Directv Broadband Inc Securities Registration Statement

NBCi / Telocity Operating Agreement

This Operating Agreement (the "Agreement") is made and entered into as of (the "Effective Date") between NBC Internet, Inc., a Delaware corporation, with its principal place of business at ("NBCi") and Telocity, Inc., a California corporation, with its principal place of business at ("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.

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 ("Stock Purchase Agreement").

1.4. Concurrently with this Agreement, Telocity and NBC have entered into a Letter Agreement dated ("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 ("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.

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.

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.

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 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.

3. Telocity Platform.

3.1. Proprietary Technology. Telocity and/or its licensors own 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.

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").

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.

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.

4.2. Front Door Interfaces. NBCi will develop interfaces to the Co-Branded Site for the personal computer, the television, and devices with flat panel displays.

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 that cannot be effectively integrated into the Front Door Interface.

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 will be created for other devices.

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.

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.

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. NBCi will host the Co-Branded Site and the Front Door Interfaces on its servers or servers within its control.

4.9. Advertising. NBCi shall own and have the right to use or sell all of the advertising inventory on the Co-Branded Site.

4.10. DNS Redirecting. The URL for the Co-Branded Site will begin with http://telocity.snap.com.

4.11. Harvesting. Telocity shall provide all Telocity Content as required herein pursuant to NBCi's harvesting technical specifications.

4.12. Exclusivity. During the Term, NBCi shall be the exclusive Internet content provider to Telocity for the Telocity Platform for utility, communications, media and entertainment content.

4.13. Promotional Exclusivity. During the first three (3) years of the Term, NBCi will not promote Telocity Competitors offering broadband delivery of Internet services.

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.

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 containing news, sports or entertainment on the Telocity Platform or the Co-Branded Site, the parties shall negotiate exclusively and in good faith.

5. Product Development; Overlapping Services.

5.1. Product Development. Both parties shall mutually agree to the top-level specifications and objectives 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.

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.

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. The parties acknowledge that there is and may nevertheless be Overlapping Services.

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.

6.3.2. Meetings. Each party shall designate a team of individuals for specific responsibilities of the party under this Agreement.

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.

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.

7.2. Marketing by Telocity. Telocity shall use commercially reasonable efforts to market the Telocity Services in the relevant local markets of the United States.

7.3. Promotional Events. Both parties shall make good faith efforts to identify additional promotional events to support the Telocity Services and the Co-Branded Site.

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.

7.5. Online Promotions. NBCi will use commercially reasonable efforts to deliver a total value of online promotional value in the aggregate dollar amount of $5,000,000 during the first three (3) years of the Term.

8. Co-Branded and International Editions.

8.1. Co-Branded Editions. NBCi produces co-branded editions of the NBCi Sites for various resellers, distributors, other licensees and/or joint venture partners.

8.2. International Editions. NBCi may desire to include localized Telocity Content within 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.

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.

9.3. Direct Marketing. During the Term, NBCi shall have the exclusive right to use the information contained in Telocity Database for email-based direct marketing purposes.

9.4. Telocity Promotional Offers. Telocity shall have the right to send emails to Users described in Telocity Database solely with respect to the billing and administration of the Telocity Services.

9.5. Telocity Database Management. Telocity will electronically send NBCi all User Profile Data then contained in the Telocity Database to one or more FTP addresses designated by NBCi.

9.6. NBCi Aggregate User Data Management. NBCi will provide Telocity, on a monthly basis, NBCi's standard report containing the NBCi Aggregate User Data.

10. Payments and Credits.

10.1. Revenue Sharing.

10.1.1. Telocity Only Services. Beginning on the Launch Date, Telocity shall pay to NBCi, on a quarterly basis, ten percent (10%) of the net revenues actually received by Telocity for the basic Telocity internet access service.

10.1.2. Value-Added Services. Telocity will pay, on a quarterly basis, ten percent (10%) of the net revenues actually received by Telocity for value-added services.

10.1.3. Overlapping Services. At such time as a value-added service is an Overlapping Service, Telocity will pay NBCi, on a quarterly basis, forty percent (40%) of the net revenues actually received from revenues generated by the Overlapping Service provided by Telocity.

10.1.4. NBCi Services. NBCi shall pay Telocity, on a quarterly basis, forty percent (40%) of the net revenues actually received by NBCi or its subsidiaries derived from advertising, tenancies, e-Commerce Services, and subscription/pay-per-view media attributable to Telocity Users.

10.1.5. Unavailable Content. In the event that Telocity chooses to contract with an independent third party for Unavailable Content, NBCi shall receive forty percent (40%) of the gross revenues actually received from the placements of such Unavailable Content within the Telocity Platform.

10.2. Bundled Services. Telocity may offer bundled services from time to time that will be priced less than the aggregate price for all the component parts.

10.3. Payment. Payments under this Agreement will be made by check or wire transfer of immediately available funds.

10.4. Warrants. Upon execution of this Agreement, Telocity will issue to NBCi a warrant to purchase shares of Series C Preferred Stock, and to NBC, a warrant to purchase shares of Series C Preferred Stock.

11. Records and Audits.

11.1. Accounting Standards. All computations relating to the determination of the amounts due and payable pursuant to this Agreement shall be made in accordance with nationally recognized and generally accepted accounting principles and practices.

11.2. Audit Rights. Each party agrees to keep accurate books of account and records at its principal place of business covering all transactions relating to this Agreement.

12. Term; Termination.

12.1. Term. The term of this Agreement will begin on the Effective Date and end on the last day of the fifteenth (15th) year after the Effective Date, unless otherwise terminated as set forth in this Agreement.

12.2. Termination for Cause. Either NBCi or Telocity may terminate this Agreement at any time by giving written notice if any other party commits a material breach that is not cured within sixty (60) days after notice thereof.

12.3. Termination for Insolvency. Either party may terminate this Agreement upon sixty (60) days notice if the other party becomes insolvent or ceases to do business as a going concern.

12.4. Competitor Termination. NBCi may terminate this Agreement if Telocity experiences a change in ownership involving an NBC Competitor or NBCi Competitor.

12.5. Termination by NBCi. NBCi may terminate this Agreement if Telocity fails to complete a Qualifying Offering or private placement within eighteen (18) months following the Effective Date.

12.6. Consequences of Termination. Upon termination or expiration, all licenses granted hereunder shall immediately terminate and each party shall return or destroy all Confidential Information of the other party in its possession.

13. Intellectual Property.

13.1. Ownership.

13.1.1. Telocity Materials. NBCi acknowledges that Telocity and its licensors own all rights, title and interest in the Telocity Materials.

13.1.2. NBCi Materials. Telocity acknowledges that NBCi and its licensors own all rights, title and interest in the NBCi Materials.

13.1.3. Jointly Developed Additional Interfaces. Each party acknowledges that the other party jointly owns all jointly developed Additional Interfaces and all specifications to such Additional Interfaces.

13.2. Telocity Marks and Content. Telocity hereby grants to NBCi and its subsidiaries a non-exclusive, non-transferable, royalty-free license throughout the Term to use, display and publish the Telocity Marks and Telocity Content.

13.3. Proprietary Technology. Telocity hereby grants NBCi and its subsidiaries a non-exclusive, non-transferable, royalty-free right and license during the Term to access and/or use the Proprietary Technology.

13.4. Integration Technologies. If NBCi has to develop specific technology to integrate the Telocity Window into the Front Door Interfaces, then the parties shall jointly own such technology.

13.5. NBCi's License Grants. NBCi hereby grants to Telocity a non-exclusive, non-transferable, royalty free license throughout the Term to use, display and publish the NBCi Marks.

13.6. General Limitation. Neither party will use the other party's proprietary marks in a manner that disparages the other party or its products or services.

13.7. General Reservation. Neither party grants any license to the other except as specifically set forth in this Section 13.

13.8. Protection of Telocity Platform. Telocity agrees to use commercially reasonable efforts to protect the Telocity Platform through owning and/or licensing all Intellectual Property Rights therein.

14. Responsibility for the Sites and Products. Telocity acknowledges and agrees that, as between Telocity and NBCi, Telocity will be solely responsible for any claims or other losses associated with or resulting from the marketing or operation of the Telocity Platform and the Telocity Sites.

15. Telocity Representations and Warranties.

15.1. Telocity represents and warrants that it possesses sufficient right, title, interest and license in or to all Intellectual Property Rights embodied in or used in connection with the Telocity Marks, the Telocity Content, the Telocity Platform, and the Telocity Site to perform its obligations hereunder.

15.2. Except as expressly set forth in Section 15.1, Telocity makes no representations or warranties regarding the Telocity Content, Telocity Marks, Telocity Platform, Telocity Services and Telocity Sites.

16. NBCi Representations and Warranties.

16.1. NBCi represents and warrants that it possesses sufficient right, title, interest and license in or to all Intellectual Property Rights embodied in or used in connection with the Front Door Interface and the Co-Branded Site to perform its obligations hereunder.

16.2. Except as expressly set forth in Section 16.1, NBCi makes no representations or warranties regarding the NBCi Marks, NBCi Properties and NBCi Services.

17. Limitation of Damages. Except for Section 18, no party will be liable for any special, indirect, consequential or incidental damages arising out of or related to this Agreement.

18. Mutual Indemnification.

18.1. Indemnification by NBCi. NBCi shall indemnify, defend and hold Telocity harmless from and against any costs, losses, liabilities and expenses arising out of the operation of the NBCi Properties, transmission of emails in violation of privacy laws, use of NBCi Marks, claims of NBCi intellectual property infringement, or use/disclosure of User Profile Data in violation of this Agreement.

18.2. Indemnification by Telocity. Telocity shall indemnify, defend and hold NBCi harmless from and against any costs, losses, liabilities and expenses arising out of the use of Telocity Content, Telocity Marks or Proprietary Technology, operation of the Telocity Sites or Telocity Platform, offer or sale of Telocity Services, claims of Telocity intellectual property infringement, use/disclosure of User Profile Data in violation of this Agreement, or violation of telecommunications laws.

18.3. Indemnification Procedures. The Indemnified Party shall permit the Indemnifying Party to control the defense, disposition or settlement of the matter at its own expense, subject to the stated limitations.

19. Alternative Dispute Resolution. Any dispute, controversy, disagreement or claim arising out of or with reference to this Agreement shall be settled in accordance with the terms of this Section 19.

20. Miscellaneous.

20.1. Assignment. NBCi shall have the right to assign all of its rights and liabilities hereunder to an Affiliate or to any person or entity that acquires all or substantially all of NBCi's operating assets.

20.2. Relationship of Parties. This Agreement will not be construed to create a joint venture, partnership or the relationship of principal and agent between any of the parties hereto.

20.3. Applicable Law. This Agreement will be construed in accordance with and governed by the laws of the State of California.

20.4. Confidentiality. Each party may have access to confidential or proprietary technical or business information of another party.

20.5. Press Release. No party will make any public statement or other announcement relating to the terms or existence of this Agreement without the prior written approval of the other parties.

20.6. Injunctive Relief. Each party agrees that in the event of a breach or alleged breach of Sections 20.4 or 20.5, the other parties shall be entitled to seek equitable relief.

20.7. Subsidiaries. Each party unconditionally guarantees to the other party the performance of all obligations by any of its subsidiaries under the Agreement.

20.8. Captions and Section Headings. Captions and section headings used in this Agreement are for convenience only.

20.9. Survival. Termination or expiration of this Agreement shall not release any party from any liabilities or obligations that survive by their nature or express agreement.

20.10. Force Majeure. If any party shall be delayed in its performance due to causes beyond its reasonable control, such delay shall be excused.

20.11. Consents and Approvals. Where agreement, approval, acceptance, consent, confirmation, notice or similar action is required, such action shall not be unreasonably delayed or withheld.

20.12. Notices. All notices or other communications shall be in writing and sent by certified mail, facsimile, overnight express mail, or hand delivery.

20.13. Third Party Beneficiary. NBC shall be a third party beneficiary of this Agreement for purposes of Section 4.15.

20.14. Counterparts. This Agreement may be executed in one or more counterparts.

20.15. Entire Agreement. This Agreement constitutes and contains the entire agreement between the parties with respect to the subject matter hereof.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives on the dates indicated below.