NBCi/TELOCITY OPERATING AGREEMENT
This Operating Agreement (the "Agreement") is made and entered into as
of December 10, 1999 (the "Effective Date") between NBC Internet, Inc., a
Delaware corporation, with its principal place of business at 225 Bush Street,
San Francisco, California 94104 ("NBCi") and Telocity, Inc., a California
corporation, with its principal place of business at 10355 N. De Anza Boulevard,
Cupertino, California 95014-2027 ("Telocity"). Subject to the provisions of
Section 20.7, Telocity acknowledges that NBCi will fulfill its obligations under
this Agreement itself and through various of its subsidiaries, including Snap!
L.L.C. ("Snap"), a Delaware limited liability company and Xoom.com, Inc.
("Xoom"), a Delaware corporation. The parties hereby agree as follows: 1. Background.
1.1. Telocity is an emerging provider of branded, broadband services,
currently and primarily provided through DSL, targeted
specifically at the residential market space. Telocity will
provide the next-generation of broadband services to consumers
by deploying the first open, end-to-end platform for delivering
digital services to, and throughout, the home.
1.2. NBCi and/or its subsidiaries operate a search and aggregation
"portal" site on the Web and a direct marketing site on the Web.
1.3. Concurrently with this Agreement, Telocity, NBCi, NBC and others
have entered into a Series C Preferred Stock Purchase Agreement
dated December 10, 1999 ("Stock Purchase Agreement").
1.4. Concurrently with this Agreement, Telocity and NBC have entered
into a Letter Agreement dated December 10, 1999 ("Letter
Agreement") whereby NBC will provide Telocity with certain
television advertising services.
1.5. Concurrently with this Agreement, Telocity and NBCi have entered
into a Letter Agreement dated December 10, 1999 ("Letter
Agreement") whereby NBCi will provide Telocity with certain
television advertising services.
2. Certain Definitions. As used in this Agreement, the terms set forth
below shall have the following meanings:
2.1. "Above the Fold" means that a particular item on a Web page is
viewable on a computer screen at an 800 x 600 pixels resolution
when the User first accesses such Web page, without scrolling
down to view more of the Web page.
2.2. "Additional Interfaces" shall have the meaning set forth in
Section 4.4.
2.3. "Affiliate" means as to any Person, (i) any other Person that
directly or indirectly controls, owns, is controlled or owned
by, or is under common control or ownership with such first
Person, (ii) any subsidiary of such first Person, and (iii) any
subsidiary of any subsidiary of such first Person. A Person
shall be 1
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deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the
direction of the management, policies and/or decision making of
such other Person, whether through the ownership of voting
securities, by contract or otherwise.
2.4. "Co-Branded Site" means the co-branded version of the Enhanced
Site that will be created in accordance with Section 4 below.
2.5. "Content Portal(s)" means the specific aggregations of linked
content within areas of the Co-Branded Site, which are organized
around the Telocity Content.
2.6. "Enhanced Site" means the enhanced, high-speed version of the
NBCi Sites focused on rich media content, together with any
successor site(s) thereof and any co-branded editions of such
service that have been or may be developed for NBCi's third
party distribution partners and licensees.
2.7. "Impression" means the display of any Promotion on any NBCi Site.
2.8. "Intellectual Property Right(s)" means any patent, copyright,
trademark, trade secret, trade dress, mask work, moral right,
right of attribution or integrity or other intellectual or
industrial property rights or proprietary rights arising under
the laws of any jurisdiction (including, without limitation, all
claims and causes of action for infringement, misappropriation
or violation thereof and all rights in any registrations and renewals).
2.9. "Interfaces" means the Front Door Interfaces and the Additional Interfaces.
2.10. "Last Mile Technologies" means all technologies used to provide
the last, short-distance link of broadband Internet
functionality to and from consumers' residences to and from the
broad telecommunications infrastructure.
2.11. "Last Mile Technologies Expenses" means the following Telocity
expenses incurred in providing Last Mile Technologies as part of
the Telocity Services through the Co-Branded Site; including,
without limitation, recurring monthly line cost (which are the
monthly fees Telocity incurs for last mile connectivity services
from carriers), nonrecurring telecommunications costs (i.e. RBOC
costs) and nonrecurring inside wiring costs.
2.12. "Launch Date" means the date on which the Co-Branded Site
functions properly and is made accessible to Users.
2.13. "Look and Feel" means the graphical user interface and flow of
User experience of an Internet site.
2.14. "Market Deployment Plan" means the introduction of the Telocity
Platform in at least thirty-two (32) markets covering
eighty-five percent (85%) of the DSL-ready homes of Telocity's
last mile providers in those markets by the end of 2000 and 2
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fifty-one (51) markets covering eighty-five percent (85%) of the
DSL-ready homes of Telocity's last mile providers in those
markets by the end of 2001.
2.15. "NBC" means the National Broadcasting Company, Inc., a Delaware
corporation with its principal place of business at 30
Rockefeller Plaza, New York, New York 10112.
2.16. "NBCi Competitor" means any entity or Affiliate thereof listed
in Exhibit C. NBCi may update this list of competitors
periodically with the prior written approval of Telocity.
2.17. "NBCi's Core Business" means (a) information, navigation and
content aggregation services distributed primarily through the
Internet that provide, across more than several topics of
general interest that do not relate to each other or to a common
topic, a combination of all or substantially all of the
following: Internet searching, content aggregation, topical
interest categories and web directories (a "Portal Service");
(b) community services distributed, primarily through the
Internet that offer its members, at a minimum, homepages, e-mail
and chat rooms (a "Community Service"); or (c) selling or
marketing a broad range of third party products and services
primarily through the Internet (an "e-Commerce Service").
2.18. "NBCi Aggregate User Data" means any aggregate data collected by
NBCi or any NBCi subsidiary about Users of broadband services or promotions.
2.19. "NBCi Marks" means any trademarks, trade names, service marks
and logos that may be delivered by NBCi to Telocity hereunder.
2.20. "NBCi Member" means a User who has registered to become a member
of one of NBCi's, or one of NBCi's subsidiary's, registration
based services, including without limitation, the NBCi Sites and
the free email service available at www.email.com.
2.21. "NBCi Product Manager" means an NBCi employee or independent
contractor holding editorial authority and responsibility for a
portal, site, collection, area, center or page on the NBCi Sites.
2.22. "NBCi Properties" means the NBCi Sites and the Co-Branded Site.
2.23. "NBCi Services" means the Web-based services offered by NBCi
through the Co-Branded Site.
2.24. "NBCi Sites" means: (i) subject to the "Distributor" (as defined
in Section 8.1) exclusion in Section 8.1, any and all search and
aggregation "portal," direct marketing, and commerce Web sites,
whether operated by NBCi, a subsidiary of NBCi, or a third party
under an "NBCi" brand, including, without limitation, the Web
sites located at http://www.snap.com, http://www.xoom.com,
http://www.nbc.com, and http://www.videoseeker.com, together
with any mirror sites, any co-branded editions of such site that
have been or may be developed for 3
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Distributors (other than the Co-Branded Site), and successors to
the foregoing; (ii) the Enhanced Site, and successors to the
foregoing; (iii) the International Editions if the parties
mutually agree in writing pursuant to Section 8.2; (iv) any
third party Web sites hosted by NBCi; and (v) if NBCi so elects
within its sole discretion, the Web site located at
http://www.nbci.com and successors thereto, and NBC's network of
affiliate Web stations' Web sites, as updated from time to time
by NBCi in its sole discretion.
2.25. "NBCi Wires" means NBCi's email newsletters sent by NBCi or an
subsidiary to NBCi Members.
2.26. "Network Operation Expenses" means fees and monthly depreciation
cost of network equipment related to the Telocity Services
including, cost of tail circuits, co-location fees, bandwidth
capacity costs, POP driven costs, and other network costs (which
are NOC capital costs, subscriber driven costs, transit costs,
fixed data exchange costs and monthly backbone costs).
2.27. "OSS" means Telocity's operational service and support system
described in Exhibit B plus the modifications that may be made
from time to time to such operational service and support system.
2.28. "Overlapping Services" means those products and services
each party offers to its customers (e.g., utility and communication
products and services) that share a significant degree of commonality.
2.29. "Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof,
or any other legal entity.
2.30. "Promotions" means (i) banners, buttons, windows, portals,
front door windows, text links, and other promotions that are offered by
NBCi now or in the future and link directly to the Telocity Sites and/or
Co-Branded Site from the NBCi Sites; and/or (ii) text links within email
newsletters distributed by NBCi (including, without limitation, NBCi
Wires) and other promotions that are offered by NBCi now or in the
future and link directly to the Telocity Sites and/or Co-Branded Site.
2.31. "Shipping and Handling Expenses" means all of Telocity's
shipping and handling expenses incurred in shipping the Gateway to Subscribers.
2.32. "Subscriber Fees" means all fees paid by Subscribers
for a
Telocity Service.
2.33. "Telocity Aggregate User Data" means any aggregate data
collected by Telocity or any Telocity subsidiary about Users of
broadband services or promotions.
2.34. "Telocity Competitor" means any entity listed in Exhibit
D. Telocity may update this list of competitors periodically with the
prior written approval of NBCi. 4
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2.35. "Telocity Content" means Telocity's and its licensors' text
links, logos, graphic links, and other materials, tools,
content, or text that are delivered by Telocity to NBCi hereunder.
2.36. "Telocity's Core Business" means the provision of next
generation, Subscriber-based broadband services to consumers
emphasizing convenience, utility and ease of use. Telocity is
deploying the first open, end-to-end platform for delivering
these services to its Subscribers, both to the home and
throughout the home which provides an infrastructure for
delivering value-added services to Subscribers.
2.37. "Telocity Database" means User Profile Data and any other
information relating to Users of the Telocity Sites or the
Co-Branded Site or other customers of Telocity or purchasers of
Telocity Services who have had information about them collected
or otherwise obtained by Telocity, or for Telocity's use or
benefit, for the purpose of direct marketing or other
communication activities, and all updates or additional
information that may be added to such database during the Term.
2.38. "Telocity Fraction" for a quarter means (a) the total number of
pages displayed by the Co-Branded Site for during the quarter,
divided by (b) the total number of pages displayed by the entire
NBCi Properties for such period; provided, however, that at such
time as NBCi distinguishes between broadband and narrow band
editions in its ad serving accounting, item (b) shall be limited
to the pages displayed by the broadband editions of the NBCi
Properties for such period.
2.39. The "Telocity Gateway" (or the "Gateway") means the gateway
described in Exhibit B, plus the modifications that may be made
from time to time to such gateway.
2.40. "Telocity Marks" means Telocity's and its licensors' trademarks,
trade names, service marks and logos that may be delivered by
Telocity to NBCi hereunder.
2.41. "Telocity Network" means Telocity's network described in Exhibit
B plus the modifications that may be made from time to time to
such network.
2.42. "Telocity Only Service" means a Telocity service that is not an
Overlapping Service.
2.43. "Telocity Services" means any and all services and products
offered through the Telocity Platform.
2.44. "Telocity Sites" means the Internet site operated by Telocity at
http://www.telocity.com, together with any mirror sites, which
shall not provide products or services competitive with those
offered on the Co-Branded Site.
2.45. "Telocity Users" means all Users described in the Telocity Database.
2.46. "Telocity Window" means a window on the Front Door Interfaces as
described in Section 4.3. 5
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2.47. "Term" means the term of this Agreement as defined in Section 12.1.
2.48. "User" means any end-user of the Web.
2.49. "User Profile Data" means data regarding a User provided by the
User on the NBCi Sites, the Telocity Sites or the Co-Branded
Site or otherwise to NBCi or Telocity: the User's name,
password, hint question, hint answer, birthday, zip code,
country, time zone and gender.
2.50. "Web" means the World Wide Web part of the Internet.
3. Telocity Platform.
3.1. Proprietary Technology. Telocity and/or (to the best of
Telocity's knowledge) its licensors own, and over the
course of the Term shall own pursuant to Section 13.8,
various patents and other Intellectual Property Rights
in certain technology that enable Telocity to create and
operate the Telocity Platform and provide the Telocity
Services (the "Proprietary Technology"), including, but
not limited to, the following:
3.1.1 the automated personal computer/telephone-based loop
qualification for a customer's DSL line qualification,
Web-based customer sign-up, and Web-based system for
deployment, provisioning and customer support.
3.1.2 The Gateway combines a DSL modem, an analog modem,
and a
microprocessor unit that automates installation,
customer support and service upgrades. The Gateway
allows a consumer who subscribes to a Telocity Service
(a "Subscriber") to split the broadband Internet
connection to multiple devices within the home. The
Gateway allows for the measuring, metering and billing
of both subscription and value added services provided
to the Subscriber.
3.2. Telocity Platform Described. Telocity has developed and is using
the Proprietary Technology to provide to consumers a broadband
Internet distribution platform consisting of the Gateway, the
Telocity Network, and OSS (collectively, the "Telocity
Platform") that will facilitate the delivery of broadband
Internet access services to, and throughout, the home. The
Telocity Platform is an "always on", automated broadband service
platform that is available to consumers utilizing the Gateway.
Telocity will use the Telocity Platform to deploy broadband
Internet service to the home initially via DSL, but also via
other means of high data rate connections to the home such as
cable, wireless local loop, satellite and any such delivery
platforms that may emerge as reasonably accepted industry
standards in the future.
3.3. Modifications. Telocity agrees to consider in good faith any
reasonable requests of NBCi to modify the Telocity Platform from
time to time to improve the Telocity Platform's ability to work
with the Co-Branded Site and the Interfaces. For purposes of
this Agreement, all modifications to the Telocity Platform, 6
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including those made pursuant to this Section 3.3, shall be
deemed to be included within the defined term Telocity Platform.
4. Co-Branded Site.
4.1. Co-Branded Site Described. NBCi will develop the Co-Branded Site
for use with the Telocity Platform in accordance with this
Section 4, and Telocity will provide reasonable assistance in
connection therewith. The Co-Branded Site will be a co-branded
version of the Enhanced Site focused on instant access to
information, communications, utility, and entertainment/media
content and will include, among other things, content and
services tailored to capitalize on the always on, broadband
environment. The parties will jointly develop the specifications
for the Co-Branded Site, and NBCi will create the Co-Branded
Site according to the joint specifications developed by the
parties. NBCi, however, will have ultimate decision making
authority over all aspects of the Co-Branded Site, including the
content contained therein, subject to compliance with the
mutually agreed upon specifications.
4.2. Front Door Interfaces. NBCi will develop interfaces to the
Co-Branded Site for: (i) the personal computer; (ii) the
television; and (iii) devices with flat panel displays in which
the presentation of information will be similar to that of a
personal computer (e.g. information appliances), specifically
designed for the broadband delivery of high-speed Internet
access over the Telocity Platform (collectively, the "Front Door
Interfaces"). The parties will collaborate to provide input to
the development of specifications for the Front Door Interfaces,
and the specifications will detail a User experience that is
compatible with the Co-Branded Site. NBCi will create the Front
Door Interfaces according to the joint specifications developed
by the parties. NBCi, however, will have ultimate decision
making authority over all aspects of the Front Door Interfaces
(other than the Telocity Window), subject to compliance with the
mutually agreed upon specifications.
4.3. Telocity Window. The Telocity Window will appear on the Front
Door Interfaces at any time there is Telocity Content, Telocity
Services or Telocity technologies (i.e., technologies and/or
access to technologies which may appear in an Additional
Interface) that cannot be effectively integrated into the Front
Door Interface. The Telocity Window may contain only Telocity
Content, Telocity Services and Telocity technologies (i.e.,
technologies and/or access to technologies which may appear in
an Additional Interface) that cannot be effectively integrated
into the Front Door Interface at that time. The parties will
collaborate to provide input to the development of
specifications for the Telocity Window, including which party
will host the Telocity Window, and the specifications will
detail a User experience that is compatible with the Co-Branded
Site. NBCi will create the Telocity Window according to the
joint specifications developed by the parties. Telocity,
however, will have ultimate decision making authority over all
aspects of the Telocity Window, subject to compliance with the
mutually agreed upon specifications. 7
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4.4. Additional Interfaces. The parties anticipate that over time
different interfaces to the Co-Branded Site or other information
in addition to the Front Door Interfaces ("Additional
Interfaces") will be created for other devices (e.g. flat-panel
displays other than those included within Front Door Interfaces,
wireless devices (WAP format and future format standards that
may emerge), personal digital assistants, cordless phones,
cellular phones, information appliances which do not present
information in a similar manner to that of a personal computer,
and other devices that may emerge in the future) (the "Other
Devices") for use in the home and "on the go" which will
necessitate that content from the Co-Branded Site or other
sources be displayed in different formats. For Additional
Interfaces designed and created by NBCi as set out in Section
4.5, the parties will jointly develop the specifications for the
Additional Interfaces with the intention of creating a
consistent and cohesive User experience across the various
features and applications offered on the Co-Branded Site. The
goal with such Additional Interfaces will be to mix the
functional requirements of the Other Device while maintaining a
consistent Look and Feel to the Co-Branded Site. However, for
such Additional Interfaces designed by a party, ultimate
decision making authority will reside with a party, subject to
compliance with the mutually agreed upon specifications.
4.5. Review and Implementation of Content for Other Devices and
Additional Interfaces. NBCi and Telocity will jointly develop
the Top Level Specifications for the design of Additional
Interfaces. Both parties agree to make good faith efforts to
analyze the cost and revenue potential for each Other Device and
share information pertaining to market research, consumer
behavior, emerging business models, and other such relevant
information. Prior to beginning the process itself or with a
third party, Telocity agrees to give NBCi at [*] days after
delivery of a written request to NBCi to determine whether NBCi
will provide content from the Co-Branded Site to an Additional
Interface for an Other Device and design and create the
Additional Interface for such Other Device. NBCi may, in its
sole discretion, determine that the aggregation, packaging, and
design of content from the Co-Branded Site for delivery to a
specific Other Devices is not commercially and/or strategically
viable to pursue.
4.5.1 Should NBCi elect to provide content designed for the
Other Device in a manner that is compatible with an
Additional Interface and implement the joint
specifications for the Additional Interface, NBCi will
make commercially reasonable efforts to deliver the
content and the Additional Interface within a mutually
agreed upon period of time.
4.5.2 Should NBCi elect to provide content designed for the
Other Device in a manner that is compatible with an
Additional Interface but not design and create such
Additional Interface, (i) NBCi will make commercially
reasonable efforts to deliver the content within a
mutually agreed upon period and (ii) Telocity may
contract with an independent third party, who is not an
NBCi Competitor, to provide such Additional Interface
design and creation services, provided that such
services are delivered to the
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the Commission. 8
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Subscriber in such a manner that the Subscriber
experiences the same Look and Feel of the Co-Branded
Site across the various Interfaces.
4.5.3 Should NBCi decide to neither provide such content nor
design and create such Additional Interface, Telocity
shall ask NBCi, for a mutually agreed fee, for NBCi to
provide additional resources needed to provide content
and create and design such Additional Interface, and if
the parties are unable to reach agreement with respect
to such fee within ten (10) days, then Telocity may
contract with an independent third party, who is not an
NBCi Competitor, to provide such services, provided that
such services are delivered to the Telocity Subscriber
in such a manner that the User experiences the same Look
and Feel of the Co-Branded Site, to the extent
reasonable, across the various Interfaces.
4.6. Co-Branding Features. Each page on the Co-Branded Site will
include branding for NBCi and Telocity so that the NBCi Marks
and Telocity Marks are both Above the Fold and are of
substantially equivalent value and prominence to each other.
Telocity Services and the customer care features for such
services will also be prominently displayed on the Co-Branded
Site. The parties shall mutually agree on the branding for
content delivered from the Co-Branded Sites to Other Devices and
the Additional Interfaces.
4.7. Launch Date. NBCi and Telocity will use diligent efforts to
achieve a Launch Date for the Co-Branded Site before [*].
4.8. Hosting. Except as expressly set forth in this Agreement, NBCi
will host the Co-Branded Site and the Front Door Interfaces on
its servers, on servers within its control, or servers of a
third party under contract with NBCi and will provide all
computer hardware, software and personnel necessary to operate
and maintain the Co-Branded Site as a functional site accessible
to Users.
4.9. Advertising. NBCi shall own and have the right to use or sell
all of the advertising inventory on the Co-Branded Site, except
that neither NBCi or any NBCi subsidiary shall display on the
Co-Branded Site any window or banner advertisements for Telocity
Competitors. Moreover, other than as expressly set forth herein,
NBCi shall have the right to display any third party links,
media, banner advertisements, other promotions, and/or paid or
unpaid editorial content anywhere on the NBCi Sites.
4.10. DNS Redirecting. Except as expressly set forth in this
Agreement, using Domain Name System redirection, the URL for the
Co-Branded Site will begin with http://telocity.snap.com.
Telocity agrees that NBCi will be entitled to count all page
views of the Co-Branded Site towards NBCi's traffic as measured
by Media Metrics and other Internet traffic-auditing firms.
4.11. Harvesting. Telocity shall provide all Telocity Content as
required herein pursuant to NBCi's harvesting technical
specifications, as updated in NBCi's sole
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the Commission. 9
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discretion from time to time, including those set forth at http://partnermarketing.snap.com/guide/htmlharvest.html
(Standard HTML Harvest Specifications), http://partnermarketing.snap.com/guide/htmlsample.html (Sample
of HTML harvested content);
http://partnermarketing.snap.com/Thor/media_mockups.html (Rich
Media Harvesting Specifications), or any other successor URLs
designated by Snap. Harvested Telocity Content will maintain the
Enhanced Sites' Look and Feel and will include branding for
Telocity using Telocity Marks, in such form and placement as a
NBCi Product Manager shall determine in his or her sole
discretion. Telocity shall ensure that all Telocity Content
remains at all times current by continually providing NBCi with
timely updates to the Telocity Content. Furthermore, under no
circumstances shall Telocity Content include any content of a
NBCi Competitor, reference an NBCi Competitor or a service which
conflicts with an offering of NBCi.
4.12. Exclusivity. During the Term, except as expressly provided
otherwise in this section, NBCi shall be the exclusive Internet
content provider to Telocity for the Telocity Platform for
utility, communications, media and entertainment content
(collectively, the "Exclusive Content"). In addition, Telocity
may not enter into any other agreement with third parties for
provision of Portal Services, Community Service or E-Commerce
Services on the Telocity Platform during the Term. Further,
during the Term, Telocity may not own any material equity
interest in, loan any monies to, or enter into any joint venture
or partnership with any NBCi Competitor without the consent of
NBCi. If Telocity identifies a category of products or a content
area within the Exclusive Content that is then currently not
provided by NBCi ("Unavailable Content"), Telocity shall notify
NBCi in writing of such deficiency; provided, however, that
Telocity may not request a product or content specific to a
particular vendor. If NBCi does not notify Telocity in writing,
within [*] of NBCi's receipt of Telocity's notification, of
NBCi's election to deliver, or is not able to deliver, within a
mutually agreeable time period from such notification, the
Unavailable Content, Telocity shall have the right to contract
with an independent third party for development services to
produce the Unavailable Content, provided that (i) NBCi is not
obligated to pay for such incremental services, and (ii) no NBCi
Competitors may be chosen by Telocity unless the desired product
or content is only available from an NBCi Competitor. Telocity
shall select third party content providers that are consistent
with the same level of quality, experience, and reliability
offered on the combined Telocity Platform and Co-Branded Site.
4.13. Promotional Exclusivity. During the first three (3) years of the
Term, NBCi will not promote, through co-branded, on-air
television marketing, any Telocity Competitors offering
broadband delivery of Internet services. However, NBCi shall
have the right to terminate the promotional exclusivity set out
in this section under the following circumstances: (a) Telocity
fails to launch the Telocity Platform in more than fifty percent
(50%) of the service markets on an annual basis as designated in
the Market Deployment Plan, (b) in the event that Patti
Manuel-Hart should leave the employ of Telocity for any reason
during the first
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the Commission. 10
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three (3) years of the Term, or (c) within eighteen (18) months
following the Effective Date, Telocity fails to complete a
Qualifying Offering (as defined in Telocity's Third Amended and
Restated Articles of Incorporation) or a private placement of
its debt or equity securities (not including the private
placement contemplated by the Stock Purchase Agreement) that
results in net proceeds to Telocity of an amount that will
enable the continued expansion of the Subscriber base for the
Telocity Platform at least fifty percent (50%) of the rates set
forth in the Market Deployment Plan for a period of six (6)
months following the closing of such Qualifying Offering or
private placement, as applicable.
4.14. Satellite Delivery. Telocity agrees to grant NBCi's Affiliate,
GE AmeriCom, a right of first negotiation for the delivery of
the Telocity Service via satellite. This right is strictly for
the carriage of Telocity Service via satellite. This right does
not pertain to any content distribution on the Telocity Service.
Beginning after thirty (30) days following the date that
Telocity provides GE Americom with written notice of its desire
to begin such discussions, which shall not be sent by Telocity
before Telocity is prepared to begin good faith negotiations,
Telocity shall be free to begin discussions with third parties
regarding the satellite delivery of the Telocity Services. The
parties agree that time is of the essence with respect to this
Section 4.14.
4.15. Video Programming and Channels. In the event that, during the
Term, Telocity or NBCi desires to offer any new class or type of
video programming or channels (i.e., full motion video of [*] or
more in length) containing news, sports or entertainment on the
Telocity Platform or the Co-Branded Site, Telocity or NBCi, as
the case may be (the "Offering Party"), shall so notify NBC in
writing. NBC and the Offering Party shall then negotiate
exclusively and in good faith with one another for a period of
thirty (30) days following NBC's receipt of such written notice
concerning the inclusion of video programming or channels of NBC
and its affiliates (including, for example, anything broadcast
on the NBC Television Network, all television stations owned and
operated by NBC or any cable, digital or Internet network owned
or controlled by NBC or its affiliates). In the event that the
parties are unable to reach a final agreement during such
period, then, on the last day of such period, the Offering Party
shall submit to NBC its final offer, in writing (the "Offer"),
which offer shall be made in good faith and shall represent the
price, terms and conditions that the Offering Party reasonably
expects to receive for such programming or channel in an
arm's-length transaction with a third party. NBC shall then have
ten (10) business days to accept or reject the Offer. If NBC
rejects the Offer, the Offering Party shall be free to negotiate
with and enter into agreements with third party(s) with respect
to such video programming or channels. NBC and Telocity
acknowledge that, in accordance with Section 4.12 hereof, NBCi
shall be the exclusive Internet content provider to Telocity for
the Telocity Platform for media and entertainment content and
that this Section 4.15 does not limit such exclusivity in any
manner. This Section 4.15 shall not be amended without the
written consent of NBC.
5. Product Development; Overlapping Services.
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the Commission. 11
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5.1. Product Development. Both parties shall mutually agree to the
top-level specifications and objectives ("Top Level
Specifications") for overall jointly developed product offerings
relating to the Telocity Network, End User Hardware and Software
Products, and associated software and utilities.
5.2. Telocity Network. The parties shall mutually develop the Top
Level Specifications and requirements of the Telocity Network,
including content distribution infrastructure, network speed,
hosting capabilities, usage monitoring and interconnect points,
for the purpose of supporting a jointly developed product
offering. Under no circumstances will such collaboration be
construed to create or grant NBCi or any NBCi Affiliate any
Intellectual Property Rights in the Telocity Platform or any
component thereof, such as the Gateway or the OSS. Telocity will
reasonably consider NBCi's comments with respect to the Telocity
Network, but Telocity will have the ultimate decision making
authority with respect to the Telocity Network, subject to
compliance with the Top Level Specifications. NBCi will
reasonably consider Telocity's comments with respect to
advertising serving and tracking, but NBCi will have the
ultimate decision making authority with respect to the with
respect to advertising serving and tracking.
5.3. End User Hardware and Software Products. The parties shall
mutually develop the Top Level Specifications and requirements
of the joint hardware and software offerings (respectively, "End
User Hardware" and "Software Products"), including Gateway
capabilities, software installer features, and integration of
software and services onto the Subscriber's operating system.
Telocity will reasonably consider in good faith NBCi's comments
with respect to End User Hardware and Software Products, but
Telocity will have the ultimate decision making authority with
respect to the End User Hardware and Software Products, subject
to compliance with the Top Level Specifications. Under no
circumstances will such collaboration be construed to create or
grant NBCi or any NBCi Affiliate any Intellectual Property
Rights in the Telocity Platform or any component thereof, such
as the Gateway or the OSS.
5.4. New Product/Service Milestones. Telocity agrees to use
commercially reasonable efforts to introduce at least one new
product or service for use on the Telocity Platform [*]
following the Effective Date.
5.5. Overlapping Services. Although NBCi's Core Business and
Telocity's Core Business are distinctly different businesses,
the parties acknowledge that there is and may nevertheless be
Overlapping Services. Each party shall share in the revenue
streams created by the Overlapping Services as set forth in
Section 10.1. In order to maximize and coordinate the collective
opportunity presented by Overlapping Services, the parties agree
as follows:
5.5.1 If either party has an existing product or service, and
the other party wishes to offer an Overlapping Service,
then the other party will be free to 12
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set features, pricing and revenue models for such Overlapping
Service, but will confer with the party with the existing
product or service.
5.5.2 In all instances where NBCi releases a generally
commercially available full production version of an
Overlapping Service which is similar to an existing
Telocity Service, then the existing revenue share for
the applicable Telocity Services shall be adjusted as
provided in Section 10.1. For those Overlapping Services
that are non Web-based, NBCi shall design such
Overlapping Service to include materially enhanced
features and functionality to distinguish the product
from the Overlapping Service offered by Telocity.
5.5.3 In all instances where Telocity releases a generally
commercially available full production version of an
existing NBCi Service, Telocity shall design such
Overlapping Service to include materially enhanced
features and functionality to distinguish the product
from the Overlapping Service offered by NBCi.
5.5.4 If an Overlapping Service is identified by either party,
then the parties will work together to develop the
specifications for integrating the product or services
into the Telocity Platform and the Co-Branded Site, as appropriate.
5.5.5 Any disputes concerning Overlapping Services will be
subject to the negotiation procedures described in
Section 19. If the negotiation procedures detailed in
Section 19 fail, then both parties agree that such
"Overlapping Services" will be placed within the
Telocity Window. The purpose of such placement will be
to minimize the confusion to the Subscriber caused by
the placement of two (2) similar products that do not
offer distinctly differentiated features or functionality.
6. Account Management.
6.1. Service Quality Milestones. Both parties will mutually agree in
writing on an annual basis on appropriate performance criteria
for the Telocity Services and Co-Branded Site.
6.2. Billing. Telocity shall be solely responsible for all billing,
collection services and customer support services with respect
to all products and services delivered by the parties to
Subscribers via the Telocity Platform.
6.3. Account Management.
6.3.1. Account and Contact Managers. For the purposes of this
Agreement, [*] shall be NBCi's account manager for
Telocity and [*] shall be Telocity's contact manager for
NBCi (collectively, the "Managers"). Subject to Section
20.12, the Managers shall be the primary
[*] The Registrant has requested confidential treatment for certain portions of
this exhibit. The omitted portions have been separately filed with the Commission. 13
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points of contact for inquiries and requests and
information related to the activities conducted by
either party pursuant to this Agreement. Each Manager
shall provide the other with such information and
assistance as may be reasonably requested by the other
from time to time. Either party to this Agreement may
change its designated Manager by giving the other party
written notice of such change provided in accordance
with Section 20.12.
6.3.2. Meetings. Each party shall designate a team of
individuals for specific responsibilities of the party
under this Agreement, such as technical integration and
marketing (collectively, the "Teams"). Each party's Team
shall include the active participation of at least one
(1) officer at the vice president level. The individuals
on the initial Teams are outlined in Exhibit F. Each
team will meet on a frequency determined to be necessary
by the applicable team, but no less than once per month
during the first three (3) years of the Term and
approximately at least once per quarter during each year
thereafter; each of those Teams shall meet separately at
the offices of Telocity or NBCi (with the location to
alternate between the two) to monitor and manage the
relationship of the parties and any items under this
Agreement either party wishes to bring to the attention
of the other party.
6.3.3. Annual Review. Beginning three (3) years after the
Effective Date, the parties will meet on an annual basis
to review the business arrangement set out in this
Agreement in light of changed industry conditions and
other business considerations and mutually agree upon
certain milestones to be set forth for the remainder of
the Term with respect to both parties' continued
performance under this Agreement. Any modifications or
amendments to this Agreement relating to such milestones
will require the written consent of both Telocity and NBCi.
6.3.4. Board Review. NBCi and Telocity agree to review the
status of the activities specified in this Agreement at
least twice a year during each party's respective board meetings.
7. Advertising, Marketing and Promotion.
7.1. Email Solicitations. During the Term, NBCi will have the
exclusive right to transmit all direct marketing email
solicitations to Subscribers as provided in Section 9, except as
provided in Section 9.4.
7.2. Marketing by Telocity. Subject to Section 13.5, Telocity shall
use commercially reasonable efforts to market the Telocity
Services in the relevant local markets of the United States, by
direct marketing to Subscribers by means other than email
solicitations, including, without limitation, voice messaging in
the message inbox, print advertising, direct physical mail,
outdoor, radio and television, and other means of marketing that
may emerge in the future; provided, however, Telocity 14
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shall not use email in any such marketing activities except as
provided in Section 9.4. All third party messages included in
such marketing efforts will contain no content of or reference
to NBCi Competitors. The third party messages shall not be on
behalf of any third parties and shall be solely for the purpose
of promoting or upselling Telocity Services and the Telocity
Platform; provided, however, that such third party messages may
include third party products and services (for example, in
connection with Telocity's affinity program) without NBCi's
approval from entities that are not NBCi Competitors so long as
the third party product or service is not in a category for
which NBCi has an express contractual relationship (of which
Telocity has notice) with respect to the direct marketing of
such product or service. NBCi will provide Telocity with a list
of such relationships within thirty (30) days of the Effective
Date and will update the list from time to time. Telocity will
be responsible for all marketing expenses for the Telocity
Services with the exception of the Promotions described in
Section 7.5.
7.3. Promotional Events. Both parties shall make good faith efforts
to identify additional promotional events to support the
Telocity Services (e.g. special product and marketing
announcements ) and the Co-Branded Site through the use of the
Co-Branded Site to deliver exclusive broadband content for such
promotional events to Telocity Subscribers.
7.4. Online Promotion Design. Telocity will design and create all
Telocity Content required for the Promotions in accordance with
NBCi's technical and editorial guidelines, as updated in NBCi's
sole discretion from time to time, including those set forth at
http://www.snap.com/media/ or any successor URL designated by NBCi.
7.5. Online Promotions. Beginning on the Effective Date, NBCi will
use commercially reasonable efforts to deliver a total value of
online promotional value in the aggregate dollar amount of Five
Million Dollars ($5,000,000) during the first three (3) years of
the Term through the delivery of Impressions on the NBCi Sites;
provided, however, that at least fifty percent (50%) of all
Impressions delivered hereunder shall be delivered to the
locations of the NBCi Sites as mutually agreed in writing by the
parties. Except as specified in the foregoing sentence, the
delivery of the Impressions hereunder and the format of the
Promotions will be based on a schedule and placement guidelines
selected by NBCi, in its sole discretion and at the rates set
forth in the applicable NBCi standard rate card. Any Impression
not listed in the applicable NBCi standard rate card shall be
assigned the value of a comparable Impression on such rate card
by NBCi. If NBCi fails to deliver the required number of
Impressions during the first three (3) years of the Term,
Telocity agrees that NBCi shall have an additional six (6)
months to deliver such Impressions.
8. Co-Branded and International Editions.
8.1 Co-Branded Editions. Telocity acknowledges that NBCi produces
co-branded editions of the NBCi Sites for various resellers,
distributors, other licensees and/or 15
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joint venture partners (collectively the "Distributors"). In
some cases, such Distributors are entitled to replace NBCi's
default content with other content within their own co-branded
editions of any NBCi Site. Notwithstanding any other provisions
of this Agreement, if any such Distributor has exercised its
right to replace Telocity Content with other content, then NBCi
will not be required to display the Promotions or Telocity
Content within such Distributor's co-branded edition of the NBCi
Sites. If NBCi does display the Promotions or Telocity Content
within a co-branded edition of any NBCi Site, such display will
be governed by this Agreement.
8.2 International Editions. NBCi is currently considering creating
one (1) or more international editions of the NBCi Sites to
reflect appropriate localized and local partner content
("International Editions") and may desire to include localized
Telocity Content within such International Editions. Upon NBCi's
request, Telocity agrees to negotiate in good faith regarding
the terms under which Telocity would agree to amend this
Agreement to grant NBCi the right to include Telocity Content
and Promotions on one (1) or more International Editions.
9. User Profile Data and Direct Marketing.
9.1. Data Ownership. Each Subscriber whose User Profile Data is
collected by a party or its subsidiaries through the Co-Branded
Site, the Telocity Site or the Telocity Platform, shall be asked
to consent to the provision of such User Profile Data to the
other party. Each party shall in its reasonable discretion,
place and word such consent request on the Co-Branded Site, the
Telocity Sites and the Telocity Platform, as applicable, and
shall consider comments from the other party with respect to
such consent requests. The User Profile Data for each Subscriber
who so consents shall be provided to the other party and shall
be jointly owned by NBCi and Telocity. Any data collected
through the Co-Branded Site for all other Users, except for the
Telocity Aggregate User Data, shall remain owned solely by NBCi.
At all times, NBCi will be the sole owner of all User data that
is collected from the NBCi Sites and Telocity will be the sole
owner of all User data that is collected from the Telocity
Sites. NBCi Aggregate User Data and Telocity Aggregate User Data
shall be jointly owned by NBCi and Telocity. Before a User is
permitted to become a Subscriber, the User must consent (e.g.,
in the Telocity terms of service) to the provision of the User's
User Profile Data to NBCi.
9.2. Use of Information and Confidentiality. Each party will have the
right to use any information provided by the other party subject
to the confidentiality restrictions set forth in Section 20.4.
All data collected from Users through the Co-Branded Site, the
Telocity Sites and the Telocity Platform will be kept
confidential and not disclosed to non-affiliated third parties
by each party in accordance with the privacy policy and
standards established by that party's respective privacy policy.
9.3. Direct Marketing. During the Term, NBCi, shall have the
exclusive right to use (or allow an Affiliate to use, in which
case all references to "NBCi" in this Section 9 shall refer to
such Affiliate) the information contained in Telocity 16
17
Database for email-based direct marketing purposes as set forth
in this Section (with the exception of customer correspondence
specifically pertaining to non-commercial communications with
Subscribers, including, but not limited to, customer service,
billing and technical support). NBCi shall have a right to
execute, or cause to be executed, promotional email offers to
all or some of the Users described in the Telocity Database.
Such email offers shall be drafted by NBCi following a mutually
agreed upon template, approved by Telocity (and such approval
shall not be unreasonably withheld) and will appear to come from
"Telocity and Snap"; provided, however, each email will not be
subject to Telocity's approval. Such email messages may have
links to the NBCi Sites or the Co-Branded Site, as NBCi shall
decide in its sole discretion. Products offered in such emails
may include NBCi's products or services or third party products
and/or services that NBCi has the right to offer, and NBCi shall
select all of such products to be offered in its sole
discretion. NBCi agrees that any direct marketing solicitations
to Subscribers will not include advertisements or commercial
messages for Telocity Competitors. NBCi may choose to distribute
emails to some or all Users in Telocity Database. NBCi shall
also have the option to create and host "sell" pages for any
marketing campaign, arrange for purchase orders to be processed
and fulfilled, and for customer service and inventory matters to
be coordinated in relation to the products offered in emails
distributed pursuant to this Section, as NBCi shall determine in
its sole discretion. All direct marketing solicitations will
afford the User with an easy and accessible means to
unsubscribe. NBCi agrees that co-branded advertisements will not
include advertisements or commercial messages for Telocity Competitors.
9.4. Telocity Promotional Offers. Notwithstanding Section 9.3,
Telocity shall have the right to send (i) emails to Users
described in Telocity Database solely with respect to the
billing and administration of the Telocity Services; and (ii)
periodic email newsletters related to the Telocity Services, but
such emails and newsletters may not promote services provided by
an NBCi Competitor. Further, Telocity may present promotional
offers to its Subscribers with their bill or newsletter (the
"Promotional Offers"). The Promotional Offers shall not be on
behalf of any third parties and shall be solely for the purpose
of promoting or upselling Telocity Services; provided that,
however, such Promotional Offers may include third party
products and services (for example, in connection with
Telocity's affinity program) without NBCi's approval from
entities that are not NBCi Competitors so long as the third
party product or service is not in a category for which NBCi has
an express contractual relationship with respect to such product
or service. NBCi will provide Telocity with a list of such
relationships and will update the list from time to time. With
the exception of the aforementioned emails and newsletters, all
other emails to Users de
