Distribution, License and Alliance Agreement - Compaq Computer Corp. and NetZero Inc.
DISTRIBUTION, LICENSE AND ALLIANCE AGREEMENT
This Distribution, License and Alliance Agreement (the "Agreement") between
Compaq Computer Corporation, with its principal business office at 20555 S.H.
240, Houston, Texas 77070, a Delaware corporation ("Compaq"), and NetZero,
Inc., with its principal business office at 3835 R. East Thousand Oaks
Blvd, Suite 338, Westlake Vilage, California 91362, a California corporation
("NETZERO"), is made effective as of this 30th day of April, 1999. Compaq
and NetZero are sometimes referred to individually as a "Party," and
collectively as the "Parties."
RECITALS
WHEREAS, Compaq and NetZero wish to enter into a business alliance to,
among other things, market, promote and offer NetZero branded Internet access
service (the "NetZero ISP Service") which shall be free to the Compaq enduser
at the time the Licensed Product associated with such service is distributed
with the Presario Product Line.
WHEREAS, Compaq and NetZero each acknowledge that the keys to developing
the desired program are a good faith commitment to solve business and
operational issues through open communication and a willingness to employ
flexible procedures to address any such issues which may arise during the
performance of this Agreement.
NOW, THEREFORE, AND IN CONSIDERATION of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties agree as follows:
1.0 PURPOSE
The intent of the Parties is to work together to allow Compaq to market,
offer and distribute the Licensed Product on the Presario Product Line
commencing with the 2C Product Run (the "Products") during the term of this
Agreement with the goal and purpose of consumer adoption of the NetZero ISP
Service by purchasers of the Products. Compaq and NetZero agree to work
together to understand the demands on an ISP service that could be made by
Compaq customers and identify what may be required by both parties to
anticipate and handle such demands.
2.0 WORK EFFORT
This Agreement shall describe:
a) the terms and conditions under which Compaq shall have the right and
obligation to distribute the Licensed Product and Compaq's marketing
obligations in connection with the distribution of the Licensed
Products,
b) the license terms by which such distribution rights are granted,
c) the parties' obligations as they relate to the development, testing
and integration of the Licensed Product to allow the Licensed Product
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bundled or shipped with the Products shipped during the term of
this Agreement (the Products which are shipped with or which
incorporate the Licensed Product pursuant to this Agreement are
referred to herein as the "Combined Products"), and
d) Compaq's ability to designate an initial start page from Alta Vista
solely for the Compaq enduser who uses the Licensed Product on the
Combined Products.
2.1 DISTRIBUTION; EXCLUSIVITY; PROMINENCE
a) Commencing with the 2C Run and during the term of this Agreement,
Compaq shall distribute the Licensed Product with all the Products to
enable purchasers of the Products to choose and sign-up to NetZero as
their free ISP. The parties agree that, as soon as technically
feasible and subject to NetZero's Licensed Product passing quality
assurance testing and integration issues as discussed more fully
below, the Licensed Product shall be incorporated into the Products in
the same manner as Compaq incorporates the AOL and Compaq branded ISP
offerings.
b) NetZero agrees that it shall not enter into an agreement with any
other personal computer manufacturer to permit such manufacturer to
distribute or combine in any manner the Licensed Product in
conjunction with the personal computers of such manufacturer where
such distribution takes place during the period commencing June 1,
1999 and ending February 28, 2000 (the "Exclusivity Period"). In
addition, NetZero agrees not to enter into an agreement with any of
Compaq's authorized dealers for the Products to permit such retailers
to distribute copies of the Licensed Product where such distribution
takes place in North America during the Exclusivity Period.
c) Compaq agrees that it shall not distribute during the Exclusivity
Period, or enter into any agreement permitting a third party to
distribute during the Exclusivity Period, Products bundled or combined
in any manner with any Free ISP Service (including any service offered
by Compaq) other than the Licensed Product, excluding (i) Compaq may
offer America Online as a Free ISP Service if required to by AOL and
(ii) Compaq may sell Products to or in support of Affinity Partners.
The phrase "Free ISP Service" for the purpose of this Agreement shall
mean any internet access service, including a service offered or
provided by Compaq, which requires the purchaser of such service to
pay less than five dollars ($5.00) per month, excluding any free
limited trial period of three (3) months or less. The intention of
the foregoing is to make NetZero the exclusive Free ISP on the
Products.
d) If America Online commences offering a Free ISP Service on or in
connection with the Products, then neither party shall be bound by the
restrictions set forth in Sections 2.1(b) and 2.1(c) above. In
addition, NetZero will have the option to terminate the restrictions
on both Parties set forth in Sections 2.1(b) and 2.1(c) above if the
conversion rate for the Licensed Product on the Combined Products is
less than twenty percent (20%) during the Measurement Period
determined as follows. The
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conversion rate shall mean the percentage of purchasers of Combined
Products who subscribe to the NetZero ISP Service as determined
during a particular period. Compaq shall prepare weekly summaries
of Combined Product sales to end-users which shall contain such
information as shall be mutually acceptable to the Parties but
which must, at a minimum, provide NetZero with enough information
to determine how many Combined Products were sold to end-users in a
particular week and what percentage of the purchasers of such
Combined Products subscribed to the NetZero ISP Service. The
Parties shall review the conversion rate on a weekly basis and, if
the conversion rate for the Combined Products in the 3C run during
August 1999 is less than 20%, the Parties shall meet to mutually
determine what additional methods should be implemented to increase
the conversion rate and shall use commercially reasonable efforts
to implement such methods during the month of September. If the
conversion rate during the first two weeks of the month of October,
1999 (the "Measurement Period") is not at least 20%, then NetZero
shall thereafter have the option to terminate the restrictions on
both Parties (but not just on one Party) in Sections 2.1(b) and
2.1(c) above effective upon the delivery of written notice to
Compaq.
e) To the extent the Licensed Product is required to be distributed with
Products pursuant to this Agreement, the NetZero ISP Service offering
shall be prominently displayed on screen as well as in marketing
materials in a manner which shall be mutually agreed to between the
Parties but which shall, subject to (i) Compaq's contractual
restrictions set forth below with respect to AOL and (ii) Compaq's
right to be displayed more prominently than AOL, result in the
NetZero ISP Service being the most prominently displayed ISP service.
NetZero acknowledges that America Online is a business partner with
Compaq in providing Internet access and that Compaq is subject to
certain pre-existing contractual relationships with America Online
which may result in AOL being displayed more prominently in accordance
with such preexisting contractual obligations. However, at a minimum,
NetZero shall have at least equal space with the most prominently
displayed ISP offering (and in no event less than 1/3 of the page) on
the first page that displays either the Compaq or the AOL Internet
access offers on the Products, an example of which is graphically
shown on Schedule 2.1(e)(1) attached hereto. The content in such
space shall be provided by NetZero, and shall be subject to Compaq's
approval and such approval shall not be unreasonably withheld. With
respect to the button (or any replacement button) on such page that
prompts the user to "Next" in the experience, such button may either
take the user to the NetZero sign up, will complete the registration
process (which shall not include any ISP sign-up offers), or to
another page that will have NetZero and Compaq as the only brands from
which to choose. Such page will provide equal prominence to the Net
Zero and Compaq offerings. The desktop shall also include an icon
for the NetZero ISP service which will launch to the Licensed Product.
Until web-based registration is available
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from NetZero enabling the end-user to launch NetZero from the page
referenced above, acceptance of the NetZero service on such page
shall guide the end-user to the site or icon through mutually
acceptable instructions.
2.2 DEVELOPMENT, TESTING AND TECHNICAL REQUIREMENTS
a) Compaq and NetZero agree to work together in the development, testing,
and integration of the current and future versions of the Licensed
Product, as may be made available during the Term of this Agreement.
The intent of the development effort will be to make the Licensed
Product available in a manner to optimize distribution with the retail
marketing cycles of the Product.
b) The work effort shall consist of two phases. The first phase shall be
to test, validate, and reproduce the NetZero 1.6.x version of the
Licensed Product so it can be distributed with the Products in the
form of a CD in the box. The second phase will be the integration of
the Licensed Product into the Compaq Out of Box Experience ("OoBE")
for the 3C Run and the other distributions during the Term of this
Agreement. This integration is intended to be implemented by
incorporating the Licensed Product into the Products in the same
manner other ISP Services are incorporated into the Products
(including web-based registration when available), subject to the
Licensed Product meeting reasonable technical specifications in
accordance with reasonable timelines related to the 3C Run required to
meet the retail marketing cycles.
PHASE 1
Compaq and NetZero shall work together to test and qualify the NetZero
version 1.6.x of the Licensed Product. In order for
Compaq to be obligated to include the Licensed Product in the Products, the
Licensed Product when included with a Product must meet the following basic
quality standards: (i) it must allow a customer who has purchased a
Product to load the Licensed Product from a CD, (ii) the CD shall install
the program either through an auto load or by providing writing
instructions on how to install the program, (i.e. insert disk, click on
the Windows Start key, click on Run, etc), and (iii) shall not cause any
of the Compaq standard features or functions of the Product to fail or
cease to function.
The parties shall work together to ensure that the Licensed Product or any
of its Updates, Enhancements, Modifications or Versions shall not cause any
of the features or functions of the Product to fail or cease to function.
To the extent that NetZero is not having to respond to a security or other
critical customer care issue relating to the NetZero ISP Service, NetZero
shall be required to provide Compaq with advance notice of any changes to
the Licensed Product by email to specified individuals within Compaq and
Compaq shall have the opportunity to test all such Updates, Enhancements,
Modifications and Versions to ensure they function properly with the
Products. The Parties understand that NetZero will effect changes to the
Licensed Product on a regular basis and that it is important
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for Compaq to test promptly. Compaq agrees to perform testing within 48
hours of delivery of the changes. If at any point in the testing of a
Licensed Product or any Update, Modification, Enhancement or Version,
Compaq determines that there is a material problem attributable to the
Licensed Product that would prevent the Licensed Product from achieving
basic quality standards, Compaq shall not have an obligation to ship the
Licensed Product, until such time as the material problems are cured.
NetZero shall be immediately notified in writing and the Parties shall
use their commercially reasonable efforts to resolve the issue as
expeditiously as possible. NetZero acknowledges that if there is a
functionality problem in the Licensed Product (other than a problem
attributable to the Product, any change to the Products or any other
third party software included in the Product) which causes it to fail to
achieve basic quality standards, and if the parties use commercially
reasonable efforts to resolve the same after written notice and a thirty
(30) day period to cure, either party may terminate this Agreement by
delivering written notice to the other. The Parties agree that
termination is a last resort and agree to work together to make the
project a success
PHASE 2
Compaq and NetZero will complete and mutually agree to the Deliverables,
test plans, development process, defect reporting and correction process
and other technical delivery and acceptance requirements to complete Phase
2, which shall be more fully described in a Schedule 2.2 to be attached to
this Agreement. Compaq and NetZero agree that within ten (10) working
days of execution of this Agreement, they shall engage to complete this
Schedule. The failure of the parties to engage and complete the
Schedule shall not be a breach of this Agreement. One of the purposes of
this Schedule is to ensure the Parties do not miss the deliverable dates.
Compaq and NetZero shall consider the following as guidelines when
developing the requirements:
a. process to develop, test and certify the Licensed Product, and to
integrate the Licensed Product with the Product.
b. required resources for both parties to certify that the NetZero
product shall meet Compaq quality and technical requirements
c. establish a process for on-going updating and incorporation of the
Licensed Product into the Product.
d. a sign-up process, so that the enduser may only have to enter their
information a single time.
e. the process for receipt of Gold Master and error correction.
2.3 DEFAULT START PAGE & ADVANTAGE WINDOW; DISPLAY OF COMPETITOR ADS
a) Compaq and NetZero agree that during the Term of this Agreement that
the designated default start page for the Licensed Products on the
Combined Products (the "Default Start Page") shall be the AltaVista
start page, and Compaq shall be responsible for procuring all rights
required to
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enable and permit NetZero to implement the same. Compaq shall have
the right to determine at Compaq's sole discretion that the Default
Start Page shall no longer be an AltaVista start page. To ensure a
smooth transition for the consumer, Compaq shall provide reasonable
notice of its intent that the Default Start Page shall no longer be
an AltaVista start page. In the event that Compaq chooses not to
use an AltaVista start page as the Default Start Page NetZero shall
be entitled to replace the Default Start Page with such other start
page as it selects, it being understood that NetZero may be
contractually limited in its choices
b) NetZero agrees that within the Advantage Window that Compaq shall be
provided an area in which a "Q" button or link designed with a Q
symbol shall be displayed. The prominence shall, at a minimum, be as
set forth in Schedule 2.3. This link shall be directed to a Compaq
site currently designated as "My Presario." Compaq shall within five
(5) working days of execution of this Agreement provide NetZero with
the appropriate URL for the Default Start Page, as well as for the
graphic for the "Q."
c) NetZero agrees that during the Term of this Agreement it shall not
display ads of other personal computer manufacturers in the Advantage
Window on the Combined Product as a result of the user accessing a
Compaq URL.
The Advantage Window is a persistent window, which is controlled and
maintained by NetZero and which, among other features, is used to display
advertisements. Compaq acknowledges that NetZero shall determine the
function, look, and feel of such window. NetZero and Compaq agree to
coordinate to minimize material inconsistencies between the icons and the
functionality of the buttons on the keyboard and in the Advantage Window,
although the parties understand that there will be some inconsistencies.
The Advantage Window is displayed only when the Compaq enduser is logging
on or actively logged onto the Internet.
2.4 SERVICE AND SUPPORT
Within five (5) days of the execution of this Agreement, the Parties shall
mutually agree to a service and support schedule, which will be attached
hereto as Schedule 2.4. The failure of the parties to prepare and attach a
Schedule shall not be deemed to be a breach of this Agreement. In the
event a Schedule is not attached NetZero agrees that the level of service
and support provided to a purchaser of Combined Products using NetZero's
ISP Service shall be at least the same level as provided to other users of
the NetZero ISP Service.
2.5 EQUITY INVESTMENT
The Parties acknowledge that they are currently in negotiations for Compaq
to participate in an equity investment in NetZero. Compaq agrees to
promptly perform its necessary due diligence and to sign a definitive
agreement within ten (10) days of the date hereof. Failure to execute such
agreement shall give NetZero the option to cancel this Agreement.
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2.6 MARKETING
Compaq agrees to advertise and promote the NetZero ISP Service through its
retail channels. Compaq and NetZero agree to the Schedule attached hereto
as Schedule 2.6 and agree to create additional Marketing Schedules for each
product cycle to describe the marketing plans and marketing materials to
implement the same which shall then be attached hereto as Schedule 2.6.
The failure of the parties to attach and prepare a Schedule shall not be
deemed a breach of this Agreement.
The parties shall consider the following as guidelines for the Marketing
Schedule
1. Reference to this Agreement,
2. Product cycle that the market Addendum is in support of,
3. Description of the promotion,
4. Technical development or modifications if any required,
5. Reliance on NetZero for implementation if required,
6. Perceived impact or change on current level of service or
obligations being provided by either party,
7. Required Deliverables if any;
8. Schedule for implementation;
9. Party's Executive that will be approving the Marketing
Addendum.
Each party shall be provided with reasonable advance written notice to
approve, which approval shall not be unreasonably withheld, any marketing
materials which such party intends to use that references the other party's
trademarks or services or products.
2.7 FORECASTING
The parties acknowledge that analysis of the timing of Product sales by
geographic region and the accurate forecasting of consumer acceptance of
the NetZero ISP Service will be critical in ensuring the quality of the
consumer experience. The parties agree to work together in good faith to
develop procedures and processes to anticipate and ameliorate issues caused
by periodic increases in customer demand.
2.8 TECHNOLOGY REVIEW BOARD
It is NetZero's current intention to establish a Technology Review Board
("TRB") for the purpose of implementing this Agreement. Upon establishment
of the TRB, NetZero shall invite Compaq to sit on and participate as a
non-voting member of the TRB.
2.9 PAYMENT OF EXPENSES
Compaq agrees to source and to pay the cost and expenses of a CD to be
placed in the Products during the 2C Run. The expenses Compaq shall pay
are a CD (four color), a feature guide,/brochure (8.5"x10", four colors/2
sides), bar code label, packaging material and kitting process.
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Compaq may invoice NetZero fifty thousand dollars ($50,000) for expenses
incurred by Compaq for providing CDs in the Products.
NetZero agrees to provide Compaq with all artwork for the CD, packaging
material and feature guide/brochure in a format which can be used by a
commercial replicator. The packaging material and feature guide/brochure
shall be subject to Compaq approval, which approval shall not be
unreasonably withheld.
The parties acknowledge that any additional cost for mutually agreed to
marketing collateral or promotional activities shall be described in a
Marketing Schedule and approved in writing by an authorized executive of
the parties.
3.0 DEFINITIONS.
Unless the context clearly requires otherwise or unless otherwise defined
herein, the capitalized terms used within CONTRACT DOCUMENTS shall have the
same meaning as ascribed to the terms below.
a. 2C Run shall mean the Product distribution by Compaq commencing in May
1999 and ending in September 1999.
b. 3C Run shall mean the Product distribution by Compaq commencing in
August 1999 and ending in December 1999.
c. Affinity Partner shall mean a group or company which provides unique
products or services on or in conjunction with the Products, and which
unique products or services are not made generally available on all of
the models of the Products so as to materially impair the purposes of
this Agreement. To be able to receive such product or services the
enduser must be a customer of the group or company sponsoring the
program. Affinity Partners shall not include any group or company
that is a retailer, a dealer or provider of Internet access services.
The Licensed Products shall be included on the Products when such
inclusion is not inconsistent with the objectives of the Affinity
Partner. An example of an Affinity Partner is FreePC.
d. Advantage Window - as defined in Section 2.3.
e. Presario Product Line - shall mean the Compaq Presario branded
personal computers which include a Microsoft Windows 98 or successor
operating system, or any successor, additional line or replacement
line of personal computers which are designated for the consumer
market and which include a Microsoft 98 or successor operating system.
f. Licensed Product(s) shall mean the Executable Code and Object Code
which comprise the Advantage Window and the underlying client
component programs that form the basis of that portion of the NetZero
ISP Service to be installed on the Products pursuant to this
Agreement, and which incorporate the NetZero trademarks (including
name and logo).
g. CODE- shall mean computer-programming instructions. Unless
specifically stated otherwise, Code shall include Executable Code,
Object Code, and
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any Maintenance Modifications or Enhancements in existence from
time to time during a relevant Work Effort.
(1) EXECUTABLE CODE - shall mean Code that loads and executes
without further processing by a software compiler or linker.
(2) OBJECT CODE - shall mean the Code that results when Source
Code is processed by a software compiler, but is not
Executable Code.
(3) SOURCE CODE - shall mean the human-readable form of the
Code and related system documentation, including all
comments and any procedural language.
(4) COMPAQ CODE, NETZERO CODE, OR THIRD-PARTY CODE - shall
mean Code in which Compaq, NetZero, or another,
respectively owns the copyrights and other intellectual
property rights or otherwise has sufficient
authorization to grant or assert rights in such Code.
h. CONTRACT DOCUMENTS - shall mean this Agreement, and its attachments,
any schedules, attachments or addenda referred to in Work Effort, and
any amendments to the foregoing in effect from time to time during the
term or terms of the applicable Contract Documents.
i. DELIVERABLES - shall mean any Materials which result from performance
under the Work Effort and which are required to be delivered by virtue
of their description or specification in the Work Effort.
j. DOCUMENTATION - shall mean user manuals and other written materials
that relate to Documentation shall include any Maintenance
Modifications or Enhancements to such Documentation in existence from
time to time during the term of the Work Effort, and shall include new
Versions of such Documentation.
k. ENHANCEMENTS - shall mean changes or additions, other than Maintenance
Modifications, to Code and related Documentation, including all new
releases, that improve functions, add new functions, or improve
performance by changes in system design or coding.
l. MODIFICATIONS - shall mean any modifications or revisions, other than
Enhancements, to Licensed Product or Documentation that correct errors
or provide other incidental corrections.
m. MATERIALS- shall mean Code, Documentation, other written materials or
tangible media, including machine-readable media with Code or
Documentation recorded thereon, hardware, or any combination of the
foregoing.
n. SUBSIDIARY- shall mean a corporation, company or other entity (1) more
than fifty percent (50%) of whose outstanding shares or securities
(representing the right to vote for the election of directors or other
managing authority) are, or (2) which does not have outstanding shares
or securities, as may be the case in a partnership, joint venture or
unincorporated association, but more than fifty percent (50%) of whose
ownership interest representing the right to make the decisions for
such
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corporation, company or other entity is, now or hereafter, owned
or controlled, directly or indirectly, by a party hereto. However,
such corporation, company or other entity shall be deemed to be a
SUBSIDIARY only so long as such ownership or control exists.
o. VERSION - shall mean Derivative Works that result from changes or
additions to Code and related Documentation that (1) provide
additional value and utility and, as a practical matter, may be priced
and offered separately as optional additions to the Code and
Documentation, or (2) are not made available without separate charge.
p. COMPAQ - shall mean Compaq Computer Corporation. operating by and
through its Consumer Products Group
q. NETZERO - shall mean NetZero and any of its Subsidiaries.
4.0 LICENSE GRANTS
4.1 NetZero grants to Compaq, for the term of this Agreement, a
non-exclusive, non-transferable, worldwide (except as set forth
herein) license to use the Licensed Products with or in the Products
(but only in conjunction with NetZero logo and trademarks) and to
market, sublicense and distribute, electronically or otherwise, the
Licensed Products and Upgrades of Licensed Products with or in the
Products, all in accordance with the intent of, and pursuant to the
terms of, this Agreement. As used herein, the term "use" includes the
right to make, have made, use, have used, copy, reproduce, perform,
display, and distribute the Licensed Products.
NetZero further grants to Compaq a non-exclusive, non-transferable
worldwide (except as set forth herein) license to publicly perform and
publicly display the Licensed Products at trade shows, exhibitions,
and to prospective Customers.
4.2 Compaq may distribute and sublicense the Licensed Products only in
conjunction with the Products, and to third party contractors used by
Compaq to install, configure and otherwise adapt and prepare the
Licensed Products for distribution with the Products. Compaq will not
alter, reverse-engineer, decompile, or disassemble the Licensed
Products without the written consent of NetZero.
4.3 NetZero and Compaq hereby grant to each other a non-exclusive,
non-transferable, worldwide right to use the other's trademarks, trade
names and logos in connection with marketing and distributing the
Licensed Products in conjunction with the Products. Each party's
usual trademark guidelines, including any third party licensed
programs shall apply to the use of the marks. Each party will use
commercially reasonable efforts to avoid any action that diminishes
the value of such marks.
4.4 NetZero has and shall retain all rights of ownership, or rights to
license in and to the Licensed Product and all copies thereof provided
to or created
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by Compaq under this Agreement, any and all Modifications, and
derivative works thereof and the Intellectual Property Rights
embodied therein and related thereto. No right or license to
Compaq, except as specifically set forth herein, shall be implied.
4.5 NetZero hereby grants to Compaq a non-exclusive, non-transferable,
royalty-free worldwide right and license to modify only in respect to
visual and formatting changes, without any change in substantive
content and in the following manner: (1) use, copy, modify,
nationalize, translate and reproduce the Documentation; (2) have the
Documentation copied, modified, nationalized, translated and
reproduced; (3) merge the Documentation with other materials, as
necessary, to meet Compaq's form factor and /or packaging
requirements; and (4) distribute the Documentation in any manner in
connection with Licensed Products, including, without limitation,
eye-readable and/or machine readable form. It is understood that
NetZero is the sole owner of the Documentation.
5.0 COMPENSATION
NetZero will compensate Compaq by providing Compaq with the right to
utilize up to 10% of the advertising inventory of the banner portion of the
Advantage Window displayed on the Combined Products ("Ad Inventory") during
the term of this Agreement. The allocation of such inventory shall be
determined on a weekly basis and the failure to utilize such inventory
shall result in the loss of the same. Compaq may utilize the banner
portion of the Advantage window for its own internal ads, ads for a Compaq
retailer, Compaq partners, direct sells by Compaq, placement of the Ad
Inventory with a third party or other manner which is consistent with the
process by which NetZero sells or monetizes the remaining NetZero ninety
percent (90%) of the banner portion of the Advantage Window displayed on
the Combined Products. In the event that Compaq desires to utilize URL
targeting, it shall inform NetZero of the same. While NetZero shall use
commercially reasonable efforts to permit Compaq to utilize URL targeting,
Compaq's ability to utilize the same shall be in all respects limited to
any existing or future arrangements, contracts or programs of NetZero
relating to the utilization of URL targeted marketing or the protection
therefrom, and the technical limitations associated with the provisioning
of URL targeted marketing.
If Compaq desires to sell its allocation through demographic or other
targeting to specific groups, NetZero agrees to assist Compaq and to
provide Compaq with up to 10% of the Ad inventory associated with a
particular group that Compaq wishes to target. NetZero agrees to use
commercially reasonable efforts to accommodate Compaq's request to help
place any unsold or unused portions of Compaq's allocation. Compaq and
NetZero agree to discuss a process by which NetZero would assist Compaq in
being able to maximize the ability to use the targeting advertising ability
within the Advantage Window to obtain a high ad rate.
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6.0 REPORTS; DEMOGRAPHIC DATA
Unless otherwise provided and to the extent agreed to by the Parties, the
Project Manager of one party shall provide to the Project Manager of the
other party monthly written progress reports for such Work Effort
specifying the current work progress level and identifying any problems
that have been resolved and any problems that are unresolved, along with a
projected date of resolution. The Project Managers shall also notify the
appropriate executives in writing at the earliest possible time of any
factor, event or anticipated event that may affect the ability to meet the
requirements of the Work Effort, including changes in the assignment of its
key employees, strikes and labor unrest, or unavailability of critical
resources. The issuance of such a notice shall not excuse the Party from
any default or performance obligation, unless the other Party consents.
Except as provided below and excluding personal identifying information,
NetZero agrees to provide Compaq on a weekly basis with the demographic
and consumer data which NetZero collects during registration and compiles
from its subscribers who utilize the Combined Products for the sole purpose
of enabling Compaq to better target advertising opportunities to NetZero's
subscribers. Compaq agrees that such data is proprietary to NetZero and
in no event shall Compaq disclose, analyze, compile, sell or otherwise use
such data for any other purpose; provided, however, the foregoing shall not
be interpreted to limit Compaq's rights to the information it derives from
Compaq's registration and support process. Furthermore, NetZero's
obligation to provide such data and Compaq's use of such data shall be
subject in all respects to, and shall comply with, all current and future
applicable laws, rules, regulations and orders regarding the collection,
retention, use, dissemination and confidentiality of such data, and to
all current and future policies and procedures of NetZero regarding the
same.
7.0 CONFIDENTIALITY AND INFORMATION EXCHANGE
a. EXCHANGE It is the intention of Compaq and NetZero to transfer and/or
exchange information as may be essential for completing the Work
Effort under this Agreement and to explore other business
relationships between the parties. Such information may be disclosed
in oral, visual, or written form (including magnetic media). The
obligations of the parties regarding confidentiality under this
Agreement and the Work Effort entered into by the parties pursuant to
the Agreement shall be governed by the Confidentiality and
Nondisclosure Agreement between the parties with an effective date of
February 2, 1999 or any renewals thereof.
b. DISCLOSURE TO OTHERS Neither party shall, without the prior written
authorization of the other party, disclose to any third-party the
terms and conditions of these CONTRACT DOCUMENTS, except as may be
necessary to establish or assert rights hereunder, or as may be
required by law or governmental regulations. The parties agree that
this Agreement may be disclosed to potential investors in NetZero and
their agents (including underwriters, brokers, attorneys and
accountants), and may be disclosed in filings with the Securities
Exchange Commission. As
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one purpose of this Agreement is to publicize the relationship
created by this Agreement, it is the Parties intention to effect
press releases and to create marketing materials regarding the
distribution of the Licensed Product by Compaq. The Parties agree
to coordinate their efforts in this regard, and all press releases
shall be upon mutual agreement of the Parties and such approval
shall not be unreasonably withheld...
8.0 INTERNATIONAL ISSUES
The NetZero ISP Service is not available outside of the United States and
is not available in Hawaii or Alaska. Compaq, however, may be distributing
Combined Products in such states as well as in Puerto Rico and Canada.
Compaq agrees that the rights hereunder extend only to distribution of the
Licensed Product in the United States, Canada and Puerto Rico. To the
extent the Combined Product are distributed in jurisdictions where NetZero
does not provide the NetZero ISP Service, the Parties agree to indicate so
in a manner as to not confuse the consumer.
9.0 WARRANTIES, DISCLAIMERS, AND LIMITS ON LIABILITY
9.1 NetZero warrants that:
1. It has the right to grant the licenses granted to Compaq in this
Agreement.
2. It has not made and will not make any commitments to any third
party inconsistent with or in derogation of the rights and
licenses granted to Compaq and that it is free of any
obligation that would prevent it from entering into this
Agreement or performing its obligations hereunder.
3. To NetZero's knowledge, the Licensed Products and/or their use
and distribution alone and/or in combination with Products
will not infringe any patent, copyright, trade secret,
trademark or any other legal or equitable rights of any third
party.
9.2 Compaq warrants that:
1. It has the right to grant the rights granted to NetZero in
this Agreement.
2. Except as specifically set forth herein, It has not made and
will not make any commitments to any third party inconsistent
with or in derogation of the rights and licenses granted to
NetZero and that it is free of any obligation that would
prevent it from entering into this Agreement or performing its
obligations hereunder.
3. To Compaq's knowledge, the Products and/or their use and
distribution alone and/or in combination with the Products
will not infringe any patent, copyright, trade secret,
trademark or any other legal or equitable rights of any third
party.
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9.3 THE WARRANTIES STATED HEREIN ARE EXPRESSLY IN LIEU OF ALL OTHER
WARRANTIES, AND UNLESS OTHERWISE EXPRESSLY STATED HEREIN, NEITHER
PARTY MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT
NOT LIMITED TO, ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
9.4 Each party shall indemnify, defend and hold the other (and its
officers and employees) harmless against all suits, actions, costs,
expenses, damages, settlements, judgments, and all other liabilities
resulting from claims by third parties that, with respect to Compaq,
the Products and with respect to NetZero the Licensed Products (or
their marketing, distribution, combination or use as allowed by this
Agreement) infringe any United States patent, copyright, trade secret,
trademark, or any other proprietary rights., The foregoing indemnity
shall not apply to the extent the claim is based on the manner in
which the parties have incorporated their products together. NetZero
shall indemnify, defend and hold Compaq (and its officers and
employees) harmless against all suits, actions, costs, expenses,
damages, settlements, judgments, and all other liabilities resulting
from claims by third parties that the collection or use of information
about NetZero's subscribers by NetZero violates any privacy or other
right of such subscriber. Compaq shall indemnify, defend and hold
NetZero (and its officers and employees) harmless against all suits,
actions, costs, expenses, damages, settlements, judgments, and all
other liabilities resulting from claims by third parties that the use
of information about NetZero's subscribers by Compaq violates any
privacy or other right of such subscriber. Each party shall promptly
notify the other in writing when it becomes aware of any claim upon
which a request for indemnity may be made hereunder, provided that the
failure to give such notice shall only constitute a waiver of an
indemnified party's rights hereunder to the extent the indemnifying
party is materially prejudiced by the failure to promptly provide such
notice. The indemnifying party shall assume and thereafter have
control of any suit involving such claim and any settlement
negotiations. The indemnifying party shall promptly pay any such
settlement or final judgment entered against the indemnified party.
If a court determines that a Licensed Product or a Product, as the
case may be, or any part thereof, infringes any United States patent,
copyright, trade secret, trademark or other right covered by this
indemnity, and the sale or use of the Licensed Product or the Product,
as the case may be, or any part thereof, is, as a result, enjoined,
then the indemnifying party may, at its option and expense (but in
addition to its obligations above): (i) procure for the other the
right under such patent, copyright, trade secret, trademark or other
right to sell or use as appropriate, the Licensed Product or Product
or such parts thereof; (ii) replace the Licensed Product or Product,
or parts thereof, with other suitable, functionally equivalent and
non-infringing product or parts; or (iii) suitably modify the Licensed
Product or Product or parts thereof.
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9.5 EXCEPT FOR THE UNAUTHORIZED USE OF A PARTY'S PROPRIETARY RIGHTS
HEREUNDER, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES,
INCLUDING LOST PROFITS, ARISING OUT OR RESULTING FROM THIS AGREEMENT
EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. THE FOREGOING SHALL APPLY REGARDLESS OF THE NEGLIGENCE OR
OTHER FAULT OF EITHER PARTY AND REGARDLESS OF WHETHER SUCH LIABILITY
SOUNDS IN CONTRACT, NEGLIGENCE, TORT, OR ANY OTHER THEORY OF LEGAL
LIABILITY.
10.0 TERM AND TERMINATION OF AGREEMENT
10.1 Unless earlier terminated as provided below, the term of this
Agreement shall be for one (1) year from the date of execution of this
Agreement. At either Party's request, the Parties shall commence
meeting prior to the end of the term to determine whether to extend
the term of this Agreement.
10.2 If either party hereto materially breaches any of the terms and
conditions of this Agreement, the other party may give written notice
to the defaulting party specifying the actions or omissions which
constitute a breach of this Agreement, and in the event that any
breach so indicated shall not be remedied by the defaulting party
within thirty (30) days after such notice, the party not in default
may by further written notice to the defaulting party terminate this
Agreement, and, except as expressly provided otherwise in this
Agreement, this Agreement and all the rights herein granted shall
terminate five (5) days after date of mailing of such notice of
termination. Failure of either party to so terminate this Agreement
due to a breach on the part of the other party shall not prejudice its
rights to terminate for a subsequent breach by the other.
10.3 All sublicenses granted to Customers under this Agreement, and all
obligations with respect thereto set forth in Sections, 4 and 9 shall
survive the expiration or termination of this Agreement. Thereafter,
Compaq agrees to return or destroy all additional copies of the
Licensed Software in its possession and to make no further use of
NetZero's trademarks or trade names.
10.4 Upon termination or otherwise, neither party shall have an obligation
to reimburse the other for any expenses or costs incurred by such
party in performing hereunder. Any costs or expenses incurred by
either party in connection with performing under this Agreement shall,
unless otherwise expressly provided herein, be at that party's sole
risk and based upon its own independent business judgment.
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11.0 MISCELLANEOUS
11.1 The licenses granted herein by NetZero to Compaq shall automatically
extend to include Compaq Subsidiaries and affiliates (other than
AltaVista) owned or controlled by Compaq, and Compaq's contractors and
consultants, but only to the extent necessary to fulfill the specific
intent of this Agreement.. This Agreement may be assigned or
transferred to and shall be binding upon and inure to the benefit of
any corporation or other legal entity with which NetZero or Compaq may
be merged or consolidated, or to the assignee of the entire assets of
either party to which this Agreement relates. Except as allowed by
the foregoing, this Agreement shall not be assignable without the
prior written consent of the other party.
11.2 Neither party is the legal representative or agent of the other, nor
shall either party have the right or authority to assume, create, or
incur any liability or any obligation of any kind, expressed or
implied, against, or in the name of or on behalf of the other party.
11.3 The parties understand and acknowledge that they may be subject to
regulation by agencies of the U.S. government, including the U.S.
Department of Commerce, which prohibit export or diversion of certain
products and technology to certain countries. Any and all obligations
of the parties shall be subject in all respects to such United States
laws and regulations as may apply to the Licensed Products, their use,
distribution, and the like, which may include the Export
Administration Act of 1979, as amended, any successor legislation, and
the Export Administration Regulations issued by the Department of
Commerce. Upon Compaq's request, NetZero shall immediately and fully
cooperate with Compaq in properly identifying and classifying the
Licensed Products according to U.S. Department of Commerce coding
conventions.
11.4 Any and all written notices, communications and deliveries between
NetZero and Compaq with reference to this Agreement shall be deemed
made two days following deposit with the US Postal Service if sent by
registered or certified mail, or one day following deposit with a
reputable overnight courier for overnight delivery to the respective
address of the other party (or such other address as a party may
designate by written notice) as follows:
In the case of Compaq Compaq Computer Corporation
20555 SH 249
Houston, Texas 77070
Attn: Software Commodity Manager
Corporate Procurement MS060217
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In the case of NetZero: 3835 R. East Thousand Oaks Blvd, Suite 338
Westlake Village, California 91362
Attn: Chief Executive Officer;
General Counsel
11.5 THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ITS CONFLICTS OF LAW
RULES WHICH MIGHT REFER TO THE LAWS OF ANOTHER JURISDICTION.
11.6 The section headings appearing in this Agreement are inserted only as
a matter of convenience and in no way define, limit, construe or
describe the scope or intent of a section, nor in any way affect this
Agreement.
11.7 This Agreement sets forth the entire agreement and understanding of
the parties relating to the subject matter contained herein, and
merges all prior discussions and agreements between them. Neither
party shall be bound by any definition, condition, warranty or
representation other than as expressly set forth in this Agreement or
its Schedules, or as subsequently set forth in writing signed by an
authorized representative of the party to be bound thereby. Nothing
in any invoice, order acknowledgment, or other document of NetZero or
Compaq shall affect, alter or modify the terms and conditions in this
Agreement unless signed as provided in the preceding sentence. The
provisions in any Schedule subsequently attached to this Agreement
shall have no legal effect and shall not be deemed to be incorporated
herein unless signed by authorized representatives of both Parties to
this Agreement. Authorized representatives of NetZero for the
purposes of the foregoing are the Chief Executive Officer, President
and Chief Financial Officer.
11.8 In the event that any terms or conditions within this Agreement
conflict with any Schedule, this Agreement shall take precedence.
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12.0 SIGNATURES
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by
their authorized representatives.
COMPAQ COMPUTER CORPORATION NETZERO, INC.
Signature /s/ Michael J. Larson Signature /s/ Mark R. Goldston
-------------------------- --------------------------
Name: Michael J. Larson Name: Mark R. Goldston
Title: GM & V.P. Consumer Title: Chairman & CEO
Products Group
Date Date
------------------------------- -------------------------------
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Amendment No. 1 to Distribution, License and Alliance Agreement
This Amendment No. 1 (the "Amendment") to that certain Distribution, License
and Alliance Agreement dated April 30, 1999 (the "Agreement") between Compaq
Computer Corporation, with its principal business office at 20555 S.H. 240,
Houston, Texas 77070, a Delaware corporation ("Compaq"), and NetZero, Inc.,
with its principal business office at 2555 Townsgate Road, Westlake Village,
CA 91361, a California corporation ("NetZero"), is made effective as of the
26th day of August, 1999. Compaq and NetZero are sometimes referred to
individually as a "Party," and collectively as the "Parties." Defined terms
not otherwise defined herein shall have the meaning ascribed to such terms in
the Agreement.
RECITALS
WHEREAS, Compaq and NetZero are parties to the Agreement and desire to
amend the Agreement to provide NetZero with the ability to designate the
start page on the Products and to enter into a revenue sharing agreement with
respect to proceeds received by NetZero from such start page;
NOW, THEREFORE, AND IN CONSIDERATION of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties agree as follows:
1. Section 2.3(a) of the Agreement is hereby deleted in its entirety and
replaced with the following:
a) Compaq and NetZero agree, commencing as soon as practicable following
the date of this Amendment and during the remainder of the Term of this
Agreement, that the designated default start page for the Licensed
Product on the Combined Products (the "Default Start Page") shall no
longer be AltaVista but shall be a start page or the start pages
determined by NetZero. NetZero shall be responsible for procuring all
rights required to enable and permit NetZero to implement the Default
Start Page. NetZero agrees to pay Compaq two cents ($.02) each time a
user of the Combined Products logs on to the NetZero ISP Service and is
displayed the Default Start Page ("Start Page Payments") during the Term
of this Agreement. Within thirty (30) days following the end of each month
during which this Agreement is in effect NetZero shall deliver to Compaq
a summary of Start Page Payments and shall concurrently therewith deliver
a check to Compaq for the Start Page Payments for such month. NetZero
shall maintain records regarding all Start Page Payments and shall provide
Compaq with reasonable audit rights with respect to the same. Audit
rights may be exercised on no more than three (3) occasions and on at least
five (5) days written notice. Any audit will be performed, at NetZero's
option, by a Compaq representative or by a nationally recognized accounting
firm acceptable to both parties. The individuals performing the audit
shall be bound by a customary form of confidentiality agreement with
NetZero. The terms and conditions of any transactions regarding the
Default Start Page shall be considered confidential information of NetZero.
Compaq shall be responsible for the costs of the audit
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unless the audit reveals underpayments by NetZero in excess of 5%, in
which event NetZero shall be responsible for such audit costs.
2. The parties acknowledge that the Agreement and this Amendment shall only
apply to the United States, Canada and Puerto Rico.
3. Except as specifically set forth in this Amendment, the Agreement shall
be unaffected and shall remain in full force and effect. This Amendment is
incorporated into the Agreement as if set forth therein.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
by their authorized representatives.
COMPAQ COMPUTER CORPORATION NETZERO, INC.
Signature /s/ Michael J. Larson Signature /s/ Charles S. Hilliard
------------------------------ -----------------------
Name: Michael J. Larson Name: Charles S. Hilliard
--------------------------------- ---------------------------
Title: GM & V.P. Consumer Products Group Title: SVP and CFO
--------------------------------- ---------------------------
Date: 8/27/99 Date: 8/29/99
--------------------------------- ---------------------------
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