<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-26825
N2H2, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
91-1686754
(I.R.S. EMPLOYER IDENTIFICATION NO.)
900 FOURTH AVENUE, SUITE 3400, SEATTLE, WA 98164
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (206) 336-1501
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 [ ]
As of February 8, 2000, the registrant had outstanding 21,237,769 shares
of common stock, no par value.
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N2H2, INC.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I--FINANCIAL INFORMATION....................................................3
Item 1. Financial Statements.............................................3
CONDENSED BALANCE SHEETS.........................................3
CONDENSED STATEMENTS OF OPERATIONS...............................5
CONDENSED STATEMENTS OF CASH FLOWS...............................6
NOTES TO CONDENSED FINANCIAL STATEMENTS..........................7
Item 2. Management's Discussion And Analysis Of Financial Condition
And Results Of...................................................8
Item 3. Quantitative And Qualitative Disclosures About Market Risk......10
PART II--OTHER INFORMATION......................................................10
Item 1. Legal Proceedings...............................................10
Item 2. Changes In Securities And Use Of Proceeds.......................11
Item 3. Defaults Upon Senior Securities.................................11
Item 4. Submission Of Matters To A Vote Of Security Holders.............11
Item 5. Other Information...............................................11
Item 6. Exhibits And Reports On Form 8-K................................11
SIGNATURES......................................................................12
</TABLE>
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PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
N2H2, INC.
CONDENSED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
(Unaudited) (Audited)
<S> <C> <C>
ASSETS:
Current assets:
Cash ...................................................... $ 10,483 $ 7,743
Investments ............................................... 25,268 35,937
Accounts receivable, net .................................. 1,335 1,434
Prepaid expenses and other assets ......................... 908 1,136
-------- --------
Total current assets ...................................... 37,994 46,250
-------- --------
Long-term investments ........................................... 16,387 16,698
Property and equipment, net ..................................... 6,047 3,990
Other assets .................................................... 495 618
-------- --------
Total assets .............................................. $ 60,923 $ 67,556
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable .......................................... $ 1,367 $ 1,971
Accrued liabilities ....................................... 728 1,062
Deferred revenue .......................................... 939 1,304
Current portion of capital leases ......................... 158 466
-------- --------
Total current liabilities ................................. 3,192 4,803
-------- --------
Deferred revenue ................................................ 236 303
Capital lease obligations ....................................... 436 952
-------- --------
Total liabilities ......................................... 3,864 6,058
Shareholders' equity (deficit)
Common stock, no par value; 250,000,000 shares
authorized, 15,643,027 and 9,060,473 issued and
Outstanding in 1999 and 1998 .............................. 75,779 75,528
Notes receivables from shareholders ....................... (25) (25)
Deferred stock options compensation expense ............... (1,511) (1,940)
</TABLE>
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<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
(Unaudited) (Audited)
<S> <C> <C>
Unrealized Gain/Loss on Foreign Currency .................. -- --
Accumulated deficit ....................................... (17,184) (12,065)
-------- --------
Total shareholders' equity (deficit) ...................... 57,059 61,498
-------- --------
Total liabilities and shareholder's equity (deficit) ...... $ 60,923 $ 67,556
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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N2H2, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited, in thousands except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
1999 1998
------------ ------------
<S> <C> <C>
Revenues ..................................... $ 2,257 $ 1,189
Cost of revenues ............................. 1,296 229
------------ ------------
Gross profit ................................. 961 960
------------ ------------
Operating expenses:
Sales and marketing .................... 2,570 364
Research and development ............... 1,116 313
General administrative ................. 2,918 786
------------ ------------
Total operating expenses ............... 6,604 1,463
------------ ------------
Operating loss ............................... (5,643) (503)
Interest income (expense), net ............... 548 (148)
Gain/(Loss) on Sale of Investments ........... (24) --
------------ ------------
Net loss ..................................... $ (5,119) $ (651)
============ ============
Basic and diluted net loss per share ......... $ (0.24) $ (0.07)
============ ============
Basic and diluted weight average shares
outstanding .................................. $ 21,114,304 $ 9,086,958
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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N2H2, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months
Ended December 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss ................................................... $ (5,119) $ (651)
Adjustments to reconcile net loss to net cash
Provided by (used by) operating activities:
Depreciation and amortization ........................ 490 134
Amortization of deferred stock compensation .......... 485 (13)
Changes in certain assets and liabilities:
Accounts receivable .................................. 99 (465)
Prepaid expenses and other assets .................... 351 31
Accounts payable ..................................... (604) 28
Accrued liabilities .................................. (334) 413
Deferred revenue ..................................... (432) 153
Note Payable ......................................... 480
-------- --------
Net cash provided by (used by) operating activities: (5,064) 110
-------- --------
Cash flows from investing activities:
Purchase of investments .............................. (3,100) --
Sale of investments .................................. 14,080 --
Additions to property and equipment................... (2,547) (278)
-------- --------
Net cash used in investing activities ...................... 8,433 (278)
-------- --------
Cash flows from financing activities:
Issuance of common stock..............................
Exercise of stock options ............................ 195 2,051
Payments under capital lease obligations ............. (824) (47)
-------- --------
Net cash provided by financing activities .................. (629) 2,004
-------- --------
Net increase (decrease) in cash ............................ 2,740 1,836
Cash, beginning of period .................................. 7,743 121
-------- --------
Cash, end of period ........................................ $ 10,483 $ 1,957
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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N2H2, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
In the opinion of management, the accompanying balance sheets and related
interim statements of income, cash flows, and stockholders' equity include all
adjustments (consisting only of normal recurring items) necessary for their fair
presentation in conformity with generally accepted accounting principles.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. Actual results may differ from these estimates. Interim results
are not necessarily indicative of results for a full year. Operating results for
the three-month period ended December 31, 1999 are not necessarily indicative of
results to be expected for a full year. The information included in this Form
10-Q should be read in conjunction with Management's Discussion and Analysis and
financial statements and notes thereto included in the N2H2, Inc. 1999 Form
10-K.
2. Net loss per share
Basic net loss per share is computed on the basis of the weighted average
number of common shares outstanding. Diluted net loss per share includes common
equivalent shares during the period, if dilutive. As the Company had a net loss
attributable to common shareholders in each of the periods presented, basic and
diluted net loss per share are the same.
The components of basic and diluted earnings per share were as follows:
<TABLE>
<CAPTION>
Three Months
Ended December 31,
1999 1998
<S> <C> <C>
Numerator:
Net loss ......................................... $ (5,119,000) $ (651,000)
Denominator:
Basic and diluted
Weighted-average common shares
outstanding ................................ 21,114,000 9,087,000
Basic and diluted net loss per share ....... $ (0.24) $ (0.07)
</TABLE>
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3. Subsequent Events:
On January 17, 2000, we entered into a Settlement and License Agreement
with Spyglass to settle the lawsuit between us pursuant to which we paid
Spyglass $650,000. The Agreement grants us a non-exclusive license to the patent
in suit, and dismisses all claims between the parties.
4. Reclassifications
Certain 1999 amounts have been reclassified to conform with the 2000
presentation including reclassification of long-term investments to short term
and reclassification of certain costs of revenue to general and administrative
expense. These reclassifications had no effect on previously reported net
income.
5. Related Party Transaction
N2H2 invested $3.1 million in OneName, Inc. (formerly Intermind) in
December 1999. David Arnold, who joined N2H2 in August 1999 and serves as Vice
President - Chief Operating Officer, owns 8.55% of the outstanding stock of
OneName, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
Statements made in this filing that are not historical facts are
forward-looking statements. Forward-looking statements include, but are not
limited to, statements containing the words will, should, expect, plan, intend,
anticipate, believe, estimate, predict, potential, believes or continue, the
negative of such terms or other comparable terminology. Actual results may
differ materially from those projected in any forward-looking statements. Such
forward-looking statements are subject to various known and unknown risks and
uncertainties and are therefore not a guarantee of future performance. The
potential risks and uncertainties which could cause actual results to differ
materially include, but are not limited to, the competitive nature of the
Internet filtering industry, changes in domestic market conditions, the success
of our brand and systems development efforts, the absence of patent protection
for N2H2's technology, the fact that others have patented various filtering
technologies, and customer acceptance of our services, products and fee
structures. Further information on the factors and risks that could affect
N2H2's business, financial condition and results of operations are included in
Part 1, Item 1 to the registrant's Form 10-K for the year ended September 30,
1999, which has been filed with the Securities and Exchange Commission and is
available at http://www.sec.gov.
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N2H2 is a leading Internet infrastructure company. We provide content
categorization of internet web sites, filtering of internet content, and caching
services. We were the first company to offer a server-based internet filtering
solution for a customer's computer network. With Bess, our flagship product, we
currently provide filtering services to approximately 10 million users in
approximately 11,300 schools in the United States and Canada. Our customers
include the statewide networks serving most of the public schools in Ohio,
Tennessee, Maine, Oklahoma and Wisconsin, as well as school systems in areas
such as Los Angeles County, Baltimore, Boston, Calgary, Seattle, Stockton and
Tampa.
Our infrastructure services enable our school, business and other
customers to limit access to the internet by allowing them to screen up to
32 content categories ranging from pornography, hate and bomb construction to
gambling and games. The key benefits of our services include:
- automated identification of potentially unsuitable Websites
backed by human review to accurately place internet content into
our database of 32 categories,
- proprietary tools which enable customers to tailor their
filtering criteria to meet their specific needs,
- minimal customer effort required for installation and
maintenance,
- server-based filtering that is difficult to bypass, and
- daily electronic updating of the filtering database.
Results Of Operations
We generate our revenues from installations, subscriptions, and search
service and related advertising fees.
Revenues for the three months ended December 31, 1999 increased 90% to
$2.3 million from $1.2 million for the three months ended December 31, 1998.
Revenues from installations increased by $247,000, or 58%, to $675,000 for the
three months ended December 31, 1999, from $428,000 for the same period in 1998.
Subscription revenues increased by $501,000, or 75%, to $1.2 million for the
three months ended December 31, 1999, from $670,000 for the same period in 1998.
Subscription revenue grew primarily as a result of the growth in number of
subscribers. We recognized search service and advertising revenues from
Searchopolis of approximately $411,000 in the three months ended December 31,
1999, an increase of $320,000, or 353%, over the same period in 1998.
No customer accounted for more than 10% of revenues.
Cost of revenues for the three months ended December 31, 1999 increased
by 466% to $1.3 million from $230,000 for the same period of the previous year.
Cost of revenues as a percentage of total revenues increased to 57% for the
three months ended December 31, 1999, from 19% for the same period in 1998. Of
this increase in cost of revenues, approximately $795,000 was due to increased
staffing in review and customer support while the balance was due to the
inclusion of search processing and hosting fees and increased depreciation on
new servers placed in customer networks.
Sales expenses consist primarily of salaries and commissions. Marketing
expenses consist primarily of salaries, marketing brochures, trade show costs,
direct mailing programs, advertising, public relations and travel.
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Sales and marketing expenses for the three months ended December 31, 1999
increased 608% to $2.6 million from $364,000 for the same period of the previous
year. This increase was due to costs related to increased staffing primarily in
the sales department.
Research and development expenses consist primarily of salaries and
benefits for software developers, consulting fees, facilities costs and
equipment depreciation. In the development of new products and enhancement of
existing products, the technological feasibility of the service is not
established until substantially all product development is complete.
Accordingly, development costs and all costs related to internal research and
development have been expensed as incurred.
Research and development expenses for the three months ended December 31,
1999 increased by 256% to $1.1 million from $313,000 for the same period of the
previous year. The increase was primarily due to increased staffing.
General and administrative expenses consist primarily of salaries,
benefits and related costs for executive, finance, human resources and
administrative personnel, third party professional service fees, the cost of
facilities and general depreciation expenses.
General and administrative expenses for the three months ended December
31, 1999 increased by 271% to $2.9 million from $786,000 for the same period of
the previous year. This increase was primarily due to increases in the number of
employees and other costs supporting the growth of the company.
Liquidity And Capital Resources
For the three months ended December 31, 1999, operating activities
resulted in a net cash outflow of $5.1 million, and capital expenditures,
excluding those under capital leases, totaled $2.5 million. Financing activities
for the three months ended December 31, 1999 provided $195,000 from the exercise
of options to purchase the Company's Common Stock. Of the cash raised, $824,000
was paid under capital lease obligations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The registrant has settled the previously-disclosed lawsuit with
Spyglass, Inc. There are no other litigation matters pending.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In connection with the registrant's initial public offering, the
registrant received net proceeds of approximately $59.8 million. From the
effective date of the registration statement to December 31, 1999, the
registrant has used those proceeds as follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Increase Operating cash $ 4,982
Increase Short term investments 25,268
Increase in Long term investments;
Corporate Bonds 10,399
Short Term Bonds 3,600
Euro Dollar Bonds 2,388 16,387
------
Increase Plant leasehold improvements 261
Increase Equipment 4,258
Debt reduction 1,767
General Operations 6,922
--------
total $ 59,845
========
</TABLE>
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None of the above uses involved direct or indirect payments to directors,
officers, affiliates or 10% owners of the registrant.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
<TABLE>
<S> <C>
10.1 Filtering Services Agreement dated November 11, 1999
between British Telecommunications PLC and the registrant*
10.2 Colocation Services Agreement dated November 11, 1999
between British Telecommunications PLC and the registrant*
10.3 Technology License Agreement dated November 18, 1999
between OneName Corporation and the registrant*
10.4 National ISP Master Service Agreement dated December 6,
1999 between AT&T Global Network Services, LLC and the
registrant*
10.5 Data Services Agreement dated December 21, 1999 between
Inktomi Corporation and the registrant*
10.6 Filtering Service and License Agreement dated January 5,
2000 between Millennial Star Network, Inc. and the
registrant*
27.1 Financial Data Schedule
</TABLE>
----------
* Information has been omitted pursuant to a request for
confidential treatment and has been filed separately
with the Securities and Exchange Commission.
b) Reports on Form 8-K.
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
N2H2, INC.
Dated: February 14, 2000 By: /s/ Peter H. Nickerson
------------------------------------
Peter H. Nickerson
Chairman, President and Chief Executive
Officer (principal executive officer)
Dated: February 14, 2000
By: /s/ John F. Duncan
------------------------------------
John F. Duncan
Vice President - Chief Financial
Officer, Secretary, and Treasurer
(principal financial and accounting
officer)
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EXHIBIT 10.1
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
BT
CONTRACT NUMBER 664378
Between
BRITISH TELECOMMUNICATIONS PLC
And
N2H2 INC.
for the supply of Filtering Services
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BT
N2H2 INC.- FILTERING SERVICE
- --------------------------------------------------------------------------------
THIS AGREEMENT is made on November 10, 1999
BETWEEN:
BRITISH TELECOMMUNICATION PLC registered in England and Wales under number
1800000 and which has its registered office at BT Centre, 81 Newgate Street,
London EC1A 7AJ ("BT"); and
N2H2 INC. a Washington Corporation, having its principal place of business at
900 4th Avenue - Suite 3400, Seattle, WA, 98164 ("N2H2")
WHEREAS
(A) N2H2 is a provider of Internet filtering services; and
(B) BT is a provider of internet and multimedia services including internet
access services;
(C) BT wishes to be able to include internet filtering service in various of
its internet services and also be able to contract with its customers for
the provision of Internet filtering services;
(D) BT wishes to be able to brand and market any such filtering services as it
chooses;
(E) N2H2 wishes to provide BT with the ability to achieve the above aims;
therefore
IT IS AGREED:
1. DEFINITIONS AND INTERPRETATION
1.1 In this agreement the following words and expressions shall, unless the
context otherwise requires, have the following meanings:
1.2 "Authorised User" means such persons or entities as BT may contract with
from time to time for the provision of the Service.
1.3 "Block Page" means the page which will appear on a screen of a Service
user who attempts to access a URL contained in N2H2's database of blocked
URLs.
1.4 "Colocation Contract" means the contract between the parties hereto for
BT's colocation services.
1.5 "Service" means N2H2's generally available internet filtering and caching
service as described in Schedule 1 including all upgrades and improvements
as may be made from time to time.
1.6 "Software" means any software provided by N2H2 pursuant to this Agreement
or used to provide the Service or used as part of the System.
1.7 "System" means the N2H2 proxy servers, the N2H2 proprietary software and
proprietary database of blocked URLs supplied by N2H2 and used to deliver
the Service via one of the delivery methods described in paragraph 2
below.
Page 1 of 14
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BT
N2H2 INC.- FILTERING SERVICE
- --------------------------------------------------------------------------------
1.5 "Server Site" means the place where the System is located pursuant to a
request from BT pursuant to paragraph 2.3
2. PROVISION OF THE SERVICE
2.1 N2H2 shall provide the Service, on the terms of this Contract, for the
following purposes:
2.1.1 so that BT may use the Service in its various internet products and
services as may exist from time to time;
2.1.2 so that BT may contract with Authorised Users for the provision of the
Service to such Authorised Users.
2.2 N2H2 will provide the Service to BT and Authorised Users via one of the
following methods as elected by BT in each particular case:
2.2.1 direct placement of an N2H2 network proxy server containing the System,
onto the network or computer of BT or the Authorised User;
2.2.2 by placement of the System at the network operation facility of the
Internet service provider providing Internet access to the Authorised
User;
2.2.3 such other method as the parties may agree.
2.3 BT will, from time to time notify N2H2 in writing, that BT wishes or
wishes an Authorised User to be supplied with the Service via particular
delivery method. N2H2 will use its reasonable efforts to deliver and
implement (including any required configuration) the Service, as soon as
possible, using the delivery method which BT requests but at least within
7 days of receipt of BT's request. N2H2 will pay for all charges,
including shipping and handling charges associated with such
implementation and delivery.
2.4 N2H2 will carry out its responsibilities under this Contract using the
standard of care of a professional and experienced Internet and multimedia
company.
2.5 N2H2 will use suitably qualified and experienced staff to carry out its
obligations under this Contract.
2.6 The System, all its components and any associated documentation shall
remain the sole and exclusive property of N2H2.
2.7 N2H2 agrees that it shall not allow any dissemination, sale or other
transfer of BT's or an Authorised User's proprietary software and
information related to or used in connection with N2H2's provision of the
Service under this contract. This includes, without limitation,
proprietary computer IP addresses provided to N2H2 for server
installation.
2.8 N2H2 will, through the provision of the Service, allow BT and its
Authorised Users to use N2H2's proprietary database of records for
filtering and screening activities. Such information shall remain the sole
and exclusive property of N2H2.
Page 2 of 14
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BT
N2H2 INC.- FILTERING SERVICE
- --------------------------------------------------------------------------------
2.9 All prices exclude VAT but include all royalties, licence fees or similar
expenses arising from the use of any intellectual property and the supply
and delivery of the System.
2.10 Where there is an opportunity to obtain advertising revenue through the
provision of this service, revenues shall *
3. BRANDING OF THE SERVICE
3.1 BT may brand and market the Service in such manner as it chooses.
3.2 BT shall control the look and appearance of the Block Pages. For the
avoidance of doubt BT shall control (and may sell the right to place) any
advertising which may appear on Block Pages. BT may create various Block
Page trailers and graphics which N2H2 shall install on the System as soon
as reasonably possible following BT's request so that these Block Page
trailer and graphics shall appear on such Block Pages as BT may request.
BT may require that different Authorised Users view Block Pages containing
different trailers and graphics. The parties acknowledge that such
trailers and graphics shall remain, in all respects, the property of BT
and N2H2 may not use such trailer and graphics except as expressly
authorised in this Contract.
4. LICENCE
4.1 N2H2 grants to BT, for the terms of this Contract, a global, non
exclusive, non transferable right to use and to allow Authorised Users to
use the System, solely as configured for BT and each Authorized User.
4.2 BT and its employees shall not attempt to access the System's Hardware,
Software, and Proprietary Content or source code.
5. MAINTENANCE
5.1 N2H2 will, at its own cost and expense, monitor the System at the Server
Site and keep the same in good and safe condition.
5.2 At all times N2H2 will follow best IT industry safety practices.
5.3 BT will and will require Authorised Users to maintain Server Sites in a
clean and relatively dust free manner. The acceptable operating
temperature range for the Server is between 60.1 Fahrenheit (15 C) and
85.0 Fahrenheit (30 C).
5.4 Maintenance services will be provided according to the severity of the
fault in accordance with Schedule 3.
6. ACCESS TO SERVER SITES
6.1 N2H2 will comply with all reasonable site regulations in place at Server
Sites.
Page 3 of 14
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BT
N2H2 INC.- FILTERING SERVICE
- --------------------------------------------------------------------------------
7. TELEPHONE SUPPORT
7.1 Upon successful installation of the System, * promptly train each
Authorised User's network administrator (or their nominee) in the proper
use of the System. * will make available by telephone, technical
consultants to assist Authorise Users concerning operation and
troubleshooting of the System.
8. INDEMNITIES
8.1 N2H2 will indemnify BT for any loss, damage or costs as a result of any
claims concerning the breach or alleged breach of clauses 2.3, 2.4, 5.1,
5.2 and 6.1. As a condition of this indemnity BT must:
8.1.1 notify N2H2 in writing as soon as it becomes aware of any breach of
allegations of breach;
8.1.2 make no admission relating to the breach or allegation of breach; and
8.1.3 allow N2H2 to conduct all negotiations and proceedings and (at N2H2's
reasonable expense) give N2H2 all reasonable assistance in doing so.
8.2 N2H2 shall indemnify and keep indemnified BT against all actions, claims,
demands, costs and charges arising from infringement or alleged
infringement of any Third Party Intellectual Property Right, Design, Right
and/or Typography Right or any breach of any obligation of non-disclosure
by the possession, copying, use or sale of any documentation or software
supplied to BT by N2H2 pursuant to this Agreement.
8.2.1 If any claim is made against N2H2 or BT that possession use of any item of
the Software (including documentation) infringes any Intellectual Property
Right, Design Right and or Typography Right owned by a third party, N2H2
and BT shall each promptly notify the other and provide full particulars
of the claim. In response to any such claim, N2H2 shall at it's own cost
negotiate for settlement of or defend the claim, and hold BT harmless from
judgement, order or settlement and at the it's option and the it's own
expense:-
(a) negotiate for BT a licence free of charge to BT for continued use of
the item against which the claim was made; or
(b) modify BT's copy or copies of the item against which the claim was made so
as to meet the current functional specification and avoid the claim of
infringement or any interlocutory injunction or court order in respect of
the item; or
(c) supply to BT a modified version of the item against which the claim was
made so that the modified version meets the current functional
specification and avoids the claim of infringement or any interlocutory
injunction or court order in respect of the item.
None of the above affects BT's rights to damages under this contract.
Page 4 of 14
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BT
N2H2 INC.- FILTERING SERVICE
- --------------------------------------------------------------------------------
9. SALE OF THE SERVICE
9.1 BT shall be entitled to contract with its customers (including, for the
avoidance of doubt, those customers who act as Virtual Internet Service
Providers) for the provision of the Service.
9.2 BT shall supply N2H2 with a list of 500 entities with which it has a
relationship in the Internet and multimedia business (the "List"). BT may,
in its absolute discretion, by notice in writing to N2H2, vary the List
from time to time. N2H2 agrees not to sell or attempt to sell the Service
or any variation of it, in the UK, to any entity whose name appears on the
List. If any entity on the List approaches N2H2 concerning the provision
of the Service or any variation of it, in the UK, then N2H2 agrees to
immediately refer such enquiry to BT and to immediately inform BT that it
has been contacted by that entity.
10. DEVELOPMENT OF THE SERVICE
10.1 N2H2 will continue to develop and improve the Service. Where reasonably
practicable N2H2 will develop the Service to meet the requirements of BT
and its customers. N2H2 will keep BT informed of its ongoing plans for the
development of the Service
10.2 To facilitate this objective the parties will meet every 6 months to
discuss the development of the Service and the requirements of BT and its
customers.
11. PREFERRED RESELLER
11.1 As long as BT continues to actively promote the service through it's sales
force, N2H2 will, for the first 12 months of this Contract, not contract
with any third parties for the provision of the Service in the UK, so that
such third party may then contract to provide another party with the
Service either in a branded or unbranded format. BT and N2H2 agree to meet
on a quarterly basis to confer on sales strategy and progress.
12. SALES TRAINING AND ASSISTANCE
12.1 N2H2 will, at no extra charge provide such reasonable assistance as BT may
require in training its sales force in the Service. N2H2 will do all
reasonable things to assist the BT sales force in promoting the service
including, if required, accompanying BT salespeople on important customer
visits.
13. RIGHT TO AUDIT
13.1 N2H2 has the right to audit BT's records, at it's own expense, for the
purpose of confirming the revenue BT has realised from the sale of the
Service once during each 12 month period. N2H2 shall give BT at least two
weeks notice of any audit, and upon receipt of such notice, BT shall make
all records reasonably necessary for the verification of such revenue
available to N2H2. All information gathered by N2H2 during such audits
shall be subject to the confidentiality provisions in this Agreement and
may only be used for the purposes of this paragraph 13.
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14. OTHER N2H2 SOLUTIONS
14.1 As part of the licence fee payable under this agreement N2H2 grants BT the
right to make available from its internet sites N2H2's client based
filtering solution when such solution becomes commercially available. The
first * users to subscribe to that client based solution from BT's
Internet sites shall be able to do so at no charge to themselves or BT.
Thereafter N2H2 will provide the client based solutions to BT (so that BT
may make it available to its customers) on commercially reasonable terms.
14.2 As N2H2 introduces new products and services, these products and services
shall be provided to BT on terms at least as favourable as those offered
to other comparable customers.
15. CONFIDENTIALITY
15.1 The parties will keep in confidence any information (whether written or
oral) of a confidential nature (including software and manuals) obtained
under this Contract and will not disclose that information to any person
(other than their employees or professional advisers who need to know the
information) without the written consent of the other party.
15.2 This paragraph 15 will not apply to:
(i) any information which has been published other than through a breach
of this Contract or any other contract or duty of confidence;
(ii) information lawfully in the possession of the recipient before
the disclosure under this Contract took place;
(iii) information obtained from a third party who is free to disclose
it; and
(iv) information which a party is required to disclose by law.
15.3 This paragraph 15 will remain in effect for 2 years after the termination
of this Contract.
16. CHARGES
16.1 The Charges for the Service will be calculated and payable in accordance
with Schedule 2 (Charges Schedule).
17. LIMITATION OF LIABILITY
17.1 Each party accept unlimited liability for death or personal injury
resulting from its negligence.
17.2 Neither party shall be liable to the other either in contract, tort
(including negligence) or otherwise for any direct loss of profits,
business or anticipated savings, nor for any indirect or consequential
loss or damage or for any destruction of data.
17.3 Each party's liability to the other, whether in contract, tort (including
negligence) or otherwise in relation to this Contract is limited to Pound
Sterling * for any one incident or series of related incidents and
to Pound Sterling * for all incidents in any 12 month period.
17.4 Each provision of this Contract excluding liability operates separately.
If any part is held by a court to be unreasonable or inapplicable, the
other parts shall continue to apply.
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18. MATTERS BEYOND THE REASONABLE CONTROL OF EITHER PARTY
18.1 If either party is unable to perform any obligation under this Contract
because of a matter beyond that party's reasonable control such as
lightning, exceptionally severe weather and fire and floods caused by the
same, explosion, war, civil disorder, industrial disputes (not involving
that party's employees) or acts of local or central government or other
competent authorities, or events beyond the reasonable control of that
party's suppliers, that party will have no liability to the other for that
failure to perform provided it informs the other party as soon as
reasonably possible and regularly updates the other party with the steps
which it is taking to remedy the matter at issue and provided that BT
relies on this paragraph 18.1 the Customer's obligations to pay the
charges shall be suspended for the period of such reliance.
19. WARRANTIES
19.1 N2H2 warrants that it has the right to supply the Software and grant
licences for the Software as described in this Agreement and will
indemnify and hold harmless BT against any claim that it is not so
entitled
19.2 N2H2 hereby represents, warrants and covenants that the Software does not
and will not contain any computer code that would disable the Software or
impair in any way its operation based on the elapsing of a period of time,
exceeding an authorized number of copies, advancement to a particular date
or other numeral, or other similar self-destruct mechanisms (sometimes
referred to as "time bombs", "time locks", or "drop dead" devices) or that
would permit N2H2 to access the Software to cause such disablement or
impairment (sometimes referred to as a "trap door" device). N2H2 agrees
that in the event of a breach or alleged breach of this Section 19.2 that
BT shall not have an adequate remedy at law, including monetary damages,
and that BT shall consequently be entitled to seek a temporary restraining
order, injunction, or other form of equitable relief against the
continuance of such breach, in addition to any and all remedies to which
BT shall be entitled.
19.3 N2H2
a) warrants that, where applicable, the Software, N2H2's internal
equipment and systems, and the N2H2's links with BT (including, without
limitation, electronic data interchange links), are fully compatible
(without modification, loss of performance, loss of use, or work or
expense on the part of BT) with changes to inputs, outputs, data or other
Information in relation to dates arising in the year 2000 and beyond; and
(b) agrees that, notwithstanding anything to the contrary in this
Contract, BT may freely disclose all information concerning such
compatibility to third parties.
20. TERMINATION
20.1 If either party (`the Defaulting Party'):
(a) commits a material or persistent breaches of the Contract (other than
BT's obligation to pay), and in the case of a breach which is capable of
remedy, fails to remedy the breach within 14 days (or such longer period
as the other party may at its option agree in writing) of written notice
from the other party to do so; or
(b) becomes insolvent or ceases to trade or compound with its creditors; or
a bankruptcy petition or order is presented or made against it; or where
N2H2 is a partnership, against any one
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BT
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partner, or if a trustee in sequestration is appointed in respect of its
assets or (where applicable) any one partner; or a receiver or an
administrator receiver is appointed in respect of any of its assets; or a
petition for an administration order is presented or such an order is made
in relation to it; or a resolution or petition or order to wind it up is
passed or presented or made or a liquidator is appointed in respect of it
(otherwise than for reconstruction or amalgamation)
then the other party shall have the right:
(i) at any time to end the Contract forthwith as a whole or (at BT's
option) in respect of any part of the Contract to be performed; and
(ii) where N2H2 is the Defaulting Party, to recover from N2H2 all directly
resulting losses and expenses (including, without limitation, the
additional cost of completing Work, or having Work completed by another
supplier, to a similar standard).
20.2 BT may at any time on written notice end the Contract immediately if
N2H2's ownership or control is materially changed to (in BT's reasonable
opinion) BT's detriment.
20.3 BT may at any time on written notice end the Contract in whole or in part
immediately. Where BT ends the Contract under this paragraph and does not
have any other right to end the Contract, the following shall apply:
(a) BT shall subject to subparagraph (b) below, pay to N2H2 such amounts as
may be necessary to cover N2H2's reasonable costs and outstanding and
unavoidable commitments (and reasonable profit thereon) necessarily and
solely incurred in properly performing the Contract in relation to
Applicable Work (as defined below) prior to ending it.
(b) BT shall not pay for any such costs or commitments that N2H2 is able to
mitigate and shall only pay costs and commitments that BT has validated to
its satisfaction. BT shall not pay for Applicable Work that, at the date
of termination, BT is entitled to reject or has already rejected. BT's
total liability under sub-paragraph (a) above shall not in any
circumstances exceed the price that would have been payable by BT for
Applicable Work if the Contract had not been ended. (c) In this paragraph,
"Applicable Work" means Work in respect of which the Contract has been
ended under this paragraph, which was ordered by BT under the Contract
before it was ended, and for which payment has not at that date become due
from BT.
21. CHANGES TO THIS CONTRACT
21.1 If the Customer asks BT to make any change to the Service BT may ask the
Customer to confirm the request in writing. If BT agrees to a change, this
Contract will be amended from the date when BT confirms the change in
writing to the Customer.
22. ASSIGNMENT
22.1 Neither party may transfer any of their rights or obligations under this
Contract, without the written consent of the other (such consent not to be
unreasonably withheld)
23. CONTRACT MANAGEMENT AND ESCALATION OF DISPUTES
23.1 Each party shall appoint a liaison officer to be responsible for managing
the performance of this Contract. The liaison officers shall arrange
regular telephone conference calls or
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meetings but in any event at least once every month to discuss and minute
the progress of the provision of the Services under this Contract. Each
liaison officer shall have a named deputy to cover during holidays,
sickness or any other periods of absence. The BT and the Customer liaison
officers and their deputies shall be appointed as soon as reasonably
possible following the commencement of this Agreement. The appointment and
replacement of each party's liaison officer and deputy shall be subject to
the prior written approval of the other party, such approval not to be
unreasonably withheld of delayed. Any issue which cannot be resolved
between the respective liaison officers shall be promptly referred to a
telephone conference call or meeting with senior management
representatives of the parties. The senior management representatives
shall agree an action plan for dealing with the issue, including where
agreed through the use of an independent expert, within 7 days of the
issue being referred.
23.2 Each party agrees to respond promptly to any issues or requirements
referred to it by the other party relating to the performance of
obligations under this Contract and shall seek to resolve any problems
arising in relation to the performance of those obligations as quickly and
effectively as possible.
24. ENTIRE AGREEMENT
24.1 This Contract contains the whole agreement between the parties and
supersedes all previous written or oral agreements relating to its subject
matter.
24.2 The parties acknowledge and agree that:
(a) they have not been induced to enter into this Contract by any
representatives, warranty or other assurance not expressly incorporated
into it; and
(b) in connection with this Contract their only rights and remedies in
relation to any representation, warranty or other assurance are for breach
of this Contract and that all other rights and remedies are excluded,
except in the case of fraud.
25. NOTICES
25.1 Notices given under this Contract must be in writing and may be delivered
by hand or by courier, or sent by first class to post to the following
addresses:
(a) to BT at its registered office or any alternative address which
BT notifies to the Customer;
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(b) to the Customer at the address to which the Customer asks BT to send
invoices, the address of the Site or, if the Customer is a limited
company, its registered office.
26. COMMENCEMENT AND TERM
26.1 This Contract shall commence once it and the Co-location Contract have
each been signed by both parties and shall continue for 2 years unless
terminated earlier as provided herein.
26.2 This Contract shall automatically terminate upon the termination of the
Co-location Contract.
27. SURVIVAL
27.1 The provisions of this Agreement with the following headings or numbers
shall survive the ending of the Contract in addition to those which by
their content or nature shall so survive:
- Confidentiality (15)
- Limitation of Liability (17)
- Indemnities (8)
28. JURISDICTION
28.1 This Contract shall be governed by the law of England and Wales and
subject to the exclusive jurisdiction of the English Courts.
IN WITNESS WHEREOF the parties have caused this agreement to be signed by
their duly authorised representatives this ____________day of
_________________1999
- ------------------------------------------------------------------------
British Telecommunication PLC N2H2 Inc.
- ------------------------------------------------------------------------
Signed: Signed:
[Paul Tinslay] [John Duncan]
- ------------------------------------------------------------------------
Name: Name:
[Paul Tinslay] [John Duncan]
- ------------------------------------------------------------------------
Position: Position:
[Team Leader] [C.F.O.]
[___________ Procurement]
- ------------------------------------------------------------------------
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BT
N2H2 INC.- FILTERING SERVICE
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SCHEDULE 1 - THE SERVICE
SERVICES
BASIC SERVICES:
N2H2 utilizes a proxy server solution to provide Internet filtering for our
customers. N2H2 will install proprietary software onto proxy servers that will
enable the servers to filter Internet content. N2H2 will monitor and maintain
all the software and hardware components of our proxy server solution remotely
from our Seattle, Washington network facility. With N2H2s(1) Bess filtering
service the customer will have access to a web interface control panel allowing
for customization of our service.
FUNCTIONALITY SPECIFICATIONS:
N2H2 provides the following features with our Bess filtering service:
[ ] Statistics. Enables the system administrator to configure filtering reports
in single day, multiple day and historical formats. The system administrator can
view summary data as web pages, e-mails, or as tab-delimited files suitable for
importing into spreadsheet programs.
[ ] Authorized Users. Enables the system administrator to create accounts in the
form of username/password that allows the user to temporarily override filtering
at their workstations.
[ ] Local URL customization. Allows the system administrator to block access to
specific sites, directories, or web pages currently not categorized in our
database or to permit access to specific sites, directories, or web pages
currently filtered.
[ ] Request site review. Allows customers to send electronic mail directly to
N2H2 to request an explanation of why a site was filtered or unfiltered.
[ ] Cache Administration. Enables the system administrator to set the parameters
for cashing.
[ ] Cache-on-demand. Enables the system administrator to preload frequently
accessed web pages into cache to increase network performance.
[ ] Filter builder. Enables the system administrator to implement customized
filtering criteria.
[ ] Filter schedules. Enables the system administrator to schedule the time of
day that specified filtering criteria will be put into effect.
[ ] IP control. Enables the system administrator to define which workstations on
their network will have access to the proxy server for filtered Internet access.
[ ] Customizable block page. Provides the system administrator with the means to
customize the block page that appears when a site has been filtered.
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BT
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SCHEDULE 2 - CHARGES SCHEDULE
1. BT shall N2H2 a licence fee of Pound Sterling * per annum * following receipt
of an invoice from N2H2. Payment shall be due 30 days from receipt of the
invoice. In recognition of this payment, the licence fee above entitles BT to
unlimited use of equipment and support of the filtering service.
2. All net revenue (excluding VAT) directly generated from the sale by BT of the
Service to Authorised Users will be * between the parties.
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BT
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SCHEDULE 3
MAINTENANCE RESPONSE TIMES AND SUPPORT GRID
Upon receipt of BT's request for support and/or rectification of a fault N2H2
shall promptly commence work on such request in accordance with the Priority
Codes detailed below:
(a) PRIORITY CODE A: Filtering service is unavailable or a major feature is
completely non-functional causing serious disruption for BT or an Authorised
User. N2H2 shall commence troubleshooting work on the problem and/or
rectification of the fault immediately upon receipt of notification from BT and
shall continue troubleshooting, work until the root-cause of the reported defect
is identified. Upon identification, N2H2 shall work continuously on the
identified defect and use its best endeavors to resolve a Priority Code A
problem and/or rectify a priority Code A fault within two (2) hours of receipt
of report from BT of the said problem or fault. Upon receipt of notice from BT
of a Priority Code A problem N2H2 will immediately use its best endeavours to
put in place a by pass so that normal service can resume as soon as possible.
(b) PRIORITY CODE B: Partial failure of Filtering Service or problems occurring
whenever a specific facility or function is invoked - Supplier shall commence
troubleshooting work on the problem and/or rectification of the fault
immediately upon receipt of notification by BT and shall continue
troubleshooting work until the root-cause of the reported defect is identified.
Upon identification, N2H2 shall use all reasonable endeavours to resolve a
Priority Code B problem and/or rectify a Priority Code B fault within four (4)
hours of receipt of report from BT of the said problem or fault. In the event
that N2H2 shall fail to meet the four (4) hour timescale for resolution of
problem or rectification of fault BT may at its discretion escalate the said
problem or fault from Priority Code B to Priority Code A. Upon receipt of notice
from BT of a Priority Code B problem N2H2 will immediately use its best
endeavours to put in place a by pass so that normal service can resume as soon
as possible.
(c) PRIORITY CODE C: Problems/failures occur occasionally but can be
circumvented without undue difficulty or disruption to BT's operation - Supplier
shall use all reasonable endeavours to resolve a Priority Code C problem and/or
rectify a Priority Code C fault within 5 business days of receipt of report from
BT of the said problem or fault.
- -------------------------------------------------------------------------------
LEVEL OF SEVERITY
- -------------------------------------------------------------------------------
ESCALATION LEVEL CATEGORY A CATEGORY B CATEGORY C
- -------------------------------------------------------------------------------
Supplier Help-Desk Formal Formal Formal
notification of notification notification
problem or fault of problem or of problem or
fault fault
- -------------------------------------------------------------------------------
Supplier Help-Desk Within 2 hours Within 4 hours Within 5
Lead problem or of Supplier working days
fault unless a identification of BT
fix is scheduled of problem or reporting the
fault unless a problem or
fix is fault unless
scheduled a fix is
scheduled.
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BT
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- --------------------------------------------------------------------------------
Within 4 hours Within 1 Within 14
Supplier Technical of Supplier working days working days
Support Manager identification of Supplier of BT
of problem or identification reporting the
fault unless a of problem or problem or
fix is scheduled fault unless a fault unless
fix is a fix is
scheduled scheduled
- -------------------------------------------------------------------------------
Supplier Director Within 24 hours Within 3
of Operations of Supplier working days
identification of Supplier
of the problem identification
or fault unless problem or
a fix is fault unless a
scheduled fix is
scheduled
- -------------------------------------------------------------------------------
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<PAGE> 1
EXHIBIT 10.2
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
N2H2 -- COLOCATION SERVICE
- --------------------------------------------------------------------------------
1. Interpretation
2. Commencement of this Contract
3. Provision of the Service
4. Connection of Customer Equipment to the Service
5. Removal or Collection of Equipment
6. Access and Site Regulations
7. Security
8. Use of the Service
9. Confidentiality
10. Charges and Deposits
11. Limitation of Liability
12. Matters Beyond the Reasonable Control of Either Party
13. Minimum Periods
14. Breaches of this Contract
15. Changes to this Contract
16. Assignment
17. Entire Agreement
18. Sales Taxes
19. Notices
20. Law
<PAGE> 2
N2H2--COLOCATION SERVICE
1. INTERPRETATION
IN THIS CONTRACT:
"APPROVED MAINTAINER" means anyone approved by the Customer as
authorised to work on the Customer
Equipment including anyone who identifies
themselves as such in accordance with the
procedures set out in 1.3(d) of the Service
Schedule.
"BT" means British Telecommunications plc of 81
Newgate Street, London EC1A 7AJ, registered in
England No. 1800000.
"BT EQUIPMENT" means any equipment belonging to or supplied
by BT on the Site for the provision of the
Service
"BT GROUP COMPANY" means a BT subsidiary or holding company, or
a subsidiary of that holding company, all as
defined by Section 736 of the Companies Act
1985, as amended by the Companies Act 1989.
"CONTRACT" means, in order of precedence, these
Conditions and the Service Schedule.
"CUSTOMER" N2H2, Inc., a Washington corporation, having
its principal place of business at 99 4th
Avenue - Suite 3400, Seattle, WA 98164.
"CUSTOMER EQUIPMENT" means any equipment belonging to or
supplied by the Customer on the Site.
"CUSTOMER RACKS" means the racks allocated for the Customer's
use as per the Service Schedule.
"FILTERING CONTRACT" means the Contract of even date between the
Customer and BT for the provision and resale
of internet filtering services.
"INTERNET STANDARDS" means the protocols and standards defined in
the following Internet documents: RFC 1009,
1122, 1123 and 1250 and any other applicable
protocols and standards.
"MINIMUM PERIOD" means the minimum periods specified in clauses
2.1(b) and 2.3(a) of the Service Schedule
beginning on the Operational Service Date.
"OPERATIONAL SERVICE DATE" means the earlier of the date when that
part of the Service subject to the Minimum
Period is first made available to the Customer
at a Site or the date when the Customer first
starts to use the Service.
2
<PAGE> 3
N2H2--COLOCATION SERVICE
"RACK PLAN" means a plan describing the proposed layout
and type of the Customer Equipment to be
placed in the Customer Racks.
"SERVICE" means the Co-location service or, where
appropriate, part of the Co-location service
described in Schedule 1 - Service Schedule.
"SITE" means the place at which BT agrees to provide
the Service as specified in the Service
Schedule.
2. COMMENCEMENT OF CONTRACT
2.1 This Contract shall commence once it and the Filtering Contract have
each been signed by both parties and shall continue for 2 years unless
terminated earlier as provided herein.
2.2 This Contract shall automatically terminate upon the termination of the
Filtering Contract.
3. PROVISION OF THE SERVICE
3.1 BT will provide the Service to the Customer on the terms of this
Contract.
3.2 BT will use reasonable endeavours to provide the Service by the date
agreed with the Customer, but all dates are estimates and BT has no
liability for any failure to meet any date.
3.3 BT will provide the Service with the reasonable skill and care of a
competent telecommunications provider.
3.4 It is technically impracticable to provide a fault free Service and BT
does not undertake to do so. However, BT will use reasonable endeavours
to meet any targets set for the Services as shown in the Service
Schedule.
3.5 Occasionally BT may:
(a) for operational reasons, change the technical specification of
the Service, provided that any change to the technical
specification does not materially affect the performance of the
Service; or
(b) give the Customer instructions which it believes are necessary
for reasons of health, safety or the quality of any
telecommunications or internet service provided by BT to the
Customer or any other customer.
Before doing so, BT will give the Customer as much notice as possible
and whenever practicable will agree with the Customer, when the Service
will be suspended.
3.6 BT will only provide those things expressly described in the Service
Schedule. The Customer is responsible for providing suitable computer
hardware, software and telecommunications equipment and services
necessary to access and use the Service. This Contract does not include
the provision of telecommunication services necessary to connect to the
Service, other than internet access as set out in the Service Schedule.
3.7 The Customer is responsible for the acts and omissions of all Approved
Maintainers in connection with the Service and is liable for any failure
by any Approved Maintainer to perform or observe the terms and
conditions of this Contract as if that failure were the failure of the
Customer, including any instructions issued under paragraph 3.5
3
<PAGE> 4
N2H2--COLOCATION SERVICE
4. CONNECTION OF CUSTOMER EQUIPMENT TO THE SERVICE
4.1 The Customer may only connect Customer Equipment to the Service as
described in the most up to date Rack Plan which has been approved by BT
pursuant to paragraph 2.1(a) of the Service Schedule.
4.2 The Customer must ensure that all Customer Equipment is connected, used
and dealt with in accordance with all applicable manufacturer's and
distributor's instructions and in accordance with best IT industry
safety standards and is not a danger to the Site or any people or
equipment in it.
4.3 The Customer must ensure that any Customer Equipment which is attached
(directly or indirectly) to the Service is technically and physically
compatible with the Service and approved for that purpose under any
legislation.
4.4 The Customer must ensure that any Customer Equipment is connected, used
and dealt with in accordance with any reasonable instructions from BT.
4.5 The Customer will indemnify BT against all reasonable costs arising out
of a breach by the Customer of this paragraph 4.
5. REMOVAL OR COLLECTION OF EQUIPMENT
5.1 In the event of termination of this Contract all the Customer Equipment
is to be removed by the Customer within 5 days of such termination. The
Customer must give BT prior notice of the date and time of removal,
which must be agreed with BT. The removal will be at the Customer's
expense.
5.2 If the Customer fails to remove all the Customer Equipment within one
month of the termination date, BT shall be entitled:
a) to remove part of or all the Customer Equipment and store it, and the
Customer shall reimburse to BT any costs incurred by BT in removing and
storing it; and
b) to sell the Equipment and section 12 of the Torts (Interference with
Goods) Act 1977 (which shall be deemed to apply in Scotland as well as
in England) shall apply as if BT had in accordance with Part II of
Schedule 1 to that Act given to the Customer notice of its intention to
sell the Equipment. In accounting to the Customer BT shall be entitled
to deduct from the proceeds of sale any sum due to BT from the Customer
under this Contract.
6. ACCESS AND SITE REGULATIONS
6.1 Access to the Site will be subject to BT's reasonable security
procedures as notified to the Customer from time to time.
6.2 All access to the Site must be booked with BT as far in advance as
reasonably possible in the circumstances. Bookings are to be made by
telephone to such number as BT may notify to the Customer from time to
time.
6.3 The Customer will observe BT's reasonable site regulations, as
previously advised in writing to the Customer. The Customer shall be
responsible for ensuring that its employees and all Approved Maintainers
also observe such regulations.
7. SECURITY
7.1 BT is responsible for the physical security of the Site.
7.2 The Customer is responsible for all other security matters.
4
<PAGE> 5
N2H2--COLOCATION SERVICE
8. USE OF THE SERVICE
8.1 The Service is provided solely for the Customer's own use and the
Customer will not resell or attempt to resell the Service (or any part
or facility of it) to any third party.
8.2 The Service must not be used, directly or indirectly, in any way that
does not comply with:
a) the terms of any legislation or any license applicable to the
Customer or that is in any way unlawful;
b) any instructions given by BT under paragraphs 3.5(b)
8.3 The Service must not be used:
a) to send, receive, upload, download, use or re-use any information
or material which is defamatory, obscene or menacing, or in
breach of confidence, copyright, privacy or any other rights
(except for the purpose of providing the Customer's internet
filtering service to its customers); or
b) other than in accordance with the legally acceptable use policies
of any connected networks and the Internet Standards.
8.4 The Customer must not use a Domain Name or URL which infringes the
rights of any person in a corresponding trade mark or name.
8.5 If the Customer uses the Service in contravention of paragraphs 8.1,
8.2, 8.3 or 8.4 then BT may treat the contravention as a material breach
of this Contract.
8.6 The Customer must indemnify BT against any claims or legal proceedings
which are brought or threatened against BT by a third party because:
a) the Service is used in breach of this paragraph 8; or
b) the Service is faulty or cannot be used by that third party.
Such indemnity will be contingent on BT notifying Customer of any such
claims or legal proceeding within 5 days of BT having notice of such
claims or legal proceeding and BT tendering defence of such claims or
legal proceeding to Customer. BT agrees (at the Customer's reasonable
expense) to provide the Customer with reasonable assistance in the
defence of such claims. The Customer will keep the BT informed as to the
progress of such claims or proceedings.
8.7 The Service includes Internet access. The Internet is independent of the
Service and BT and use of the Internet is solely at the Customer's risk
and subject to all applicable laws. BT has no responsibility for any
information, software, services or other materials obtained by the
Customer using the Internet.
9. CONFIDENTIALITY
9.1 The parties will keep in confidence any information (whether written or
oral) of a confidential nature (including software and manuals) obtained
under this Contract and will not disclose that information to any person
(other than their employees or professional advisers, or in the case of
BT the employees of a BT Group Company or their suppliers, who need to
know the information) without the written consent of the other party.
9.2 This paragraph 9 will not apply to:
a) any information which has been published other than through a
breach of this Contract;
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N2H2--COLOCATION SERVICE
b) information lawfully in the possession of the recipient before
the disclosure under this Contract took place;
c) information obtained from a third party who is free to disclose
it; and
d) information which a party is requested to disclose and, if it did
not, could be required by law to do so.
9.3 This paragraph 9 will remain in effect for two years after the
termination of this Contract.
10. CHARGES
10.1 BT will invoice N2H2 quarterly in arrears for the greater of Pound
Sterling * or the value of the Service being provided by BT to
N2H2 under this Contract, calculated using BT's then generally available
prices for such services. It is recorded that BT's generally available
price for the 1 rack and 1MB of bandwidth being provided at the
commencement of this contract is Pound Sterling 35800.00 per annum.
10.2 Invoices shall be payable within 30 days of their date.
11. LIMITATION OF LIABILITY
11.1 Both parties accept unlimited liability for death or personal injury
resulting from its negligence. Paragraphs 11.2 and 11.3 do not apply to
such liability.
11.2 Neither party shall be liable to the other either in contract, tort
(including negligence) or otherwise for any direct or indirect loss of
profits, business or anticipated savings, nor for any indirect or
consequential loss or damage or for any destruction of data.
11.3 Each party's liability to the other, whether in contract, tort
(including negligence) or otherwise in relation to this Contract is
limited to Pound Sterling 250,000 for any one incident or series of
related incidents and to Pound Sterling 500,000 for all incidents in any
period of 12 months.
11.4 BT excludes all liability of any kind in respect of any material on the
Internet which can be accessed using the Service and is not responsible
in any way for any goods (including software) or services provided by
third parties advertised, sold or otherwise made available by means of
the Service or on the Internet;
11.5 Neither party shall be liable to the other either in contract, tort
(including negligence) or otherwise for the acts or omissions of other
providers of telecommunications or Internet services (including domain
name registration authorities) or for faults in or failures of their
equipment.
11.6 Each provision of this Contract, excluding or limiting liability,
operates separately. If any part is held by a court to be unreasonable
or inapplicable, the other parts shall continue to apply.
12. MATTERS BEYOND THE REASONABLE CONTROL OF EITHER PARTY
12.1 If either party is unable to perform any obligation under this Contract
because of a matter beyond that party's reasonable control such as
lightning, flood, exceptionally severe weather, fire, explosion, war,
civil disorder, industrial disputes (whether or not involving that
party's employees) or acts of local or central Government or other
competent authorities, or events beyond the reasonable control of that
party's suppliers, that party will have no liability to the other for
that failure to perform.
12.2 If any of the events detailed in paragraphs 12.1 continue for more than
3 months either party may serve notice on the other terminating this
Contract.
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N2H2--COLOCATION SERVICE
13. MINIMUM PERIODS
13.1 Upon termination of this Contract the Customer must pay the charges due
for any remaining part of any Minimum Periods.
14. BREACHES OF THIS CONTRACT
14.1 Either party may terminate this Contract or the Service immediately on
notice, if the other:
a) commits a material breach of this Contract, which is capable of
remedy, and fails to remedy the breach within a reasonable time
of a written notice to do so; or
b) commits a material breach of this Contract which cannot be
remedied; or
c) is repeatedly in breach of this Contract; or
d) is the subject of a bankruptcy order, or becomes insolvent, or
makes any arrangement or composition with or assignment for the
benefit of their creditors, or goes into voluntary (otherwise
than for reconstruction or amalgamation) or compulsory
liquidation, or a receiver or administrator is appointed over
their assets, or if the equivalent of any such events under the
laws of any of the relevant jurisdictions occurs to the other
party.
14.2 If either party delays in acting upon a breach of this Contract that
delay will not be regarded as a waiver of that breach. If either party
waives a breach of this Contract that waiver is limited to that
particular breach.
14.3 BT's rights under paragraph 14.1 do not prejudice any other rights of BT
under this Contract, including any claim for payment of arrears or for
damages for breach of this Contract.
15. CHANGES TO THIS CONTRACT
15.1 If the Customer asks BT to make any change to the Service BT may ask the
Customer to confirm the request in writing. If BT agrees to a change,
this Contract will be amended from the date when BT confirms the change
in writing to the Customer.
16. ASSIGNMENT
16.1 Neither party may transfer any of their rights or obligations under this
Contract, without the written consent of the other (such consent not to
be unreasonably withheld), except that BT may transfer its rights or
obligations (or both) to a BT Group Company without consent.
17. ENTIRE AGREEMENT
17.1 This Contract contains the whole agreement between the parties and
supersedes all previous written or oral agreements relating to its
subject matter.
17.2 The parties acknowledge and agree that:
(a) they have not been induced to enter into this Contract by any
representation, warranty or other assurance not expressly
incorporated into it; and
(b) in connection with this Contract their only rights and remedies
in relation to any representation, warranty or other assurance
are for breach of this Contract and that all other rights and
remedies are excluded, except in the case of fraud.
18. SALES TAX
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N2H2--COLOCATION SERVICE
18.1 All monetary figures exclude VAT and any other applicable sales taxes.
19. NOTICES
19.1 Notices given under this Contract must be in writing and may be
delivered by hand or by courier, or sent by first class post to the
following addresses:
(a) to BT its registered office or any alternative address which BT
notifies to the Customer;
(b) to the Customer at the address to which the Customer asks BT to
send invoices or if the Customer is a limited company, its
registered office.
20. LAW
20.1 This Contract is governed by the law of England and Wales and subject to
the exclusive jurisdiction of the English courts.
IN WITNESS WHEREOF the parties have caused this agreement to be signed
by their duly authorised representatives this _____ day of
_____________, 1999.
British Telecommunications PLC N2H2
Signed: Signed:
---------------------------------- ---------------------------
Name: Name:
------------------------------------ -----------------------------
Title: Title:
----------------------------------- ----------------------------
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N2H2--COLOCATION SERVICE
SCHEDULE 1 -- SERVICE SCHEDULE
The provisions of this Service Schedule are in addition to the Conditions and
form part of the Contract.
1.1 EQUIPMENT RACKING
a) BT will provide 1 standard 19" rack. Manufacturers and BT's reasonable
safety and mounting/racking practices must be observed at all times. A
fully equipped rack is not to exceed a total equipment floor loading of
800 lbs/sq. in.
b) Each rack will be provided with lockable front and rear doors with keys
being held by Site security.
c) Electrical supplies to the racks will be fed from a PDU (power
distribution unit). Two feeds of 240VAC 50HZ will be supplied, each
fused within the rack at 13 amps. (The maximum usable load.) Each feed
will terminate on a 10 socket power pole. The electrical feeds to the
rack will be backed up by the use of Standby Generators and UPS
(uninterruptable power supplies).
d) The Customer Racks are dedicated for the Customer's sole use and will be
used only by the Customer. However, the Customer acknowledges that the
deployment of such racks does not constitute a grant to the Customer of
any right, title or interest in such racks or in any software or other
application of any kind provided by BT which is connected with such
racks.
e) BT reserves the right, at the Customer's expense, to remove any rack,
from any element of the Service for reasons of security implications,
fire and safety hazards or breaches of these terms and conditions.
Notice will be given but in extreme emergency cases service will be
removed at BT's discretion.
f) BT also reserves the right, in exceptional circumstances, to move racks
to accommodate further growth of the data centre facility. A minimum
period of 28 days notice will be given.
1.2 INTERNET CONNECTIVITY
a) BT will provide 1Mb peak internet connectivity. The interface will be
presented as 1 CAT5 cable with standard RJ45 termination for connection
to the Customer Equipment. The interface cable will terminate on
10/100BaseTX ports on a BT owned and managed Catalyst switch. The
Customer is not allowed to access the router/catalyst configuration.
b) A Class C "IP Address range" will be allocated directly for initial
usage with the remainder of the Class C range being held in reserve. The
Customer must allocate addresses in an orderly, efficient manner and
provide to BT regular usage and forecast usage on the address range. BT
reserves the right to re-allocate/re-assign IP addresses as required to
fulfill operational requirements and those conditions as stipulated by
RIPF. In such circumstances a minimum 28 days notice period will be
given to allow for co-ordination. All IP addresses remain the property
of BT. Additional IP addresses will be available subject to appropriate
approvals on usage and payment of BT's then current administration
charge.
1.3 PHYSICAL SECURITY
a) The Site will be a BT server farm currently located at *
b) *
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N2H2--COLOCATION SERVICE
c) *
d) *
e) *
f) *
g) The Customer will, at no charge, during the first month of the Contract,
be granted 3 days access to the site. The timing of such access must be
arranged in advance with BT and must be used in lots of 24 hours each.
Further to this the Customer will receive, at no additional charge, a
period of 2 hours access to the Site each calendar month. All additional
visits will be charged at BT's then current rates. Unused visits may not
be carried forward from one month to the next.
1.4 CONTROLLED ENVIRONMENT
a) Forced air-cooling will be supplied to the bottom of the Customer Racks
and extracted through natural and fan assisted convection out through
the top. Cooling air at 17 degrees Centigrade (62.6 degrees Fahrenheit)
will be supplied at the bottom of the Customer Racks. Average room air
temperature will be maintained to 20 degrees Centigrade (70 degrees
Fahrenheit) within a tolerance of plus or minus 2 degrees Centigrade.
Humidity will be maintained at 50% within a tolerance of plus or minus
2%.
1.5 REMOTE HANDS
a) Remote Hands is the name given for the use of BT personnel to carry out
routine tasks at the request of the Customer. Such tasks are limited to
those identified below and BT takes no responsibility of any kind
whatsoever for the consequences of following any of the Customer's
instructions. BT accepts no liability of any kind whatsoever (including
negligence) in the event that the Remote Hands facility carries out, at
the Customer's request, tasks other than those listed in this paragraph
1.5.
b) A 24 hour Remote Hands facility will be available to perform the
following basic system tasks: checking lamp status, power cycling,
insertion/removal of tapes, button pushing and the removal/insertion of
cords/cables/leads with a recognised connection plug/socket. The Remote
Hands facility does not carry out unpacking and install of
servers/equipment.
c) The Customer will receive, at no charge, use of the Remote Hands
facility for 3 hours per month. Each request for "Remote Hands"
assistance will count as a minimum of one hour. Additional Remote Hands
visits will be charged at BT's then current rates. Unused Remote hands
hours may not be carried forward from one month to the next.
d) The Remote Hands service will be available by dialing such number as BT
may advise from time to time.
The call request will be logged and BT will use reasonable endeavours to
call back to assist within 30 minutes. The call back will be made from a
telephone line installed in the rack, and which has been pre-provisioned
at the customer's expense. All charges, including calls, will be the
customer responsibility.
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N2H2--COLOCATION SERVICE
1.6 SERVICE MANAGEMENT
BT shall establish and shall operate a single, 24 hour, fault reporting
Service desk on such number as BT may advise from time to for the
purpose of the reporting of all customer faults and the issuing of
trouble tickets.
1.7 SCHEDULED SERVICE TIME
a) The Service is scheduled to be available 24 hours per day, 7 days a
week, but 24x7 availability is not guaranteed. From time to time, it
will be necessary for BT to schedule maintenance (including but not
limited to network maintenance, replacement of faulty components, or
testing of the uninterruptable power supply) which may cause a
disruption to the Service. BT will use reasonable endeavours to provide
a minimum of 72 hours' notice before conducting such planned Service
affecting maintenance but does not guarantee it will always be able to
do so.
b) Where significant changes are planned BT will provide a minimum of 28
days notice when it is reasonably practicable to do so.
c) Emergency maintenance, updates, and other procedures will be scheduled
on a case-by-case basis.
e) Planned maintenance activity is not considered to be part of the
scheduled service time.
f) Nothing in this paragraph should be construed as a guarantee that BT
will always comply with the notice periods set out above, and BT is
obliged only to provide, as much prior notice of any Service affecting
maintenance as is reasonably practicable under the circumstances.
2. CUSTOMER RESPONSIBILITIES
2.1 EQUIPMENT RACKING
a) BT must approve, in writing, a Rack Plan provided by the Customer before
the Customer may place any Customer Equipment at the Site. In
considering such approval BT will have regard, without limitation, to
packing densities, potential heat output problems, and fire hazards. Any
changes to a Rack Plan must also be approved by BT in writing.
b) The Customer shall be entitled to increase the number of racks on 28
working days notice to BT. Any increase in the number of racks required
will be subject to a Minimum Period of 12 months and the Customer must
give BT 28 working days notice of its intention to change the number of
racks and any increase will be subject to availability of equipment,
labour and floor space.
c) All customer racking, equipment, shelving and components must be clearly
labelled to assist the Remote Hands service in navigating to the
appropriate item of kit requiring attention. Rack layouts and numbering
must be provided as an on-site paper record also for maintenance
purposes.
2.2 CUSTOMER EQUIPMENT
a) The Customer is responsible for the provision, installation, maintenance
and insurance of the Customer's Equipment.
b) The Customer is responsible for ensuring that the Customer's Equipment,
including any additions, are compatible with the equipment racking
parameters specified in the Service Schedule at paragraph 2.1.a.
c) The Customer must not add to, modify or in any way interfere with the BT
Equipment, nor allow anyone else to do so without the express approval
of BT.
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N2H2--COLOCATION SERVICE
d) The Customer will be liable to BT for any loss arising out of a breach
of paragraph 3.2(c), except where such loss is caused by BT's
negligence.
e) All installation work for wiring between the Customer Equipment and the
appropriate network terminating point (which will be located on the
Customer Racks) and between items of Customer Equipment within the rack
cluster must be carried out, at the Customer's cost, by a BT approved
wiring contractor.
f) BT will at the Customer's request do all reasonable things to put in
place cable tray connections between adjacent racks and between any
non-contiguous racks. BT's then current reasonable charges for such work
will apply.
Note: All underfloor cabling work will be scheduled outside of normal
working hours for operational and safety reasons.
g) The Customer is responsible for testing and maintenance of the Customer
Equipment to ensure:
(i) that it meets the manufacturer's specification,
if any;
(ii) that the installation has been correctly carried out; and
(iii) that the Customer Equipment is functioning correctly, including,
where appropriate, testing in conjunction with other equipment including
remotely located equipment connected to the Customer Equipment by means
of a telecommunication system.
h) The Customer will provide a list of the Customer Equipment on the Site
when requested from time to time by BT.
2.3 INTERNET CONNECTIVITY
a) The Customer shall be entitled to increase the internet connectivity,
subject to the provisions of this sub-paragraph. All increases will be
subject to giving 28 working days notice to BT, a Minimum Period of 12
months and will be subject to availability.
2.4 PHYSICAL SECURITY
a) The Customer must ensure that those people which it approves to have
access to the Site, are suitably competent to carry out the necessary
tasks and that they are responsible for their own safety whilst on the
Site.
2.5 REMOTE HANDS
a) The Customer must not give any instructions to the Remote Hands for
activities outside those listed in paragraph 1.5(b).
2.6 SERVICE MANAGEMENT
a) The Customer will provide a nominated contact with BT for all matters
relating to the provision of the Service. The Customer will also provide
contact details for any appointed agents whom BT may need to communicate
in relation to the Service.
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N2H2--COLOCATION SERVICE
18.1 All monetary figures exclude VAT and any other applicable sales taxes.
19. NOTICES
19.1 Notices given under this Contact must be in writing and may be delivered
by hand or by courier, or sent by first class post to the following
addresses:
(a) to BT its registered office or any alternative address which BT
notifies to the Customer;
(b) to the Customer at the address to which the Customer asks BT to
send invoices or if the Customer is a limited company, its
registered office.
20. LAW
20.1 This Contract is governed by the law of England and Wales and subject to
the exclusive jurisdiction of the English courts.
IN WITNESS WHEREOF the parties have caused this agreement to be signed
by their duly authorised representatives this 11th day of November,
1999.
British Telecommunications PLC N2H2
Signed: Signed:
-------------------------------- ---------------------------
[ ]
Name: Name:
-------------------------------- ---------------------------
[ ]
Title: Title:
-------------------------------- ---------------------------
[ ]
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Exhibit 10.3
As Filed with the Securities and Exchange Commission on February 14, 2000.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
TECHNOLOGY LICENSE AGREEMENT
This License Agreement ("the AGREEMENT"), is made and entered into this ___ day
of November, 1999 ("the EFFECTIVE DATE") by and between:
INTERMIND CORPORATION, to be renamed as OneName Corporation, a
Washington corporation duly organized under law and having a place of
business at 2101 Fourth Avenue, Suite 230, Seattle, WA 98121
("ONENAME");
and
N2H2, INC., a Washington corporation with a place of business at 900
Fourth Avenue, Suite 3400, Seattle, WA 98164 ("N2H2").
WHEREAS, ONENAME has developed, and plans to further enhance, certain technology
it calls eXtensible Name Service ("XNS"), which is defined in a Strategic
Marketing Agreement ("MARKETING AGREEMENT") entered into by ONENAME and N2H2, a
copy of which is attached as Schedule A, and ONENAME is the owner of other
technology and intellectual property rights relating to XNS;
WHEREAS, ONENAME intends to use the XNS technology to provide enhanced Internet
address and naming services using web agents to control and automate
communications;
WHEREAS, the XNS technology is intended to include privacy filters that can,
among other things, monitor and manage the email communications of ONENAME's
customers and such customers may use ONENAME's privacy filters either at the
client level ("CLIENT PRIVACY FILTER"), or at the server level ("SERVER PRIVACY
FILTER");
WHEREAS, ONENAME and N2H2 desire to develop products which use and support XNS
and other technologies relating to XNS; and,
WHEREAS, N2H2 desires to license certain rights relating to XNS and other
technology relating to XNS from ONENAME;
NOW THEREFORE, in consideration of the promises, mutual covenants and agreements
set forth herein, and in the MARKETING AGREEMENT, ONENAME and N2H2 agree as
follows:
1. DEFINITIONS
1.1. PREVIOUSLY DEFINED TERMS. The terms "AGREEMENT," "MARKETING AGREEMENT,"
"EFFECTIVE DATE," "ONENAME,"
<PAGE> 2
"N2H2," "CLIENT PRIVACY FILTER," and "SERVER PRIVACY FILTER" have the
same meanings as ascribed to them above. Terms defined in MARKETING
AGREEMENT shall have the meaning defined in MARKETING AGREEMENT, unless
otherwise defined herein.
1.2. PARTIES, PARTY. The term "PARTIES" means ONENAME and N2H2,
collectively. The term "PARTY" means either ONENAME or N2H2.
1.3. XNS, XSP, and XNSORG. The terms "XNS SERVICE PROVIDER" and "XSP" mean
the registrars and operators of XNS servers and agents, as defined in
the MARKETING AGREEMENT. The terms "XNS PUBLIC TRUST ORGANIZATION" and
"XNSORG" mean an international non-profit organization ONENAME is
establishing to maintain the XNS protocol, vocabulary, and XSP
quality-of-service standards.
1.4. PATENT RIGHTS. The term "PATENT RIGHTS" means and includes U.S. Patent
No. 5,862,325 listed in Schedule B ("PATENT"), U.S. and foreign patent
applications listed in schedule B ("PATENT APPLICATIONS"), any U.S. or
foreign patent issuing thereon, any U.S. or foreign patent issuing from
any applications claiming priority to the PATENT or any of the PATENT
APPLICATIONS, and any reexamination certificates or reissued patent to
issue based on any such U.S. or foreign patents or the PATENT.
1.5. COMPUTER PROGRAM. The terms "COMPUTER PROGRAM" and "COMPUTER PROGRAMS"
include computer program, module, database manager, agent, proxy,
socket, or any other software entity or collection of computer program
instructions for causing a computer to perform a particular task.
1.6. TECHNOLOGY. The term "TECHNOLOGY" means technology for implementing:
1.6.1. Data communication control performed by an intermediary COMPUTER
PROGRAM (for example any proxy computer program which operates
between two nodes of a network, for example between a client and
server computer program or between two server programs, in order
to control data communications between said nodes, for example
to filter said communications) for transferring information
from a publisher of information to a subscriber of information,
such COMPUTER PROGRAM incorporating, implementing, relying on,
or in any way using or improving on techniques described in the
PATENT in sections titled Basic Processes and Advanced System
Architecture ("DATA COMMUNICATION CONTROL SECTIONS") and/or
claimed by the claims of the PATENT the subject matter of which
are mainly described in the DATA COMMUNICATION CONTROL SECTIONS
of the PATENT. Such data communication control includes content
filtering of data transferred over
2
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the World Wide Web, filtering email messages, performing access
control, personalizing advertisement displayed to a user, and
integrating data exchange with third party systems.
1.6.2. Processing and additional control of metadata created by and
during performing data communication control described in 1.6.1
by incorporating, implementing, relying on, or in any way using
or improving on techniques described in the Patent in sections
titled Event Tracking Control, Data Archiving, and Reporting and
Statistics Control ("METADATA CONTROL AND PROCESSING SECTIONS')
and/or claimed by the claims of the PATENT the subject matter of
which were mainly described in the METADATA CONTROL AND
PROCESSING SECTIONS of the PATENT. Such processing and
additional control includes data mining of log files created by:
content filtering of data transferred over the World Wide Web;
filtering email messages, and personalizing advertisement
displayed to a user;
1.6.3. Controlling email messages in performing the data communication
control described in 1.6.1 and in performing the processing and
additional control of metadata described in 1.6.2, including
automatic addition of metadata to email messages or headers to
permit automated processing of email messages at email
recipients, such control of email messages incorporating,
implementing, relying on, or in any way using or improving on
techniques described in the PATENT in sections titled Message
Objects, Data Exchange Control, Communication Object Exchange
Control, and Forwarding and Chaining Control ("EXCHANGE CONTROL
SECTIONS") and/or claimed by the claims of the PATENT the
subject matter of which were mainly described in the EXCHANGE
CONTROL SECTIONS of the PATENT. Such control of email messages
includes automated and semi-automated processing of page filter
request messages (for example, in the case of a school system,
prioritizing such requests in a particular order of priority
such as the following order: first, requests from school
administrators; second, requests by classroom teachers; third,
requests by parents; and fourth, requests by students).
The TECHNOLOGY includes technical know how; data communication
standards and protocols; technical manuals; trade secrets;
COMPUTER PROGRAMS for implementing the data communication
control described in 1.6.1 the processing and additional control
described in 1.6.2, and email control described in 1.6.3; the
COBRANDED PRODUCTS as delivered by ONENAME, and any other
related products, techniques, and technology.
Notwithstanding the foregoing, nothing in this definition, the
above examples or the AGREEMENT shall be deemed to constitute
any acknowledgement, admission or waiver by N2H2 that the PATENT
RIGHTS grant exclusive rights to any particular development,
product,
3
<PAGE> 4
service, technology or implementation thereof, and N2H2 hereby
expressly reserves such rights as to claims regarding the scope
or applicability of the PATENT RIGHTS to any N2H2 development,
product, service, technology, or implementation thereof, whether
now existing or hereafter devised.
1.7. COBRANDED PRODUCTS. "APPROVED CLIENT PLATFORMS" means Windows
95, Windows 98, Windows NT version 4.0 and higher, and Apple
Macintosh version 8.1 and higher. "APPROVED SERVER PLATFORMS"
means a single UNIX (including Linux) or Windows NT server
platform, with versions to be mutually agreed upon. "COBRANDED
CLIENT" means versions of the CLIENT PRIVACY FILTER made
specifically for the APPROVED CLIENT PLATFORMS that contain the
branding of both ONENAME and N2H2. The COBRANDED CLIENT includes
all new versions of, or upgrades and enhancements to, the
COBRANDED CLIENT that ONENAME makes generally available for the
COBRANDED CLIENT. "COBRANDED SERVER" means versions of the
SERVER PRIVACY FILTER made specifically for the APPROVED SERVER
PLATFORMS that contain the branding of both ONENAME and N2H2.
The COBRANDED SERVER includes all new versions of, or upgrades
and enhancements to, the COBRANDED SERVER that ONENAME makes
generally available for the COBRANDED SERVER. "COBRANDED
PRODUCTS" means the COBRANDED CLIENT and the COBRANDED SERVER.
"PRIVACY FILTER PRODUCTS" means all CLIENT PRIVACY FILTERS
(including all COBRANDED CLIENTS) and all SERVER PRIVACY FILTERS
(including all COBRANDED SERVERS).
1.8. FIELD OF USE. The term "FIELD OF USE" means activities relating
to developing and marketing the TECHNOLOGY, the N2H2 FILTER
PRODUCTS, the N2H2 SERVICES and the COBRANDED PRODUCTS.
1.9. LICENSE TERM. The term "TERM" means three (3) years from the
EFFECTIVE DATE of this AGREEMENT.
1.10. INTELLECTUAL PROPERTY RIGHTS mean any rights in any jurisdiction
under any patents, copyrights, trade secrets, trademarks, trade
dress, droit moral, or foreign equivalents of the foregoing. In
addition, with respect to ONENAME's INTELLECTUAL PROPERTY
RIGHTS, such term shall also mean the PATENT RIGHTS described in
Section 1.4 above, and any rights to the TECHNOLOGY described in
1.6 above.
1.11. N2H2 FILTER PRODUCTS mean the privacy filter products that N2H2
develops based on the TECHNOLOGY for the APPROVED CLIENT
PLATFORMS.
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1.12. N2H2 SERVICES mean the services that N2H2 provides to its
privacy and filtering customers in connection with the COBRANDED
PRODUCTS and N2H2 FILTER PRODUCTS.
1.13. SOURCE CODE means the software code from which object code is
compiled and shall include the commented software source code,
as well as other materials such as design documents, data
models, help materials, tutorial programs and any information or
other programs necessary to compile the SOURCE CODE into
executable, fully-functioning object code.
1.14. DERIVATIVE WORKS means any modification, extension, alteration
or adaptation of an existing work and/or any work that would be
deemed a derivative work under the Copyright Act, Title 17 of
the U.S. Code, as amended.
2. GRANT OF LICENSE, DERIVATIVE WORKS AND OWNERSHIP; NON-COMPETITION
2.1. Subject to the terms and conditions set forth below, under its
INTELLECTUAL PROPERTY RIGHTS, ONENAME grants N2H2 for the TERM of this
AGREEMENT (or as specified in the survival provision in Sections 7.5
and 7.6 below), a worldwide, nonexclusive, irrevocable (except for
material breach), royalty-free license to engage in activities within
the FIELD OF USE, to make, have made, use and reproduce the TECHNOLOGY,
and to make modifications to and create DERIVATIVE WORKS from the
TECHNOLOGY, and to sell, offer to sell, import, market lease, rent,
timeshare, grant access to and distribute products incorporating the
TECHNOLOGY and DERIVATIVE WORKS therefrom, including by making,
offering to sell and selling, distributing and using any product,
service, process or other subject matter covered by the PATENT RIGHTS
(the "LICENSE RIGHTS'). Except as restricted in Section 2.3 below, the
foregoing license shall apply to the TECHNOLOGY in SOURCE CODE format
and ONENAME shall deliver the SOURCE CODE to the COBRANDED PRODUCTS in
connection with the parties joint development of the COBRANDED
PRODUCTS. All object code rights shall be fully sublicensable, through
multiple tiers of sublicensees. The foregoing grant and the remainder
of this Agreement shall not be construed, nor are they intended, to
confer on N2H2 any status or rights as an XNS SERVICE PROVIDER, it
being understood that all XNS SERVICE PROVIDERS will be required to
enter into a separate agreement with ONENAME, the details of which
(excluding the grant of Most Favored Nations status to N2H2 in Section
7.1 of the MARKETING AGREEMENT) are not yet available.
2.2. Further, nothing herein contained shall be construed or is intended to
allow N2H2 to operate an XNS directory service or registry (i.e.,
providing XNS rootlevel name services); and N2H2 covenants that it
shall not operate, directly or indirectly, and neither shall it attempt
to operate, directly or indirectly, an XNS directory or registry
service; neither shall N2H2 have the right to create or
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implement alternative XNS protocols, vocabularies, or quality of
service standards other than those established by XNSORG.
2.3. N2H2 agrees that apart from the licenses in this Agreement, and subject
to the terms and conditions hereof, it shall not market or provide
products or services during the term of this license, which will
provide (a) any naming, addressing, privacy protection, or automated
data exchange service which would compete with XNS; or (b) data
communications control or automation and compete with the same features
and functions being offered by or within XNS or in applications built
on top of the XNS platform. Notwithstanding the foregoing, if, as and
when XNS should prove commercially unacceptable or uncompetitive in the
marketplace (this does not mean it must be in a number one market
position), then, but no earlier than eighteen months from the date of
this Agreement, nothing shall prevent N2H2 from developing, acquiring,
licensing, engaging in, marketing or providing any naming, addressing,
privacy protection, automated data exchange service, data
communications control or automation activities to the extent such
activities are not covered by the valid scope of the TECHNOLOGY.
2.4. In exercising the license in Section 2.1 above, other than with respect
to COBRANDED PRODUCTS, N2H2 shall have the right, but not the
obligation to do so in a cobranded format. Nothing in this Agreement
shall prevent N2H2 from exercising such rights to create, market and
distribute a N2H2 FILTER PRODUCT based on the TECHNOLOGY, which may be
a Derivative Work of the COBRANDED PRODUCTS, but is not mutually
branded by the parties. Nevertheless, N2H2 shall comply with the
provisions of Section 9 regarding Marking. That is, all N2H2 PRODUCTS
based on the TECHNOLOGY shall bear ONENAME marking consistent with
Section 9, including ONENAME trademark(s), even if not a COBRANDED
PRODUCT. For non-COBRANDED PRODUCTS under this section 2.4, the ONENAME
marks may be less prominent than the N2H2 marks. If any such PRODUCT is
eligible for XNS certification, it shall be submitted for certification
and, if approved, bear an appropriate certification mark(s) from XNSORG
and/or ONENAME.
2.5. Under no conditions shall N2H2 disclose, publicly display, publicly
perform, sell, offer to sell, distribute or sublicense, the SOURCE CODE
of the COBRANDED PRODUCTS to any third party. N2H2 acknowledges that
the SOURCE CODE of the TECHNOLOGY constitutes valuable, proprietary,
unique, and confidential information and trade secrets of ONENAME. N2H2
agrees to provide confidentiality instructions to and enter into
agreements with its employees who are permitted access to the SOURCE
CODE of the TECHNOLOGY.
2.6. Cobranding and Trademarks: The Parties agree to the following
cobranding and trademark provisions:
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2.6.1. Initial Cobranding: The Parties anticipate that ONENAME's initial
delivery of the COBRANDED PRODUCTS shall include cobranding that
has been mutually agreed to by both parties. Cobranded use of
each party's trademarks shall be subject to the trademark license
in Section 2.6.2 below.
2.6.2. Trademark License Grant and Ownership: Subject to the terms and
conditions of this Agreement, each Party hereby grants to the
other a worldwide, non-exclusive, irrevocable (except for
material breach), royalty-free license, without the right to
sub-license, to use, reproduce and distribute such Party's
trademarks on or in the COBRANDED PRODUCTS or in or on
advertising, marketing materials, and/or packaging for the
COBRANDED PRODUCTS and in any end user documentation, subject to
each party's right of prior written approval. Each party, as part
of its standard business practice, may issue and provide the
other party with trademark usage guidelines, which shall be
binding and may be amended from time to time.
2.6.3. Prior to using any of the other PARTY's trademarks, the trademark
owner shall be given an opportunity to inspect and approve the
quality of the goods or services intended to be offered
thereunder. The trademark owner shall have fifteen business days
to notify the other PARTY of any deficiencies it requires to have
remedied, in its sole discretion (which shall not be exercised
unreasonably) before the license to use its trademark becomes
effective. The noted deficiencies shall be remedied prior to any
commercial use being made of said mark(s) and the use of the
marks will them promptly be approved by the mark's owner. If
neither approval nor disapproval are communicated by the mark's
owner within fifteen business days of a written request, approval
shall be deemed to have been given. At any time after initial
approval, if there is a significant change to a previously
approved product or service, a new approval shall be required.
The quality of an approved product or service shall be maintained
consistent, at the time of sale, for the duration of this
license. Any decline in quality shall be corrected within a
thirty day cure period following delivery of written notice;
failure to cure within such time shall entitle the trademark
owner to declare a default and terminate this trademark license.
Each PARTY shall provide the other reasonable access to those
goods and services marketed under this license, to conduct
quality control inspections.
2.7. N2H2 hereby grants ONENAME a worldwide, nonexclusive, royalty free
license to any and all INTELLECTUAL PROPERTY RIGHTS ("NEW INTELLECTUAL
PROPERTY RIGHTS") which (a) are owned by N2H2 and (b) arise from N2H2's
activities relating to developing the TECHNOLOGY or the COBRANDED
PRODUCTS. The NEW INTELLECTUAL PROPERTY RIGHTS include rights in any
and all inventions arising from further development of the TECHNOLOGY
and the COBRANDED PRODUCTS, and any improvements on the techniques
described in the PATENT (whether or not
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claimed by the PATENT). Notwithstanding the forgoing, however, the
definition of NEW INTELLECTUAL PROPERTY RIGHTS shall not extend to any
independent development of N2H2, as defined in Section 2.13 below, or
to any N2H2 FILTER PRODUCT, N2H2 SERVICES or any other N2H2 product or
service, to the extent that subsections (a) and (b) of this Section 2.7
do not apply. The license back granted in this Section 2.7 shall
require N2H2 to deliver to ONENAME on a timely basis two copies of the
SOURCE CODE and OBJECT CODE for any COMPUTER PROGRAM embodying any of
the TECHNOLOGY, including without limitation the COBRANDED PRODUCTS and
the NEW INTELLECTUAL PROPERTY RIGHTS. This license back shall be
limited, however, in that it does not give ONENAME the right to
distribute copies of any such COMPUTER PROGRAM. Notwithstanding the
foregoing limitations, however, such NEW INTELLECTUAL PROPERTY RIGHTS
also include any rights residing in the mutually agreeable APIs to be
developed by N2H2 to enable the COBRANDED SERVER to work in conjunction
with N2H2 products, as per the MARKETING AGREEMENT.
2.8. Notwithstanding anything in section 2.7., any and all Intellectual
Property Rights having co-authors or co-inventors who are under
obligation, either jointly or severally, to assign those intellectual
property rights to both ONENAME and N2H2 ("JOINT INTELLECTUAL PROPERTY
RIGHTS") shall be subject to good faith negotiation between ONENAME and
N2H2 to determine ownership rights in the JOINT INTELLECTUAL PROPERTY
RIGHTS. For any JOINT INTELLECTUAL PROPERTY RIGHTS, the parties shall
discuss in good faith, within such negotiation, the filing of patents
therefor and a fair allocation of rights to practice the invention(s)
or use and distribute the copyrightable works and trade secrets. In
such negotiations, an important goal shall be enabling ONENAME to
exploit, develop, and enhance the XNS technology and its acceptance
within the market, and N2H2 shall not unreasonably interfere with the
achievement of that goal, subject to any right of accounting and
reasonable division of revenues generated by such JOINT INTELLECTUAL
PROPERTY RIGHTS.
2.9. N2H2 hereby grants ONENAME an irrevocable option to acquire outright
ownership of the entire NEW INTELLECTUAL PROPERTY RIGHTS and JOINT
INTELLECTUAL PROPERTY RIGHTS, or any mutually agreed upon portion
thereof, for a reasonable payment to be determined by a software
valuation expert at a first tier public accounting firm. ONENAME may
only exercise the option for the purpose of open-sourcing the acquired
rights by providing a license to all users of XNS technology.
2.9.1. Upon exercise of such option, ONENAME shall be deemed to have
granted to N2H2 a fully paid-up, royalty-free, irrevocable,
worldwide, non-exclusive license (as broad as the grant of
LICENSE RIGHTS set forth I Section 2.1, above) to fully practice
those NEW INTELLECTUAL PROPERTY RIGHTS and/or JOINT INTELLECTUAL
PROPERTY
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RIGHTS. The right to distribute PRODUCTS under this license
shall be sublicenseable through multiple tiers of distribution.
2.9.2. ONENAME may exercise its option by providing written notice to
N2H2 that it intends to exercise its option to acquire the NEW
INTELLECTUAL PROPERTY RIGHTS or the JOINT INTELLECTUAL PROPERTY
RIGHTS. The PARTIES agree to negotiate, in good faith to
determine the reasonable payment for exercising the option, for
a period of not less than thirty (30) days before referring the
question to the above-mentioned expert. The cost of said experts
shall be shared equally by the PARTIES.
2.10. Ownership of Privacy Filter Products: Nothing herein shall be
construed to constitute a sale or other disposition of the Privacy
Filter Products from ONENAME to N2H2. Except to the extent expressly
licensed or addressed hereunder, ONENAME shall retain all right, title
and interest in and to the Privacy Filter Products and this Agreement
shall not be construed in any manner as transferring to N2H2 any
rights of ownership of the Privacy Filter Products, and N2H2 shall
make no claim contrary to the foregoing.
2.11. Development of Initial COBRANDED PRODUCTS: During and with respect to
the development process for the initial COBRANDED PRODUCTS, the
following shall apply:
2.11.1. N2H2 Development: N2H2 shall own all right, title and
interest in and to all INTELLECTUAL PROPERTY RIGHTS relating
to the COBRANDED PRODUCTS that N2H2 develops, creates,
authors, discovers, invents, or fixes in a tangible medium.
2.11.2. ONENAME Development: ONENAME shall own all right, title and
interest in and to all INTELLECTUAL PROPERTY RIGHTS relating
to the COBRANDED PRODUCTS that ONENAME develops, creates,
authors, discovers, invents, fixes in a tangible medium
and/or reduces to practice.
2.11.3. Joint Development: Joint development shall be handled per
Section 2.8, above.
2.12. DERIVATIVE WORKS from the TECHNOLOGY and/or The COBRANDED PRODUCTS: If
under the licenses granted in this Section 2, N2H2 creates DERIVATIVE
WORKS from the TECHNOLOGY and/or the COBRANDED PRODUCTS, N2H2 shall
solely and exclusively own the entire right, title and interest in and
to such DERIVATIVE WORKS and all copyrights related thereto, subject
to ONENAME's ownership of any underlying works thereto and ONENAME's
license and option rights specified above.
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2.13. Independent Works: Nothing in this Agreement grants any right,
license, option or interest to ONENAME in or to any INTELLECTUAL
PROPERTY RIGHTS of N2H2 in or to any works, inventions, products or
services, or portions thereof, developed by N2H2 which are not
DERIVATIVE WORKS of the TECHNOLOGY or COBRANDED PRODUCTS. The Parties
expressly acknowledge that products connecting to the COBRANDED
PRODUCTS via API are not deemed DERIVATIVE WORKS of the TECHNOLOGY or
COBRANDED PRODUCTS unless and to the extent such products incorporate
code or other protectable elements of the TECHNOLOGY or COBRANDED
PRODUCTS.
3. EXTENSION OF LICENSE TERMS
3.1. ONENAME anticipates that XNS Service offerings will be commercially
launched by APRIL 1, 2000.* If such launch does not occur by such
date, for each subsequent month of delay, the TERM of this AGREEMENT
shall be deemed extended by an equal number of months. In addition, at
the end of the original TERM of this AGREEMENT, if N2H2 shall not have
been offered an XNS SERVICE PROVIDER agreement on terms set forth in
the MARKETING AGREEMENT, and if ONENAME has extant non-exclusive
licenses with third parties relating to the LICENSE RIGHTS (other than
XNS SERVICE PROVIDER license), N2H2 shall have the option to negotiate
a new license ("NEW LICENSE") with respect to the LICENSE RIGHTS. In
such case, such NEW LICENSE shall be offered, if available, on a Most
Favored Nation Basis, in that the NEW LICENSE shall have substantially
the same terms and conditions as that of a license to a third party
substantially similar to N2H2 provided that:
3.1.1. N2H2 must be continuing to devote significant resources toward
the development and/or sale of products in the FIELD OF USE;
and
3.1.2. N2H2 provides a written notice one hundred and eighty (180)
days prior to the end of the TERM of this AGREEMENT.
3.2. In the event of a dispute as to the NEW LICENSE terms, the PARTIES
shall enter into a mutually acceptable mediation process to establish
the New License within a reasonable period of time. However, it is
understood that N2H2 shall not be entitled to a NEW LICENSE if either
(a) it was offered and did not enter into an XNS SERVICE PROVIDER
agreement (whether by ONENAME or XNSORG), or (b) there are at the end
of the TERM no extant licenses between third parties and ONENAME
relating to the LICENSE RIGHTS.
4. SUBLICENSING AND ASSIGNABILITY
4.1. N2H2 shall have no right to sublicense the rights received hereunder,
except insofar as it shall be allowed to use distributors to reproduce
and sell its products
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marketed under the licenses received herein. If N2H2 desires to use
the services of a third-party vendor to develop products under this
license, contractually obligated to adhere to all relevant terms of
this AGREEMENT. No such developer sublicensee of N2H2 shall be
entitled to market any product hereunder, except to N2H2.
4.2. Unless N2H2 has obtained prior express written consent of ONENAME,
N2H2 may not sublicense, (except as set forth in this AGREEMENT), in
whole or in part, the LICENSE RIGHTS. Either party may or assign or
otherwise transfer this AGREEMENT or any other rights or obligations
herein, to a third party ("ACQUIRING PARTY"), provided that:
4.2.1. The ACQUIRING PARTY is able to meet the financial and
technical obligations of the assigning party and the
assigning party and/or the ACQUIRING PARTY have provided the
following to the non-assigning party for its review at least
thirty (30) days prior to a proposed assignment or transfer:
4.2.1.1. Documents and other information sufficient to substantiate
the assertion that the ACQUIRING PARTY is able to meet the
financial and technical obligations of the assigning party;
4.2.1.2. Representations by the assigning party and ACQUIRING PARTY
that ACQUIRING PARTY intends to purchase all or substantially
all of the assigning party's assets or voting securities, or
intends to purchase as a going business concern the division
or department of the assigning party that carries out
obligations of the assigning party under this AGREEMENT;
4.2.1.3. A written undertaking, in consideration for the non-assigning
party's consent, to comply with all terms and conditions of
the AGREEMENT, the MARKETING AGREEMENT, and any other
agreement being in effect at the time between ONENAME and
N2H2; and
4.2.1.4. A written undertaking by the ACQUIRING PARTY, that the
ACQUIRING PARTY will apply efforts to the marketing of
licensed products and services at least equal to those the
assigning party had expended in the twelve months prior to
the acquisition.
4.3. With respect to N2H2, an assignment shall be deemed to have occurred
if there is a change in ownership of twenty-five percent (25%) or more
in the voting rights or equity of N2H2 in any single transaction or
related series of transactions in a three (3) month period. With
respect to ONENAME, an assignment shall be deemed to have occurred if
there is a change in ownership of
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fifty percent (50%) or more in the voting rights of ONENAME in any
single transaction or related series of transactions in a three (3)
month period.
5. DEVELOPMENT REQUIREMENT
5.1. In developing the products using the TECHNOLOGY and in developing the
COBRANDED PRODUCTS (collectively referred to as "PRODUCTS"), N2H2
agrees where commercially reasonable, to use current and proposed XNS
standards ("STANDARDS") promulgated and published by XNSORG. The
STANDARDS may include standards relating to architecture, protocol,
and vocabulary. Until such time that XNSORG publishes the STANDARDS,
standards set out and developed by ONENAME shall constitute the
STANDARDS. ONENAME agrees to use commercially reasonable efforts to
ensure that future adopted standards shall be compatible with the
standards shared by ONENAME and N2H2 hereunder.
5.2. If at any time XNSORG, or ONENAME until the time XNSORG publishes the
STANDARDS, modifies the STANDARDS, N2H2 where commercially reasonable
shall modify and upgrade, at its own expense, already developed
PRODUCTS to comply and conform with such new STANDARDS within a
commercially reasonable period. Such commercially reasonable period
shall not extend beyond ninety days (90) from the date of publication
of the new STANDARDS or the date when the new STANDARDS are made
available to N2H2, whichever comes first. N2H2 may obtain the written
consent of ONENAME to extend the ninety (90) day period. ONENAME shall
not unreasonably withhold such consent.
5.3. Nothing in this Section 5 shall be deemed to limit or restrict N2H2
rights granted in the MARKETING AGREEMENT.
6. REPRESENTATIONS AND DISCLAIMER OF WARRANTIES, INDEMNIFICATION, AND IP
ENFORCEMENT
6.1. Warranties. Each party warrants to the other that (i) it shall perform
its obligations under this Agreement with due care and diligence; (ii)
it has the right and authority to enter into this Agreement and grant
the rights conveyed hereunder and that doing so does not conflict with
any obligation it has or shall undertake; (iii) its performance under
this Agreement shall not violate any applicable law or regulation; and
(iv) it is not aware of any actual or overtly threatened claim that
exercise of any license right granted herein under its respective
INTELLECTUAL PROPERTY RIGHTS would violate or infringe the
INTELLECTUAL PROPERTY RIGHTS of a third party. EXCEPT AS EXPRESSLY
STATED HEREIN, THE PARTIES MAKE NO OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR IMPLIED
WARRANTY ARISING
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FROM COURSE OF PERFORMANCE, COURSE OF DEALING, OR USAGE OF TRADE.
6.2. ONENAME Indemnification: ONENAME shall defend, indemnify and hold N2H2
and its licensees harmless from and against any and all actions,
suits, or proceedings ("Claims"), resulting in any losses, damages,
judgments, awards, settlements (as authorized in Section 6.5 below),
or expenses (including reasonable attorney's fees) (collectively,
"Liabilities") arising from: (a) any breach of a warranty in Section
6.1 above; or (b) any claim, which if true, would constitute a breach
of such warranty.
6.3. N2H2 Indemnification: N2H2 agrees to defend, indemnify and hold
ONENAME and its licensees harmless from and against any and all Claims
resulting in any Liabilities arising from: (a) any breach of a
warranty in Section 6.1 above; or (b) any claim, which if true, would
constitute a breach of such warranty.
6.4. Limitations: Neither party shall have any liability or obligation for
any Claim or Liability under Section 6.2 or 6.3 above to the extent
that: (i) any version of or Derivative Work from the TECHNOLOGY has
been modified by the party seeking coverage and such modification
constitutes the cause of such claim or Liability, (ii) a party seeking
coverage combines any version of the TECHNOLOGY or Derivative Work
therefrom, with other software, equipment or devices, and such
combination constitutes the basis of Liability under the Claim; or,
(iii) any version of the TECHNOLOGY or Derivative Work therefrom has
been modified according to the specification or request of a party
seeking coverage and such specification or request contributes to the
basis of the Claim.
6.5. Procedure: The party seeking coverage shall: (i) provide the covering
party with prompt, written notice of a Claim; (ii) permit the covering
party to defend or settle the claim to the extent such claim relates
to the covering party's INTELLECTUAL PROPERTY RIGHTS; and (iii)
provide the covering party with the assistance and information
necessary to defend or settle the Claim (subject to reimbursement for
reasonable third party expenses incurred in connection therewith). A
covering party shall not be responsible for any settlement made
without its prior written consent. In addition, the covering party may
not settle any Claim to the extent such Claim relates to or impacts
the covered party's separate INTELLECTUAL PROPERTY RIGHTS, without the
covered party's prior written consent.
7. TERM AND TERMINATION
7.1. Initial Term of Agreement. The initial term ("Initial Term") of this
Agreement shall commence on the Effective Date and continue for a
period of three (3) years thereafter.
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7.2. Termination For Cause:
7.2.1. Mutual Right of Termination for Breach: Either Party may
terminate this Agreement for cause if the other Party breaches
any material term of this Agreement, provided that the
terminating Party has provided thirty (30) days written notice
of such breach and such breach has not been cured in such
thirty (30) day period.
7.2.2. Bankruptcy and Similar Causes: Either Party may terminate this
Agreement for cause if the other Party: (a) files or has filed
against it a petition in bankruptcy; (b) has a receiver
appointed to handle or liquidate its assets or affairs; (c)
makes or attempts to make an assignment for the benefit of
creditors; (d) has a civil judgment entered against it which is
for an amount greater than available cash or the most recent
year's revenues; or (e) otherwise for a period of at least
ninety (90) days ceases to operate its business as a going
concern, which shall be evidenced by events such as the
inability to fund operations, large scale termination of
employment, relinquishing substantially all office space, or
other similar indicia. For Section 7.2.2(a through (d),
termination shall be effective immediately upon receipt of
notice. For Section 7.2.2(e), termination shall be effective
once said ninety day period has elapsed.
7.3. Cumulative Remedies: Each Party's rights to terminate are in addition
to any other rights that Party may have, subject to the limitations on
liability imposed in this Agreement.
7.4. Orderly Termination, Consequences of Termination, and Survival: In the
event of expiration or termination of this Agreement, the following
provisions shall apply as indicated:
7.4.1. The Parties shall abide by and uphold any rights or obligations
accrued or existing on the date of expiration or termination,
including but not limited to confidentiality obligations and
obligations to remit any payments and/or deliver any warrants
to the other Party accrued, earned or due as of such date.
7.4.2. Provided that termination was not due to N2H2's breach, N2H2
and its Distributors shall be entitled to a period of one
hundred and eighty (180) days as a sell-through period for
inventory of PRODUCTS existing as of the effective date of such
termination.
7.4.3. Upon expiration or termination of this Agreement, each Party
shall immediately return to the other Party any and all
Confidential Information or materials of the other Party in its
possession or control to the other Party,
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except to the extent that such Confidential Information is
required to exercise license rights which survive under this
license Section 7.
7.4.4. Upon expiration or termination of this Agreement, any validly
granted licenses to end users by either Party shall survive.
7.5. Upon expiration or termination for any reason of this Agreement, the
following provisions shall survive: 1, 2.8, 2.9, 2.10, 2.11, 2.12,
2.13. 4.2, 6, 7, 10.1, 11, 12, 13 and 14.
7.5.1. If termination is due to N2H2's breach or cause attributable to
N2H2 under Section 7.2.2 above, the following provisions shall
also survive: 2.7.
7.5.2. If termination is due to ONENAME's breach or cause attributable
to ONENAME under Section 7.2.2 above, the following provisions
shall also survive: 2.1, 2.4, 2.5, and 9.
7.6. Continuity of License Rights. In the event the Agreement is terminated
under Section 7.3.2 above, the following additional provisions shall
apply:
7.6.1. Each party acknowledges that if the other party as a debtor in
possession or a trustee in bankruptcy in a case under the
Bankruptcy Code rejects this Agreement, the licensee party may
elect to retain its rights hereunder as provided in Section
365(n) of the Bankruptcy Code. Such debtor party or such
bankruptcy trustee shall not interfere with the rights of the
licensee party as granted herein.
7.6.2. If terminated by ONENAME, then the rights optioned in Section
2.9 above shall be deemed transferred without any requirement
of payment by ONENAME to N2H2.
7.6.3. If terminated by N2H2, the restriction in Section 2.5 above
shall no longer apply.
8. REPORTING
8.1. N2H2 shall keep full, clear, and accurate records sufficient to
prepare the report required by 8.3.
8.2. N2H2 shall notify ONENAME in writing when N2H2 begins furnishing the
PRODUCTS to customers.
8.3. Within thirty (30) days from the end of each six month period of
N2H2's financial year, N2H2 shall give ONENAME a written report signed
by an authorized representative of N2H2, the contents of which shall
be deemed N2H2 Confidential Information, identifying:
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8.3.1. new PRODUCTS and/or new versions of old PRODUCTS released in
the latest quarter, and their new features (in this respect,
the report shall be accompanied by copies of the identified
PRODUCTS, copies of available technical and user manuals, and
information required to understanding and evaluating the
PRODUCTS);
8.3.2. current prices charged by N2H2 for the PRODUCTS and for
services relating to the PRODUCTS, and any discounts and
promotional programs provided by N2H2, during the latest
quarter,
8.3.3. N2H2's activities in the FIELD OF USE during the latest
quarter, including N2H2's activities relating to developing the
TECHNOLOGY and COBRANDED PRODUCTS, and the results of those
activities; and,
8.3.4. information possessed by N2H2, or provided to N2H2 by third
parties including N2H2's customers, during the latest quarter,
concerning the technical operation of the PRODUCTS including
any reported bugs in COMPUTER PROGRAMS included in the
PRODUCTS.
9. MARKING
9.1. N2H2 shall include proprietary rights legends in or on the PRODUCTS in
a manner reasonably determined by ONENAME to indicate that the
PRODUCTS are covered by one or more patents of ONENAME and are
licensed under ONENAME trademarks. Such marking may include placing
marks on the packaging materials of the PRODUCTS, in graphical user
interfaces generated by the PRODUCTS, or on technical manuals
accompanying the PRODUCTS.
10. LITIGATION
10.1. NOTICE. Each PARTY shall notify the other PARTY of any suspected
infringement of the PATENT RIGHTS of which it is aware, and shall
provide the other PARTY with any evidence of such infringement
including a statement of facts or beliefs by the PARTY which may
assist in identifying such third party and the nature of the alleged
infringement. Upon notification of possible infringement, the party
owning the rights infringed shall have the right (but not the
obligation) to institute a suit for infringement. The notified PARTY
shall, in determining whether to file suit consult with and make a
good faith effort to take into account the situation and desire of the
notifying PARTY. Each PARTY agrees to cooperate with the other PARTY
in all respects, to have any of their employees testify when requested
by the other PARTY, and to make available any records, papers,
information, specimens, and the like. Any recovery, less the PARTIES'
expenses of litigation, received pursuant to any such suit instituted
under this paragraph shall be retained by ONENAME.
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10.2. During the TERM of this AGREEMENT, N2H2 shall bring to the attention
of ONENAME any prior art or other information known to N2H2 which is
relevant to the validity of the PATENT RIGHTS and which might cause a
court to deem the PATENT RIGHTS wholly or partially inoperative or
invalid. N2H2 shall particularly specify such prior art or other
information to ONENAME at the time it learns thereof and not less than
ninety (90) days prior to bringing any action against ONENAME
asserting the invalidity of the PATENT RIGHTS.
11. LIMITATION OF LIABILITY AND INDEMNIFICATION; DISPUTE RESOLUTION
11.1. PARTY TO PARTY. In no event shall either PARTY be liable to the other
PARTY for any indirect, incidental, special, consequential, exemplary,
punitive or reliance damages (including, without limitation, lost or
anticipated revenues or profits, loss of use, loss of data, or loss of
business) arising out of this AGREEMENT or use of the software, on any
theory of liability even if such PARTY is advised of the possibility
of such damages.
11.2. INSURANCE. N2H2 shall maintain at its own expense in full force and
effect at all times during which the PRODUCTS are being sold, with a
responsible insurance carrier, at least ten (10) minion dollars
product liability insurance policy with respect to the COBRANDED
PRODUCTS. N2H2 shall name ONENAME as an additional insured and shall
provide for at least thirty (30) days prior written notice to ONENAME
of the cancellation or any substantial adverse modification of the
policy If ONENAME markets any product bearing an N2H2 mark, or which
might create indemnity liability for N2H2, it likewise shall maintain
at its own expense in full force and effect at all times during which
the PRODUCTS are being sold, with a responsible insurance carrier, at
least ten (10) million dollars product liability insurance policy with
respect to the COBRANDED PRODUCTS; and ONENAME shall name N2H2 as an
additional insured and shall provide for at least thirty (30) days
prior written notice to N2H2 of the cancellation or any substantial
adverse modification of the policy.
11.3. NO WAIVER. No failure or delay on the part of either PARTY in the
exercise of any power or right hereunder shall operate as a waiver
thereof. No single or partial exercise of any right or power hereunder
shall operate as a waiver of such right or of any other right or
power. The waiver by either PARTY of a breach of any provision of this
AGREEMENT shall not operate or be construed as a waiver of any other
or subsequent breach hereunder.
11.4. DISPUTE RESOLUTION.
11.4.1 Injunctive Relief Nothing in this section shall be deemed to
limit or restrict the PARTIES access to any court or any other
tribunal or
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government authority with appropriate jurisdiction for
purposes of seeking and obtaining injunctive relief.
11.4.2 Mediation Prior to taking any further action hereunder, except
for seeking injunctive relief, the parties agree to attempt to
resolve any dispute through mediation. The mediator shall be
selected in the same manner as specified below in section
11.4.3 for an arbitrator, unless the parties otherwise shall
agree. (It is understood that a trained mediator may be
preferable.)
11.4.3 Arbitration If mediation fails to result in agreement the
PARTIES shall submit any dispute regarding the interpretation
of language in this Agreement and any alleged breach of the
following terms of this AGREEMENT, besides those to which
LICENSOR seeks specific performance, to arbitration: sections
2, 3, 4, 8, and 9. The arbitration shall be conducted under
the governing rules and regulations, deemed pertinent by the
arbitrator, of the American Arbitration Association ("AAA") in
the city of Seattle, WA, USA Any arbitration hereunder shall
be by a sole arbitrator. The arbitrator shall be a
disinterested current or former CEO of a software company who
has at least three years' experience as CEO of one or more
software companies whose revenues exceeded $10M annually for
each of said three years. Each party shall, within ten (10)
business days of the lodging of the arbitration demand, submit
to the AAA a list of three to five arbitrator candidates
meeting such qualifications. If there are one or more names in
common on both lists, the AAA shall choose the arbitrator from
those common names. If there are no names in common on both
lists, the AAA shall choose as arbitrator either one of the
names on either list or another individual meeting the stated
qualifications. The costs of the arbitration and the legal
expenses of the prevailing PARTY shall be paid by the PARTY
that does not prevail unless the arbitrator for good cause
determines that arbitration costs and legal fees should be
allocated in a different fashion. Judgment supporting the
decision of arbitrator may be entered in any court otherwise
having jurisdiction over the matter. In the event of the
breach of this AGREEMENT by LICENSEE, LICENSOR shall be
entitled to recover all damages, including legal fees,
incurred in the pursuit of any cure by LICENSEE or any legal
or equitable remedy and consequential damages that it can
substantiate. An arbitration hearing shall occur no later than
thirty days (30) after an arbitration is lodged and a final
decision shall be rendered by the arbitrator no later than
sixty (60) days after the arbitration is lodged. The PARTIES
understand that this AGREEMENT contains an AGREEMENT to
arbitrate. After signing this document, they understand that
they will not be able to bring a lawsuit concerning any
dispute that may arise which is covered by the arbitration
clause of AGREEMENT unless it involves a question of
constitutional or civil rights, or requires a seeking of
specific performance by LICENSOR.
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11.5. GOVERNING LAW This AGREEMENT shall be construed in accordance with the
substantive laws of the State of Washington (regardless of the laws
that might be applicable under principles of conflicts of law). Each
PARTY hereby submits to venue in and to the exclusive personal
jurisdiction of a federal or state court of competent subject matter
jurisdiction located within the State of Washington in respect of the
interpretation and enforcement of the provisions of this AGREEMENT.
Each PARTY waives and agrees not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement of
this AGREEMENT, that (i) it is not subject to such jurisdiction; (ii)
such action, suit or proceeding may not be brought or is not
maintainable is said court; (iii) this AGREEMENT may not be enforced
in or by said court; (iv) its property is exempt or immune from
execution; (v) the suit, action or proceeding is brought in an
inconvenient forum; or (vi) the venue of the suit, action or
proceeding is improper.
12. WAIVER, INTEGRATION, ALTERATION; CONSTRUCTION; NOTICE
12.1. ENTIRE AGREEMENT. The terms and conditions contained herein, together
with any terms and conditions attached as Exhibits or Schedules
hereto, including terms of the MARKETING AGREEMENT, SERIES D PREFERRED
STOCK SUBSCRIPTION AGREEMENT (dated November 1999) and NON-DISCLOSURE
AGREEMENT (dated ___________________, 1999), constitute the entire
AGREEMENT between the PARTIES hereto relating to the subject matter of
this AGREEMENT and shall supercede all previous and contemporaneous
communications between the PARTIES hereto with respect to the subject
matter of this AGREEMENT, including but not limited to, any associated
purchase order or prior AGREEMENT, quotation, proposal, correspondence
or oral discussion relating to the subject matter hereof. Neither
ONENAME nor N2H2 has entered into this AGREEMENT in reliance upon any
representation, warranty, covenant or undertaking of the other PARTY
that is not set out or referred to in this AGREEMENT, an Exhibit or a
Schedule to this AGREEMENT.
12.2. AMENDMENT. This AGREEMENT may be modified or amended only by the
written AGREEMENT of the PARTIES hereto specifically referencing this
AGREEMENT. Any terms and conditions stated on a purchase order or
other accounting statement, whether delivered prior to or subsequent
to this AGREEMENT, shall not modify the terms and conditions of this
AGREEMENT.
12.3. SEVERABILITY. If any provision of this AGREEMENT is held to be
illegal, invalid or unenforceable in any respect, then the PARTIES
hereto shall substitute such provision with a legal, valid and
enforceable provision which attempts to obtain the same result as the
provision declared illegal, invalid or unenforceable. The provisions
hereof are severable, and in the event any provision of this AGREEMENT
is held to be illegal, invalid or unenforceable in
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any respect, then the remaining provisions of this AGREEMENT shall
remain binding on ONENAME and N2H2.
12.4. USAGE. Wherever any provision of this AGREEMENT uses the term
"including" (or "includes"), such term shall be deemed to mean
"including without limitation" and "including but not limited to" (or
"includes without limitation" and "includes but is not limited to")
regardless of whether the words "without limitation" or "but not
limited to" actually follow the term "including" (or "includes").
12.5. HEADINGS. The descriptive headings of the several Paragraphs of this
AGREEMENT are inserted for convenience only and do not constitute a
part of this AGREEMENT.
12.6. NOTICES UNDER THIS AGREEMENT For the purposes of all written
communications and notices between the PARTIES, their addresses shall
be:
ONENAME:
INTERMIND Corporation
2101 Fourth Avenue,
Suite 230,
Seattle, WA 98121
And
N2H2:
N2H2, Inc.
900 Fourth Avenue
Suite 3400
Seattle, WA 98164
or any other addresses of which either PARTY shall notify the other
PARTY in writing. All notices and written communications required by
this AGREEMENT shall be sent by Registered Mail, and shall be
effective as of the receipt date.
13. RELATIONSHIP
13.1. Nothing contained herein is intended nor is to be construed so as to
constitute ONENAME and N2H2 as partners, agents, or joint venturers
with respect to this AGREEMENT. Neither PARTY hereto shall have any
express or implied right or authority to assume or create any
obligations on behalf of or in the name of the other PARTY or to bind
the other PARTY to any contract, AGREEMENT or undertaking with any
third party.
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14. MISCELLANEOUS
14.1. FORCE MAJEURE. Neither PARTY shall be in default of this AGREEMENT or
be liable for any delay or failure in performance resulting directly
or indirectly from any cause beyond its reasonable control; provided
however that either PARTY who fails because of force majeure to
perform its obligations hereunder shall, upon the cessation of the
force majeure, take all reasonable steps within its power to resume
compliance under the AGREEMENT with the least possible delay.
14.2. COMPLIANCE WITH LAW. Each party shall comply with all applicable laws,
including, without limitation, the export control laws of the United
States and prevailing regulations which may be issued from time to
time by the U.S. Department of Commerce and Department of State
concerning the exporting, importing and re-exporting of the
TECHNOLOGY, COBRANDED PRODUCTS, and PRODUCTS. Each party, at its sole
expense, shall maintain in effect all permits, licenses and to the
conduct of its activities under this AGREEMENT. Each PARTY shall
execute, acknowledge, and deliver any instruments, and do such other
acts, reasonably believed by the other PARTY to be necessary to
implement the provisions of this AGREEMENT. Noncompliance shall be
grounds for immediate termination of the AGREEMENT.
14.3. NONDISCLOSURE. PARTIES agree not to disclose the terms of this
AGREEMENT or the purpose of this AGREEMENT to any third party unless
required by law or required by a release prepared and/or authorized by
both PARTIES.
14.4. COSTS AND EXPENSES. Each PARTY to this AGREEMENT shall bear the
responsibility for payment of all costs and expenses in connection
with its performance of any provisions under this AGREEMENT.
14.5. The PARTIES represent and warrant to each other that they are duly
authorized and have the authority to enter this AGREEMENT.
14.6. Counterparts. This AGREEMENT may be executed in any number of
counterparts and may be executed and transmitted by facsimile. All
counterparts shall collectively constitute one and the same AGREEMENT.
14.7. SUPERSEDURE OF MARKETING AGREEMENT. In addition, notwithstanding
anything to the contrary in this Agreement or the MARKETING AGREEMENT,
to the extent any provision of this Agreement is inconsistent with or
silent on any provision in the MARKETING AGREEMENT addressing a
similar issue, fact or right, the provisions of this Agreement shall
control and the superseded provisions in the MARKETING AGREEMENT shall
have no force or effect whatsoever.
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IN WITNESS WHEREOF the PARTIES have caused this agreement to be executed on
the respective dates and at the respective places hereinafter set forth.
ONENAME N2H2
INTERMIND CORPORATION N2H2, INC.
By: By:
-------------------------------- --------------------------
Title: Title:
----------------------------- -----------------------
Dated: Dated:
----------------------------- -----------------------
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SCHEDULE A
[attach MARKETING AGREEMENT]
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SCHEDULE B
A. PATENTS
Reed, et al., "Computer-Based Communication System and Method Using Metadata
Defining a Control Structure," U.S. Patent No. 5,862,325, issued Jan. 19, 1999.
B. PATENT APPLICATIONS
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*
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*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
STRATEGIC MARKETING AGREEMENT
This Strategic Marketing Agreement (this "Agreement") is entered into to
be effective as of November 18, 1999 (the "Effective Date"), by and between
Intermind Corporation, a Washington corporation with a place of business at 2101
Fourth Avenue, Suite 230, Seattle, WA 98121 ("OneName"); and N2H2, Inc., a
Washington corporation with a place of business at 900 Fourth Avenue, Suite
3400, Seattle, WA 98164 ("N2H2"). In consideration of the mutual covenants set
forth herein, the parties agree as follows:
1. BACKGROUND.
1.1 XNS Network Structure. OneName has developed, and plans to further
enhance, certain technology it calls extensible name service ("XNS") technology,
for use with computer networks. OneName intends to use the XNS technology to
provide enhanced Internet address and naming services using web agents to
control and automate communications. The XNS technology is intended to include
privacy filters that can, among other things, monitor and manage the email
communications of OneName customers. Such customers may use the OneName privacy
filters either at the client level ("Client Privacy Filter"), or at the server
level ("Server Privacy Filter"). In order to be able to use the XNS technology,
customers will have to register with OneName or OneName's licensee (in such
case, an "XNS Service Provider"). Customers shall be comprised of both
individuals and businesses. It is anticipated that individuals will have to
renew their registration with an XNS Service Provider annually, and businesses
will have to renew such registration annually and also pay an annual fee. An
"Active Customer" means a customer that has established or renewed their
registration during the current fiscal year and paid the annual fee, if any, and
has not otherwise cancelled their registration. Each XNS Service Provider will
provide Active Customers with an XNS address, and will be responsible for
servers that will support the network of XNS customers. It is anticipated that
such XNS network will supplement the domain name service (DNS) network now in
place on the Internet.
1.2 N2H2 Participation. N2H2 develops and provides various filtering and
communications tools for use with computer networks. Pursuant to the terms and
conditions of this Agreement, the parties shall develop and distribute certain
Client Privacy Filters and certain Server Privacy Filters that contain the
brands of both OneName and N2H2, and N2H2 shall obtain certain rights relating
to becoming an XNS Service Provider and distributing other OneName products.
2. DEFINITIONS. In addition to capitalized terms defined elsewhere in this
Agreement, the following terms shall have the meanings given them below:
2.1 "Approved Client Platforms" means Windows 95, Windows 98, Windows NT
version 7.0 and higher, and Apple Macintosh version 8.1 and higher.
2.2 "Approved Server Platforms" means a single UNIX (including Linux) or
Windows NT server platform, with versions to be mutually agreed.
2.3 "Closed Source Product" means a product or feature that only
operates with complete material functionality in conjunction with a particular
third party's technology, and is intended for use by only a discrete and limited
segment of the total market.
2.4 "Cobranded Client" means versions of the Client Privacy Filter made
specifically for the Approved Client Platforms that contain the branding of both
OneName and N2H2. The Cobranded Client includes all new versions of, or upgrades
and enhancements to, the Cobranded Client that OneName makes generally available
for the Cobranded Client.
2.5 "Cobranded Products" means the Cobranded Client and the Cobranded
Server.
2.6 "Cobranded Server" means versions of the Server Privacy Filter made
specifically for the Approved Server Platforms that contain the branding of both
OneName and N2H2. The Cobranded Server
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includes all new versions of, or upgrades and enhancements to, the Cobranded
Server that OneName makes generally available for the Cobranded Server.
2.7 "Most Favored Nation Basis" means, with respect to the particular
right in question, that N2H2 may give notice to OneName and receive, on a going
forward basis for up to two (2) years after the commercial release of the first
Cobranded Product, substantially the same terms and conditions that any
substantially similar third party receives from OneName; provided, however,
that: a) such new terms and conditions are materially more favorable to N2H2
than N2H2's then current terms and conditions, and b) N2H2 must provide to
OneName substantially the same benefits that such third party provides to
OneName for such terms and conditions. Notwithstanding anything in this
Agreement that may be construed to the contrary, the ability of N2H2 to receive
any right on a Most Favored Nation Basis shall terminate two (2) years after the
commercial release of the first Cobranded Product.
2.8 "Privacy Filter Products" means all Client Privacy Filters
(including all Cobranded Clients) and all Server Privacy Filters (including all
Cobranded Servers).
3. MUTUAL CONSULTATION.
3.1 Development Consultation. OneName shall obtain input from N2H2
regarding the open-standard specifications for version 1.0 of the XNS protocol,
the application program interfaces for the Privacy Filter Products, and the
product specifications for the Cobranded Products.
3.2 XNS Public Trust Organization. OneName hereby grants N2H2 the right
to serve, at N2H2's option, on a non-profit XNS steering organization that
OneName intends to form to foster industry participation and promotion of XNS.
OneName has tentatively named such organization the XNS Public Trust
Organization (or XNSORG for short).
4. COBRANDED PRODUCTS.
4.1 Cobranded Client. OneName shall develop the Cobranded Client.
Subject to the terms and conditions of this Agreement, OneName hereby grants to
N2H2 a nonexclusive, royalty free license to market and distribute the Cobranded
Client to provide privacy-protected email services to N2H2 customers. Such
customers shall be required to enter into license agreements for the Cobranded
Client that are consented to by OneName and N2H2, which consent shall not be
unreasonably withheld.
4.2 Cobranded Server. OneName shall develop the Cobranded Server. N2H2
shall develop mutually agreeable APIs that will become part of the Cobranded
Server to enable it to work in conjunction with N2H2 products. Subject to the
terms and conditions of this Agreement, OneName grants to N2H2 a nonexclusive,
royalty free license to distribute the Cobranded Server to provide
privacy-protected email services to N2H2 customers. Such customers shall be
required to enter into license agreements for the Cobranded Server that are
consented to by OneName and N2H2, which consent shall not be unreasonably
withheld.
4.3 N2H2 Marks. N2H2 will promptly provide OneName with any marks,
logos, and graphics of N2H2 (collectively, "N2H2 Marks") delivered in the
format, resolution and size specified by OneName. OneName may select, reproduce
and use the N2H2 Marks in whole or in part in order to develop the Cobranded
Products, provided that N2H2 must approve in writing the final use of the N2H2
Marks in the Cobranded Products before they are released. All right, title and
interest in and to the N2H2 Marks shall be the property of N2H2, provided that
N2H2 hereby grants OneName a nonexclusive, royalty-free license to use and copy
the N2H2 Marks in connection with the development, marketing and distribution of
the Cobranded Products.
4.4 N2H2 Distribution. By the launch date, which is intended to be in
early ,* N2H2 shall supply to OneName a schedule of efforts it will
make to market and distribute the Cobranded Products. N2H2 agrees to offer the
Cobranded Products to a substantial portion of N2H2's customers, provided that
N2H2 is satisfied in its reasonable judgment that the Cobranded Products contain
the functionality and features described in OneName written materials and
function in a commercially acceptable manner. N2H2 shall not remove or destroy
any proprietary, trademark or copyright markings or notices placed upon or
contained in the Privacy Filter Products, and shall not decompile, reverse
engineer, disassemble, or
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otherwise attempt to obtain source code for the Privacy Filter Products (other
than such source code that OneName provides to N2H2).
5. OWNERSHIP. Nothing herein shall be construed to constitute a sale or other
disposition of the Privacy Filter Products from OneName to N2H2. Except to the
extent they contain N2H2 Marks or to the extent they are expressly licensed
hereunder, OneName shall retain all right, title and interest in and to the
Privacy Filter Products. This Agreement shall not be construed in any manner as
transferring to N2H2 any rights of ownership of the Privacy Filter Products, and
N2H2 shall make no claim contrary to the foregoing. All contributions,
modifications and enhancements that N2H2 makes to the Privacy Filter Products
shall be owned by OneName, and N2H2 hereby assigns, and agrees to assign, any
rights it has in the Privacy Filter Products to OneName; provided, however, that
OneName hereby grants N2H2 a nonexclusive, royalty free license to use and
distribute such contributions, modifications and enhancements in connection with
the Cobranded Products, and further provided that N2H2 owns the N2H2 Marks.
6. ENHANCED PRODUCTS.
6.1 Exclusive OneName Development. N2H2 acknowledges and agrees that
OneName intends to be the exclusive developer, or if not the exclusive developer
then the exclusive owner, of certain products that will not be Cobranded
Products and that will have additional features and functionality enhancements.
OneName hereby grants N2H2, at N2H2's option, the nonexclusive right to be a
sales agent for such products on a Most Favored Nation Basis under mutually
agreeable terms and conditions. At a minimum, N2H2 shall receive, for all such
products that N2H2 sells, a sales commission of * of the sales price that
OneName receives for such products.
6.2 Development with a Third Party. N2H2 acknowledges and agrees that
OneName may develop, in conjunction with third parties, certain products that
will not be Cobranded Products and that will have additional features and
functionality enhancements. For all such products that are not Closed Source
Products, OneName hereby grants N2H2, at N2H2's option, the nonexclusive right
to be a sales agent for such products on a Most Favored Nation Basis under
mutually agreeable terms and conditions. At a minimum, N2H2 shall receive, for
all such products that N2H2 sells, a sales commission of * of the sales price
that OneName receives for such products. Notwithstanding anything in this
Agreement that may be construed to the contrary, OneName may unilaterally buyout
such right of N2H2 with respect to any third party by paying N2H2 * of the
payments that OneName receives from such third party. Such payments shall be
made pursuant to Section 10.1.
7. XNS SERVICE PROVIDER SERVICES.
7.1 Pricing and License Provisions. OneName shall grant N2H2, at N2H2's
option, the nonexclusive right to be an XNS Service Provider. Such right shall
be granted on a Most Favored Nations Basis under mutually agreeable terms and
conditions. At a minimum, N2H2 shall receive pricing that provides a gross
margin to N2H2 * after N2H2's direct third party expenses from being an XNS
Service Provider, if any. Notwithstanding the foregoing, N2H2 acknowledges and
agrees that all XNS Service Providers will be subject to licensing terms that
ensure: a) a unified global standard for XNS technology, and b) minimum
quality-of-service standards with regards to reliability, availability,
security, and privacy. Failure to comply with these terms may result in
temporary or permanent decertification of an XNS Service Provider and
deactivation of the XNS root registry service, if such failure is not cured
within the agreed cure period after notice is given.
7.2 Revenue Sharing. N2H2 shall further receive on a quarterly basis a
portion of: a) total revenue earned by OneName from its XNS root registry
services for Active Customers, including but not limited to registration fees
and fees for certification and rating services, less the portion of such revenue
earned from N2H2 for being an XNS Service Provider, and b) excluding revenue
earned by OneName from third parties for development fees or in connection with
Closed Source Products. The parties acknowledge and agree that OneName's
business model may change to emphasize advertising revenue, and that therefore
N2H2 shall also receive the same portion of all revenue earned by OneName from
third parties for advertising.
The portion N2H2 shall receive equals the applicable amount from the first
paragraph of this Section 7.2, multiplied by * and then further multiplied by a
fraction whose numerator shall be the number of Active Customers who registered
through a Privacy Filter Product distributed by N2H2 or through N2H2 as an XNS
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Service Provider, and whose denominator shall be the total number of Active
Customers who registered through Privacy Filter Products or XNS Service
Providers.
For example, if, as of a fiscal quarter's end, OneName had a total of 10,000,000
Active Customers, and 3,000,000 of such Active Customers registered through
Privacy Filter Products distributed by N2H2 or through N2H2 as an XNS Service
Provider, and during such fiscal quarter the applicable amount from the first
paragraph of this Section 7.2 equaled * then the N2H2 revenue sharing amount
would be *
8. WARRANTS.
8.1 Terms. Subject to the terms and conditions of this Agreement,
OneName shall issue to N2H2 warrants for the right to purchase one share of
OneName common stock for every three Active Customer registrations that were
registered through a Privacy Filter Product distributed by N2H2, provided that
the maximum cumulative amount of such Active Customer registrations cannot
exceed * If a single customer has more than one Active Customer registration,
then each such registration shall be counted, but not more than once, in
determining whether warrants had been earned. The form of warrant is set forth
on Exhibit A. OneName shall issue such warrants at the end of each fiscal
quarter during which N2H2 makes a demand for such warrants to issue. The
exercise price shall be three dollars ($3) per common share, and the exercise
period shall be seven (7) years from the Effective Date.
8.2 Example. For example, if N2H2 makes a demand that such warrants
should issue, and at the end of such fiscal quarter OneName had a total of
10,000,000 Active Customer registrations, and 3,000,000 of such Active Customer
registrations registered through Privacy Filter Products distributed by N2H2,
and of those 3,000,000 Active Customer registrations, 900,000 had never been
counted before in determining whether warrants had been earned, then OneName
would issue warrants to N2H2 for the right to purchase 300,000 common shares. If
during the next fiscal quarter N2H2 again makes a demand that such warrants
should issue, and at the end of such fiscal quarter OneName had a total of
16,000,000 Active Customer registrations, and 7,000,000 of such Active Customer
registrations were registered through Privacy Filter Products distributed by
N2H2, and of those 7,000,000 Active Customer registrations, 4,000,000, had never
been counted before in determining whether warrants had been earned, then
OneName would issue warrants to N2H2 for the right to purchase 800,000 common
shares (since 3,000,000 Active Customer registrations had already been counted,
only * additional Active Customer registrations could be counted before the *
maximum was reached).
9. TIME LIMIT FOR MOST FAVORED NATION BASIS. N2H2 acknowledges that OneName's
granting of various rights to N2H2 on a Most Favored Nation Basis can impede the
ability of OneName to enter into future agreements, and, as a shareholder of
OneName, N2H2 has an interest in limiting such impediment. Therefore, N2H2
agrees that at any time OneName may give N2H2 notice of particular terms and
conditions that OneName has with a third party, and, if within 30 days N2H2 does
not agree to provide the same benefits to OneName as such third party in order
to receive the same terms and conditions, then N2H2 shall be deemed to have
waived its Most Favored Nation Basis rights with respect to such terms and
conditions with respect to such third party.
10. PAYMENTS; AUDIT RIGHTS.
10.1 Due Dates. Within 45 days after the end of each fiscal quarter
OneName shall submit to N2H2 a report showing the amount owed under Sections 6.2
and 7.2 above, as well as the applicable payment. All other payments due from
one party to the other shall be made in U.S. dollars within thirty (30) days of
the date of invoice. All payments not made within such thirty (30) day period
shall accrue interest at the rate of 1% per month or the maximum amount allowed
by applicable law, whichever is less.
10.2 Records and Audits. Each party (in such case the "Audited Party")
agrees to maintain books and records relating to the activities under this
Agreement in accordance with generally accepted accounting principles. Either
party (in such case the "Auditing Party") shall have the right to conduct, at
its expense and no more than once per fiscal quarter, an audit of such books and
records of the Audited Party during regular business hours upon at least ten
(10) business days' advance notice. Audits shall be for the sole purpose of
determining whether amounts payable pursuant to this Agreement have been
properly calculated and paid. In the event that such an audit reveals any
underpayment to the Auditing Party, the
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Audited Party shall immediately reimburse the Auditing Party for all underpaid
amounts. If the underpayment is greater than 5%, the Audited Party shall pay the
reasonable costs of that audit.
11. WARRANTIES. Each party warrants to the other that (i) it shall perform its
obligations under this Agreement with due care and diligence; (ii) it has the
right and authority to enter into this Agreement; and (iii) its performance
under this Agreement shall not violate any applicable law or regulations. EXCEPT
AS EXPRESSLY STATED HEREIN, THE PARTIES MAKE NO OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING, OR USAGE OF TRADE.
12. INDEMNIFICATION. Each party shall indemnify and hold harmless the other from
and against any and all claims, demands, actions, suits, losses, liabilities,
damages, injuries, fines, penalties, costs and expenses including, without
limitation, reasonable attorneys' fees, arising out of a breach of its
warranties provided in Section 11 above, provided that the party claiming a
right of indemnification promptly notifies the other party (the "Indemnifying
Party") in writing of the claim and allows the Indemnifying Party to control the
defense and all related settlement negotiations.
13. LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES,
ARISING OUT OF THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO LOST PROFITS,
BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, OR COVER, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
14. TERM AND TERMINATION.
14.1 Term and Termination. The term of this Agreement shall be for
three (3) years after the Effective Date. This Agreement may be terminated by a
party for cause immediately by written notice if the other party breaches any
material provision of this Agreement and fails to cure such breach within thirty
(30) days of written notice thereof.
14.2 Effect of Termination. Upon expiration or termination of this
Agreement, each party shall remit all payments accrued but unpaid as of the
effective date of termination to the other party within thirty (30) days of such
termination and issue warrants earned prior to termination. Upon termination,
each party will destroy or return to the other party materials of the other
party, or copies thereof, in its possession or under its control. Sections 2, 5,
and 10 through 16, shall survive termination of this Agreement.
15. CONFIDENTIALITY. Each party agrees that during the existence of this
Agreement and thereafter it will hold in strictest confidence, and will not use
or disclose to any third party, any Confidential Information of the other party.
The term "Confidential Information" shall mean all non-public information,
whether business or technical in nature, that the other party designates as
being confidential, or which under the circumstances of disclosure ought to be
treated as confidential. If either party has any questions as to what comprises
Confidential Information of the other party, it agrees to consult with such
other party. "Confidential Information" shall not include information that was
known to the receiving party prior to disclosure, information that is or becomes
publicly available through no fault of the receiving party, or information that
is required to be disclosed by applicable law.
16. GENERAL PROVISIONS. This Agreement shall be governed by the laws of the
State of Washington without regard to its conflicts of laws rules, and shall not
be governed by the United Nations Convention on Contracts for the International
Sale of Goods, the application of which is hereby excluded. Failure of either
party to perform, if occasioned in whole or in part by any act of God, act of
governmental authority, or any other occurrence, act or thing beyond the
reasonable control of that party, shall excuse that party from its obligation to
perform when due and shall suspend its performance until such time as its
performance can reasonably be undertaken. This Agreement is one between
independent contractors, and shall not create the relationship of employer and
employee, a partnership, joint venture, or any agency relationship between the
parties. Neither party shall assign this Agreement or any rights hereunder
without the prior written consent of the other party, which shall not be
unreasonably withheld; provided, however, that either party may assign this
Agreement to an entity which succeeds by operation of law to, or otherwise
acquires substantially all of the assets of such party, or into which such party
is merged, and which assumes such party's obligations hereunder. This Agreement
is intended to be the parties' complete, integrated expression
5
<PAGE> 31
of the terms of their agreement with respect to its subject matters, and any
prior agreements or understandings with respect to such subject matters are
superseded hereby and fully merged herein. All exhibits attached hereto are
incorporated herein by this reference. All notices and demands hereunder shall
be in writing and shall be served by personal service, courier, or certified
mail return receipt requested, to the address of the receiving party set forth
in the first paragraph above (or at such different address as may be designated
by such party by written notice to the other party). All such notices and
demands shall be deemed given upon receipt. No waiver of any term or provision
of this Agreement or right hereunder shall be valid unless the waiver is in
writing and signed by the waiving party. No waiver of failure to enforce any
provision or right hereunder shall be deemed to be a waiver of the same or any
other provision or right in any other instance. If any provision of this
Agreement shall be found to be unenforceable, the remainder of this Agreement
shall not be affected. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one and the same
instrument. For purposes hereof, a facsimile copy of this Agreement shall be
deemed to be an original.
17. INSURANCE. Each party shall maintain at its own expense in full force and
effect at all times during which the Cobranded Products are being sold, with a
responsible insurance carrier, at least a $10,000,000 product liability
insurance policy with respect to the Cobranded Products. Each party shall name
the other as an additional insured and shall provide for at least thirty (30)
days prior written notice to the other party of the cancellation or any
substantial adverse modification of the policy.
18. PATENTS. For the avoidance of doubt, OneName hereby grants N2H2 a license
under all patents now or hereafter owned by OneName to exercise the rights
granted to N2H2 under this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement to be effective
as of the Effective Date.
Intermind Corporation ("OneName") N2H2, INC. ("N2H2")
By: By:
-------------------------------------- ---------------------------
Print Name: Print Name:
------------------------------ -------------------
Title: Title:
----------------------------------- ------------------------
6
<PAGE> 1
EXHIBIT 10.4
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
NATIONAL ISP MASTER SERVICE AGREEMENT
This National ISP Master Service Agreement ("Agreement") is entered into
as of the 6th of December, 1999 (the "Effective Date") by and between N2H2,
Inc., a Washington corporation, having its principal place of business at 900
4th Avenue - Suite 3400, Seattle, WA, 98164 ("N2H2") and AT&T Global Network
Services, LLC, a Delaware limited liability company, with offices at 231 N.
Martingale Road, Schaumburg, Illinois 60173-2254 ("LICENSEE"), for the purpose
of providing the Licensee's end-user subscribers, and Licensee's customers who
provide Internet connectivity to end-users, with N2H2's Internet filtering
services.
WITNESSETH
WHEREAS, N2H2 provides Internet filtering and network caching services
to education, Internet service providers ("ISPs") and commercial organizations;
and
WHEREAS, Licensee provides Internet access to end-user subscribers and
to customers, including but not limited to other ISPs, who provide Internet
connectivity to their end-users, as a function of the Internet service provided
by and managed by Licensee, and
WHEREAS, Licensee and N2H2 (collectively, the "Parties" and each
individually, a "Party") desire to enter into this Agreement to govern their
respective rights and obligations regarding Licensee's purchase, use and resale
of, and N2H2's sale, delivery and service of, the System and Service, as each
are defined below.
NOW THEREFORE, in recognition of the mutual promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is acknowledged, the Parties hereby agree as follows:
1. INTENT OF RELATIONSHIP BETWEEN PARTIES. It is the intent of the
Parties that they will work together to provide Internet filtering services to
Licensee's end-users and customers requesting such filtering service. Each Party
will use commercially reasonable efforts to meet its obligations under this
Agreement, and will strive to provide an optimal level of customer satisfaction
to the end-users. Furthermore, it is the intent of the Parties to pursue such
related opportunities within the Internet filtering market as may arise from
time to time, provided the Parties can mutually agree on such opportunities.
Notwithstanding the foregoing, the Parties are independent contractors only and
not joint venturers or partners.
2. DESCRIPTION OF N2H2 INTERNET ACCESS FILTERING SERVICES. N2H2 will
provide, at a minimum, a turnkey service inclusive of hardware, software,
technical and customer support, system maintenance and software updates, that
filters and caches content received via the Internet onto a computer network or
workstation (collectively, as upgraded, modified, or otherwise improved from
time to time, the "Service"). The Service will be delivered through either
direct placement of an N2H2 network proxy server containing N2H2 proprietary
software
Page 1 of 12
<PAGE> 2
and proprietary blocked database (collectively, the "System") onto the network
or computer of the end-user (the "End-User), or by placement of the System onto
the network or computer of Licensee or the network or Computer of a customer of
Licensee who resells Licensee's services to the End-User. The placement of a
System will be determined according to the requirements of Licensee's customer
or End-User for each specific application under this Agreement, and will be
documented along with other requirements, including but not limited to the
applicable charges, the term of provision of the Services, the installation
location and configuration of the System and the contact name, number, etc. at
the installation site of the System, in a project schedule ("Schedule") which,
when signed by both Parties, shall become effective and shall be deemed to be
attached to and incorporated into this Agreement.
3. TERM. The initial term of this Agreement shall be for one (1) year
commencing on the Effective Date. If either Party does not terminate this
Agreement, as provided herein, this Agreement will automatically renew for a one
(1) year extension term on each anniversary of the Effective Date. During the
initial term or any extension term, either Party has the right to terminate the
Agreement, with or without cause, by giving at least thirty (30) days prior
written notice of its intent to terminate to the other Party. The expiration or
termination of this Agreement shall not affect the System and Services then
currently being delivered under any Schedule(s) to this Agreement, which shall
remain in place and continue until the then current term of such Schedule(s)
expires, or is terminated by Licensee pursuant to the terms and conditions of
this Agreement or the applicable Schedule. Any provisions of this Agreement
which by their nature extend beyond the termination or expiration of this
Agreement or the applicable Schedule shall remain in effect beyond such
termination until fulfilled and shall apply to the Parties' respective
successors and permitted assigns.
4. ARTWORK. Licensee shall create the trailer and block page graphics
for N2H2's reasonable approval and installation on the System by N2H2 prior to
final System configuration and delivery.
5. CONFIGURATION. Prior to shipping to, and placement and installation
of the System at the address specified in the applicable Schedule, N2H2 will
configure each System based on the information set forth in such applicable
Schedule and any additional information provided by Licensee over the Internet
via use of N2H2's "On-line Network Information Form". Upon delivery and
successful installation of the System by N2H2, N2H2 will provide, at no
additional cost, on-site training and education to Licensee's employees, and/or
customers or End-Users, regarding the configuration and use of the System. N2H2
shall pay for all shipping and handling charges associated with the delivery of
the System.
6. HARDWARE/SOFTWARE. Licensee shall have the option to obtain the
hardware for the System from N2H2 or from a third party. If the System's server
hardware is provided by N2H2 ("Hardware"), it shall remain the sole and
exclusive property of N2H2. If the System's server hardware is provided by
Licensee, such Hardware shall remain the sole and exclusive property of
Licensee. The System's filtering and caching software ("Software") and all
documentation related thereto ("Documentation") shall remain the sole and
exclusive property of N2H2. N2H2 hereby agrees that it shall allow no
dissemination, sale or other transfer of Licensee's hardware, proprietary
software and/or content related to or used in connection with
Page 2 of 12
<PAGE> 3
N2H2's provision of Services to Licensee, including, without limitation,
proprietary computer IP addresses as provided to N2H2 for server installation,
without the prior written approval of Licensee. Licensee, if necessary to
accommodate multiple "transparently installed" servers, will, at its option and
cost, provide load-balancing hardware/software, as may be required.
7. PROPRIETARY CONTENT. N2H2 will, through the provision of its
filtering services, provide to Licensee the use of its proprietary database of
records for filtering and screening activities and other proprietary data
(together, "Proprietary Content"). The Proprietary Content shall remain the sole
and exclusive property of N2H2.
8. LICENSE. So long as Licensee complies with the terms of this
Agreement, N2H2 grants to Licensee and to Licensee's customers and End-Users,
the * (except to an Affiliate of Licensee), limited, right (the "License") to
use the Hardware, Software, Documentation and Proprietary Content in conjunction
with the System, as follows:
a. N2H2 grants to Licensee, and via a pass-through license, to
Licensee's customers and End-Users, the * right to use, execute, display,
distribute, perform, and copy (to the extent provided herein), the Software,
Documentation and Proprietary Content solely as configured for Licensee's
Authorized Users, as defined below, and as set forth in each applicable
Schedule.
b. The Licensee shall provide N2H2 with a monthly report which
identifies the then current Licensee's customers and the number of End-User, but
such report will not discretely identify End-Users.
c. Licensee agrees that Licensee and its Affiliates shall not
attempt to reverse assemble, reverse compile, reverse engineer or otherwise
derive a source code equivalent from the System's Hardware or Software, and not
attempt to extract or copy the Proprietary Content, provided hereunder by N2H2.
d. N2H2 reserves the right to terminate this License upon written
notice, and to seek any other legal remedies, if Licensee violates any
provisions hereof.
9. PAYMENT. Licensee's payments to N2H2 are calculated as specified in
the applicable Schedule. On the 15th of each month the Licensee will notify N2H2
of the total number of Licensee's End-Users and Licensee's customer's End-Users
(collectively, the "Authorized Users") of the filtering Services provided
hereunder. This number will be the basis for calculation of the upcoming month's
monthly service fee, per the applicable Schedule. Monthly payments are to be
made to N2H2 within thirty (30) days of receipt of a correct invoice from N2H2
for the applicable charges hereunder. The payment shall be calculated as * All
monthly service fees for System service, which service is described on attached
Exhibit B, will be paid annually within thirty (30) days of receipt of an
invoice therefor from N2H2. The initial invoice under a Schedule shall follow
successful installation of the applicable System, and thereafter the annual
Page 3 of 12
<PAGE> 4
service fee shall be due as of the anniversary of the commencement date of the
applicable Schedule.
10. FILTERED SUBSCRIBER COUNT REPORTING BY LICENSEE. On a monthly basis,
Licensee shall provide N2H2 with verifiable documentation of the monthly count,
as of the 15th of the month, of its Internet customers and End-User subscribers
utilizing the filtering Services provided hereunder. N2H2 reserves the right to
audit, at its own cost, Licensee's billing and subscriber records once per year,
for the purpose of verifying accurate billing submissions by Licensee. If, upon
audit, Licensee is found to have underpaid N2H2 for previous billing periods,
Licensee shall provide payment to correct any errors or omissions to those
monthly payments to N2H2, and, in the event such underpayment is for a
significant amount, Licensee shall reimburse the reasonable cost of the audit to
N2H2. Such payment will be made within thirty (30) days notice of such errors
from N2H2. If, upon audit, Licensee is found to have overpaid N2H2 for previous
billing periods, N2H2 will provide payment or credit to Licensee, within thirty
(30) days of such discovery, to correct any such overpayment.
11. MAINTENANCE SERVICES. N2H2 will monitor, maintain and repair the
System at the server site and keep the System in good condition at N2H2's sole
cost and expense, in the manner set forth in Exhibit B. If the System is
installed on Licensee's premises, Licensee will maintain the premises
surrounding the System in a clean and suitable condition and will maintain the
immediate environment according to the applicable, reasonable environmental
specifications provided to Licensee by N2H2. To help troubleshoot any problems
that may occur, the make and model of any power conditioning/UPS unit that the
N2H2 server is using should be reported to N2H2 technical support. N2H2 will
install all N2H2 servers strictly in compliance with N2H2 Technical Installation
Specifications, as defined on the N2H2 Web site. Licensee will be solely
responsible for, and will reimburse N2H2 for, the costs of all repairs and
maintenance necessitated by any negligent or willful act or omission of
Licensee, its employees, or agents. Licensee shall not attempt to make any
updates or other modifications to the System's Hardware, Software, or
Proprietary Content without the written consent of N2H2.
12. UPGRADES; UPDATES. At its sole expense and in a timely manner, N2H2
will provide Licensee with all software and hardware updates or upgrades and
fixes for the System which are generally provided by N2H2 to all similar N2H2
Licensees. Such updates and upgrades shall include all features and services
available, including, but not limited to, the warranties provided in Section 14
hereof. Licensee shall use the upgraded or updated System only in accordance
with this Agreement.
13. HELP SERVICES. Upon successful installation of the System, N2H2
shall train the Licensee's, and/or the Licensee's customer's or End-User's,
network administrator(s) and/or other individuals identified by Licensee in the
proper use of the System at Licensee's premises or the location where the System
is installed, at no cost to Licensee. N2H2 will make available technical
consultants by telephone 24 hours per day, 7 days per week to assist Licensee
with questions concerning operation and troubleshooting of the System. N2H2 will
not be required to travel to Licensee's premises to provide services, except for
travel for maintenance services and training which shall be solely at N2H2's
cost, unless the Licensee agrees in advance to reimburse N2H2 for time and
travel costs.
Page 4 of 12
<PAGE> 5
14. LIMITED WARRANTY. N2H2 WARRANTS TO LICENSEE ONLY THAT (A) THE
SERVICES WILL BE PROVIDED IN A WORKMANLIKE MANNER, AND (B) DURING THE TERM OF
THIS AGREEMENT, THE SYSTEM WILL CONFORM TO ITS DOCUMENTATION AND SPECIFICATIONS
WHEN USED IN CONFORMANCE WITH SUCH DOCUMENTATION AND SPECIFICATIONS. N2H2
FURTHER WARRANTS THAT THE SYSTEM WILL BE FREE FROM DEFECTS IN MATERIALS AND
WORKMANSHIP UNDER NORMAL USE, AND THE SYSTEM AND SOFTWARE CONTAIN NO MALICIOUS
CODE, PROGRAM OR OTHER INTERNAL COMPONENT, COMPUTER VIRUS, COMPUTER WORM, OR
COMPUTER TROJAN HORSE OR TIME BOMB, WHICH COULD DAMAGE, DESTROY OR ALTER ANY
HARDWARE, SOFTWARE OR DATA. N2H2 ADDITIONALLY WARRANTS THAT THE SOFTWARE WILL
RECORD, STORE PROCESS AND PRESENT CALENDAR DATES FALLING ON OR AFTER JANUARY 1,
2000, IN THE SAME MANNER AND WITH THE SAME FUNCTIONALITY AS IT PERFORMED BEFORE
JANUARY 1, 2000. EXCEPT AS PROVIDED HEREIN, THE SYSTEM IS LICENSED WITHOUT
WARRANTY, EITHER EXPRESSED OR IMPLIED, AS TO PERFORMANCE, MERCHANTABILITY, OR
FITNESS FOR ANY PARTICULAR PURPOSE. LICENSEE ASSUMES THE ENTIRE RISK AS TO THE
RESULTS OF THE SYSTEM.
15. LIMITED LIABILITY. TO THE MAXIMUM EXTENT PERMITTED BY LAW; IN NO
EVENT SHALL EITHER PARTY OR ANYONE INVOLVED IN THE CREATION, PRODUCTION,
DELIVERY OR LICENSING OF THE SYSTEM BE LIABLE TO THE OTHER PARTY, OR ANY THIRD
PARTY, FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES; INCLUDING
WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION,
LOSS OF BUSINESS INFORMATION, OR OTHER PECUNIARY LOSS ARISING OUT OF THE USE OR
INABILITY TO USE THE SYSTEM.
16. INDEMNIFICATION. N2H2 will indemnify and defend Licensee and its
directors, officers, employees and agents, at N2H2's expense, against any and
all losses, liabilities, judgments, awards and costs (including reasonable legal
fees and expenses) arising from or relating to (a) any breach or default of
N2H2's obligations herein; (b) any negligent act or omission or willful
misconduct by N2H2 or its employees, agents, invitees, licensees, users or
subscribers; (c) any claim by a third party of copyright, patent or other
intellectual property infringement by the System or the Services provided
hereunder; (d) any claim by any third party relating to the blocking of any
content or materials through use of the System and/or Services; and (e) any
claim by any customer of Licensee, or any End-User relating to the content or
materials which are not filtered by the Services.
17. COPYRIGHT. Licensee acknowledges that N2H2 asserts that the Software
and Proprietary Content and any copies thereof are owned by N2H2 and are
protected by United States copyright laws and international treaty provisions.
Therefore, Licensee agrees to treat the Software and Proprietary Content like
any other copyrighted material. Licensee agrees not to rent, lease, lend or sell
the Software except to the extent allowed hereunder to sublicense or resell the
right to use which is implicit in the delivery of the N2H2 Services to End-Users
and
Page 5 of 12
<PAGE> 6
customers of Licensee. If Licensee attempts to reverse engineer, decompose,
disassemble or make any attempt to discover the Proprietary Content, Software or
source code to the Software and/or the details of the Proprietary Content, N2H2
shall have the right to immediately terminate this Agreement.
18. ASSIGNMENT. Neither Party may assign or transfer, in whole or in
part, this Agreement or any of its rights or obligations under this Agreement
without the prior written consent of the other Party, which shall not
unreasonably be withheld, provided, however, Licensee may assign this Agreement
to an entity that directly controls, is controlled by or is under common control
with Licensee (an "Affiliate") without the prior written consents of N2H2. The
obligations of the Parties shall be binding on and inure to the benefit of their
respective successors and permitted assigns. Any transfer or assignment in
violation of this paragraph shall be void and will have no force or effect.
19. FORCE MAJEURE. The Parties will not be in default and liable for
breach of this Agreement in the event their business is interrupted because of
strikes, labor disturbances, lockout, riot, fire, flood, outside electrical
failure, outside telecommunications facilities failure, act of God, or the
public enemy, or any other cause, whether like or unlike the foregoing, if
beyond their reasonable control and which may prevent or delay them from
performing their obligations herein.
20. MARKS; USAGE AND PROMOTION. Neither Party shall, without the prior
express written consent of the other Party, use the other Party's name, logos,
service marks, trademarks or trade names, or those of any subsidiary or
Affiliate of the other Party, or reveal the existence of this Agreement, in any
advertisement, publicity release, Internet page, or marketing materials. Both
Parties will take such action as is necessary to protect, and shall not
misrepresent, the other Party's copyrights, trade names, trademarks, service
marks, goodwill, trade secrets, proprietary information, products and/or
services. Each Party may attach to or modify the other Party's marketing
materials to the extent necessary to provide information about the appropriate
contacts within its own organization, but may not otherwise modify the other
Party's materials, or distribute its own version of the other Party's marketing
materials, without the written approval of the other Party. Each Party shall
submit to the other Party for approval any and all changes made to the other
Party's documentation, either printed or electronic, in advance of distribution.
Similarly, any and all printed or electronic documentation originated by one
Party which describes or represents the services and technologies of the other
Party must be approved by the other Party prior to distribution. Requests for
approval shall be made allowing reasonable time for review by the other Party,
and approvals shall not be unreasonably withheld.
Any and all public relations activities undertaken by one Party which
include reference to the other Party's products, services or technologies, or
containing quotes by the other Party's executives or representatives, including
but not limited to the issuance of press releases, shall first be submitted for
review and approval by the other Party. Requests for approval shall be made
allowing reasonable time for review by the other Party, and approvals shall not
be unreasonably withheld. N2H2 agrees to provide samples of acceptable language
for use in Licensee's public relations materials.
Page 6 of 12
<PAGE> 7
21. REMEDIES. In the event either Party under this Agreement fails to
cure a breach or default within thirty (30) days after written notice from the
other Party, in addition to its right to terminate the applicable Schedule(s)
set forth in Section 22 below, such other Party shall have the right to pursue
any other remedies available at law or in equity to enforce or interpret the
terms of this Agreement. An action for any breach of this Agreement must be
commenced within two (2) years from the date when a Party learned of the alleged
breach.
22. BREACH; TERMINATION. Except as set forth in paragraph 17, in the
event that any breach or default of this Agreement by either Party remains
uncured for more than thirty (30) days after written notice from the other
Party, the non-breaching Party may terminate the applicable Schedule(s) under
this Agreement by giving the breaching Party written notice of termination. Upon
termination of a Schedule by either Party, N2H2 will have the right to
disconnect Licensee from the applicable System(s), following the notice and cure
period, and, upon N2H2's request, Licensee will promptly return the System(s) to
N2H2 in "AS IS" condition. N2H2 shall pay for all shipping and handling charges
associated with the return of the System(s).
23. NOTICES. Any notice required by this Agreement or given in
connection with it, will be in writing and will be given to the appropriate
Party by personal delivery or by certified mail, or recognized overnight
delivery services. Facsimile notice or email may be used only if a means of
obtaining an immediate written confirmation of receipt is available and such
proof is presented in the event of a dispute. All notices will be effective upon
receipt, and will be made to the following addresses for each Party (or as such
address may be modified by notice to the other Party):
For Licensee: AT&T Global Network Services
231 N. Martingale Road, M/S 2A
Schaumburg, Illinois 60173-2254
Attn: Internet Service Manager
with a copy to: AT&T Global Network Services
231 N. Martingale Road, M/S 10-A
Schaumburg, Illinois 60173-2254
Attn: Legal Department
For N2H2: N2H2, Inc.
900 4th Avenue, Suite 3400
Seattle, Washington 98164
Attn: Vice President and General Manager
24. SEVERABILITY. The invalidity or unenforceability of any provision
hereof will in no way affect the validity or enforceability of any other
provision.
25. GOVERNING LAW. The Parties agree that this Agreement will be
governed by the internal laws of the State of New York, without regard to
conflict of law principles.
Page 7 of 12
<PAGE> 8
26. CONFIDENTIALITY. Any disclosure of confidential or proprietary
information between the Parties during the term of this Agreement, with the
exception of the Hardware, Software, Documentation, Proprietary Content and
Licensee's IP addresses, shall be made under and pursuant to the terms and
conditions of a mutually agreeable confidentiality agreement between the Parties
(the "Confidentiality Agreement"), Information exchanged between the Parties
during the normal course of business under this Agreement shall not be
considered proprietary or confidential unless so identified and disclosed under
such Confidentiality Agreement.
27. ENTIRETY. This Agreement constitutes the complete agreement between
N2H2 and Licensee, and may not be modified except by written agreement of both
Parties.
28. TAXES. N2H2 will invoice Licensee for any sales, use or other
legally collectable taxes on the Services provided hereunder, except where
Licensee provides N2H2 with a resale or other exemption certificate; provided,
however, that Licensee shall not be responsible to pay any taxes: (i) imposed on
N2H2's net or gross income, capital or franchise taxes, (ii) in the nature of
employee withholding taxes, FICA, Medicare taxes, unemployment insurance or
other taxes relating to N2H2's personnel performing Services hereunder, (iii)
imposed on, with respect to, or in connection with N2H2's purchase of any
supplies, materials, equipment, software, or services for use in providing the
Services, (iv) based on or in respect of any property or equipment used in
providing the Services, including but not limited to property taxes on the
System, or (v) in the nature of government licenses or permits required to
provide the Services.
29. BRANDING. The customized "Block" and "Review URL" pages that shall
be used in conjunction with the Services provided hereunder shall include an
N2H2-approved reference to N2H2, such as "Powered by N2H2". The reference shall
be hyperlinked to N2H2's web site.
ACCEPTED AND AGREED FOR N2H2, INC. (N2H2): ACCEPTED AND AGREED FOR AT&T GLOBAL
NETWORK SERVICES, LLC (LICENSEE):
Signature: Signature:
----------------------------- --------------------------
[David W. Arnold] [G. F. Dravitz]
Printed: Printed:
------------------------------- ----------------------------
[David W. Arnold] [G. F. Dravitz]
Title: Title:
--------------------------------- ------------------------------
[Vice President & COO] [Procurement Director]
Date: Date:
---------------------------------- -------------------------------
[11/19/99] [12-6-99]
Page 8 of 12
<PAGE> 9
EXHIBIT A
AT&T Pricing
N2H2 agrees to provide Internet Filtering Service to Licensee for the following
charges.
Proxy Server Set-up & Installation "One time Charge"
----------------------------------------------------
1 N2H2 Filtering Cluster* * per Cluster
1 Alteon Ace Director Switch * per customer
- ----------
*(10) Rack Mount P300 w/ 384 MB RAM*, Additional Servers required will be
provided by N2H2 at no cost as required. A Cluster may be used to serve one or
more Licensee customers, as technically possible.
Standard Monthly Service Fee
Schedule
----------------------------
SUBSCRIBERS MONTHLY SERVICE FEE (MSF)
All subscribers * per subscriber
Annual Maintenance Service Fee Schedule
---------------------------------------
Yearly Alteon Service Agreement * (per Ace Director Switch per year, due on the
commencement date and each anniversary/renewal date of the term of the
applicable Schedule.)
Page 9 of 12
<PAGE> 10
* INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT B
Maintenance Service Plan Description
N2H2 shall provide annual maintenance service to the System according to the
following terms and conditions:
N2H2 will provide Licensee with pass-through Alteon Support Services, which
include:
1. 24 x 7 Tech Support: telephone, fax and e-mail support 24 hours a day, seven
(7) days a week. Live support is offered from 6:00 A.M. to 7:00 P.M., Monday
through Friday, Pacific time, excluding holidays. Pager support is offered from
7:00 P.M. to 6:00 A.M., Monday through Friday, plus weekends and holidays.
Premium support subscribers have access to a special support phone number and a
special e-mail address. Leaving a message of any priority in these special
voicemail and e-mail boxes generates a page. Up to six (6) authorized users may
be registered with Alteon WebSystems' technical support under this program, two
(2) of which may be Licensee. The Alteon program will be upgraded to live 24 x 7
support before end of year 1999.
2. Alteon will ship replacement product directly to either N2H2 or to Licensee
upon determination of a hardware problem. Once the replacement unit reaches the
customer site, the defective unit is returned to Alteon.
3. Full technical support web access provides access to FAQs, on-line
documentation, and a channel into the Alteon and N2H2 call tracking databases.
Through secure user authentication, Licensee can query the on-line call tracking
database to view service calls and submit new service requests. Access is also
provided via login and password into the technical support FTP server. Plan
members are provided their own home directories for uploading/downloading
information, all while protecting their data from others.
4. Switch software subscription is provided for end-user access to all new
switch software releases, including new feature releases and releases to correct
software defects.
TERMS AND CONDITIONS
Term for paid support contracts: 12 months. Initial period starts after three
(3) month free support period.
End-users who purchase any end-user support program for NICs must buy it for all
Alteon WebSystems NICs they have purchased.
FTP is the primary distribution mechanism for software releases. Other media may
be made available upon request.
Any returned units MUST obtain prior authorization from Alteon Technical
Support. After obtaining authorization, an RMA form must be filled out and
accompany each returned unit.
Advance Replacement units are delivered to the customer site by next day if RMA
information is received at Alteon headquarters by 2:00 P.M., Pacific time.
Alteon must receive failed units within 15 calendar days after delivery of
replacement product, and reserves the right to bill for units not returned
within this time.
For return-to-factory repairs, Alteon will ship a repaired or replacement unit
within 15 calendar days of receipt of the failed unit.
Shipping charges: During 90-day free support period, Alteon pays shipping
charges both ways. For Advance Replacement, Alteon pays shipping charges both
ways. During warranty period, Alteon pays shipping charges for return of product
to Alteon. For return-to-factory repair, Alteon pays shipping charges for return
of product to Alteon. Other shipping charges are paid by Licensee.
Callback period for Premium contract: Support will respond to calls within 15
minutes during the program hours of operation.
Page 10 of 12
<PAGE> 11
* INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
PROJECT SCHEDULE NO. 99-01
NAME OF CUSTOMER OR END-USER (OR IDENTIFICATION OF LICENSEE'S APPLICATION):
Families On Line
CONFIGURATION OF SYSTEM:
1 N2H2 Filtering Cluster*
1 Alteon Ace Director Switch
*(10) Rack Mount P300 w/384 MB RAM. Additional servers, if required, will be
provided by N2H2 at no additional cost.
APPLICABLE CHARGES:
INSTALLATION PAYMENT SCHEDULE
<TABLE>
<CAPTION>
DUE DATE SERVICE AMOUNT* TOTAL*
<S> <C> <C> <C>
Upon Installation Completion Mini Cluster Set-up
Upon Installation Alteon Ace Director
Upon Schedule Commencement Alteon Service Agreement (1 Year) *
Initial Payment *
</TABLE>
MONTHLY SERVICE FEE
* per subscriber per month (flat fee for all subscribers)
TERM OF SERVICES UNDER SCHEDULE:
The Service Period shall be for three (3) years, commencing on the date
Service is first implemented for Families On Line.
Page 11 of 12
<PAGE> 12
* INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
LICENSEE'S (OR CUSTOMER'S) NETWORK REPRESENTATIVE
INFORMATION
CONTACT NAME: MARK THURMAN
--------------------------------------
EMAIL ADDRESS: [email protected]
--------------------------------------
OFFICE PHONE NUMBER: 954-771-8558
--------------------------------------
FAX PHONE NUMBER: 954-771-4241
--------------------------------------
PAGER PHONE NUMBER: 954-648-0351 (CELL PHONE)
--------------------------------------
LOCATION OF
Server(s)
CONTACT NAME: BEAU CHAMBERS (PRIMARY) 650-556-1698
ALT: MIKE SHEA (MGR) 858-812-4624
-----------------------------------------
ORGANIZATION: AT&T
-----------------------------------------
STREET ADDRESS #1: 3175 SPRING STREET
-----------------------------------------
STREET ADDRESS #2:
-----------------------------------------
CITY/STATE/COUNTRY: REDWOOD CITY, CALIFORNIA, USA
-----------------------------------------
ZIP/POSTAL CODE: 94063-3928
-----------------------------------------
COMPLETED BY
------------
NAME: SAM PARRINO
--------------------------------------
TITLE: PROJECT MANAGER
--------------------------------------
DATE: 12/2/99
--------------------------------------
ACCEPTED AND AGREED FOR N2H2, INC. (N2H2): ACCEPTED AND AGREED FOR AT&T GLOBAL
NETWORK SERVICES, LLC (LICENSEE):
Signature: Signature:
------------------------------ --------------------------
[David Arnold] [G. F. Dravitz]
Printed: Printed:
-------------------------------- ----------------------------
[David Arnold] [G. F. Dravitz]
Title: Title:
---------------------------------- ------------------------------
[VP & Chief Operating Officer] [Procurement Director]
Date: Date:
----------------------------------- -------------------------------
[12/6/99] [12-6-99]
Page 12 of 12
<PAGE> 1
EXHIBIT 10.5
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
DATA SERVICES AGREEMENT
This Data Services Agreement (this "Agreement") is entered into as of
December , 1999 (the "Effective Date"), by and between Inktomi Corporation, a
Delaware corporation with its principal place of business at 4100 East Third
Avenue, Foster City, California, 94404 ("Inktomi") and N2H2, Inc., a Washington
corporation with its principal place of business at 1301 5th Avenue, Suite 1501,
Seattle, Washington, 98101 ("N2H2").
RECITALS
A. Inktomi provides its customers Internet search services.
B. N2H2 reviews Internet content, categorizes such content in accordance
with a number of tags developed by N2H2 and offers a service to its customers
that permits its customers to filter the content retrieved from Internet
searches.
C. Inktomi desires to offer an Internet search service that can be
filtered by N2H2 tags.
NOW THEREFORE, in return for the mutual promises made herein and for
other consideration, the sufficiency of which is acknowledged and agreed, the
parties agree as follows:
AGREEMENT
In consideration of the foregoing and the mutual promises contained
herein the parties agree as follows:
1. Definitions. For purposes of this Agreement, in addition to the other terms
defined in this Agreement, the following terms shall have the indicated
meanings:
1.1. "Filter Proxy" means the N2H2 Proxy and the Inktomi Proxy which
perform functions including the N2H2 Pre Processing and N2H2 Post Processing
that incorporates the functionality agreed upon in the Engineering Plan (as
defined below).
1.2. "Inktomi Customers" means all current and future search and/or
directory service customers.
1.3. "Inktomi Data Protocol" means the written specification on how an
interface communicates and interacts with the Inktomi search engine.
1.4. "Inktomi Optional Safe Search Customer" means an Inktomi Customer
who has the option to offer N2H2 Filtered Search to its users.
1.5. "Inktomi Safe Search Customer" means an Inktomi Customer who
chooses to offer N2H2 Filtered Search exclusively to its users.
1.6. "Intellectual Property Rights" means any and all rights existing
from time to time under patent law, copyright law, semiconductor chip protection
law, moral rights law, trade secret law, trademark law, unfair competition law,
publicity rights law, privacy rights law, and any and all other proprietary
rights, and any and all applications, renewals, extensions and restorations
thereof, now or hereafter in force and effect worldwide.
<PAGE> 2
1.7. "Interim Service Period" means that period of time beginning from
the Effective Date through the live implementation of the Filter Proxy.
1.8. "Inktomi Proxy" means the software developed by Inktomi that
implements the Inktomi Proxy Protocol to communicate with proxies such as the
N2H2 Proxy.
1.9. "Inktomi Proxy Protocol" means the application programming
interface and/or protocol developed by Inktomi that is used to permit third
party applications to communicate with the software and/or hardware used in
Inktomi's search services.
1.10. "N2H2 Database" means the database compiled and continually
updated by N2H2 that identifies the URLs of Web sites and N2H2 Tags associated
with such URLs.
1.11. "N2H2 Filtered Search" a service offered by Inktomi to Inktomi
Customers that in response to a query delivers search results that have been
filtered using the N2H2 Database, N2H2 Pre Processing and N2H2 Post Processing.
1.12. "N2H2 Post Processing" means additional filtering applied to the
search results after they are sent from the cluster but before they are sent to
the Inktomi Customer to remove any remaining objectionable material that is
detected.
1.13. "N2H2 Pre Processing" means changes made to the search query prior
to sending it to the Inktomi search cluster which are required to obtain high
quality filtered search results.
1.14. "N2H2 Proxy" means the software developed by N2H2 that interfaces
with the Inktomi Proxy using the Inktomi Proxy Protocol to provide N2H2 Pre
Processing and N2H2 Post Processing.
1.15. "N2H2 Tags" means the tags (existing now or in the future) that
N2H2 uses to describe the nature of the content contained on a Web page. The
list of N2H2 Tags used as of the Effective Date is attached hereto as Exhibit A.
1.16. "Proxy Service Period" means that period of time beginning from
the live commercial implementation of the Filter Proxy.
1.17. "Results Set" means a set of results consisting of between one and
one hundred records presented in response to a search query.
1.18. "Term" shall have the meaning indicated in Section 13.1
1.19. "Usage Data" means the demographic, psychographic, statistical and
other end user data generated by operation of an Inktomi search service,
including without limitation all end user "click through" information.
1.20. "Web page" means a document on the Web which may be viewed in its
entirety without leaving the applicable distinct URL address.
1.21. "Web site" means a collection of inter-related Web pages.
1.22. "Web" means the so-called World Wide Web, containing, inter alia,
pages written in hypertext markup language (HTML) and/or any similar successor
technology.
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<PAGE> 3
2. Provision of N2H2 Filtered Search Service.
N2H2 shall provide Inktomi the services, data and/or support as set forth in
this Agreement to permit Inktomi to provide Inktomi Customers a N2H2 Filtered
Search service.
3. Development of Engineering Plan.
3.1. Engineering Plan. During the sixty (60) day period following the
Effective Date, the parties will meet and use commercially reasonable efforts to
agree upon an engineering, operations and support plan that will set forth the
manner in which Inktomi will host a N2H2 Filtered Search service and N2H2 will
support such N2H2 Filtered Search service ("Engineering Plan"). The Engineering
Plan will set forth each party's development, operational and support
obligations to enable Inktomi to offer a N2H2 Filtered Search service to replace
the service offered during the Interim Service Period(which will likely include
development by each party of their respective elements of the Filter Proxy).
3.2. Project Managers. The parties shall each appoint a "Project
Manager" to administer the party's performance of development efforts under this
Agreement. Either party may change its Project Manager upon written notice to
the other party. The Project Manager shall meet regularly to discuss the
progress of the Engineering Plan.
3.3. Development Costs. The parties shall each be responsible for any
and all development costs incurred by such party in its development activities
under this Agreement.
4. Marketing of N2H2 Filtered Search.
4.1. Filtered Search. Inktomi may offer a N2H2 Filtered Search service
to current and prospective Inktomi Customers.
4.2. Attribution. Inktomi will use its commercially reasonable efforts
to convince Inktomi Customers to include on any Results Page that incorporates
results that have been processed through the N2H2 Database an attribution to
N2H2, the content of which is mutually agreed upon by the parties; provided,
that, Inktomi shall obtain attribution for N2H2 on such Results Page displayed
by Inktomi Customers who also agree to provide Inktomi attribution.
5. Services.
5.1. Interim Service Period. During the Interim Service Period, and
subject to the operational considerations to be agreed upon by the parties, N2H2
Filtered Search shall be implemented as follows: *
5.2. Proxy Service Period. Subject to the Engineering Plan, during the
Proxy Service Period, the parties expect that N2H2 Filtered Search will be
implemented as follows: *
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<PAGE> 4
5.3. Reporting. Inktomi shall inform N2H2 within fifteen (15) days of
the end of calendar month of the identities of Inktomi Optional Safe Search
Customers and Inktomi Safe Search Customers.
6. Service Obligations.
6.1. N2H2 Database/Tags. N2H2 shall develop and maintain the N2H2
Database and N2H2 tags in a professional manner and otherwise in accordance with
the performance criteria set forth on Exhibit B. N2H2 shall provide the N2H2
Database and N2H2 Tags to Inktomi by methods designated by Inktomi from time to
time. N2H2 shall not knowingly include in the N2H2 Database and/or the N2H2 tags
any material that infringes the rights of a third party. N2H2 shall ensure that
the N2H2 Database and N2H2 Tags do not violate the rules, laws or regulations of
any jurisdiction worldwide. N2H2 shall, at the request of Inktomi, expeditiously
tag and/or remove from the N2H2 Database: (i) any material Inktomi believes
infringes the rights of a third party; or (ii) that it deems objectionable.
6.2. Interim Service Period. During the Interim Service Period, N2H2
shall provide N2H2 Pre Processing and N2H2 Post Processing substantially in
accordance with the functionality specifications, performance criteria and
limitations specified on Exhibit C. N2H2, at its own expense, shall provide all
data transmission capacity (bandwidth), disk storage, server capacity and other
hardware and software required to run the N2H2 Pre Processing and N2H2 Post
Processing. N2H2 shall provide reasonable assistant (through telephone, e-mail,
the Web, or fax) to Inktomi for N2H2 Pre Processing and N2H2 Post Processing in
accordance with Exhibit C.
6.3. Support. N2H2 shall provide Inktomi support for N2H2 Filtered
Search in the manner agreed upon in the Engineering Plan.
7. Intellectual Property Licenses/Ownership.
7.1. N2H2.
(a) N2H2 grants Inktomi a * license to use the N2H2 Database and
N2H2 Tags in connection with the provision of a N2H2 Filtered Search service to
Inktomi Customers and such customer's users.
(b) To the extent necessitated by the Engineering Plan, N2H2
grants Inktomi a * license to use the N2H2 Proxy as part of a Filter Proxy used
in connection with the provision of a N2H2 Filtered Search service to Inktomi
Customer and such customer's users.
7.2. Inktomi.
(a) To the extent necessitated by the Engineering Plan, Inktomi
grants N2H2 a * license to incorporate the Inktomi Proxy Protocol into the N2H2
Proxy and for no other purpose and to further operate the N2H2 Proxy solely in
connection with the fulfillment of N2H2's obligations under this Agreement.
Nothing in this Section 7.2(a) shall limit N2H2's ability to develop, distribute
and/or use a version of the N2H2 Proxy that does not incorporate the Inktomi
Proxy Protocol.
(b) To the extent necessitated by the Engineering Plan, and
during the Interim Service Period, Inktomi grants N2H2 a * license to use the
Inktomi Data Protocol solely in order to fulfill its obligations to Inktomi
under this Agreement. Unless explicitly licensed by Inktomi pursuant to other
written agreements, N2H2 shall not use the Inktomi Date Protocol for any other
purpose.
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<PAGE> 5
(c) To the extent Inktomi is permitted contractually and legally
permitted to provide N2H2 access to and licenses to Usage Data, Inktomi grants
N2H2 * license to use Usage Data internally solely for the purpose of enhancing
N2H2 Filtered Search.
7.3. Trademark License. Each party ("Licensor") grants to the other
party ("License") the right to use the trademarks, marks, and trade names that
Licensor may adopt from time to time ("Licensor's Trademarks"), solely to
exercise Licensee's rights or perform Licensee's obligations under this
Agreement. All representations of Licensor's Trademarks that Licensee intends to
use shall first be submitted to Licensor for approval (which shall not be
unreasonably withheld) of design, color and other details or shall be exact
copies of those used by Licensor. In addition, Licensee shall fully comply with
all reasonable guidelines, if any, communicated by Licensor to Licensee
concerning the use of Licensor's Trademarks. Nothing contained in this Agreement
shall grant or shall be deemed to grant to Licensee any right, title or interest
in or to Licensor's Trademarks.
(a) At no time during or after the term of this Agreement shall
either party challenge or assist others to challenge Licensor's Trademarks
(except to the extent such restriction is expressly prohibited by applicable
law) or the registration thereof or attempt to register any trademarks, marks or
trade names confusingly similar to those of the other party. If Licensee, in the
course of exercising its rights hereunder, acquires any goodwill or reputation
in any of Licensor's Trademarks, all such goodwill or reputation shall
automatically vest in Licensor, when and as, on an on-going basis, such
acquisition of goodwill or reputation occurs, as well as at the expiration or
termination of this Agreement, without any separate payment or other
consideration of any kind to Licensee, and Licensee agrees to take all such
actions necessary to effect such vesting.
(b) To the extent necessary to properly protect Licensor's
rights, Licensor and Licensee shall enter into registered user agreement with
respect to Licensor's Trademarks pursuant to applicable trademark law
requirements in countries outside the United States. Licensee shall be
responsible for proper filing of the registered user agreement with appropriate
government authorities and shall pay all costs or fees associated with such
filing.
7.4. N2H2 Property. As between Inktomi and N2H2, Inktomi acknowledges
that N2H2 owns all right, title and interest in and to: (i) the N2H2 Proxy
(except for that portion that incorporates or otherwise communicates using the
Inktomi Proxy Protocol); (ii) the N2H2 Tags as a compilation. Inktomi shall not
acquire any right, title, and interest in or to the N2H2 Tags; and (iii) any
feedback or input provided by Inktomi to N2H2 regarding any of the foregoing.
7.5. Inktomi Property. Inktomi shall own all, right title and interest
to any and all Usage Data, the Inktomi Proxy, the Inktomi Proxy Protocol, the
Inktomi Data Protocol and any feedback or input provided by N2H2 regarding any
of the foregoing.
7.6. Joint Property. Except to the extent incorporating N2H2 property
and Inktomi property (as described in Sections 7.4 and 7.5 respectively),
Inktomi and N2H2 shall jointly own all right, title and interest to the
Engineering Plan.
8. Revenue.
8.1. Interim Service Period. Subject to Section 8.5, during the Interim
Service Period, Inktomi shall pay N2H2 an annual Information Service Fee of *
for each Inktomi Customer that chooses to obtain N2H2 Filtered Search through
Inktomi and a * fee per N2H2 Filtered Search Result Set sent to an Inktomi
Customer. Notwithstanding the above, there shall be no Information
5
<PAGE> 6
Services Fee due on the first * customers that chose to obtain N2H2 Filtered
Search through Inktomi.
8.2. Proxy Service Period. Subject to Section 8.5, during the Proxy
Service Period, Inktomi shall pay N2H2 an annual Information Service Fee of *
for each Inktomi Customer that chooses to obtain N2H2 Filtered Search through
Inktomi and a: (I) * fee per N2H2 Filtered Search Result Set sent to an Inktomi
Optional Safe Search Customer; and (ii) * fee per N2H2 Filtered Search Result
Set sent to an Inktomi Safe Search Customer.
8.3. Special Pricing. N2H2 shall, at the reasonable request of Inktomi,
agree to adjust the rates set forth in Section 8.2 for N2H2 Filtered Search to
accommodate certain customers of Inktomi.
8.4. Minimum Information Services Fee. Beginning with the second year of
the Term (as defined below), Inktomi shall pay N2H2 a minimum annual Information
Services Fee of * ("Minimum ISF") in accordance with the payment schedule set
forth below; provided, that, if the parties fail to: (i) agree on an Engineering
Plan; and/or (ii) begin the Proxy Service Period within the one (1) year period
following the Effective Date, Inktomi's obligation to make Minimum ISF payments
after the first year of this Agreement shall terminate.
8.5. Limitations. Inktomi shall have no obligation to fees for N2H2
Filtered Search Result Sets delivered to Inktomi Customers for demonstration
and/or test purposes.
8.6. Review. Inktomi and N2H2 shall meet once each calendar quarter to
review the fees charged pursuant to this Agreement.
8.7. Payments. For the one (1) year period from the Effective Date
("First Year"), Inktomi shall pay N2H2 a fee of * in two monthly installments to
reserve processing capacity for the provision of services in the Interim Service
Period. Within forty-five (45) days: (i) of the end of each calendar quarter,
Inktomi shall pay N2H2 the actual Information Services Fee collected by Inktomi
from Inktomi customers who choose to receive N2H2 Filtered Search through
Inktomi; and (ii) of the end of each calendar month, Inktomi shall pay N2H2 any
fees owed by Inktomi to N2H2 that are attributed to the delivery of N2H2
Filtered Search Result Sets. To the extent that Inktomi is obligated to pay
Minimum ISF, if at the end of four calendar quarters, Inktomi has not paid N2H2
Information Service Fees that equal or exceed the Minimum ISF, then Inktomi
shall, within forty-five (45) days of the end of the fourth calendar quarter,
pay N2H2 the difference between the Minimum ISF and the actual Information
Services Fee paid by Inktomi to N2H2. Inktomi shall provide N2H2 with a
statement, together with payment for any amount shown thereby to be due to N2H2.
The fee statement shall be based upon the calculations set forth above during
the month and/or calendar quarter then ended, and shall contain information
reasonably sufficient to discern how the fees, if any, were computed. All
statements and all other accounts rendered by Inktomi to N2H2 shall be binding
upon N2H2 and not subject to any objections by N2H2 for any reason unless
specific objection in writing, stating the basis thereof, is received by Inktomi
within one (1) year from the date rendered.
8.8. Records. Inktomi agrees to keep all proper records and books of
account and all proper entries therein relating to the fee calculations made
under Section 8.2. Such records and books of account shall be maintained for a
one (1) year period following the year in which any payments pertaining to such
revenue were due. N2H2 shall have the right to examine Inktomi's records and
books of account from time to time but not more than once every year to verify
statements rendered under Section 8.2. Such examination shall be conducted at
reasonable times during Inktomi's normal business hours and upon at least ten
(10) business days' advance notice and in a manner so as not to interfere
unreasonably with the conduct of Inktomi's business. If any such examination
indicates that the audited party has underpaid or
6
<PAGE> 7
overpaid N2H2 for any particular period, then N2H2 or Inktomi, as the case may
be, shall promptly remit the difference to the other party.
9. Confidentiality.
9.1. Definition of Confidential Information. All information and
documents disclosed or produced by either party in the course of this Agreement
which are disclosed in written form and identified by a marking thereon as
proprietary, or oral information which is defined at the time of disclosure and
confirmed in writing within ten (10) business days of its disclosure, shall be
deemed the "Confidential Information" of the disclosing party. "Confidential
Information" includes without limitation the Inktomi Proxy, Inktomi Data
Protocol, the Inktomi Proxy Protocol and the Engineering Plan.
9.2. Treatment of Confidential Information. Each party agrees to protect
the other party's Confidential Information in the same manner as such party
protects its own Confidential Information of substantially similar proprietary
value, but in no case less than reasonable care. Each party agrees that it will
use the Confidential Information of the other party only for the purposes of
this Agreement and that it will not divulge, transfer, sell, license, lease, or
otherwise disclose or release any such information or documents to third
parties, with the exception of: (i) its employees or subcontractors who require
access to such for purposes of carrying out such party's obligation hereunder;
and (ii) persons who are employed as auditors by a public accounting firm or by
a federal or state agency. Each party will use reasonable efforts to advise any
person obtaining Confidential Information that such information is proprietary
and to obtain a written agreement obligating such person to maintain the
confidentiality of any Confidential Information belonging to the party or it
suppliers.
9.3. No Other Confidential Information. Neither party shall have any
obligation under this Article 9 for information of the other party which the
receiving party can substantiate with documentary evidence that has been or is:
(i) developed by the receiving party independently and without the benefit of
information disclosed hereunder by the disclosing party; (ii) lawfully obtained
by the receiving party from a third party without restriction and without breach
of this Agreement; (iii) publicly available without breach of this Agreement;
(iv) disclosed without restriction by the disclosing party to a third party; or
(v) known to the receiving party prior to its receipt from the disclosing party.
9.4. Independent Development. Each party, as a discloser of Confidential
Information, understands that the other party, as recipient, may currently or in
the future be developing information internally, or receiving information from
other parties that may be similar to the disclosing party's information.
Accordingly, nothing in this Agreement will be construed as a representation or
inference that a party as a receiving party will not develop products or
services, or have products or services developed or provided for it that,
without violation of this Agreement, compete with the products or services
contemplated by a disclosing party's Confidential Information.
10. Warranties.
10.1. By N2H2. N2H2 represents and warrants that: (a) it has full power
and authority to enter into this Agreement and to grant the rights set forth
herein; (b) throughout the Term, the N2H2 Database and N2H2 Tags shall be free
of material errors and defects and shall perform in strict accordance with the
functionality specifications and performance criteria set forth on Exhibit C;
and (c) the N2H2 Proxy, N2H2 Tags and N2H2 Database do not and will not infringe
any copyright, patent, trade secret, or other proprietary right held by any
third party, and N2H2 has no knowledge of any allegations of any such
infringement.
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<PAGE> 8
10.2. By Inktomi. Inktomi represents and warrants that it has full power
and authority to enter into this Agreement.
11. Indemnification.
11.1. By N2H2. N2H2 shall, at its expense and Inktomi's request, defend
any third party claim or action brought against Inktomi, and Inktomi's
subsidiaries, affiliates, directors, officers, employees, agents and independent
contractors ("Inktomi Parties"), which, if true, would constitute a breach of
any warranty, representation or covenant made by N2H2 under this Agreement and
N2H2 shall hold the Inktomi Parties and/or Inktomi Customers ("Indemnified
Party") (as the case may be) harmless from and against any costs, damages and
fees reasonably incurred by an Indemnified Party, including but not limited to
fees of attorneys and other professionals, that are attributable to such claim.
Inktomi shall: (a) provide N2H2 reasonably prompt notice in writing of any such
claim or action and permit N2H2, through counsel mutually acceptable to Inktomi
and N2H2, to answer and defend such claim or action; and (b) provide N2H2
information, assistance and authority, at N2H2's expense, to help N2H2 to defend
such claim or action. N2H2 will not be responsible for any settlement made by
Inktomi without N2H2's written permission, which permission will not be
unreasonably withheld.
11.2. By Inktomi. Inktomi shall, at its expense and N2H2's request,
defend any third party claim or action brought against N2H2, and N2H2
subsidiaries, affiliates, directors, officers, employees, agents and independent
contractors, which, if true, would constitute a breach of any warranty,
representation or covenant made by Inktomi under this Agreement, and Inktomi and
hold N2H2 harmless from and against any costs, damages and fees reasonably
incurred by N2H2, including but not limited to fees of attorneys and other
professionals, that are attributable to such claim. N2H2 shall: (a) provide
Inktomi reasonably prompt notice in writing of any such claim or action and
permit Inktomi, through counsel mutually acceptable to N2H2 and Inktomi, to
answer and defend such claim or action; and (b) provide Inktomi information,
assistance and authority, at Inktomi's expense, to help Inktomi to defend such
claim or action. Inktomi will not be responsible for any settlement made by N2H2
without Inktomi's written permission, which permission will not be unreasonably
withheld.
11.3. Separate Counsel; Reimbursement. An indemnified party shall have
the right to employ separate counsel and participate in the defense of any claim
or action. The indemnifying party shall reimburse the indemnified party upon
demand for any payments made or loss suffered by it at any time after the date
hereof, based upon the judgment of any court of competent jurisdiction or
pursuant to a bona fide compromise or settlement of claims, demands, or actions,
in respect to any damages related to any claim or action under this Article 11.
11.4. Settlement. The indemnifying party may not settle any claim or
action under this Article 11 without first obtaining the indemnified party's
written permission, which permission will not be unreasonably withheld. In the
event Inktomi and N2H2 agree to settle a claim or action, each party agrees not
to publicize the settlement without first obtaining the other's written
permission, which permission will not be unreasonably withheld.
11.5. Proprietary Rights Infringement. Without limiting any of Inktomi's
rights or remedies, in the even of any breach or alleged breach by N2H2 of
Section 6.1 or 6.2, N2H2 shall notify Inktomi and shall at N2H2's expense: (i)
procure for Inktomi all rights necessary so that N2H2 shall not be in breach of
Section 6.1 or 6.2; or (ii) modify the pertinent item or infringing part
thereof, or replace the infringing software with other software having
substantially the same or better capabilities. If neither of the foregoing is
commercially practicable to achieve within a reasonable period of time, then, in
addition to any other rights and remedies available to Inktomi, Inktomi may
immediately terminate this Agreement.
8
<PAGE> 9
12. LIMITATION OF LIABILITY
IN NO EVENT WILL INKTOMI BE LIABLE FOR FOR ANY SPECIAL, CONSEQUENTIAL,
INCIDENTAL, OR OTHER DAMAGES, HOWEVER CAUSED, WHETHER FOR BREACH OF CONTRACT,
NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT INKTOMI HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION WILL APPLY NOTWITHSTANDING ANY
FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN.
INKTOMI'S LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED THE AMOUNTS PAID BY
INKTOMI TO N2H2 OVER THE PREVIOUS TWELVE (12) MONTH PERIOD.
13. Term/Termination/Remedies.
13.1. Term. The term of this Agreement (the "Term") shall commence on
the Effective Date and shall continue in force for a period of three (3) years
from the Effective Date and shall automatically renew for one (1) year periods
unless a party sends written notice to the other party of its desire not to
renew at least one hundred and twenty (120) days prior to the expiration of the
then current term.
13.2. Termination by Inktomi. In addition to any other rights and/or
remedies that Inktomi may have under the circumstances, all of which are
expressly reserved, Inktomi may suspend performance and/or terminate this
Agreement immediately upon written notice at any time: (a) if N2H2 is in
material breach of any material warranty, term, condition or covenant of this
Agreement, other than those contained in Section 6.1 or 6.2, or Article 9, and
fails to cure that breach within thirty (30) days after written notice thereof;
or (b) if N2H2 is in material breach of: (i) Article 9; or (ii) Section 6.1 or
6.2; (c) if N2H2 becomes insolvent or makes any assignment for the benefit of
creditors or similar transfer evidencing insolvency, or suffer or permits the
commencement of any form of insolvency or receivership proceeding, or has any
petition under any bankruptcy law filed against it which petition is not
dismissed within sixty (60) days of such filing, or has a trustee or receiver
appointed for its business or assets or any part thereof; or (d) after the first
twelve (12) months of the Agreement upon one hundred twenty (120) days prior
written notice for convenience.
13.3. Termination by N2H2. In addition to any other rights and/or
remedies that N2H2 may have under the circumstances, all of which are expressly
reserved, N2H2 may suspend performance and/or terminate this Agreement
immediately upon written notice at any time if: (a) Inktomi is in material
breach of Article 9;or (b) Inktomi becomes insolvent or makes any assignment for
the benefit of creditors or similar transfer evidencing insolvency, or suffers
or permits the commencement of any form of insolvency or receivership
proceeding, or has any petition under any bankruptcy law filed against it which
petition is not dismissed within sixty (60) days of such filing, or has a
trustee or receiver appointed for its business or assets or any part thereof.
13.4. Effect of Termination/Expiration. Upon the expiration or
termination of this Agreement for any reason, subject to the Transition Period
(as defined below): (i) all license rights granted herein shall terminate; (ii)
Inktomi shall pay to N2H2 all amounts due and outstanding as of the date of the
termination; and (iii) each party shall return to the other party, or destroy
and certify the destruction of all, Confidential Information of the other
property.
13.5 Transition. At Inktomi's request, N2H2 shall, for a period not to
exceed one-hundred eighty (180) days following the expiration or termination of
this Agreement ("Transition Period") continue to provide Inktomi the services
set forth under this Agreement at the same rates, terms and conditions as set
forth in this Agreement.
9
<PAGE> 10
13.6 Survival. In the event of any termination or expiration of this
Agreement for any reason, Articles and Sections 1, 7.4, 7.5, 7.6, 8.8, 9, 11,
12, 13.7(a), 14 and this Section 13.6 shall survive termination. Neither party
shall be liable to the other party for damages of any sort resulting solely from
terminating this Agreement in accordance with its terms.
13.7 Remedies.
(a) Each party acknowledges that its breach of the
confidentiality restrictions contained herein would cause irreparable harm to
the other party, the extent of which would be difficult to ascertain.
Accordingly, each party agrees that, in addition to any other remedies to which
he other party may be legally be entitled, such party shall have the right to
seek injunctive relief in the event of a breach of such sections by the other
party or any of its officers, employees, consultants or other agents.
(b) Excerpts as expressly set forth in Section 13.7(a) above, no
breach of this Agreement by Inktomi shall entitle N2H2 to terminate or rescind
this Agreement or to injunctive or other equitable relief, it being agreed that
Inktomi's sole remedy, if any, in the event of such a breach shall be an action
for damages; provided, however, that such waiver shall not prohibit Inktomi from
seeking an injunction with respect to any violation of N2H2's Intellectual
Property Rights so long as such injunctive relief shall not result in the
limitation, restriction or termination of Inktomi's rights hereunder or prevent
the provision of an Inktomi service, including its search functionality, in
compliance with the terms of this Agreement by Inktomi or any Inktomi Customer.
14. Miscellaneous.
14.1 Capacity. Each party acknowledges that it has read this Agreement,
understands it and agrees to be bound by it. Each party acknowledges that such
party has not been induced to enter into such agreements by any representations
or statements, oral or written, not expressly contained herein or expressly
incorporated by reference.
14.2 Notice. Any notice required for or permitted by this Agreement
shall be in writing and shall be delivered as follows with notice deemed given
as indicated: (i) by personal delivery when delivered personally, (ii) by
overnight courier upon written verification of receipt, (iii) by telecopy or
facsimile transmission when confirmed by telecopier or facsimile transmission
report, or (iv) by certified or registered mail, return receipt requested, upon
verification of receipt. All notices must be sent to the addresses first
described above or to such other address that the receiving party may have
provided for the purpose of notice in accordance with this Section.
14.3 Assignment. Neither party may assign its rights or delegate its
obligations under this Agreement without the other party's prior written
consent, except to the surviving entity in a merger or consolidation in which it
participates or to a purchaser of all or substantially all of its assets, so
long as such surviving entity or purchaser shall expressly assume in writing the
performance of all of the terms of this Agreement.
14.4 No Third Party Beneficiaries. All rights and obligations of the
parties hereunder are personal to them. This Agreement is not intended to
benefit, nor shall it be deemed to give rise to, any rights in any third party.
14.5 Governing Law. This Agreement will be governed and construed, to
the extent applicable, in accordance with United States law, and otherwise, in
accordance with California law, without regard to conflict of law principles.
Any dispute or claim arising out of or in connection with this Agreement shall
be finally settled by binding arbitration in San Mateo County, California under
the
10
<PAGE> 11
Commercial Rules of the American Arbitration Association by one arbitrator
appointed in accordance with said rules. Judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
14.6 Independent Contractors. The parties are independent contractors.
Neither party shall be deemed to be an employee, agent, partner or legal
representative of the other for any purpose and neither shall have any right,
power or authority to create any obligation or responsibility on behalf of the
other.
14.7 Force Majeure. Neither party shall be liable hereunder by reason of
any failure or delay in the performance of its obligations hereunder during any
event of force majeure.
14.8 Compliance with Law. Each party shall be responsible for compliance
with all applicable laws, rules and regulations, if any, related to the
performance of its obligations under this Agreement.
14.9 Waiver. The failure of either party to require performance by the
other party of any provision shall not affect the full right to require such
performance at any time thereafter; nor shall the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of the provision
itself.
14.10 Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be contrary to law, such provision shall be
changed and interpreted so as to best accomplish the objectives of the original
provision to the fullest extent allowed by law and the remaining provisions of
this Agreement shall remain in full force and effect.
14.11 Headings. The section headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit, construe
or describe the scope or extent of such paragraph, or in any way affect such
agreements.
14.12 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be considered an original, but all of
which together will constitute one and the same instrument.
14.13 Entire Agreement. This Agreement and the Exhibits hereto,
constitute the entire agreement between the parties with respect to the subject
matter hereof. This Agreement supersedes, and the terms of this Agreement
govern, any other prior or collateral agreements with respect to the subject
matter hereof. Any amendments to this Agreement must be in writing and executed
by an officer of the parties.
IN WITNESS WHEREOF, the parties have caused this Data Services Agreement
to be signed by their duly authorized representatives.
N2H2 INKTOMI CORPORATION
Signed: Signed:
------------------------------- -------------------------------
[ ]
Name: Name:
--------------------------------- ---------------------------------
[Peter H. Nickerson] [Jerry Kennelly]
Title: Title:
-------------------------------- --------------------------------
[President] [Chief Financial Officer]
11
<PAGE> 1
EXHIBIT 10.6
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL
FILTERING SERVICE AND LICENSE AGREEMENT
This Service Agreement ("Agreement") is entered into by and between N2H2, Inc. a
Washington corporation, having its principal place of business at 900 4th Avenue
- - Suite 3400, Seattle, WA, 98164 ("N2H2") and Millennial Star Network, Inc.
("MSTAR.NET"), a Utah corporation having its principal place of business at 1305
N. Research Way, Orem, Utah 84097 ("Licensee")
WHEREAS, N2H2 has developed a proprietary system, consisting of computer
hardware, computer software, and related Internet filtering and caching
services, all as described in Schedule A (the "BESS System"); and
WHEREAS, Licensee provides Internet services to its subscribers
("Authorized Users"); and
WHEREAS, Licensee desires to use the BESS System in connection with its
Internet services and to make certain N2H2 services available to its
Authorized Users; and
WHEREAS, N2H2 is willing to provide Licensee and its Authorized Users
access to the BESS System and to provide the services described in this
Agreement all on the terms and conditions set out herein.
THEREFORE, in consideration of the foregoing and the mutual promises set
out in this Agreement, N2H2 and Licensee (together, the "Parties") agree
to the following terms and conditions:
1. TERM. The initial term of this Agreement, as set forth in Schedule A,
shall extend for a period of two (2) years, commencing on November 1,
1999 and continuing through October 31, 2001, and this Agreement shall
automatically renew for additional one-year terms thereafter, unless
either party provides written notice of termination to the other not
less than sixty (60) days prior to the end of the then current term.
2. DELIVERY OF THE BESS SYSTEM. N2H2 shall deliver and install the BESS
System at the location specified in Schedule B and Licensee and its
Authorized Users shall have the right to use the BESS System during the
term of this Agreement, subject to the terms, conditions, and
limitations set out herein.
3. ARTWORK. Licensee shall. choose a trailer, override trailer and a block
page graphics from N2H2's selection of artwork. Said graphics will be
installed on the BESS System prior to its final configuration and
delivery. Any, customization to N2H2's standard artwork must be approved
in writing by N2H2. All artwork and links from said artwork must adhere
to N2H2's Customization Guidelines, which may be updated from time to
time by N2H2; provided that no such update shall materially adversely
affect Licensee's rights hereunder.
4. CONFIGURATION. Prior to shipping and placement of the BESS System to the
address specified in Schedule B, N2H2 will configure the BESS System
based on the information it receives from Licensee using the information
provided by Licensee in Schedule B and via N2H2's web form. Upon
delivery and successful installation, N2H2 will work together with
Licensee's representative to ensure proper completion of the
configuration of the BESS System. N2H2 shall pay for all shipping and
handling charges associated with the delivery of the BESS System.
5. HARDWARE/SOFTWARE. The BESS System's server hardware ("Hardware") shall
remain the sole and exclusive property of N2H2. The BESS System's
filtering and caching software ("Software") and all documentation shall
remain the sole and exclusive property of N2H2.
6. PROPRIETARY CONTENT. N2H2 shall, through the provision of its filtering
services as part of the BESS System, provide to Licensee the use of its
proprietary database of records used for filtering and screening
activities and other proprietary data (together, "Proprietary Content").
The Proprietary Content shall be deemed a part of the BESS System and
shall remain the sole and exclusive property of N2H2.
7. LICENSE. So long as Licensee complies with the terms of this Agreement,
N2H2 grants to Licensee the non-exclusive, nontransferable, limited,
personal night (the "License") to use the Hardware, Software and
Proprietary Content, in conjunction with the BESS System, as follows:
A. N2H2 grants to Licensee the non-exclusive right to use the
Hardware, Software, and Proprietary Content solely as configured
for Licensee's Authorized Subscribers, as set forth in Schedule
A.
<PAGE> 2
B. Licensee shall provide N2H2 with a monthly port by the 15th of
each month with subscriber count as of the 1st of each month as
described in Schedule that lists the authorized users.
C. The License excludes all rights by Licensee to attempt to
repair, alter, or modify the BESS System's Hardware, Software,
or Proprietary Content or to access the source code.
D. N2H2 reserves, the right to terminate this License and to seek
any other legal remedies if Licensee violates any provisions
hereof and fails to cure the violation within the time period
allowed in this Agreement.
E. This contract and a Search Agreement of even date, together
replace all existing Agreements between N2H2 and Infobases or
Bookcraft or LDSWorld.com. All services and hardware provided
under previous contracts will become part of this Agreement, and
any amounts due under previous contracts will be due under this
contract.
8. PAYMENT. Licensee will make payment(s) to N2H2 as calculated and
specified in Schedule A.
9. MAINTENANCE SERVICES. N2H2 shall, at its sole cost and expense, monitor,
maintain and repair the BESS System and keep the same in good condition
and operating in accordance with all of the specifications set out in
this Agreement or referred to herein. Licensee will maintain the
premises surrounding the BESS System in a clean and reasonably suitable
condition to permit N2H2 to fulfill its obligations hereunder. Licensee
will be solely responsible for and will reimburse N2H2 for the costs of
all repairs and maintenance necessitated by any act or omission of
Licensee, its employees, agents, or invitees that is inconsistent with
the normal use of the BESS System as described in documentation provided
to Licensee by N2H2. Licensee shall not attempt to make any updates to
the BESS System's Hardware, Software, or Proprietary Content without the
written consent of N2H2.
10. UPGRADES; UPDATES. From time-to-time and at its sole discretion, N2H2
will provide Licensee with updates or upgrades for the BESS System.
Licensee shall be entitled to all updates or upgrades that are provided
to licensees of the BESS System generally. Licensee shall use the
upgraded or updated BESS System only in accordance with this Agreement
which supersedes any prior license to any prior versions of the BESS
System, and any license that may be provided in connection with the
upgrade or update.
11. HELP SERVICES. Upon successful installation of the BESS System, N2H2
shall train Licensee's network administrator in the proper use of the
BESS System. N2H2 will make available competent technical consultants by
telephone to provide prompt assistance to Licensee with questions
concerning operation and troubleshooting of the BESS System. N2H2 will
not be required to travel to Licensee's Premises to provide services
unless Licensee reimburses N2H2 for time and travel costs.
12. LIMITED WARRANTY. N2H2 WARRANTS TO LICENSEE ONLY THAT DURING THE TERM OF
THIS AGREEMENT, (I) N2H2 OWNS ALL OF THE HARDWARE, SOFTWARE, AND
PROPRIETARY CONTENT AND HAS THE RIGHT TO LICENSE THE SAME TO LICENSEE
AND TO PROVIDE LICENSEE AND ITS AUTHORIZED USERS USE OF THE BESS SYSTEM
AS CONTEMPLATED BY THIS AGREEMENT; AND (II) THE BESS SYSTEM WILL CONFORM
TO ALL OF THE DOCUMENTATION AND SPECIFICATIONS THAT N2H2 HAS PROVIDED TO
LICENSEE, WHEN USED IN CONFORMANCE WITH SUCH DOCUMENTATION. N2H2 FURTHER
WARRANTS THAT THE BESS SYSTEM WILL BE FREE FROM DEFECTS IN MATERIALS AND
WORKMANSHIP UNDER NORMAL USE. EXCEPT AS PROVIDED HEREIN, THE BESS SYSTEM
IS LICENSED "AS IS" AND WITHOUT WARRANTY, EITHER EXPRESSED OR IMPLIED,
AS TO PERFORMANCE, MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR
PURPOSE. LICENSEE ASSUMES THE ENTIRE RISK AS TO THE RESULTS AND
PERFORMANCE OF THE BESS SYSTEM, SO LONG AS IT FUNCTIONS IN ACCORDANCE
WITH THIS LIMITED WARRANTY.
<PAGE> 3
13. LIMITED LIABILITY. To the maximum extent permitted by law, and except
for the indemnification commitment set out in Paragraph 14, in no event
shall N2H2 or anyone involved in the creation, production, delivery or
licensing of the BESS System be liable to Licensee or any third party
for incidental, indirect, special or consequential damages (including,
without limitation, damages for loss of business profits, business
interruption, loss of business information, or other pecuniary loss)
arising out of the use or inability to use the BESS System.
14. N2H2'S INDEMNIFICATION OF LICENSEE. N2H2 will indemnify and defend
Licensee and its directors, officers, employees and agents, at N2H2's
expense, against any and all claims, demands, losses, liabilities,
judgments, awards and costs (including reasonable legal fees and
expenses) arising from or relating to (a) any default or material breach
by N2H2 hereunder; (b) any negligent act or omission or willful
misconduct by N2H2 or its employees, agents, invitees, or licensees; or
(c) any claim that Licensee's use or possession of the BESS System
infringes or violates the copyright, trade secret, patent, or other
proprietary right of any third party; provided, that N2H2 will not be
required to indemnify Licensee hereunder for (i) liability created
solely by any Licensee modifications or changes to the BESS System (not
including ordinary customizations or any of the initial configuration)
and (ii) for Licensee's failure to use the BESS System as described in
this Agreement; provided, however, that N2H2 shall have liability only
for direct damages (and not indirect, special, or consequential damages
or any other costs or expenses) arising out of a material breach of this
Agreement by N2H2 that does not also fall under clause (b) or (c),
above.
15. LICENSEE'S INDEMNIFICATION OF N2H2. Licensee will indemnify and defend
N2H2 and its directors, officers, employees and agents, at Licensee's
expense, against any and all claims, demands, losses, liabilities,
judgments, awards and costs (including reasonable legal fees and
expenses) arising from or relating to (a) any breach of Licensee's
obligations herein; or (b) any negligent act or omission or willful
misconduct by Licensee or its employees, agents, invitees, licensees,
users or subscribers; provided, however, that Licensee shall have
liability only for direct damages (and not indirect, special, or
consequential damages or any other costs or expenses) arising out of a
material breach of this Agreement by Licensee that does not also fall
under clause (b), above.
16. COPYRIGHT. The Software and Proprietary Content and any copies thereof
are owned by N2H2 and are protected by United States copyright laws and
international treaty provisions. Therefore, Licensee must treat the
Software and Proprietary Content like any other copyrighted material.
Licensee agrees not to rent, lease, lend or sell the Software, but it
shall have the right to allow its Authorized Users to use the Software
as part of the BESS System as contemplated by this Agreement. Licensee's
attempt to reverse engineer, decompose, disassemble or make any attempt
to discover the Proprietary Content, Software or source code to the
Software and/or the details of the Proprietary Content shall result in
the immediate termination of this Agreement.
17. ASSIGNMENT. The rights in this Agreement are personal to each party and
will not be transferred or assigned by operation of law or otherwise
except to a successor organization resulting from an acquisition, merger
sale of assets or similar event which includes a change in control,
without the prior written consent of the other party. Any transfer or
assignment in violation of this paragraph shall be void and will have no
force or effect.
18. FORCE MAJEURE. The Parties will not be in default and liable for breach
of this Agreement due to a business interruption because of strikes,
labor disturbances, lockout, riot, fire, flood, outside electrical
failure, outside telecommunications facilities failure, computer virus,
act of God, or the public enemy, or any other cause, whether like or
unlike the foregoing, if beyond the reasonable efforts of them to
control and which may prevent or delay them from performing their
obligations herein. All performance of both parties shall be excused
during the continuance of such circumstances if the circumstances
materially impair the value of this Agreement to the non-affected party.
If the circumstances persist for more than thirty (30) days, the
non-affected party shall have the night to immediately terminate this
Agreement by sending notice of termination to the affected party.
19. USAGE. Each party will take such action as is necessary to protect and
shall not misrepresent the other party's copyrights, tradenames,
trademarks, goodwill, trade secrets, proprietary information, products
and/or services.
<PAGE> 4
Licensee may attach to or modify N2H2 marketing materials to the extent
necessary to provide contact information about Licensee, but may not
otherwise modify N2H2 materials or distribute Licensee's own version of
marketing materials without the written approval of N2H2. Licensee
agrees to not create or use a private label for N2H2's products or
services without the written approval of N2H2.
20. NON-COMPETITION. Licensee will not offer, operate or attempt to develop any
other Internet content filtering system in competition with the BESS System
during the term of this Agreement. Licensee agrees that during term of this
Agreement and for a period of one year after its termination, if terminated by
Licensee's breach, Licensee agrees to not develop any competing Internet content
filtering system for its own use, or a third party's use, without N2H2's written
approval.
21. REMEDIES. Licensee acknowledges and agrees that the use or release of
Proprietary Content in violation of this Agreement will cause irreparable harm
for which N2H2 may not be fully or adequately compensated by recovery of
monetary damages. Accordingly, in the event of any such violation or threatened
violation, N2H2 will be entitled to injunctive relief from a court of competent
jurisdiction in addition to monetary damages and any other remedy available at
law or in equity. If any action at law or in equity is brought to enforce or
interpret the terms of this Agreement, the prevailing party will be entitled to
recover, at trial and on appeal, reasonable attorneys' fees, costs and
disbursements in addition to any other relief that may be granted. Except as
provided in Paragraph 14, Licensee's exclusive remedy against N2H2 will be a
return of fees paid for the BESS System for the months in which a breach by N2H2
occurs. An action for any breach of this Agreement must be commenced within two
(2) years from the date when a party had knowledge of the alleged breach.
22. TERMINATION. Except as set forth in paragraph 15, in the event that any
breach or default of this Agreement by either party remains uncured for more
than ten (10) days after written notice from the other party, the non-breaching
party may terminate this Agreement and all rights hereunder by giving the
breaching party written notice of termination. Upon termination by either party,
N2H2 will have the right immediately to disconnect Licensee from the BESS System
and Licensee will promptly return the BESS System to N2H2 in good working
condition. N2H2 shall pay for all shipping and handling charges associated with
the return of the BESS System.
23. NOTICES. Any notice required by this Agreement or given in connection with
it, will be in writing and will be given to the appropriate party by personal
delivery or by certified mail, or recognized overnight delivery services.
Facsimile notice or email may be used only if a means of obtaining an immediate
written confirmation of receipt is available and such proof is presented in the
event of a dispute.
24. MISCELLANEOUS. The terms of this Agreement are binding on the Parties, their
subsidiaries, affiliates and any party controlling, controlled by or under
common control with the Parties, and their successors, licensees, agents and
employees. The invalidity or unenforceability of any provision hereof will in no
way affect the validity or enforceability of any other provision. The Parties
agree that this Agreement will be governed by the internal laws of the State of
Washington, without regard to Washington conflict of law' principles. Suits
relating to this Agreement must be brought in the appropriate state or federal
court in the state of Washington and the Parties submit to the jurisdiction of
such Washington courts.
25. CONFIDENTIALITY. The Parties agree to maintain the confidential nature of
all proprietary information disclosed or received during this relationship.
Proprietary information shall include lists of customers and prospects, product
or service development plans, all technical system information not on published
marketing materials, financial information, customer usage and billing reports,
software, and any other information identified as confidential or proprietary.
This responsibility will continue for five (5) years after termination of this
Agreement as long as the disclosing Party does not make such proprietary
information public.
26. ENTIRETY. This Agreement constitutes the complete agreement between N2H2 and
Licensee, and may not be modified except by written agreement of both Parties.
27. ADDITIONAL FEES. Payments to N2H2, as set forth in Schedule A, are exclusive
of applicable taxes on the
<PAGE> 5
license, transfer or use of the BESS System. In the event N2H2 is charged such
taxes on the services provided in this Agreement, N2H2 may add an equal amount
to the total fees owed by Licensee hereunder. Any other services purchased by
Licensee from N2H2 will be payable through a separate invoice of N2H2.
ACCEPTED AND AGREED FOR N2H2, INC.: ACCEPTED AND AGREED FOR LICENSEE:
Signature: [/s/ Sarah Hastings] Signature: [/s/ Paul D. Hansen]
------------------------------ ---------------------------
Printed: [Sarah Hastings] Printed: [Paul D. Hansen]
-------------------------------- -----------------------------
Title: [Contract Manager] Title: [Executive V.P.]
---------------------------------- -------------------------------
Date: [1/5/00] Date: [12/30/99]
----------------------------------- --------------------------------
<PAGE> 6
SCHEDULE B
LICENSEE'S NETWORK REPRESENTATIVE INFORMATION
CONTACT NAME: [JIM MOSHER]
----------------------------------
EMAIL ADDRESS: [[email protected]]
----------------------------------
OFFICE PHONE NUMBER: [801-705-42240]
----------------------------------
FAX PHONE NUMBER: [801-705-4300]
----------------------------------
PAGER PHONE NUMBER: [-----]
----------------------------------
LOCATION OF SERVER(S)
CONTACT NAME: [SHAWN HOGAN]
----------------------------------
ORGANIZATION: [SISNA]
----------------------------------
STREET ADDRESS #1: [265 E 100 S]
----------------------------------
STREET ADDRESS #2: [SUITE 310]
----------------------------------
CITY/STATE/COUNTRY: [SALT LAKE CITY, UT]
----------------------------------
ZIP/POSTAL CODE: [84111]
----------------------------------
COMPLETED BY
NAME: [JIM MOSHER]
----------------------------------
TITLE: [DEV. MANAGER]
----------------------------------
DATE: [12-30-99]
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<PAGE> 7
FUTURE PROJECTS. Parties shall meet in Seattle on or before March 30, 2000 to
discuss the following potential future projects:
1. Client software featuring N2H2's server-level filtering,
customized for use by Licensee's users which are unable to
connect locally to a Licensee-leased POP.
2. Real language search technology that allows visitors to
Licensee's Web site search for key words/terms within Licensee's
Web site.
ACCEPTED AND AGREED FOR N2H2, INC.: ACCEPTED AND AGREED FOR LICENSEE:
Signature: [/s/ Sarah Hastings] Signature: [/s/ Paul D. Hansen]
------------------------------ ---------------------------
Printed: [Sarah Hastings] Printed: [Paul D. Hansen]
-------------------------------- -----------------------------
Title: [Contract Manager] Title: [E.V.P.]
---------------------------------- -------------------------------
<PAGE> 8
SCHEDULE A
N2H2 shall provide BESS Internet Filtering Service to MSTAR.NET for an initial
period of 24 months:
SERVICE START DATE: 11/1/-99
SERVICE END DATE: 10-31-01
The BESS System is a Proxy Server Internet Filtering and Caching System.
N2H2 proprietary hardware is an [*], Server includes; [*]. *
PROXY SERVER SET-UP & INSTALLATION
RACKMOUNT HARDWARE PRICING *
NUMBER OF SERVERS [*] [*]
Servers 1-3 [*] [*]
Servers 4-6 [*] [*]
Servers 7-9 [*] [*]
Servers 10-12 [*] [*]
Servers 13+ [*] [*]
MONTHLY SERVICE FEE SCHEDULE
<TABLE>
<CAPTION>
SUBSCRIBERS MONTHLY SERVICE FEE
<S> <C>
Up to 50,000 subscribers [*] per subscriber*
50,001 - 100,000 subscribers [*] per subscriber*
100,001 - 150,000 subscribers [*] per subscriber
150,000+ subscribers [*] per subscriber but not less than [*] per month
</TABLE>
- ----------
* N2H2 will provide filtering for [*] per subscriber through September 30,
2000. After September 30, 2000 pricing reverts to schedule defined above.
Subscriber counts will be submitted via Monthly Traffic Report. Monthly Traffic
Report is to be submitted on the 15th of each month with monthly fees due on the
1st of the following month.
MONTHLY MINIMUM FEE SCHEDULE*
<TABLE>
<CAPTION>
MONTHS MINIMUMS * SUBSCRIBERS * PAYMENT DUE
<S> <C> <C> <C>
Nov 1999 - Jan 2000 [*] [*] 1st of each month
Feb 2000 - Mar 2000 [*] [*] 1st of each Month
Apr 2000 - May 2000 [*] [*] 1st of each Month
Jun 2000 - Jul 2000 [*] [*] 1st of each Month
Aug 2000 - Sep 2000 [*] [*] 1st of each Month
Oct 2000 - Oct 2001 [*] [*] 1st of each Month
</TABLE>
ACCEPTED AND AGREED FOR N2H2, INC.: ACCEPTED AND AGREED FOR LICENSEE:
Signature: [/s/ Sarah Hastings] Signature: [/s/ Paul D. Hansen]
--------------------------- -----------------------------
Printed: [Sarah Hastings] Printed: [Paul D. Hansen]
----------------------------- -------------------------------
Title: [Contract Manager] Title: [E.V.P.]
------------------------------- ---------------------------------
<PAGE> 9
ADDENDUM A
This Addendum A ("Addendum") is entered into by and between N2H2, Inc. a
Washington corporation, having its principal place of business at 900 4th Avenue
- - Suite 3400, Seattle, WA, 98164 ("N2H2") and Millenial Star Network, Inc.
("MSTAR.NET"), a Utah corporation having its principal place of business at 1305
N. Research Way, Orem, Utah 84097 ("Licensee")
This Addendum amends and supplements a Filtering Service and License Agreement
(the Agreement) of even date between N2H2 and Licensee (together, the
"Parties"), and all of the terms and conditions of the Agreement are hereby
incorporated into this Addendum. The Parties agree to the following additional
terms and conditions:
DEMO SERVER. Within thirty days of request, N2H2 shall deliver a demonstration
server "that shall be used solely by Licensee's potential customers. This
demonstration server shall feature rotating proxy ports, each lasting for no
more than two (2) weeks and shall conform to the description and specifications
set out in Schedule A. N2H2 shall provide daily updates to this demonstration
server, including the supplemental database, as described in paragraph C6
(below). The demonstration server and all associated computer hardware, computer
software, and database content shall be considered part of the BESS System, as
that term is defined in the Agreement, and all terms, conditions,
representations, and warranties set out in the Agreement relating to the BESS
System shall apply to all of the foregoing items. Licensee shall pay N2H2 a
one-time setup fee of [*] per server and an ongoing monthly rotation/update fee
of [*] per month.
BRANDING. N2H2 and Licensee shall co-create a set of trailers and block page
that shall be used in conjunction with the filtering services being provided by
N2H2 to Licensee under this Addendum. The trailer and block page graphics shall
include an N2H2-approved reference to N2H2, such as "Powered by N2H2". The
reference shall be hyperlinked to N2H2's web site.
REVIEW PROCESS. Within the time frame set out in Schedule A, N2H2 shall
customize its Web site review process for Licensee in the following manner:
1. [*]
2. [*]
3. [*]
4. [*]
5. [*]
6. [*]
TERM OF ADDENDUM. This Addendum shall be co-terminous with the Base Agreement
and shall terminate automatically upon any termination of the Base Agreement for
any reason; provided however, that either party may terminate this Addendum
without terminating the Base Agreement in the event of any material breach of
the terms of this Addendum that is not cured within the applicable cure period
set out in the Agreement.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 10,483
<SECURITIES> 41,655
<RECEIVABLES> 1,335
<ALLOWANCES> 1,129
<INVENTORY> 206
<CURRENT-ASSETS> 37,994
<PP&E> 8,160
<DEPRECIATION> 2,113
<TOTAL-ASSETS> 60,923
<CURRENT-LIABILITIES> 3192
<BONDS> 594
0
0
<COMMON> 75,779
<OTHER-SE> 18,721
<TOTAL-LIABILITY-AND-EQUITY> 60,923
<SALES> 2,257
<TOTAL-REVENUES> 2,257
<CGS> 1,296
<TOTAL-COSTS> 6,604
<OTHER-EXPENSES> 24
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (548)
<INCOME-PRETAX> (5,119)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,119)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,119)
<EPS-BASIC> (.24)
<EPS-DILUTED> (.24)
</TABLE>
