Network Credits Program Services Agreement - Microsoft Corp. and Encoding.com Inc.
NETWORK CREDITS PROGRAM SERVICES AGREEMENT
This Network Credits Program Services Agreement (the "Agreement") is entered
into and effective as of June 22, 1998 (the "Effective Date") by and between
Microsoft Corporation, a Washington corporation located at One Microsoft Way,
Redmond, WA 98052 ("Microsoft") and ISP, as described immediately below:
<TABLE>
<S> <C>
------------------------------------------------------------------------
ISP Name & Address: Encoding.com, Inc.
1725 Westlake Ave. N.
Suite 102
Seattle, WA 98109
------------------------------------------------------------------------
Attention: Contact/Title: Martin Tobias
Phone: (206) 285-7205
Fax: (206) 285-1128
Email: martin@encoding.com
------------------------------------------------------------------------
State of Incorp.: Delaware
------------------------------------------------------------------------
ISP Services Credit $250,000
------------------------------------------------------------------------
</TABLE>
Recitals
ISP is an Internet service provider capable of delivering Internet
infrastructure services for Internet Content Providers and corporate customers,
including the encoding, production, hosting and serving of live or on-demand ICP
content.
Microsoft is a developer of operating system technologies and tools for the
development and serving of high-performance, high-fidelity web and intranet
content, including interactive media content.
Microsoft is establishing a "Network Credits Program" whereby ICP's may utilize
Microsoft operating system technologies and ISP services to deliver ICP Content
to the ICP's users.
Microsoft wishes to engage ISP as, and ISP wishes to become, a supplier of
services to the Network Credits Program.
Agreement
1. Definitions
1 "ASF" means the proposed industry standard format referred to as the
"Advanced Streaming Format," which as of the Effective Date is in
comment/revision processes within industry standards bodies, and also any
successors or replacements for such format that may be designated by such
industry standards bodies.
2 "Confidential Information" means: (i) any source code of software provided
by either party upon written request of the other party; (ii) any trade
secrets and/or other proprietary information not generally known relating
to either party's product plans, designs, costs, prices and names,
finances, marketing plans, business opportunities, personnel, research,
development, hardware configurations, customers or know-how; and (iii) the
terms and conditions of this Agreement. "Confidential Information" shall
not include information that: (i) is or becomes generally known or
available by
<PAGE>
publication, commercial use or otherwise through no fault of the receiving
party; (ii) is known and has been reduced to tangible form by the receiving
party at the time of disclosure and is not subject to restriction; (iii) is
independently developed by the receiving party without any use of the
Confidential Information of the disclosing party; (iv) is lawfully obtained
from a third party that has the right to make such disclosure without
breach of this Agreement by the receiving party; or (v) is made generally
available by the disclosing party without restriction on disclosure.
3 "Content" means data, text, audio, video, graphics, photographs, artwork
and other technology and materials.
4 "ICP Content" means the Streaming Media Content ICP and Microsoft wish to
make available through the ISP Services.
5 "ICP Site" means the URL and/or intranet site from which ICP wishes to
redirect its users to take advantage of the ISP Services.
6 "ICP" means a Microsoft-designated Network Credits Program participant,
including Internet Content Providers and corporate/large entity customers
using intranets.
7 "ISP Site" means ISP's main website located at www.encoding.com.
8 "ISP Services Credit" means the amount set forth in the table on page 1 of
this Agreement.
9 "ISP Services Guidelines" means the guidelines and procedures by which ISP
will engage an ICP, deliver ISP Services to the ICP, and charge/bill the
ICP for services additional to the portion of the ISP Services Credit
assigned to the ICP by Microsoft, as more fully described in Exhibit B.
10 "ISP Services" means the provision of development, production, encoding,
hosting, serving and delivery of "live," "on-demand" and archived ICP
Content, as more fully described in Exhibit A.
11 "Microsoft Media Player" means the version released in June 1998 of the
upgrade to the Windows 95 and Windows 98 Microsoft Media Player client
technology, including all Updates thereof during the Term, that displays
ASF, other formats of Streaming Media, and other multimedia data-types.
12 "Microsoft Technologies" means NetShow and the Microsoft Media Player.
13 "NetShow" means Microsoft's Streaming Media server technology and services
for Microsoft Windows NT, including all Updates during the Term, regardless
of whether marketed by Microsoft under the name "NetShow."
14 "Streaming Media" means audio, video and other media Content that is
transmitted and played or displayed incrementally, or in semi-real time,
such that it can be heard, viewed or received by an end user without
substantial download delays.
15 "Term" means the period commencing on the Effective Date and ending on June
24, 1999; unless this Agreement is earlier terminated in accordance with
Section
16 "Updates" means all public releases of Microsoft Technologies during the
Term, including public maintenance releases, error corrections, upgrades,
enhancements, additions, improvements, extensions, modifications and
successor versions.
All other initially capitalized terms shall have the meanings assigned to them
in this Agreement.
2. Microsoft Obligations.
2.1 Software.
--------
<PAGE>
(a) Microsoft Technologies. Microsoft hereby grants to ISP a worldwide, non-
exclusive, non-transferable, royalty-free license for the Term, to
reproduce and use copies of Microsoft Technologies solely for purposes
of (i) providing the ISP Services and (ii) developing and supporting
Microsoft Technologies usage as part of ISP's business.
(b) Other Microsoft Software. Microsoft shall provide ISP with the Microsoft
software ("Microsoft Software") set forth in Exhibit C.
(c) EULA. Except and solely to the extent otherwise provided in this Section
2.1, all use of the Microsoft Technologies and Microsoft Software shall
be in accordance with the end user license agreement ("EULA")
accompanying such Microsoft Technologies.
(d) No Other Rights/Ownership. Except as expressly licensed in this Section
2.1, ISP shall have no other rights in the Microsoft Technologies and
Microsoft Software. Microsoft retains all right, title and interest in
and to the Microsoft Technologies and Microsoft Software. Nothing in
this Agreement shall be construed, by implication, estoppel or
otherwise, as granting ISP any rights to any Microsoft software,
technology or other intellectual property rights other than the express
rights granted hereunder with respect to the Microsoft Technologies and
Microsoft Software.
2.2 Early Releases. During the Term, Microsoft will provide to ISP, at no
--------------
charge, an object code copy of each successive commercial release (and, at
Microsoft's sole discretion, beta and pre-beta releases) of Microsoft
Technologies. Any pre-release Microsoft Technologies may only be used by
ISP in accordance with the license grant in Section 2.1. ISP understands
that pre-release software is not intended for commercial use.
2.3 Consideration. In consideration of ISP's obligations under this Agreement,
-------------
Microsoft will pay ISP (i) the ISP Services Credit upon execution of this
Agreement and (ii) the monetary consideration, including the ISP
Development/Infrastructure payment, specified in Exhibit C.
2.4 Promotional Efforts. Microsoft will use reasonable commercial efforts to
-------------------
promote ISP and the ISP Services to top ICPs and to the public at large as
detailed in Exhibit C, Section IV.
3. ISP Obligations
3.1 ISP Services.
------------
(a) Development/Infrastructure Build Out Work. ISP shall complete the
development and infrastructure build out work outlined in Exhibit A.
(b) Services. ISP shall provide the ISP Services to ICPs in accordance
with the ISP Services Guidelines and up to the ISP Services Credit.
ISP shall deliver a description of all available ISP Services,
including a schedule of fees for such services, so that Microsoft and
any ICP may track usage of the ISP Services Credit when using ISP
Services. Microsoft may reallocate the ISP Services Credit among ICPs
in Microsoft's sole discretion upon reasonable notice to ISP.
Microsoft may also use ISP Services for its own Streaming Media
Content.
<PAGE>
Any ISP Services Credit not allocated by Microsoft by the end of the
Term may be used by Microsoft as mutually agreed upon with the ISP for
non-streaming related services during the following six (6) month
period. Any ISP Service Credit not allocated by Microsoft by the end
of such six (6) month period shall be forfeit by Microsoft and
Microsoft shall not be entitled to a refund for such unused ISP
Service Credit.
(c) Other Services. Pursuant to a separate agreement between ISP and ICP,
ISP may provide to the ICP services in addition to the ISP Services,
or additional ISP Services beyond the amount of ISP Services Credit
assigned to an ICP by Microsoft.
(d) Reporting. On a monthly basis or as otherwise mutually agreed upon,
ISP shall report ISP services performed and ISP service credits
actually used in relation to program.
3.2 Technology Adoption and Promotion. During the Term, ISP shall use and
---------------------------------
promote Microsoft Technologies as follows:
(a) ISP shall complete the promotional obligations set forth in Exhibit C.
(b) ISP shall make reasonable commercial efforts to place a "Powered by
NetShow" logo on those ICP pages that contain Microsoft-funded ICP
Content to the extent ISP designs, influences the design, or hosts such
ICP pages on any ISP website which provides ISP Services. Such logo
shall be used by ISP in accordance with Microsoft's logo guidelines in
Exhibit D.
(c) Microsoft shall be entitled to substitute a different sponsorship
notice (and corresponding guidelines) in place of the "Powered by
NetShow" notice for purposes of this Agreement upon reasonable advance
written notice to ISP.
4. Non-Exclusive
For purposes of clarification, nothing in this Agreement shall be deemed to
restrict either party's ability to license, develop, sub-license, manufacture,
deploy, support, promote, or distribute software, Content, Streaming Media or
any other technology.
5. Confidentiality.
5.1 Confidentiality Obligations. Each party shall protect the other's
---------------------------
Confidential Information disclosed hereunder from unauthorized
dissemination and use with the same degree of care that such party uses to
protect its own like information. Neither party will use the other's
Confidential Information for purposes other than those necessary to
directly further the purposes of this Agreement. Neither party will
disclose to third parties the other's Confidential Information without the
prior written consent of the other party. Except as expressly provided in
this Agreement, no ownership or license rights are granted in any
Confidential Information. The other provisions of this Agreement
notwithstanding, either party will be permitted to disclose the
Confidential Information to its outside legal and financial advisors; and
to the extent required by applicable law, provided however that before
making any such required filing or disclosure, the disclosing party shall
first give written notice of the intended disclosure to the other party,
within a reasonable time prior to the time when disclosure is to be made,
and the disclosing party will exercise best efforts, in cooperation with
and at the expense of the other party, consistent with reasonable time
constraints, to obtain confidential treatment for all non-public and
sensitive provisions of this Agreement, including without limitation dollar
amounts and other numerical information. Each party agrees to notify the
other in writing of any actual or suspected misuse, misappropriation or
unauthorized disclosure of Confidential Information of the disclosing party
which may come to the receiving party's attention.
<PAGE>
5.2 Limitations. The parties' obligations of confidentiality under this
-----------
Agreement shall not be construed to limit either party's right to
independently develop or acquire products without use of the other party's
Confidential Information. Further, either party shall be free to use for
any purpose the residuals resulting from access to or work with such
Confidential Information, provided that such party shall maintain the
confidentiality of the Confidential Information as provided herein. The
term "residuals" means information in non-tangible form, which may be
retained by persons who have had rightful and good faith access to the
Confidential Information, including ideas, concepts, know-how or techniques
contained therein. Neither party shall have any obligation to limit or
restrict the assignment of such persons or to pay royalties for any work
resulting from the use of residuals. However, the foregoing shall not be
deemed to grant to either party a license under the other party's
copyrights or patents.
6. Warranties
6.1 ISP. ISP warrants and covenants that: (i) it has the full power to enter
---
into and perform according to the terms of this Agreement; and (ii) the ISP
Services will be of high quality and performed in a manner commensurate
with industry standards and practices.
6.2 Microsoft. Microsoft warrants and covenants that it has the full power to
---------
enter into and perform according to the terms of this Agreement.
6.3 Continuous Nature. The representations and warranties contained in this
-----------------
Section 6 are continuous in nature and shall be deemed to have been given
by the warrantor at execution of this Agreement and at each stage of
performance hereunder.
7. Disclaimer Of Further Warranties
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6, ANY AND ALL SOFTWARE, CONTENT, OR
CONFIDENTIAL INFORMATION PROVIDED BY EITHER PARTY TO THE OTHER HEREUNDER IS
PROVIDED "AS IS," WITHOUT WARRANTY OF ANY KIND. EACH PARTY DISCLAIMS ALL
WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND
NONINFRINGEMENT, WITH RESPECT TO ANY MATERIALS OR INFORMATION PROVIDED
HEREUNDER.
8. Termination
8.1 Termination By Either Party. Either party may suspend performance and/or
---------------------------
terminate this Agreement:
(a) Immediately upon written notice at any time, if the other party is in
material breach of any material warranty, term, condition or covenant
of this Agreement, other than those contained in Section 5, and fails
to cure that breach within forty-five (45) days after written notice
thereof; and
(b) Immediately upon written notice at any time, if the other party is in
material breach of Section 5.
8.2 Effect of Termination.
---------------------
<PAGE>
(a) Neither party shall be liable to the other for damages of any sort
resulting solely from terminating this Agreement in accordance with
its terms.
(b) Termination of this Agreement shall not affect any other agreement
between the parties.
8.3 Survival. In the event of termination or expiration of this Agreement
--------
for any reason: (i) Sections 1, 2.1(d), 3.1(b), 4, 5, 6, 7, 8, 9 and 10
shall survive. Except for Microsoft's termination of this Agreement for
ISP's material breach, licenses granted to ISP under Sections 2.1(a) and
(b) shall survive any termination or expiration of the Term of this
Agreement solely as set forth in the applicable EULA and solely with
respect to the then current version of the Microsoft Technologies and
Microsoft Software licensed to ISP.
9. Limitation Of Liabilities
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT,
INCIDENTAL, PUNITIVE OR SPECIAL DAMAGES WHATSOEVER, INCLUDING WITHOUT LIMITATION
DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF DATA OR
BUSINESS INFORMATION, AND THE LIKE, ARISING OUT OF THIS AGREEMENT OR THE USE OF
OR INABILITY TO USE ANY MICROSOFT TECHNOLOGIES, MICROSOFT SOFTWARE OR EITHER
PARTY'S CONFIDENTIAL INFORMATION OR CONTENT, EVEN IF A PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
THIS SECTION SHALL NOT APPLY TO SECTION 5.
10. General Provisions
10.1 Notices. All notices and requests in connection with this Agreement shall
-------
be deemed given as of the day they are received either by messenger,
delivery service, or in the United States of America mails, postage
prepaid, certified or registered, return receipt requested, and addressed
as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
To ISP: see box on page 1
--------------------------------------------------------------------------------------------------------
To Microsoft: Copy to:
--------------------------------------------------------------------------------------------------------
<S> <C>
Microsoft Corporation Microsoft Corporation
One Microsoft Way One Microsoft Way
Redmond, WA 98052-6399 Redmond, WA 98052-6399
Attention: Director of Business Development, Personal Attention: Law & Corporate Affairs
and Business Systems Division
--------------------------------------------------------------------------------------------------------
Phone: (425) 882-8080 Phone: (425) 882-8080
--------------------------------------------------------------------------------------------------------
Fax: (425) 936-7329 Fax: (425) 936-7409
--------------------------------------------------------------------------------------------------------
</TABLE>
or to such other address as a party may designate pursuant to this notice
provision.
10.2 Independent Parties. Nothing in this Agreement shall be construed as
-------------------
creating an employer-employee relationship, a partnership, or a joint
venture between the parties.
10.3 Governing Law. This Agreement shall be governed by the laws of the State
-------------
of Washington. Any action or litigation concerning this Agreement shall
take place in the federal or state courts in King County, Washington.
<PAGE>
10.4 Attorneys' Fees. In any action or suit to enforce any right or remedy
---------------
under this Agreement or to interpret any provision of this Agreement, the
prevailing party shall be entitled to recover its costs, including
reasonable attorneys' fees.
10.5 Assignment. This Agreement shall be binding upon and inure to the benefit
----------
of each party's respective successors and lawful assigns; provided,
however, that neither party may assign its rights or delegate its duties
under this Agreement, in whole or in part, to any third party without the
prior written approval of the other party.
10.6 Force Majeure. Neither party shall be liable to the other under this
-------------
Agreement for any delay or failure to perform its obligations under this
Agreement if such delay or failure arises from any cause(s) beyond such
party's reasonable control, including by way of example labor disputes,
strikes, floods, fire, lightning, utility or communications failures,
earthquakes, vandalism, war, acts of terrorism, riots, insurrections,
embargoes, or laws, regulations or orders of any governmental entity.
10.7 Construction. If for any reason a court of competent jurisdiction finds
------------
any provision of this Agreement, or portion thereof, to be unenforceable,
that provision of the Agreement will be enforced to the maximum extent
permissible so as to effect the intent of the parties, and the remainder
of this Agreement will continue in full force and effect. Failure by
either party to enforce any provision of this Agreement will not be deemed
a waiver of future enforcement of that or any other provision. This
Agreement has been negotiated by the parties and their respective counsel
and will be interpreted fairly in accordance with its terms and without
any strict construction in favor of or against either party.
10.8 Entire Agreement. This Agreement does not constitute an offer by
----------------
Microsoft and it shall not be effective until signed by both parties. This
Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and merges all prior and
contemporaneous communications. It shall not be modified except by a
written agreement dated subsequent to the date of this Agreement and
signed on behalf of ISP and Microsoft by their respective duly authorized
representatives.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
Effective Date written above.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
MICROSOFT ISP
-------------------------------------------------------------------------------
<S> <C>
By: /s/ William Poole By: /s/ Martin Tobias
-------------------------------------------------------------------------------
Name (print): William Poole Name (print): Martin Tobias
-------------------------------------------------------------------------------
Title: Sr. Director Bus. Dev. Title: Minister of Reason
-------------------------------------------------------------------------------
Date: 6/25/98 Date: June 22, 1998
-------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit A
ISP Services
I. Development/Infrastructure Build Out
[* * *]
II. ISP Services
[* * *]
Definitions and Explanation
[* * *]
[*] Confidential Treatment Request
<PAGE>
Exhibit B
ISP Services Guidelines
Microsoft shall have sole discretion regarding what ICPs, ISP Services,
and allocation of ISP Services Credits shall be used under this Agreement.
Microsoft shall make reasonable efforts to accommodate ICPs that ISP recommends
for this program. Microsoft shall use its best efforts to ensure that each
project for an ICP is at least $10,000 of ISP Services Credits. Microsoft shall
notify ISP of approved ICPs, ISP Services to be used, and allocation of ISP
Services Credits.
Notwithstanding the foregoing, the relationship between ISP and ICP shall be
separate from ISP's relationship with Microsoft. ICP shall be solely responsible
for the services acquired from ISP. ISP shall enter into a separate agreement
with participating ICPs, and such separate agreement shall be entered into in a
timely manner, ISP shall use its best efforts to enter into such agreement
within two weeks following Microsoft written notification to ISP of ICP
participation. At Microsoft's sole discretion, the ISP Services may be performed
for Microsoft acting on behalf of the ICP and under the terms of this Agreement.
ISP shall use reasonable commercial efforts to perform hosting and other
services as ICP shall reasonably request in manner ICP deems reasonably fitting,
including but not limited to "private labeling" of the site (that is, making the
site appear seamlessly a part of the existing ICP sites).
<PAGE>
Exhibit C
Consideration
I. Software Licenses Provided.
[*]
II. Development/Infrastructure Consideration.
[*] shall pay [*] [*] to assist [*] with its development/infrastructure build
out as described in Exhibit A. The foregoing shall be paid to ISP within thirty
(30) days of the Effective Date.
III. ISP Services Credit
[*]
IV. Promotion.
ISP shall complete the following promotional efforts:
. ISP shall establish a public web page with a list of NetShow services
available from ISP.
. ISP shall use appropriate "Powered by NetShow" and other Microsoft technology
logos in conjunction with content hosted in this program.
. ISP shall allow Microsoft to reference ISPs participation in the program in
sales and marketing materials, including but not limited to presentations and
press releases.
Microsoft shall complete the following promotional efforts:
. Microsoft will promote ISP services on appropriate NetShow sites
. Microsoft will promote and evangelize the Network Credits Program to ICPs
. To the extent that there are public relations activities planned and executed
involving the program activities, Microsoft shall include ISP
. Microsoft allows ISP to reference ISPs participation in the Microsoft program
in conjunction with sales and marketing materials (excluding a press release,
which should be coordinated by Microsoft's program announcements).
[*] Confidential Treatment Request
<PAGE>
Exhibit D
Logo Program
1. Except as Microsoft may authorize elsewhere, non-Microsoft Web sites may
use only the logo provided herein ("Logo"). By downloading or otherwise
using the Logo, you agree to be bound by these Policies.
2. You may only use the Logo on your Web site, and not in any other manner.
It must always be an active link to the Microsoft NetShow Player Download
page at http://www.microsoft.com/ntserver/netshow/download/player.htm.
HTML code for the link is shown below.
3. The Logo gif includes the words "Powered by Microsoft NetShow, Get
NetShow," describing the significance of the Logo on your site (i.e., the
Logo is a link to Microsoft, not an endorsement of your site). You may
not remove or alter this or any other element of the Logo.
4. The Logo may be used only on Web pages that make accurate references to
Microsoft or its products or services. Your Web page title and your
company's other trademarks and logos must appear at least as prominently
as the Logo. You may not display the Logo in any manner that implies
sponsorship, endorsement, or license by Microsoft.
5. The Logo must appear by itself, with a minimum spacing (the height of
the Logo) between each side of the Logo and other graphic or textual
elements on your page. The Logo may not be used as a feature or design
element of any other logo.
6. You may not alter the Logo in any manner, including size, proportions,
colors, elements, and so on, or animate, morph or otherwise distort its
perspective or two-dimensional appearance, except with the authorization
of Microsoft.
7. You may not use the Logo on any site that, to your knowledge,
(i) disparages Microsoft or its products or services, (ii) infringes upon
any Microsoft intellectual property or other rights, or (iii) violates
any state, federal, or international law.
8. These Policies do not grant a license or any other right in Microsoft's
logos or trademarks. Microsoft reserves the right in its sole discretion
to terminate or modify permission to use the Logo at any time. Microsoft
reserves the right to take action against any use that does not conform
to these Policies, infringes upon any Microsoft intellectual property or
other rights, or violates other applicable laws.
9. MICROSOFT DISCLAIMS ANY WARRANTIES THAT MAY BE EXPRESS OR IMPLIED BY
LAW REGARDING THE LOGO, INCLUDING WARRANTIES AGAINST INFRINGEMENT.
[*]
[*] Confidential Treatment Request