine to be appropriate.
FURTHER RESOLVED, that any action authorized by these resolutions which has
already taken place is hereby ratified, affirmed and approved.
I, the undersigned secretary of International Computer Systems, Inc.,
hereby certify that the foregoing is an extract of the resolutions duly adopted
by the Board of Directors of International Computer Systems, Inc. at a meeting
held on the 29th day of July, 1996, and the same have not been revoked, modified
or amended.
Date: Oct. 10, 1996 /s/
--------------------------------------
Secretary, International Computer
Systems, Inc.
<PAGE>
EXHIBIT D
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is made on this 30th day of
September, 1995, by and among, Sullivan, Stolier & Daigle, APLC ("Escrow
Agent"), International Computer Systems, Inc. ("ICS"), and IDT Corporation
("IDT").
WHEREAS, concurrently herewith, ICS has sold certain equipment (the
"Equipment") to IDT for [ ]* of which has already been paid,
[ ]* of which is to be paid, and [ ]* of which is to be paid
concurrently herewith.
WHEREAS, in connection with the sale of the Equipment, Bank One is lending to
IDT [ ]* of which would otherwise be payable to ICS and
[ ]* of which would otherwise be payable to IDT.
WHEREAS, IDT currently owes ICS $13,160.97 for services and goods provided by
ICS to IDT, as more fully described on Schedule 1 attached hereto and
incorporated herein by reference.
WHEREAS, IDT desires that Bank One pay to ICS the amount currently owed by
IDT to ICS ($13,160.97) and that Bank One pay to IDT the balance of the loan
proceeds otherwise payable to IDT, [ ]* - $13,160.97).
WHEREAS, pursuant to the Sale Agreement between ICS and IDT (the "Sale
Agreement"), [ ]* of the sale proceeds are being retained by Bank One
for payment of amounts owed by ICS to Bank One in connection with the redemption
by ICS of ICS preferred stock owned by Bank One.
WHEREAS, IDT desires that the amounts payable to ICS, [
]* + $13,160.97 - [ ]* be paid to the Escrow Agent to
be disbursed by the Escrow Agent as set forth herein.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereto agree as follows:
1. Payment of Funds to Escrow Agent and IDT
IDT shall cause Bank One to pay to Escrow Agent [
]* Dollars (the
"Funds") by wire transfer of readily available funds to the following banking
coordinates:
First National Bank of Commerce
New Orleans, Louisiana
Confidential Treatment Requested
and the Redacted Material has been separately filed with the Commission.
ABA Routing No.: 065000029,
For credit to the account of:
Sullivan, Stolier & Daigle, APLC, Trust Account
Acct. No.: 1101 78874
2. Escrow Agent to Disburse Funds
Escrow Agent shall disburse the Funds as set forth in Schedule 2 attached
hereto and incorporated herein by reference.
3. Dispute
In the event of any dispute with respect to the disposition of all or part
of the Funds, the Escrow Agent shall commence an action in the nature of
interpleader (either in state district court, federal district court, or
bankruptcy court) and shall seek to deposit the disputed portion of the Funds in
such court. In the event the Escrow Agent incurs any expenses incident to such
legal proceedings, including court costs and attorney's fees, the Escrow Agent
shall be reimbursed for such expenses out of the Funds.
4. No Liability of Escrow Agent
The Escrow Agent shall not be liable for any acts or omissions of any kind
unless occasioned by the Escrow Agent's own negligence or willful misconduct.
Further, Escrow Agent shall not be responsible for any loss or damage to the
Funds by virtue of the failure or closure of the bank or any financial
institution in which the Funds may from time to time be deposited by Escrow
Agent. Escrow Agent shall have no liability to pay any amount in excess of the
portion of the Funds then held by Escrow Agent.
5. Amendment to Schedule 2
Schedule 2 may be amended by the parties, provided, however, that such
amendment will have not effected the obligations of the Escrow Agent hereunder
with respect to any disbursement made before the Escrow Agent received actual
notice of such amendment and provided further that any such amendment must be
executed by all parties hereto.
-2-
<PAGE>
6. Cooperation
The parties hereto shall execute and deliver such further documents and
do such further acts and things as shall be necessary to effectuate the
purposes of this Agreement.
7. Choice of Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Louisiana, applicable to contracts made and to be performed
wholly within such state.
8. Interpretation
No provision of this Agreement shall be construed against or interpreted
to the disadvantage of any party by any court or other governmental, judicial or
arbitral authority by reason of such party having or being deemed to have
drafted, devised or imposed such provision.
9. Attorney's Fees
In the event of any litigation by any party against another party to
this Agreement to enforce any provision of this Agreement, the prevailing party,
in addition to all other relief, will be entitled to reasonable attorney's fees
and costs.
10. Headings and Captions
Headings and captions are intended solely for convenience of reference
and shall not constitute a part of this Agreement nor shall they affect its
meaning, construction or effect.
11. Invalidity of Part
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement
12. Counterparts
-3-
This Agreement may be executed in any number of counterparts, each of
which shall be an original and all of which shall together constitute one
agreement.
-4-
13. No Waiver
No delay on the part of a party in the exercise of any right or remedy
shall operate as a waiver thereof and no single or partial exercise by a party
of any right or remedy shall preclude other or further exercise thereof, or the
exercise of any other right or remedy.
14. Entire Agreement
This Agreement and the documents contemplated hereby contain the entire
agreement of the parties with respect to the subject matter hereof.
15. Amendment
This Agreement may not be changed orally, but only by an agreement in
writing, signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
WITNESSES Sullivan, Stolier & Daigle, APLC
- ------------------------ ---------------------------------------
By: Daniel J. Daigle
Its: Treasurer
- ------------------------ IDT Corporation
/s/
---------------------------------------
By:
Its:
International Computer Systems, Inc.
/s/ Gordon E. Kime
---------------------------------------
By: GORDON E. KIME
Its: PRESIDENT
-5-
<PAGE>
Invoice # Description Amount
- ----------------------------------------------------------------------
Consulting Services
1001 Consulting Services 7/15/96 to 8/15/96 $32,083.00
1006 Revised Consulting Services 8/16/96 to 8/31/96 $16,041.50
1008 Consulting Services 9/1/96 to 9/30/96 $32,083.00
----------
Total Consulting Services $80,207.50
Customer Support
1002 Customer Support 7/15/96 to 7/31/96 $815.50
1007 Customer Support 8/1/96 to 8/31/96 $1,627.00
---------
Total Customer Support $2,442.50
Miscellaneous
1004 Excess programming hours (20 @ $75) $1,500.00
1003 Reimbursement of Travel Expenses $7,852.77
1005 Sale of Giga Switches, etc. $51,158.20
----------
Total Miscellaneous $60,510.97
Total Owed on Above Referenced Invoices $143,160.97
Less Credit for Advance Payment ($100,000.00)
Less Credit for Consulting Services ($30,000.00)
Amount Currently Due $13,160.97
Page 1
<PAGE>
Schedule 2 to Escrow Agreement
Name Amount
----------------------------------------------------------------
Bell South $250,188.00
Department of Revenue $12,276.41
Dexon Computer $47,632.00
Digital Equipment $204,192.33
England Development District $18,034.16
First Stop Commuters $39,927.55
The Graham Group $169,220.32
Hibernia - P/R taxes $85,739.59
Gordon Kime $12,207.72
La. Department of Labor $10,690.14
Robert Laurents $20,192.34
MCI Telecommunications $49,982.39
Motorola, Inc. $154,759.36
Tomba Communications $34,708.00
Bell South Equipment Leasing $16,500.66
Accrued Payroll - Employees $15,000.00
Corporate Income Taxes $20,000.00
KALB TV $1,910.00
-------------
TOTAL $1,163,160.97
<PAGE>
Exhibit E to Sale Agreement
Liabilities After Close
All creditors in the amount set forth on the attached
11 page listing of creditors entitled "ICS, INC. d/b/a
Linknet Internet Services - Aged Open Income Summary"
with exception to those creditors being paid pursuant
to the Escrow Agreement and listed on Schedule 2
to the Escrow Agreement. $374,097.26
Security National Bank $499,000.00
Hibernia National Bank $825,000.00
Amounts Due Stockholders $492,973.63
Total $2,191,070.89
Page 1
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor=balance
Contact-1 Terms Put-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
A1100 A-1 KEY AND LOCK CO 30.00
NET 20 .00
318-448-3319 3010-000 30.00
TRADE ACCOUNTS PAYABLE 8/02/06
AB1100 ASITA SPRINGS WATER CO 45.02
NET 30 DAYS .00
3010-000 45.02
TRADE ACCOUNTS PAYABLE 7/31/96
ADA100 AGAME AND ????? 7,440.12
NET 30 .00
2010-000 7,440.12
TRADE ACCOUNTS PAYABLE 9/06/94
ALS100 CITY OF ALEXANDRIA 51.25
NET 15 .00
3010-000 51.25
TRADE ACCOUNTS PAYABLE 7/31/96
ALE101 ALEXANDRIA TOWN TALK 537.84
NET 10 .00
2010-000 537.84
TRADE ACCOUNTS PAYABLE 8/32/96
AMS100 AMSTERDAM PRINTERS 55.53
NET 10 DAYS .00
800-543-6882 2010-000 55.53
TRADE ACCOUNTS PAYABLE 6/24/96
AM010 ANDREWS MANAGEMENT 500.00
.00
2010-000 500.00
TRADE ACCOUNTS PAYABLE 9/01/96
AMI100 ANIXTRA, INC 27,019.86
NET 20 .00
404-921-3732 2010-000 27,019.86
TRADE ACCOUNTS PAYABLE 7/31/96
ARR100 ARROW ELECTRONICS 10,543.21
NET 30 .00
800-477-2740 2010-000 10,543,21
TRADE ACCOUNTS PAYABLE 3/26/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor-balance
Contact-1 Terms Put-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
ATT100 AT&T 91.97
NET 15 .00
2010-000 91.97
TRADE ACCOUNTS PAYABLE 7/12/96
BIL100 BELL SOUTH 256,174.36
NET 10 .00
2010-000 256,174.36
TRADE ACCOUNTS PAYABLE 8/30/96
BEL101 BERE EQUIPMENT LEASING 24,500.66
NET 300 .00
800-633-3960 3010-000 16,500.66
TRADE ACCOUNTS PAYABLE 9/01/96
BEL103 BELLSOUTH COMMUNIC SYSTEM 1,203.40
NET 30 .00
800-934-3552 2010-000 1,303.40
TRADE ACCOUNTS PAYABLE 6/23/96
BUG100 BUG INDUSTRIES 5,884.45
NET 30 .00
316-946-3200 2010-000 5,884.45
316-981-4015 TRADE ACCOUNTS PAYABLE 9/29/96
CEL100 CELLULAR ONE 253.67
NET 15 .00
315-447-5500 3010-000 253.67
TRADE ACCOUNTS PAYABLE 8/30/96
CEN102 CENTURY TELEPHONE 3,309.46
NET 30 .00
800-466-2661 2010-000 3,309.46
TRADE ACCOUNTS PAYABLE 9/01/96
CLE100 CLECO 75.07
NET 10 .00
800-622-6837 3010-000 76.07
TRADE ACCOUNTS PAYABLE 9/05/96
CO100 COMMERCIAL UNION INS CO 3,639.00
NET 15 .00
2010-000 3,639.00
TRADE ACCOUNTS PAYABLE 9/05/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor=balance
Contact-1 Terms Put-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
CYP100 CYPRESS NETWORK, INC 10,924.36
KEN GLASS NET 20 .00
712-688-2190 3010-000 10,924.36
712-967-0227 TRADE ACCOUNTS PAYABLE 1/01/96
DAN100 DANIEL GILMER 700.00
.00
904-837-7244 2010-000 700.00
TRADE ACCOUNTS PAYABLE 9/01/96
DEP100 DEPT OF REVENUE 3,209.70
NET 30 .00
2010-000 3,209.70
TRADE ACCOUNTS PAYABLE 7/31/96
DEX100 DEXON COMPUTER 17,613.00
NET 10 .00
3010-000 17,613.00
TRADE ACCOUNTS PAYABLE 8/29/96
DIA100 DIAMOND SOFTWARE 22,592.24
NET 30 .00
904-837-8822 2010-000 537.84
TRADE ACCOUNTS PAYABLE 8/32/96
DIG100 DIGITAL EQUIPMENT 204,192.33
NET 30 .00
214-702-4102 2010-000 204,192.33
TRADE ACCOUNTS PAYABLE 7/31/96
DUR100 BOBBY DURHAM 1,315.00
.00
316-279-8600 2010-000 1,315.00
TRADE ACCOUNTS PAYABLE 9/01/96
ENG100 ENGLAND DEVELOP DISTRICT 10,969.69
.00
318-449-3504 2010-000 10,969.69
TRADE ACCOUNTS PAYABLE 9/01/96
ENT100 ENTEROY 110.40
NET 10 .00
2010-000 110.40
TRADE ACCOUNTS PAYABLE 9/12/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor-balance
Contact-1 Terms Put-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
EQU100 EQUITABLE LIFE 483.79
.00
318-369-3117 2010-000 482.79
TRADE ACCOUNTS PAYABLE 9/01/96
FED100 FEDEX 584.26
NET 15 .00
###-##-#### 3010-000 584.26
TRADE ACCOUNTS PAYABLE 9/29/96
FIN100 FINE PRINT 168.31-
NET 30 .00
442-0185 2010-000 168.31-
TRADE ACCOUNTS PAYABLE 8/01/94
FIR100 FIRSTOP COMPUTER CO. 39,827.55
NET 15 .00
216-587-3600 2010-000 39,827.55
TRADE ACCOUNTS PAYABLE 2/12/96
0%100 0 % CORPORATE PLUS 4,296.68
NET 15 .00
2010-000 4,296.68
TRADE ACCOUNTS PAYABLE 8/31/96
GRA100 THE GRAHAM GROUP 169,220.32
MICHELL CORSTAN NET 30 .00
218-222-8214 2010-000 169,220.32
TRADE ACCOUNTS PAYABLE 4/20/96
HB100 HB DISTRIBUTION, INC. 1,283.01
.00
800-929-2747 2010-000 1,283.01
TRADE ACCOUNTS PAYABLE 4/09/96
HIB100 HIBERNIA 10,540.26
NET 10 .00
2010-000 10,540.26
TRADE ACCOUNTS PAYABLE 9/28/96
HIB102 HIBERNIA BANK 78,680.39
10 .00
2010-000 78,680.39
TRADE ACCOUNTS PAYABLE 9/13/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend=8 Name Vendor=balance
Contact-1 Terms Put-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
INF100 INFORMATION MANAGEMENT SY 4,926.00
NET 30 .00
404-626-9716 3010-000 4,926.00
712-967-0227 TRADE ACCOUNTS PAYABLE 1/30/96
INS100 INTERNATIONAL NETWORK SV 114,533.03
FAX NET 30 .00
419-234-4286 2010-000 114,533.03
TRADE ACCOUNTS PAYABLE 1/26/96
INT101 INTERLINK COMMUNICATIONS 956.44
NET 30 .00
318-222-5660 2010-000 956.44
TRADE ACCOUNTS PAYABLE 9/01/96
INT103 INTERNET 19.97
NET 10 .00
2010-000 19.97
TRADE ACCOUNTS PAYABLE 6/18/96
IP100 IPSWITCH 150.00
NET 30 .00
2010-000 150.00
TRADE ACCOUNTS PAYABLE 7/26/96
JDR100 JDR MICROSERVICES 126.94
NET 30 .00
800-338-5000 2010-000 126.94
TRADE ACCOUNTS PAYABLE 4/15/96
JTA100 J T A FACTORS, INC 1,333.80
NET 30 .00
316-445-1314 2010-000 1,333.80
TRADE ACCOUNTS PAYABLE 3/06/96
KAL100 KALS-TV 1,910.00
NET 30 .00
318-445-2486 2010-000 1,910.00
TRADE ACCOUNTS PAYABLE 6/30/96
KAY100 KAY'S VENDING & CATERING 302.38
NET 30 .00
2010-000 302.38
TRADE ACCOUNTS PAYABLE 9/09/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor-balance
Contact-1 Terms Put-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
KDM100 KDM ELECTRIC, INC 3,626.00
NET 30 .00
318-487-2074 2010-000 3,626.00
TRADE ACCOUNTS PAYABLE 2/18/96
KEL100 KELLY TEMPORARY SERVICES 3,094.91
NET 6 DAYS .00
318-449-9585 2010-000 3,094.91
TRADE ACCOUNTS PAYABLE 8/23/96
KEN100 KENTWOOD WATER CO 143.91
NET 30 .00
318-448-4800 2010-000 143.91
TRADE ACCOUNTS PAYABLE 9/03/96
KIM100 GORDON KIME 12,307.72
NET 10 .00
2010-000 12,307.72
TRADE ACCOUNTS PAYABLE 9/01/96
KIN100 KINKO'S 2,307.72
NET 30 .00
2010-000 2,307.72
TRADE ACCOUNTS PAYABLE 9/01/96
KQI100 KQID-FM 720.00
TRADE .00
318-445-1234 2010-000 720.00
TRADE ACCOUNTS PAYABLE 5/31/96
LA100 LA DEPT. OF LABOR 10,690.14
NET .00
2010-000 10,690.14
TRADE ACCOUNTS PAYABLE 7/31/96
LAN100 LANIER WORLDWIDE, INC. 7,753.45
NET 30 .00
800-685-7772 2010-000 7,753.45
TRADE ACCOUNTS PAYABLE 8/10/96
LAN101 LAN 29.97
NET 10 .00
2016-000 29.97
TRADE ACCOUNTS PAYABLE 9/05/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor=balance
Contact-1 Terms Put-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
LAU100 ROBERT LAURENTS 30,192.34
NET .00
3010-000 30,192.34
TRADE ACCOUNTS PAYABLE 9/01/96
LED100 WILLIAM LEDBETTER 2,500.00
NET 10 .00
328-747-5333 2010-000 2,500.00
TRADE ACCOUNTS PAYABLE 6/24/96
MAT100 MATT'S JANITORIAL SERVICE 317.98
NET 30 .00
328-445-8754 2010-000 317.98
TRADE ACCOUNTS PAYABLE 8/13/96
MCG100 MCGRAW-HILL COMPANIES 51.36
NET 10 .00
2010-000 51.36
TRADE ACCOUNTS PAYABLE 8/23/96
MCI100 MCI TELECOMMUNICATIONS 145,982.39
NET 10 .00
800-825-4860 2010-000 145,982.39
ext 7385 TRADE ACCOUNTS PAYABLE 7/26/96
MEM100 MEMORY POSTERS, INC. 255.00
NET 1 .00
2143923724 2010-000 255.00
TRADE ACCOUNTS PAYABLE 9/05/96
MIC100 MICROWAVE INTERNATIONAL 44.95
NET 15 .00
2010-000 44.75
TRADE ACCOUNTS PAYABLE 7/12/96
MICR10 MICROSOFT 70.00
NET 30 .00
318-445-2486 2010-000 70.00
TRADE ACCOUNTS PAYABLE 9/20/96
MID100 MID-SOUTH PEST CONTROL 155.00
NET 30 .00
318-487-2079 2010-000 155.00
TRADE ACCOUNTS PAYABLE 8/21/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor=balance
Contact-1 Terms Pmt-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
MOT100 MOTOROLA, INC. 7,404.24
MARTIN COYNE NET 30 .00
800-446-0144 2010-000 7,404.24
508-241-1205 TRADE ACCOUNTS PAYABLE 8/09/96
NET100 NETMANAGE, INC. 521.00
NET 30 .00
4089737171 2010-000 521.00
TRADE ACCOUNTS PAYABLE 7/18/96
NIG100 NIGHTINGALE COMPANY 44.71
NET 30 .00
800-323-3936 2010-000 44.71
TRADE ACCOUNTS PAYABLE 4/15/96
OFF100 OFFICE DEPOT 342.14
NET 30 .00
2010-000 342.14
TRADE ACCOUNTS PAYABLE 8/26/96
OIL100 THE OIL EXCHANGE 23.71
NET 30 .00
2010-000 23.71
TRADE ACCOUNTS PAYABLE 8/31/96
PBC100 PITNEY BOWES CREDIT CORP. 18.91
NET 30 .00
800-587-4537 2010-000 18.91
TRADE ACCOUNTS PAYABLE 9/14/96
PET100 PETRO POINT 727.00
.00
518-478-8704 2010-000 727.00
TRADE ACCOUNTS PAYABLE 9/01/96
PIT100 PITNEY BOWES 148.57
NET 30 .00
800-326-1071 2010-000 148.57
TRADE ACCOUNTS PAYABLE 8/24/96
POS100 U.S. POSTAL SERVICE 1,200.00
NET 10 .00
800-245-7800 2010-000 1,200.00
TRADE ACCOUNTS PAYABLE 8/16/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor-balance
Contact-1 Terms Pmt-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
PRI100 PRICE OFFICE SUPPLY 3,266.93
NET 30 .00
316-442-8884 2010-000 3,266.93
TRADE ACCOUNTS PAYABLE 8/28/96
PRO100 PROCONN STUDIO SERVICES 27.50
NET 30 .00
7046841461 2010-000 27.50
TRADE ACCOUNTS PAYABLE 6/30/96
QUY100 QUYEN SYSTEMS 615.00
NET 10 .00
3012683087 2010-000 615.00
TRADE ACCOUNTS PAYABLE 8/06/96
REG100 REGIONAL DISTRIBUTION CTR. 2,406.47
RCW NET 30 .00
800-267-9916 2010-000 2,406.47
TRADE ACCOUNTS PAYABLE 2/20/96
REL100 RELIABLE OFFICE SUPPLIES 9.18
NET 30 .00
800-877-6087 2010-000 9.18
TRADE ACCOUNTS PAYABLE 4/23/96
REN100 RENT-IT CO. 325.42
NET 15 .00
2010-000 325.42
TRADE ACCOUNTS PAYABLE 9/03/96
RCE100 ROBERTS, CHERRY & COMPANY 8,600.00
TOM SIMMS NET 30 .00
318-222-2222 2010-000 8,600.00
TRADE ACCOUNTS PAYABLE 3/08/96
RUS100 CITY OF RUSTON 85.43
NET 10 .00
318-231-8653 2010-000 85.43
TRADE ACCOUNTS PAYABLE 8/27/96
SEC100 SECURITY 1ST NATIONAL 3,544.98
BOB ALEXANDER NET 10 .00
2010-000 3,544.98
TRADE ACCOUNTS PAYABLE 8/16/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor-balance
Contact-1 Terms Put-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
SHA100 SHARON SCHAFER 300.00
310-323-5316 3010-000 300.00
TRADE ACCOUNTS PAYABLE 9/01/96
SHO100 SHOWERS OF FLOWERS #2 41.04
NET 10 .00
310-445-4274 2010-000 41.04
TRADE ACCOUNTS PAYABLE 9/24/96
SIM100 SIMPSON SECURITY SYSTEMS 94.00
NET 30 .00
318-442-3381 2010-000 94.00
TRADE ACCOUNTS PAYABLE 7/18/96
SPR100 SPRINT 2,928.02
NET 15 .00
800-977-4020 2020-000 2,928.02
TRADE ACCOUNTS PAYABLE 8/20/96
SUL100 SULLIVAN, STOLIER, DAIGLE 287.30
NET 30 .00
604-561-1044 2010-000 287.30
TRADE ACCOUNTS PAYABLE 8/22/96
TCA100 TCA CABLE 23.41
NET 10 .00
2010-000 23.41
TRADE ACCOUNTS PAYABLE 8/23/96
TOM100 TOMBA COMMUNICATIONS 34,708.00
NET 30 .00
904-340-2448 2010-000 34,708.80
TRADE ACCOUNTS PAYABLE 9/26/96
TYR100 TYRELL 801.00
NET 30 .00
2010-000 801.00
TRADE ACCOUNTS PAYABLE 3/22/96
UPS100 UNITED PARCEL SERVICE 425.36
NET 10 .00
8007425677 2010-000 425.36
TRADE ACCOUNTS PAYABLE 8/10/96
<PAGE>
A G E D O P E N I T E M S S U M M A R Y
Aged as of 09/29/96 based upon invoice dates
- ----------------------------------------------------------------------
Vend-8 Name Vendor=balance
Contact-1 Terms Put-grp Valid-discounts
Phone-1 A/P-account Vendor-net
Phone-2 Last-prch-date
- ----------------------------------------------------------------------
VAN100 VAN EATON & ROMERO 233.22
NET 30 .00
318-267-4096 3010-000 233.22
TRADE ACCOUNTS PAYABLE 9/01/96
WAS100 WASTE MGMT LAKE CHARLES 408.21
NET 10 .00
316-443-6688 2010-000 408.21
TRADE ACCOUNTS PAYABLE 9/31/96
WIN100 WINDOWS 16.97
.00
2010-000 16.97
TRADE ACCOUNTS PAYABLE 4/23/96
WIR100 WIRED 24.95
NET 10 .00
2010-000 24.95
TRADE ACCOUNTS PAYABLE 7/18/96
Grand totals for 94 vendors printed
Aged as of 09/29/96 based upon invoice dates
Gross-bal Valid-disc Net-bal
---------------
1238762.93 .00 1338762.93
===============
<PAGE>
Exhibit F to Sale Agreement
Liabilities Incurred by ICS since July 29, 1996, for which IDT will be Liable
None.
<PAGE>
RESTATED CONSULTANT AND CUSTOMER SUPPORT AGREEMENT BETWEEN
INTERNATIONAL COMPUTER SYSTEMS, INC.
AND
IDT CORPORATION
This Consultant and Customer Support Agreement (the "Agreement") is entered
into as of the 29th day of July, 1996 by and between INTERNATIONAL COMPUTER
SYSTEMS, INC., a Louisiana corporation (hereinafter referred to as "ICS"),
represented herein by Gordon E. Kime, who has been duly authorized by the Board
of Directors of ICS, and IDT CORPORATION, a Delaware corporation (hereinafter
referred to as "IDT"), represented herein by Howard Balter, who has been duly
authorized by its Board of Directors.
WITNESSETH
WHEREAS, the parties hereto entered into an Agreement styled Consultant and
Customer Support Agreement, dated July 29, 1996, and desire to restate in its
entirety that Agreement; and
WHEREAS, ICS is an Internet service provider doing business under the trade
nane of "Linknet" and provides for Internet access to customers, including
management of the Internet and customer support for all customers of Linknet,
throughout the State of Louisiana; and
WHEREAS, IDT is an Internet service provider throughout tne United States
providing Internet services to its customers, management of the network and
customer support for the customers on its network; and
WHEREAS, IDT has purchased or is in the process of purchasing the equipment
and other assets comprising the Linknet network; and
1
<PAGE>
WHEREAS, IDT desires to expand its Internet services by contracting with ICS
for it to provide consulting services; and
WHEREAS, ICS has the expertise required to implement and operate the
consulting and customer support needs of IDT.
NOW THEREFORE, it is mutually agreed as follows:
1.
PROVISION OF SERVICES
ICS shall provide to IDT and/or its network customers the Consulting
Services, described below, and the Customer Support Services, described below.
2.
TERM AND TERMINATION
SECTION 2.1 TERM. ICS shall provide the Consulting Services for an initial
term commencing August 15, 1996, and terminating July 31, 2000. ICS shall
provide the Customer Support Services for an initial term commencing July 1,
1996, and terminating July 31, 2000. This Agreement shall be automatically
renewed for successive two (2) year additional term(s), absent written notice,
from either party, provided at least ninety (90) days prior to the commencement
of such additional term(s).
SECTION 2.2 TERMINATION FOR CAUSE. This Agreement may be terminated by
either party for cause in the event of a breach by the other party (the
"Breaching Party") of any material term or condition hereof and the failure of
the Breaching Party to cure such breach within thirty (30) days following the
receipt of notice of such breach.
2
<PAGE>
3.
CONSIDERATION
SECTION 3.1 CONSULTING SERVICES FEE. As consideration for the Consulting
Services to be provided by ICS in accordance with the terms of this Agreement,
IDT shall pay to ICS a Base Consulting Services Fee and a Supplemental
Consulting Services Fee. The Base Consulting Services Fee shall be
[ ]/*/ Dollars per month. The Supplemental Consulting
Services Fee shall be an amount equal to the product of [
]/*/ ("Supplemental Unit Rate") times each Supplemental
Unit, defined below. As used herein, a "Supplemental Unit" shall mean groups of
ten points of presence ("POPs") in excess of 21 POPs. For example, if there are
18 POPs, then the number of Supplemental Units is 0; if there are 21 POPs, then
the number of Supplemental Units is 0; if there are 22 POPs, then the number of
Supplemental Units is 1; if there are 27 POPs, then the number of Supplemental
Units is 1; and if there are 37 POPs, then the number of Supplemental Units is
2. The Base Consulting Services Fee and the Supplemental Consulting Services Fee
(collectively the "Total Consulting Services Fee") shall be paid monthly, and
such payment shall be due and payable on or before the first day of the month
during which services are to be rendered. The Base Consulting Services Fee for
the first month in which consulting services are rendered shall be prorated to
reflect that the Consulting Services will be provided only for a given portion
of the month, i.e., for the first month in which consulting services are
provided, the Base Consulang Services Fee will be [
]/*/
3
CONFIDENTIAL TREATMENT REQUESTED AND THE REDACTED MATERIAL
HAS BEEN SEPARATELY FILED WITH THE COMMISSION
<PAGE>
SECTION 3.2 REIMBURSEMENT. IDT shall reimburse ICS for reasonable travel
expenses incurred by ICS in connection with performing the Consulting Services.
Such travel expenses shall include, but shall not be limited to, air fare,
ground transportation, lodging, meals, etc. ICS shall prepare and forward to IDT
a detailed invoice with supporting documentation describing ICS's travel
expenses of approved travel by IDT. IDT shall pay such travel expense
reimbursement invoices within 30 days receipt thereof.
SECTION 3.3. [DELETED]
SECTION 3.4. [DELETED]
SECTION 3.5. ANNUAL FEE ADJUSTMENT. Effective August 1 of each year during
the term of this Agreement (other than August 1, 1996), the Base Consulting Fee
and the Supplemental Unit Rate shall be increased by five percent (5%) over the
Base Consulting Fee and the Supplemental Unit Rate then in effect, respectively.
SECTION 3.6. [DELETED]
SECTION 3.7. EFFECT OF TERMINATION. Payments due to ICS for expenses
incurred or services rendered by ICS prior to the effective date of the
termination of this Agreement shall be paid by IDT to the extent earned,
notwithstanding the termination of this Agreement.
4.
DESCRIPTION OF SERVICES TO BE PROVIDED BY ICS
SECTION 4.1. CONSULTING SERVICES. As used herein, the term "Consulting
Services" shall mean (i) router management, (ii) modem management and asset
management (iii) usage reporting, (iv) bandwith reporting, (v) server
management, (vi) overall network consulting, (vii) telephony consulting and
provisioning, (viii) network maintenance and monitoring with a response to
faults or problems
4
<PAGE>
within one hour from occurrence, (ix) programming staff to include (a) two
programmers at 20 hours per week for network programming, (b) two programmers at
20 hours per week for IDT projects, in the event IDT is dissatisfied with or
chooses for any reason to discontinue use of the programming services set forth
in this subsection, IDT reserves the right, excercisable on or before January
15, 1997, to do so and decrease the base consulting fee as well as the
supplemental unit rate by [ ]/*/ per month, and (x) network set up
(in-house set up by ICS) of new POPs. In the event the network is for any
reason, within the control of ICS, not functioning during the term of this
Agreement, ICS agrees that IDT may deduct [ ]/*/ per hour from the fees
otherwise due hereunder.
SECTION 4.2 CUSTOMER SUPPORT SERVICES. As used herein, the term "Customer
Support Services" shall mean telephone support supplied by ICS to IDT customers
relating to Internet access software distributed by IDT.
SECTION 4.3 ADDITIONAL SERVICES. If IDT desires to purchase additional
network services management services for IDT projects, IDT shall pay for hours
in excess of an average of twenty hours a week over a two month period at the
rate of [ ]/*/.
5.
INDEPENDENT CONTRACTOR
It is expressly acknowledged by the parties hereto that ICS is an
independent contractor, and nothing in this Agreement is intended, nor shall be
construed, to create any employer/employee relationship or a joint venture
relationship; provided that the services to be rendered hereunder by ICS shall
be provided in a manner consistent with the standards governing
5
CONFIDENTIAL TREATMENT REQUESTED AND THE REDACTED MATERIAL
HAS BEEN SEPARATELY FILED WITH THE COMMISSION
<PAGE>
such services and the provisions of this Agreement. As such, IDT shall have the
final say and dictate all technical strategy and implementation. Notwithstanding
this paragraph, ICS agrees that intellectual property rights, including
copyrights to all source codes, and programs, patents and trademarks are "work
for hire" belonging to IDT. ICS shall not have the right to use or sell software
or components of software created for IDT without the written consent of IDT.
ICS will cause all of its employees or agents that perform services pursuant to
this agreement or in any connection for IDT to execute a non-compete agreement
that precludes such employee from competing with IDT in any of its businesses
during the term of this Agreement or for 12 months following temination or
soliciting IDT's employees during the term of this agreement and for 18 months
following its termination.
6.
NOTICES
Any notice, demand or consent required or permitted hereunder shall be in
writing and shall be delivered in person or mailed to the following:
IF TO ICS: International Computer Systems, Inc.
1316 Mayer Avenue
Alexandria, Louisiana 71303
Attention: Gordon E. Kime
IF TO IDT: IDT Corporation
294 State Street
Hackensack, New Jersey 07601
Attention: Joyce Mason, Esq.
AND
Peretz Bronstein, Esq.
Easton & Echtman, P.C.
270 Madison Ave. 7th Floor
6
<PAGE>
New York, NY 10016
7.
GOVERNING LAW
This Agreement shall be govered by the laws of the State of Louisiana. Any
disputes under this agreement shall be resolved before The American Arbitration
Association in New York City.
8.
ASSIGNMENT
No assignment of this Agreement or the rights or obligations hereunder
shall be valid without the specific written consent of both parties, such
written consent to be mailed as provided in paragraph 6.
9.
ENTIRE AGREEMENT
This Agreement supersedes all previous contracts and constitutes the entire
agreementX betsveen the parties relating to the matters covered by this
Agreement. No oral statements or prlor written materials not specifically
incorporated herein shall be of any force and effect, and no changes in or
additions to this Agreement, shall be recognized unless incorporated herein by
amendment, as provided herein, such amendment(s) to become effective on the date
stipulated in such amendment(s).
10.
HEADINGS
The headings of tEs Agreement are inserted for convenience only and are not
to be
7
<PAGE>
considered in the interpretation of this Agreement. They shall not in any way
limit the scope or modify the substance or context of any section of this
Agreement.
11.
WAIVER OF BREACH
The waiver by either party of a breach or violation of any provision of this
Agreement shall not operate as or be construed to be, a waiver of any subsequent
or other breach thereof.
12.
PROVISIONS HELD INVALID
If any one or more of the provisions contained in this Agreement shall be
held to be invalid, illegal or unenforceable, for any reason or in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such provision had
never been contained herein.
13.
AMENDMENTS
This Agreement may be amended only by an instrument in writing, signed by
both parties. Such signed instrument shall state the effective date of the
amendment.
14.
MUTUAL COOPERATION
Both the ICS and IDT acknowledge that mutual cooperation and assistance is
essential to either party's performance under this Agreement; therefore, it
will be the duty of both parties to make all good faith efforts to fully
cooperate in the execution of this Agreement.
15.
COUNTERPARTS
8
<PAGE>
This Agreement may be executed in any number of counterparts, each of which
shall be an original and all of which shall together constitute one agreement.
16.
RECORDS
IDT and ICS agree to make available for inspection to each other any books,
documents and records of the other party that may be necessary to verify the
nature and amount of any payments due pursuant to this Agreement.
17.
ICS MANAGEMENT AND OPERATIONS
IDT reserves the right to terminate this Agreement in the event that Mr.
Gordon Kime ceases to function as the Chief Technical Officer of ICS.
18.
INTERPRETATION
No provision of this Agreement shall be construed or interpreted against any
party on the basis of such parties being deemed to have drafted such provision.
9
<PAGE>
IN WITNESS WHEREOF, ICS and IDT have executed this Agreement effective
as of the day and year first written above.
WITNESSES: INTERNATIONAL COMPUTER SYSTEMS,
INC.
/s/ BY: /s/
- ------------------------ -------------------------------------
/s/
- ------------------------
IDT CORPORATION
BY: /s/
- ------------------------ -------------------------------------
- ------------------------
10
<PAGE>
ROYALTY AGREEMENT BETWEEN
INTERNATIONAL COMPUTER SYSTEMS, INC.
AND
IDT CORPORATION
This Royalty Agreement (the "Agreement") is entered into as of the 29th day
of July, 1996 by and between INTERNATIONAL COMPUTER SYSTEMS, INC., a Louisiana
Corporation, (hereinafter referred to as "ICS"), represented herein by Gordon
Kime, who has been duly authorized by the Board of Directors of ICS, and IDT
CORPORATION, a Delaware corporation (hereinafter referred to as "IDT"),
represented herein by Howard Balter, who has been duly authorized by its Board
of Directors.
WITNESSETH
WHEREAS, ICS is an Internet service provider doing business under the trade
name of "LinkNet" and provides for Internet access to customers, including
management of the Internet and customer support for all customers of LinkNet,
throughout the State of Louisiana; and
WHEREAS, IDT is an Internet service provider throughout the United States
providing Internet services to its customers, management of the network and
customer support for the customers on its network; and
WHEREAS, IDT has purchased the equipment comprising the LinkNet network (the
"Equipment Purchase"); and
WHEREAS, coinciding with the Equipment Purchase, IDT has agreed to pay a
royalty to ICS in accordance with this Agreement.
NOW THEREFORE, it is mutually agreed as follows:
1
<PAGE>
1.
ROYALTY
A. Payment of Royalty. IDT shall pay to ICS a royalty equal in amount to
-------------------
(i) the [ ]/*/
during the Royalty Period, defined below, plus (ii) the [
]/*/ plus (iii) the [
]/*/ The royalty due with respect to
collections made within any calendar month shall be paid by IDT to ICS on or
before the 10/th/ day of the following calendar month. Collections received by
IDT after the Royalty Period for providing Internet access to Base Customers,
Non Dedicated New Customers, and Dedicated New Customers during the Royalty
Period shall be paid by IDT to ICS as provided in this paragraph 1
notwithstanding that such collections were received after the Royalty Period.
B. Non Dedicated Customers Defined. As used herein, "Non Dedicated
--------------------------------
Customers" shall mean Internet access customers who do not use a dedicated line.
C. Dedicated Customers Defined. As used herein, "Dedicated
----------------------------
Customers" shall mean Internet access customers who use a dedicated line.
D. Base Customers Defined. As used herein, "Base Customers" shall mean ICS'
-----------------------
existing Internet access customers, less Internet access customers who
discontinue their Internet access service with IDT/ICS during the Royalty
Period, plus any new Internet access customers
2
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
in Louisiana that ICS signs up through ICS' efforts during the Royalty Period,
provided however, in no event shall the number of Base Customers exceed
[ ]/*/ the number of Customers existing as of [ ]/*/. Attached
hereto as Exhibit A is a listing by category of the Base Customers.
E. Non Dedicated New Customers Defined. As used herein, "Non Dedicated New
------------------------------------
Customers" shall mean the number of IDT/ICS Non Dedicated Customers in
Louisiana that ICS signs up through ICS' efforts during the Royalty Period in
excess of the number of Non Dedicated Base Customers existing as of July 29,
1996.
F. Dedicated New Customers Defined. As used herein, "Dedicated New
-------------------------------
Customers" shall mean the number of IDT/ICS Dedicated Customers in Louisiana
that ICS signs up through ICS' sole efforts during the Royalty Period in excess
of the number of Dedicated Base Customers existing as of July 29, 1996.
G. Royalty Period Defined. As used herein, "Royalty Period" shall mean the
-----------------------
period commencing July 29, 1996, and terminating on July 31, 1997.
2.
TRANSFER OF CUSTOMERS
ICS agrees to assist IDT in the immediate and orderly transition of customers
from ICS to IDT, which may include development of dedicated connectivity
between ICS and IDT, as well as programming and customization of either or
both accounting systems to transition such customers. ICS agrees to expend all
necessary resources to transition the network systems, accounting systems, and
customers as quickly as possible, with the goal and objective of completing such
transition on or before December 31, 1996. Until such time as the transition is
3
Confidential Treatment Requested and the Redacted Material
has been separately filed with the Commission
<PAGE>
completed, ICS shall serve as agent for IDT in collecting amounts due IDT for
providing Internet access to the ICS Base Customers or any other customers of
IDT designated by IDT. ICS may retain from amounts collected by it as agent for
IDT the amount due ICS by IDT as royalties as provided in paragraph l hereof.
3.
ICS INDEMNITY
ICS hereby agrees to protect, defend and indemnify IDT, its officers,
members, agents, managers and employees against, and hold the same harmless from
any and all liability, losses, damages, obligations, judgments, claims, causes
of action and expenses associated therewith (including reasonable attorney
fees), resulting from or arising out of, directly or indirectly, any intentional
act, wanton misconduct or negligent act or omission by ICS or its employees or
agents.
4.
IDT INDEMNITY
IDT hereby agrees to protect, defend and indemnify ICS, its officers,
members, agents, managers and employees against, and hold the same harmless from
any and all liability, losses, damages, obligations, judgments, claims, causes
of action and expenses associated therewith (including reasonable attorney
fees), resulting from or arising out of, directly or indirectly, any intentional
act, wanton misconduct or negligent act or omission by IDT or its employees or
agents.
5.
NOTICES
4
<PAGE>
Any notice, demand or consent required or permitted hereunder shall be in
writing and shall be delivered in person or mailed to the following:
IF TO ICS: International Computer Systems, Inc.
1316 Mayer Avenue
Alexandria, Louisiana 71303
Attention: Gordon E. Kime
IF TO IDT: IDT Corporation
294 State Street
Hackensack, New Jersey 07601
Attention: Joyce Mason, Esq.
AND
Peretz Bronstein, Esq.
Easton & Echtman, P.C.
270 Madison Ave., 7th Floor
New York, NY 10016
6.
GOVERNING LAW
This Agreement shall be governed by the laws of the State of Louisiana
applicable to contracts executed and to be performed wholly within such state.
Any dispute arising out of this transaction shall be resolved before the
American Arbitration Association in New York City.
7.
ASSIGNMENT
No assignment of this Agreement or the rights or obligations hereunder shall
be valid without the specific written consent of both parties hereto.
8.
ENTIRE AGREEMENT
This Agreement supersedes all previous contracts and constitutes the entire
agreement between the parties relating to the matters covered by this
Agreement. No oral statements or
5
<PAGE>
prior written materials not specifically incorporated herein shall be of any
force and effect, and no changes in or additions to this Agreement, shall be
recognized unless incorporated herein by amendment, as provided herein, such
amendment(s) to become effective on the date stipulated in such amendment(s).
9.
HEADINGS
The headings of this Agreement are inserted for convenience only and are not
to be considered in the interpretation of this Agreement. They shall not in any
way limit the scope or modify the substance or context of any section of this
Agreement.
10.
WAIVER OF BREACH
The waiver by either party of a breach or violation of any provision of
this Agreement shall not operate as or be construed to be, a waiver of any
subsequent or other breach thereof.
11.
PROVISIONS HELD INVALID
If any one or more of the provisions contained in this Agreement shall be
held to be invalid, illegal or unenforceable, for any reason or in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such provision had
never been contained herein.
12.
AMENDMENTS
This Agreement may be amended only by an instrument in writing, signed by
both parties. Such signed instrument shall state the effective date of the
amendment.
13.
6
<PAGE>
MUTUAL COOPERATION
Both the ICS and IDT acknowledge that mutual cooperation and assistance is
essential to either party's performance under this Agreement; therefore, it will
be the duty of both parties to make all good faith efforts to fully cooperate
in the execution of this Agreement.
14.
COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be an original and all of which shall together constitute one agreement.
15.
RECORDS
IDT and ICS agree to make available for inspection to each other any books,
documents and records of the other party that may be necessary to verify the
nature and amount of any payments due pursuant to this Agreement.
16.
USAGE AGREEMENT
This Agreement completely supersedes and replaces the Usage Agreement
between ICS and IDT, dated July 29, 1996 (the "Usage Agreement"). The Usage
Agreement is void.
17.
INTERPRETATION
No provision of this Agreement shall be construed against or interpreted to
the disadvantage of any party by reason of such party having or being deemed to
have drafted such
7
<PAGE>
provision.
8
<PAGE>
IN WITNESS WHEREOF, ICS and IDT have executed this Agreement effective
as of the day and year first written above.
WITNESSES: INTERNATIONAL COMPUTER SYSTEMS, INC.
/s/ /s/ Gordon Kime
- ------------------------ -------------------------------------
By: Gordon Kime
Its: Duly Authorized Agent
/s/
- ------------------------
IDT CORPORATION
/s/ Howard Balter
- ------------------------ -------------------------------------
By: Howard Balter
Its: Duly Authorized Agent
- ------------------------
9
<PAGE>
Exhibit 21.01
Subsidiaries of Registrant
IDT America, Corp.
IDT International Corp.
IDT Internet Services, Inc.
Internet Online Services, Inc.
Media Response, Inc.
New World Telecommunications, Corp.
Shmuelco Equipment Corp.
Phone Depot, Inc.
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<CASH> 14,893,756
<SECURITIES> 0
<RECEIVABLES> 13,597,565
<ALLOWANCES> 2,100,000
<INVENTORY> 0
<CURRENT-ASSETS> 30,501,411
<PP&E> 14,106,544
<DEPRECIATION> 1,653,214
<TOTAL-ASSETS> 43,797,371
<CURRENT-LIABILITIES> 16,954,695
<BONDS> 0
0
0
<COMMON> 96,669
<OTHER-SE> 26,746,007
<TOTAL-LIABILITY-AND-EQUITY> 43,797,371
<SALES> 0
<TOTAL-REVENUES> 57,693,880
<CGS> 0
<TOTAL-COSTS> 36,437,583
<OTHER-EXPENSES> 37,011,393
<LOSS-PROVISION> 4,041,573
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (15,409,792)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,409,792)
<DISCONTINUED> 0
<EXTRAORDINARY> (233,500)
<CHANGES> 0
<NET-INCOME> (15,643,292)
<EPS-PRIMARY> (0.86)
<EPS-DILUTED> (0.86)
</TABLE>
