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
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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
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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
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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.
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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.
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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,
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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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 m
