Internet Protocol Telephone Service Participation Agreement - Priceline Long Distance LLC and ZeroPlus.com Inc.
INTERNET PROTOCOL TELEPHONE SERVICE PARTICIPATION AGREEMENT
This INTERNET PROTOCOL TELEPHONE SERVICE PARTICIPATION AGREEMENT (this
"Agreement") is made and entered into this 23rd day of May, 2000 (the "Effective
Date"), by and between PRICELINE LONG DISTANCE, LLC ("Priceline"), a Delaware
limited liability company and wholly-owned subsidiary of priceline.com
Incorporated ("priceline.com"), and ZEROPLUS.COM, INC., f/k/a e-Net, Inc., a
Delaware corporation ("ZeroPlus.com") (Priceline and ZeroPlus.com are sometimes
hereinafter referred to individually as a "Party" and collectively as the
"Parties").
RECITALS:
A. Priceline.com and its subsidiaries are in the business of offering and/or
selling consumer services and products, primarily over the Internet through
the use of Priceline's proprietary Name Your Own Pricesm, demand collection
system, whereby a consumer can make offers to purchase various services and
products at prices and terms offered by the consumer (the "Demand
Collection System" or "DCS").
B. ZeroPlus.com is a provider of various Internet Protocol telephone services.
C. Priceline is establishing a DCS for the sale of blocks of minutes of
various Internet Protocol telephone services, and ZeroPlus.com desires to
participate is such service as a Participating Provider (as hereinafter
defined).
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the meanings set forth below:
"Agreement" has the meaning ascribed to it in the introductory paragraph hereto.
"ANI" or "Automatic Number Identification" means the automatic identification of
a User's working telephone number (WTN) from the local exchange carrier ("LEC").
"Co-Brand" or "Co-Branding" means such joint branding, marketing and promotion
of Telecom DCS Services, and other related joint marketing efforts as the
Parties shall mutually agree, taking into account Priceline's and ZeroPlus.com's
trademark guidelines.
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"ZeroPlus.com Launch Date" means the first date when ZeroPlus.com's services are
available for sale through the Telecom DCS.
"Demand Collection Service" or "DCS" has the meaning ascribed to it in the
Recitals.
"First Look Opportunities" means the first opportunities to meet User's offers
for Telecom DCS Services.
"IP" means Internet Protocol.
"IP Indemnified Party" and "IP Indemnifying Party" have the meanings ascribed to
them in Section 5.1.
"Launch Date" means the launch date of the initial commercial sales for Telecom
DCS.
"LEC" means local exchange carrier.
"150-day Expiration" has the meaning ascribed to it in Schedule 3.1.
"Parties" have the meanings ascribed to them in the introductory paragraph of
this Agreement.
"Participating Provider" means a provider of telecommunications services
(including ZeroPlus.com) that participates in the Telecom DCS in one or more
telecommunications markets.
"Per Call Rounding" has the meaning ascribed to it in Schedule 3.1.
"PIN" means the personal identification number provided by a User or by
Priceline to validate such User's entitlement to utilize the Telecom DCS
Services of ZeroPlus.com or any Participating Provider through the Telecom DCS.
"Point of Presence" or "POP" means the existence and availability to local
Users of a local and/or toll-free access number of a Participating Provider.
"P.01 grade" means that during the busy hour of Participating Provider's network
or access, only 1 in 100 originating telephone calls receives a circuit busy
signal.
"P.001 grade" means that during the busy hour of Participating Provider's
network or access, only 1 in 1,000 originating telephone calls receives a
circuit busy signal.
"Preferred Provider" means, among other things, the recipient of preferred First
Look Opportunities.
"Preferred Status" has the meaning ascribed to it in Section 2.5(b).
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"Prepaid Call Anywhere Service True-Up" has the meaning ascribed to it in
Schedule 3.1.
"Rates" means the rates for the provision of Telecom DCS Services for a
one-minute telephone call, normalized by Priceline to one second billing, that a
Participating Provider loads with Priceline.
"Telecom DCS" means prepaid DCS for the sale of long distance
telephone-to-telephone minutes provided through a managed network that originate
and terminate on telephones.
"Telecom DCS Market" means each of (i) the United States domestic market, as a
whole, and (ii) each foreign country. Notwithstanding the foregoing, a city,
region or other subdivision of a foreign country may hereafter be deemed a
separate Telecom DCS Market if so designed by Priceline in its sole discretion.
"Telecom DCS Services" means telecommunications services offered through the
Telecom DCS.
"Tier One Customer Service" has the meaning ascribed to it in Schedule 2.2(a).
"User(s)" means user(s) of the Telecom DCS.
"User Account Expiration Breakage" has the meaning ascribed to it in Schedule
3.1.
ARTICLE II
DEMAND COLLECTION SYSTEM
Section 2.1 DEMAND COLLECTION SYSTEM. Priceline shall develop and implement the
Telecom DCS as a vehicle for the provision of Telecom DCS Services to Users.
Except as otherwise specifically set forth herein, Priceline will have full
control over the design, development, functionality, Launch Date and day-to-day
operation of the Telecom DCS. The parties will cooperate as may be reasonably
necessary in testing and implementing the Telecom DCS. In its operation of the
Telecom DCS, Priceline will collect demand for Telecom DCS Services and will
establish an allocation system, as discussed in more detail below, for matching
User's offers against inventory provided by ZeroPlus.com and other Participating
Providers. A User will be able to make offers by specifying the price and
minimum desired quality at which the User is willing to purchase a specified
number of minutes of use of a particular Telecom DCS Service(s). For all
Internet Protocol telephone services offered by ZeroPlus.com through the Telecom
DCS, Priceline shall be the merchant of record in the transaction between
Priceline and a User for the User's purchase of Telecom DCS Services, and
ZeroPlus.com shall be the provider of such Telecom DCS Services to such User.
Section 2.2 MINIMUM PARTICIPATION REQUIREMENTS; RULES OF PARTICIPATION. Set
forth on SCHEDULE 2.2(a) and SCHEDULE 2.2(b), respectively, and incorporated
herein by reference, are (i) Priceline's minimum eligibility requirements for
each Participating Provider's providing Telecom DCS Services, and (ii) the
standard rules for participation by each such Participating Provider. Priceline
may, in its sole discretion, and on an individual Participating Provider basis,
permit non-material, as determined by Priceline in its sole discretion,
modifications or exceptions
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to the Schedule 2.2(a) requirements and Schedule 2.2(b) rules to accommodate the
varying systems, procedures and protocols of its varying Participating
Providers. Additionally, Priceline may from time to time, on a
non-discriminatory basis as between all of its Participating Providers, modify,
amend or supplement Schedules 2.2(a) and 2.2(b), and will provide each
Participating Provider with reasonable advance notice thereof. *
If ZeroPlus.com
terminates this Agreement pursuant to the provisions of this Section 2.2, then,
in addition to its obligations under 6.4, ZeroPlus.com shall continue to fulfill
and comply with its financial obligations to Priceline under Section 3.1 and 3.2
of this Agreement through the last day of the financial quarter under this
Agreement in which such termination becomes effective. The failure of a
Participating Provider (including ZeroPlus.com), to satisfy all of the
requirements of Section 2.2, Schedule 2.2(a) and Schedule 2.2(b) shall be
grounds for Priceline's suspension and/or termination of such Participating
Provider's Preferred Status and/or participation in the Telecom DCS.
Section 2.3 ZEROPLUS.COM RESPONSIBILITIES. ZeroPlus.com shall provide Internet
Protocol telephone services in connection with this Agreement. In addition,
ZeroPlus.com shall identify to Priceline all steps necessary to be taken by
Priceline or ZeroPlus.com such that Priceline is not engaged in any activity
that would subject it to, or cause it to violate, communications regulations
under any applicable laws, and shall take all steps requested by Priceline in
this regard. Upon the implementation of the Telecom DCS, ZeroPlus.com will make
available for Priceline to offer to Users the types of Telecom DCS Services as
further described in Section 2.4 below.
Section 2.4 TYPES OF SERVICE. Priceline will, at its discretion, determine the
types of Telecom DCS Services that will be made available to Users. Priceline
will provide ZeroPlus.com with reasonable advance notice of all package
offerings for Telecom DCS Services and changes in such package offerings. At a
minimum, ZeroPlus.com shall make available for Priceline to offer to Users the
following types of Telecom DCS Services:
(a) PREPAID DOMESTIC CALLS. ZeroPlus.com shall make available for
Priceline to offer to Users the ability to place telephone calls
originating in the United States and terminating in the United States
at any time of day and on any day of the week, for a number of minutes
specified by the User at a price per minute of use at the Rates loaded
by ZeroPlus.com.
(b) PREPAID COUNTRY-SPECIFIC CALLS. ZeroPlus.com shall make available to
Priceline to offer to Users the ability to place telephone calls
originating in the United States and terminating in a specific foreign
country (and, as applicable, particular cities within such country),
without restrictions on the times of day and/or days of the week on
which calls may be made, for a number of minutes specified by the User
at a price per minute of use at Rates loaded by ZeroPlus.com.
ZeroPlus.com may set its own Rates for such minutes of use. The
minimum
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number of minutes required to be purchased in order to obtain any such Rate is
thirty (30) minutes. Priceline shall provide ZeroPlus.com advance notice of each
package offering for Telecom DCS Services, and changes thereto, on a country by
country basis (and, as applicable, on a city by city basis within a country),
and will enable ZeroPlus.com to provide Priceline with inventory available for
use against such package offerings, at ZeroPlus.com's discretion. Unless
otherwise agreed to by the Parties, ZeroPlus.com shall make available at least
one Rate for each foreign country listed in the International Rate Conversion
Table, a copy of which is attached hereto and incorporated herein at Schedule
2.4 which may change periodically at Priceline's sole discretion.
(c) CALL ANYWHERE SERVICE. ZeroPlus.com shall make available for Priceline
to offer to Users a Telecom DCS Service that provides the ability to
place telephone calls originating in the United States at any times of
day and on any days of the week for a specified number of Telecom DCS
Service "units" at a specified rate. For purposes of this service, a
"unit" will be equal to (i) one minute of use for calls terminating in
the United States, and (ii) a number of (or fraction of a) minute(s)
of use for calls terminating in foreign countries, as may be
determined on a country-by-country basis by using a conversion table
(of United States' minutes into foreign country minutes) identical for
all IP telephone Participating Providers, a copy of which is attached
hereto and incorporated herein at Schedule 2.4. This schedule may
change periodically at Priceline's sole discretion.
Section 2.5 TELECOM DCS ALLOCATIONS.
(a) GENERAL ALLOCATION METHODOLOGY. In an attempt to meet a User's offer
for Telecom DCS Services, Priceline will, subject to the special
allocation rights of ZeroPlus.com under Section 2.5(b) of this
Agreement, allocate among its Participating Providers the first
opportunity to meet User's offers for such services (the "First Look
Opportunities") in Priceline's sole discretion. User offers will only
be consummated with a Participating Provider when the User's offer is
greater than or equal to the Participating Provider's Rate loaded with
Priceline, PLUS Priceline's required margin, which margin is variable
(at Priceline's sole discretion) and may be negative.
(b) SPECIAL ALLOCATION OF FIRST LOOK OPPORTUNITIES TO ZEROPLUS.COM. For
each United States based IP Telephone Service offered by Priceline
through the Telecom DCS in each United States market (determined on an
area-code-by-area-code basis), ZeroPlus.com will receive * percent
(*%) of all First Look Opportunities ("Preferred Status") for such
service in such market provided that ZeroPlus.com: (i) is a provider
of such service in such market at the time Priceline offers such
service through the Telecom DCS; (ii) has loaded Rate(s) and made
available sufficient minutes for use of such service by Users in such
market; (iii) has the ability to terminate traffic in such market;
(iv) meets the pricing threshold set in Section 2.5(c)(i) below; (v)
provides call quality for such service not less than what the User or
Priceline has designated as the minimum level of quality at the time
of the User's offer; and (vi) is otherwise in compliance with the
terms this Agreement.
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(c) SUSPENSION OF FIRST LOOK OPPORTUNITIES. ZeroPlus.com's "Preferred
Status" under Section 2.5(b) for a particular service within a
particular market may at the sole discretion of Priceline be suspended
under the following circumstances:
(i) With respect to any individual Telecom DCS Service, in the event
that the Rates made available by ZeroPlus.com to Priceline for
such service in such market are more than * percent (*%) higher
than the lowest normalized one second Rate made available to
Priceline for such service in such market by any other
Participating Provider. Priceline shall, on a weekly basis,
inform ZeroPlus.com when ZeroPlus.com is not in compliance with
the requirements of this Section 2.5(c)(i), but will not reveal
to ZeroPlus.com any other Participating Provider's pricing
information.
(ii) In the event that ZeroPlus.com fails to meet the requirements of
Section 2.5(b) (with the exception of 2.5(b)(iv), Priceline shall
have the right to immediately suspend ZeroPlus.com's Preferred
Status within the individual market. Priceline will provide
ZeroPlus.com. notice on a weekly basis of such suspension, and
ZeroPlus.com will have the right to cure within thirty (30) days
of the first of each such notification. In the event that
ZeroPlus.com cure(s) within the thirty (30) day cure period,
ZeroPlus.com's Preferred Status will be reinstated in such
market. In the event that ZeroPlus.com has failed to cure within
the thirty day (30) cure period, Priceline shall thereupon and
thereafter have the right to terminate ZeroPlus.com's Preferred
Status in the market(s) where ZeroPlus.com has failed to comply
with Section 2.5(b) (with the exception of 2.5(b)(iv). In the
event that ZeroPlus.com Preferred Status is terminated in a
market, Priceline shall, in accordance with Section 2.5(a) have
full discretion in determining the allocation of such First Look
Opportunities in that particular market.
(iii) In the event that ZeroPlus.com fails to meet the requirements of
Section 2.5(c)(i), Priceline shall have the right to immediately
suspend ZeroPlus.com's Preferred Status within the individual
market. Priceline will provide ZeroPlus.com, on a weekly basis,
notice of such suspension, and ZeroPlus.com will have the right
to cure within thirty (30) days of the first of each such
notification. In the event that ZeroPlus.com cure(s) within the
thirty (30) day cure period, ZeroPlus.com's Preferred Status will
be reinstated in such market. In the event that ZeroPlus.com has
failed to cure within the (30) thirty day cure period, Priceline
shall thereupon and thereafter have the right to terminate
ZeroPlus.com's Preferred Status in the market(s) where
ZeroPlus.com has failed to comply with Section 2.5(c)(i). In the
event that ZeroPlus.com Preferred Status is terminated in a
market, Priceline shall, in accordance with Section 2.5(a) have
full discretion in determining the allocation of such First Look
Opportunities in that particular market. *
In the event that ZeroPlus.com terminates this Agreement pursuant to this
provision, ZeroPlus.com shall, in addition to its obligations under Section 6.4,
continue to fulfill and comply with all its financial obligations to Priceline
under Section 3.1 and 3.2 of this Agreement through the last day of the
financial quarter in which such termination becomes effective.
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Section 2.6 TERMS OF USE OF TELECOM DCS SERVICES. Use of each Telecom DCS
Service by a User will be governed by Priceline's general terms and conditions
and, with respect to a User's use of each Telecom DCS Service provided by
ZeroPlus.com, the ZeroPlus.com-specific terms and conditions mutually agreed to
by the Parties and loaded into the Telecom DCS web path. ZeroPlus.com shall
ensure that prices, day and time restrictions and other terms and conditions
contained in its applicable publicly-available statements of general terms and
conditions and/or tariffs shall in all cases not conflict with the Rates, day
and time restrictions and other terms and conditions (including those set forth
in this Agreement) on which the applicable Telecom DCS Services are made
available to Priceline and/or Users hereunder.
Section 2.7 ADDITIONAL MINUTES; NO PREFERRED STATUS. Priceline, in its sole
discretion, may, at any time, provide an existing User the ability to add
additional minutes to one or more accounts of the User. In the event that
Priceline provides an existing User with additional minutes, Priceline may
allocate First Look Opportunity on additional minutes to the Participating
Provider currently servicing the User or any other Participating Provider for
the specific Telecom DCS Service for which additional minutes are being added,
without reference to or compliance with the allocation methodology prescribed in
Section 2.5(b).
Section 2.8 CALL BRANDING. ZeroPlus.com shall have the right to (i) identify
calls made using the Telecom DCS Services provided by ZeroPlus.com and purchased
through the Telecom DCS using the brand name "ZeroPlus.com" and (ii) if agreed
to by the Parties, to identify ZeroPlus.com calls using a different brand name.
Priceline shall have the right to Co-Brand the calls in a manner to be mutually
agreed upon by the Parties, which agreement by ZeroPlus.com shall not be
unreasonably withheld.
Section 2.9 SERVICE QUALITY STANDARDS.
(a) Priceline, in its sole discretion, may set quality standards for:
DTMF tones; sound, clarity and audibility of calls; call completion; network
quality; and customer service. Substandard or unsatisfactory quality includes,
all issues affecting the quality of the call and the customer experience and is
based on the presence of echo, static, clipping, noise, multiple disconnects and
latency in excess of * milliseconds. If Priceline determines, in its sole
discretion, that ZeroPlus.com is experiencing recurring substandard or
unsatisfactory quality, as described above, in any Telecom DCS Market, Priceline
may suspend or restrict ZeroPlus.com's participation in such Telecom DCS Market
for a period of up to ninety (90) days or the earlier cure thereof by
ZeroPlus.com. Priceline will make commercially reasonable efforts to notify
ZeroPlus.com within one (1) U.S. business day after invoking any such suspension
or restriction, which notification shall include a general description of the
substandard or unsatisfactory quality and/or customer service issues. In the
event that ZeroPlus.com cure(s) such substandard or unsatisfactory condition to
the satisfaction of Priceline within 90 days following Priceline's delivery of
notice thereof to ZeroPlus.com, Priceline will lift the suspension or
restriction imposed in respect thereto. In the event that ZeroPlus.com fails to
cure such substandard or unsatisfactory condition(s) within 90 days following
Priceline's delivery of notice thereof to ZeroPlus.com, Priceline shall
thereupon and thereafter have the right to terminate ZeroPlus.com's
participation in such Telecom DCS Market.
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(b) Priceline may, in its sole discretion, establish and maintain a process
to evaluate the quality of calls for Participating Providers, including
ZeroPlus.com. Such process may use a combination of User evaluations or
Priceline's evaluations. ZeroPlus.com acknowledges and agrees that Priceline
shall have the right to disseminate and disclose information regarding
ZeroPlus.com's service quality and customer service quality evaluations: to its
current customers; to potential customers inquiring about the quality of
carriers' services; and in response to the media's specific inquiries and where
otherwise required by law; provided that Priceline not regularly publish for
general dissemination to the public the service or customer service quality
evaluations specific to ZeroPlus.com.
Section 2.10 ZEROPLUS.COM-PRICELINE INTERFACE. The Parties will agree upon an
electronic interface through which ZeroPlus.com will load Rates in the Telecom
DCS in accordance with Priceline's business processes. ZeroPlus.com acknowledges
that Priceline may use identical interfaces through which other Participation
Providers will load Rates into the Telecom DCS.
Section 2.11 REPORTS. Upon the implementing and launching of the Telecom DCS,
and from time to time thereafter, the Parties will work together to establish
reports to be regularly prepared by Priceline and delivered to ZeroPlus.com to
assist ZeroPlus.com in monitoring their aggregate demand in the Telecom DCS and
ZeroPlus.com's performance in the Telecom DCS.
ARTICLE III
PRICELINE COMPENSATION
Section 3.1 TELECOM DCS COMPENSATION. Compensation payments and billing under
the Telecom DCS shall be made in accordance with the provisions set forth in
Schedule 3.1 attached hereto and incorporated herein.
Section 3.2 TELECOM DCS PREFERRED STATUS COMPENSATION. Compensation payments and
billing for the Telecom DCS Preferred Status shall be made in accordance with
the provisions set forth in Schedule 3.2 attached hereto and incorporated
herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 GENERAL REPRESENTATIONS AND WARRANTIES. Each of the Parties
represents and warrants to the other Party as follows:
(a) It is an entity duly formed, validly existing and in good standing
under the laws of the jurisdiction in which it exists, and that it has the power
and authority to enter into this Agreement and fully to perform its respective
obligations hereunder.
(b) All necessary corporate action to approve the execution, delivery
and performance of this Agreement has been duly taken by it, and this Agreement
constitutes a valid
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and binding Agreement (to the extent set forth herein) of
such party enforceable against it in accordance with its terms.
(c) The performance by such Party of its obligations hereunder does not
violate any agreement to which such Party is a party or by which it is
otherwise bound.
(d) The services to be provided by such Party pursuant to this Agreement
will be provided in a professional and workmanlike manner conforming
to industry standards and the quality standards referred to herein
and/or established in accordance herewith.
(e) It has all licenses, approvals, certifications, permits and other
authorizations required under all United States federal, state and
local, and all applicable foreign laws and regulations for it to
perform its obligations under this Agreement.
Section 4.2 REPRESENTATIONS, WARRANTIES AND COVENANTS BY ZEROPLUS.COM. As to its
provision of Internet Protocol telephone services and any other
telecommunications services offered by ZeroPlus.com pursuant to this Agreement,
ZeroPlus.com represents, warrants, and covenants to Priceline as follows:
(a) It has all licenses, approvals, certifications, permits and other
authorizations required under all United States federal, state and
local, and all applicable foreign laws and regulations for it to
perform its obligations under this Agreement.
(b) It will comply at all times with all United States federal, state and
local, and all applicable foreign laws and regulations applicable to
it, including without limitation, the Communications Act of 1934, as
amended, the telecommunications laws of the U.S. states and applicable
foreign jurisdictions, all consumer finance, fair trade and
non-discrimination laws.
(c) That the Restricted Stock, as such term is defined in Schedule 3.2,
and the issuance thereof by ZeroPlus.com in accordance with this
Agreement, have been duly authorized by all requisite corporate
action; and that when issued, the Restricted Stock will be validly
issued, fully paid and nonassessable, subject only to the forfeiture
provisions of Schedule 3.2.
Section 4.3 NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED
WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.
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ARTICLE V
INDEMNIFICATION AND LIMITATIONS OF LIABILITY
Section 5.1 INDEMNITY. Subject to Section 5.3, each Party (the "Indemnifying
Party") shall, at its sole cost and expense, indemnify, defend, and hold
harmless the other and its affiliates, officers, agents, and employees (the
"Indemnified Party"), from all claims, suits, actions, demands, damages,
liabilities, expenses (including reasonable fees and disbursements of counsel),
judgments, settlements and penalties of every kind (collectively, "Losses") to
the extent resulting from, arising out of, or incurred in connection with (a)
any breach by such Party of any representation, warranty, covenant, agreement or
other obligation contained herein; and/or (b) the negligent, intentionally
wrongful or illegal acts or omissions of such Party, its employees, agents,
subcontractors or other representatives; and/or (c) violations of any federal,
state, local and/or international laws, rules and/or regulations to which such
party is subject; and/or (d) solely as to indemnification by ZeroPlus.com, any
failure by ZeroPlus.com, either through its acts or omissions, to provide
quality services, including, without limitation, customer service and network
services, to Users in respect to the telecommunications service of ZeroPlus.com
to be made available through the Telecom DCS; and/or (e) solely as to
indemnification by Priceline, any failure by Priceline, either through its acts
or omissions, to provide quality services to its customers in operating and
hosting the Telecom DCS, including customer service.
Section 5.2 INDEMNIFICATION PROCEDURES. The Indemnified Party shall notify the
Indemnifying Party in writing of any suits, claims or demands covered by these
indemnities promptly after becoming aware of such suits, claims or demands.
Promptly after receipt of such notice, the Indemnifying Party shall assume the
defense of such claim with counsel reasonably satisfactory to the Indemnified
Party. If the Indemnifying Party fails, within a reasonable time after receipt
of such notice, to assume the defense with counsel reasonably satisfactory to
the Indemnified Party, or if, in the reasonable judgment of the Indemnified
Party, a direct or indirect conflict of interest exists between the Parties with
respect to the claim, or if in the reasonable judgment of the Indemnified Party
the assumption and conduct of the defense by the Indemnifying Party would
materially and adversely affect the Indemnified Party in any manner or prejudice
its ability to conduct a successful defense, then the Indemnified Party shall
have the right to undertake the defense. Notwithstanding the above, if the
Indemnified Party, in its sole discretion so elects, such Party may also
participate in the defense of such actions by employing counsel at its expense,
without waiving the Indemnifying Party's obligations to indemnify or defend. The
Indemnifying Party shall not settle or compromise any claim or consent to the
entry of any judgment without the prior written consent of the Indemnified Party
unless the Indemnifying Party procures an unconditional release of all liability
by each claimant or plaintiff to the Indemnified Party.
Section 5.3 LIMITATIONS OF LIABILITY .
UNDER NO CIRCUMSTANCES SHALL EITHER PARTY OR BROADWING COMMUNICATIONS SERVICES
INC. ("BROADWING"), AS PROVIDER OF SERVICES THAT SUPPORT ZEROPLUS.COM, BE LIABLE
TO THE OTHER FOR, AND THE PARTIES HEREBY WAIVE THE RIGHT TO CLAIM, ANY INDIRECT,
INCIDENTAL, RELIANCE, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, (INCLUDING
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LOSS OF PROFITS, REVENUE, PROSPECTIVE BUSINESS, DATA, OR USE) INCURRED BY EITHER
PARTY, DIRECTLY OR INDIRECTLY RELATING TO OR ARISING FROM BREACH OR OTHERWISE
RELATING TO THIS AGREEMENT, WHETHER IN AN ACTION IN CONTRACT OR TORT (INCLUDING
NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, AND WHETHER OR NOT SUCH DAMAGES WERE
FORESEEN OR UNFORESEEN, EVEN IF EITHER PARTY OR BROADWING HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES; PROVIDED THAT EACH PARTY WILL REMAIN LIABLE TO
THE OTHER PARTY TO THE EXTENT THAT ANY DAMAGES ARE PAYABLE TO A THIRD PARTY
PURSUANT TO THIS ARTICLE V.
ARTICLE VI
TERM AND TERMINATION
Section 6.1 TERM. This Agreement shall begin on the Effective Date and shall end
on the third anniversary of the Launch Date unless extended by mutual agreement
of the Parties or terminated earlier pursuant to Sections 2.2, 2.5(c)(ii) and
(iii), 6.2, 6.3, and 8.4, and as otherwise specifically set forth in this
Agreement.
Section 6.2 EARLY TERMINATION.
(a) ZeroPlus.com shall have the right prior to the date of the first sale
of ZeroPlus.com telecom services in the Telecom DCS to terminate this
Agreement, if (i) the ZeroPlus.com Launch Date does not occur, other
than as a result of a delay caused by ZeroPlus, within * days
following the Effective Date of this Agreement, or (ii) if Priceline
prohibits, for a period of more than * days following the Effective
Date, ZeroPlus.com from commencing participation in the Telecom DCS,
as a result of Priceline's determination that ZeroPlus.com does not
meet Priceline's quality requirements. If ZeroPlus.com terminates this
Agreement pursuant to this Section 6.2(a), then Priceline shall pay
ZeroPlus.com * dollars ($*) in liquidated damages.
(b) Should either party (i) become insolvent or unable to pay debts as
they mature, become the subject of bankruptcy proceedings not
terminated within ninety days of any filing, make a general assignment
for the benefit of creditors, or make or permit the appointment of a
receiver for all or substantially all of its property, or (ii)
materially fail or refuse to perform its obligations under this
Agreement and not cure such failure within thirty (30) days after
written notice thereof from the non-defaulting party, the other party
shall have the right, at its election and without prejudice to any
other rights or remedies, to terminate this Agreement.
(c) ZeroPlus.com shall have the right to terminate this Agreement in the
event that ZeroPlus.com has not accrued from its participation in the
Telecom DCS (i) $* million in total gross revenues after * of
participation in the Telecom DCS or (ii) $* million in gross
revenues after * of participation in the Telecom DCS. Any
termination effected pursuant to this Section shall be made by
delivery of written notice to Priceline within thirty (30) days
following the completion (but not on or before the completion) of the
* with respect to clause (i) above or * ,
with respect to clause (ii) above (each a "Measuring Quarter End"),
of participation in the Telecom
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DCS, and shall be effective on the ninetieth (90th) day following the Measuring
Quarter End for which a termination notice shall have been delivered in
accordance with this Section 6.2(c). Failure of ZeroPlus.com to give notice of
termination as provided for in this Section 6.2(c) shall constitute a waiver of
ZeroPlus.com's right to terminate this Agreement under this provision.
Section 6.3 TERMINATION FOR REGULATORY REASONS. This Agreement shall terminate
automatically, in the event termination is required or mandated by any federal
or state law, rule, regulation or valid order of a court of competent
jurisdiction (including, without limitation, the application of any restrictions
which may be applicable to ZeroPlus or its affiliates or Priceline or its
affiliates pursuant to the Communications Act of 1934, as amended, the
Telecommunications Act of 1996, and the rules and regulations of the FCC
promulgated, from time to time, in connection therewith (as subsequently
modified and interpreted from time to time).
Section 6.4 EFFECT OF TERMINATION. The termination of this Agreement shall not
affect the obligations of either Party to the other pursuant to Articles III, V,
VII and VIII of this Agreement or vested rights or causes of action which have
accrued prior to the effective date of the termination. ZeroPlus.com shall
provide Telecom DCS Services that have been paid for by a User prior to the
termination of this Agreement.
ARTICLE VII
CONFIDENTIAL INFORMATION AND PUBLICITY
Section 7.1 CONFIDENTIAL INFORMATION. The Parties reaffirm and incorporate
herein by reference the terms of the Mutual Confidentiality Agreement dated July
29, 1999 (it being acknowledged by ZeroPlus.com that it signed such agreement
under its former name e-Net, Inc.).
Section 7.2 IRREPARABLE HARM. It is agreed that a violation of any of the
provisions of this Article VII will cause irreparable harm and injury to the
disclosing Party and that Party shall be entitled, in addition to any other
rights and remedies it may have at law or in equity, to seek an injunction
enjoining and restraining the receiving Party from doing or continuing to do any
such act and any other violations or threatened violations of this Article VII.
Section 7.3 PUBLICITY AND DISCLOSURE. Each party agrees not to provide copies of
this Agreement, or otherwise disclose the terms of this Agreement, to any third
party without the prior written consent of the other Party; provided, however,
that either Party may, without obtaining the other Party's consent, provide
copies or make disclosures to any affiliate of such Party provided that such
affiliate is subject to a confidentiality obligation to such Party and needs to
know such information for purposes of the Party's fulfillment of its obligations
hereunder; or as may otherwise be required under federal securities laws to
which a Party is subject. Each Party further agrees to submit to the other, for
written approval as to both timing and content, all advertising, sales
promotion, press releases and other publicity matters, when the other Party's
name or mark is mentioned or included, and will not publish or use such
advertising, sales promotions, press releases, or publicity matters without the
prior written approval of the other
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Party. Any approval required under this Section 7.3 shall not be unreasonably
withheld or delayed by either Party.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 RELATIONSHIP OF PARTIES. In performing their obligations under this
Agreement each Party is acting solely as an independent contractor and, except
as explicitly set forth herein, not as an agent of any other Party. Personnel
furnished by the respective Parties shall be solely the employees or agents of
such Parties, respectively, and shall be under the sole and exclusive direction
and control of such Parties. They shall not be considered employees of the other
Party for any purpose. Neither Party undertakes by this Agreement or otherwise
to perform or discharge any liability or obligation of the other Party, whether
regulatory or contractual, or to assume any responsibility whatsoever for the
conduct of the business or operations of the other Party. Nothing contained in
this Agreement is intended to give rise to a partnership or joint venture
between the Parties or to impose upon the Parties any of the duties or
responsibilities of partners or joint ventures.
Section 8.2 NON-COMPETITION. During the term of this Agreement, ZeroPlus.com
agrees that it shall not participate in another "name your price" business model
program for the provision of the telecommunications services offered in
connection with Priceline by ZeroPlus.com under this Agreement without the
express written consent of Priceline.
Section 8.3 THIRD PARTY BENEFICIARIES. Except as may be otherwise specifically
provided in this Agreement, this Agreement is not intended to and shall not
confer upon any other person or business entity, other than the Parties hereto,
any rights or remedies with respect to the subject matter hereof.
Section 8.4 FORCE MAJEURE. Neither party shall be responsible for any delay or
failure in performance of any part of this Agreement to the extent that such
delay or failure is caused by fire, flood, explosion, war, embargo, acts of God,
or any other circumstances beyond its reasonable control. If any such condition
occurs, the Party delayed or unable to perform shall promptly give notice to the
other Party and, if such condition remains at the end of thirty (30) days, the
Party affected by the other's delay or inability to perform may elect to
terminate the affected potion of this Agreement.
Section 8.5 ASSIGNMENT. Neither Party may assign any or all of its rights or
delegate any or all of its duties under this Agreement without the prior written
consent of the other Party Any attempted assignment or delegation in violation
of this Agreement shall be void and of no force and effect. For purposes of this
Agreement, the term "assignment" shall not include the sale, transfer or
assignment of all or substantially all of the assets of a Party, the change in
control of a Party through a sale or a series of sales of capital stock of a
party, and the merger or consolidation of a Party with or into another party.
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Section 8.6 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach, termination or validity hereof, shall
be governed exclusively and finally by arbitration conducted in accordance with
the then-prevailing Commercial Arbitration Rules of the American Arbitration
Association, as modified herein (the "Rules"). The place of arbitration shall be
New York City, NY. There shall be three arbitrators, of whom ZeroPlus.com and
Priceline shall each appoint one within ten (10) days after the delivery by one
party to the other of an arbitration demand. The two arbitrators so appointed
shall select the third arbitrator and appoint him or her chairman of the
tribunal within thirty days of the appointment of the second arbitrator. If any
arbitrator is not appointed within the time limits provided herein or in the
Rules, such arbitrator shall be appointed by the American Arbitration
Association. By agreeing to arbitration, the Parties do not intend to deprive
any court of its jurisdiction to issue a pre-arbitral injunction, pre-arbitral
attachment or other order in aid of arbitration proceedings. The award rendered
by the arbitrators shall consist of compensatory damages only, and shall be
final, binding and non-appealable. Judgment upon such award may be entered in
any court of competent jurisdiction. The Parties agree that the existence,
conduct and content of any arbitration shall be kept confidential and that
neither Party shall disclose to any person any information about such
arbitration except as may be required by law or by any governmental authority or
for financial reporting purposes in each Party's financial statement.
Section 8.7 REMEDIES CUMULATIVE. Any rights of cancellation, termination,
liquidation, damages or other remedies prescribed in this Agreement are
cumulative and are not intended to be exclusive of any other remedies to which
the injured Party may be entitled pursuant to this Agreement or at law or in
equity in case of any breach or threatened breach by the other Party of any
provision of this Agreement. Unless otherwise provided, the use of one or more
available remedies provided in this Agreement shall not bar the use of any other
remedy provided in this Agreement or at law or in equity; provided, however,
that a Party shall not be entitled to retain the benefit of inconsistent
remedies.
Section 8.8 NOTICE. Except as otherwise provided herein, any notice or demand
given under the terms of this Agreement or pursuant to statute shall be in
writing and shall be given or made by certified or registered mail, return
receipt requested, express mail, other overnight delivery service or by hand
delivery, proper postage or other charges paid and addressed or directed to the
respective Parties as follows:
To Priceline:
Priceline Long Distance LLC
800 Connecticut Avenue
Norwalk, CT 06854
Attn: Ted Vagelos
Cc: General Counsel
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<PAGE>
To ZeroPlus.com:
ZeroPlus.com, Inc.
12800 Middlebrook Road
Suite 400
Germantown, MD 20874
Attn: Robert Veschi, President
Cc: General Counsel
Such notice or demand shall be deemed to have been given or made when actually
received or 72 hours after being sent, whichever occurs first. A Party may
change its address for notice set out above by giving notice in accordance with
this Section 8.8.
Section 8.9 NONWAIVER. Unless otherwise provided for in this Agreement, Either
Party's failure to enforce any of the provisions of this Agreement or any
purchase order issued pursuant hereto or to exercise any option, shall not be
construed as a waiver of such provisions, rights, or options, or affect the
validity of this Agreement or any order and shall not constitute or be construed
to be a waiver of the right of either Party thereafter to enforce any such
provisions.
Section 8.10 SEVERABILITY. If any of the provisions of this Agreement shall be
invalid or unenforceable, then such invalidity or unenforceability shall not
invalidate or render unenforceable the entire Agreement. The entire Agreement
shall be construed as if not containing the particular invalid or unenforceable
provision or provisions, and the rights and obligations of the Parties shall be
construed and enforced accordingly.
Section 8.11 HEADINGS. The headings of the sections and schedules are inserted
for convenience only and are not intended to affect the meaning or
interpretation of this Agreement.
Section 8.12 SURVIVAL. The respective obligations of the Parties under this
Agreement that by their nature would continue beyond the termination,
cancellation or expiration, shall survive any termination, cancellation or
expiration, including, but not limited to, obligations to indemnify and maintain
confidentiality.
Section 8.13 CHOICE OF LAW AND JURISDICTION. The construction, interpretation
and performance of this Agreement shall be governed by and construed in
accordance with the laws of the state of New York without regard to any
conflicts of law principles that would require the application of the laws of
any other jurisdiction and subject to the exclusive jurisdiction of its federal
or state courts in New York City, New York for pre-arbitral issues and orders in
aid of arbitration proceeding pursuant to Section 8.5.
Section 8.14 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties and merged herein are all prior and collateral
representations, promises, and conditions in connection with the subject matter
hereof. Any representation, promise, or condition not incorporated herein shall
not be binding upon either Party and this Agreement supersedes and is in lieu of
all prior or contemporaneous agreements or arrangements between the Parties with
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respect to the subject matter hereof. This Agreement may be modified only by a
writing signed by duly authorized representatives of each Party.
Section 8.15 EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
Parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all of which together shall constitute but one and the
same instrument. The Parties expressly authorize the use of facsimile
counterparts, as a valid method of execution; however, the Parties agree to
cooperate in good faith to provide each other with a fully executed original of
this Agreement within five (5) business days of any facsimile counterpart
execution.
IN WITNESS WHEREOF, each Party represents that it has executed this Agreement
through its authorized corporate representative as of the day and year first
above written:
PRICELINE LONG DISTANCE, LLC ZEROPLUS.COM, INC.
By: /s/ TED VAGELOS By: /s/ ROBERT A. VESCHI
------------------------- ------------------------
Name: Ted Vagelos Name: Robert A. Veschi
Title: President Title: President and CEO
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SCHEDULE 2.2(a) MINIMUM REQUIREMENTS FOR PARTICIPATION
Set forth below are the minimum eligibility requirement for Participating
Providers to participate in the Telecom DCS:
*
17
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SCHEDULE 2.2(b) STANDARD RULES OF PARTICIPATION
Set forth below are the standard rule for Participating
Providers participation in the Telecom DCS:
*
18
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SCHEDULE 2.4 CONVERSION TABLE (OF UNITED STATES' MINUTES INTO FOREIGN COUNTRY
MINUTES)
CONVERTING YOUR U.S. MINUTES
If you select the U.S. as your primary calling destination, you can still use
your long distance minutes to call anywhere in the world, at anytime of the day.
Keep in mind, however, that one minute of domestic long distance time is not
always equal to one minute of international long distance calling time. Due to
the higher cost of connecting and carrying international calls, domestic long
distance minutes purchased through priceline will be automatically converted
into international minutes on a country by country basis.
For example, if you wanted to make a call to Japan you would need three U.S.
minutes for each minute of call time to Japan. See the conversion table below to
see how many domestic minutes you'll need to make your international call.
NOTE : CONVERSION FACTORS ARE SUBJECT TO CHANGE AT ANY TIME
COUNTRY NAME CONVERSION FACTOR
AFGHANISTAN 21
ALBANIA 7
ALGERIA 8
AMERICAN SAMOA 8
ANDORRA 6
ANGOLA 10
ANGUILLA 9
ANTARCTICA 8
ANTIGUA 10
ARGENTINA 9
ARMENIA 13
ARUBA 7
ASCENSION ISLAND 16
ATLANTIC OCEAN - ANALOG 155
ATLANTIC OCEAN - DIGITAL 118
ATLANTIC WEST - ANALOG 155
ATLANTIC WEST - DIGITAL 118
AUSTRALIA 3
AUSTRIA 3
AZERBAIJAN 9
BAHAMAS 5
BAHRAIN 14
BANGLADESH 16
BARBADOS 11
BELARUS 9
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BELGIUM 3
BELIZE 14
BENIN 11
BERMUDA 4
BHUTAN 10
BOLIVIA 11
BOSNIA AND HERZOGOVINA 8
BOTSWANA 9
BRAZIL 6
BRITISH VIRGIN ISLANDS 7
BRUNEI 8
BULGARIA 7
BURKINA FASO 13
BURMA(MYANMAR) 22
BURUNDI 13
CAMBODIA 18
CAMEROON 15
CANADA 2
CAPE VERDE ISLANDS 11
CAYMAN ISLANDS 6
CENTRAL AFRICAN 20
CHAD 24
CHILE 6
CHINA 8
CHRISTMAS ISLANDS 9
COCOS ISLANDS 11
COLOMBIA 7
COMOROS 17
CONGO 15
COOK ISLANDS 24
COSTA RICA 7
CROATIA 7
CUBA 15
CYPRUS 7
CZECH REPUBLIC 6
DENMARK 3
DIEGO GARCIA 15
DJIBOUTI 17
DOMINICA 12
DOMINICAN REPUBLIC 4
ECUADOR 7
EGYPT 13
EL SALVADOR 8
EQUAT. GUINEA 21
ERITREA 22
ESTONIA 6
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ETHIOPIA 19
FAEROE ISLANDS 7
FALKLAND ISLANDS 9
FIJI ISLANDS 18
FINLAND 3
FRANCE 3
FRENCH ANTILLES 9
FRENCH GUIANA 9
FRENCH POLYNESIA 14
GABON REPUBLIC 11
GAMBIA 11
GEORGIA 14
GERMANY 3
GHANA 9
GIBRALTAR 8
GREECE 5
GREENLAND 9
GRENADA 13
GUADELOUPE 8
GUAM 3
GUATEMALA 6
GUINEA 10
GUINEA-BISSAU 22
GUYANA 17
HAITI 12
HONDURAS 11
HONG KONG 3
HUNGARY 5
ICELAND 4
INDIA 12
INDIAN OCEAN - ANALOG 138
INDIAN OCEAN - DIGITAL 118
INDONESIA 7
IRAN 17
IRAQ 20
IRELAND 3
ISRAEL 4
ITALY 4
IVORY COAST 17
JAMAICA 11
JAPAN 3
JORDAN 14
KAZAKHSTAN 12
KENYA 14
KIRIBATI 19
KOREA NORTH 16
21
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KOREA SOUTH 4
KUWAIT 15
KYRGYSTAN 13
LAOS 17
LATVIA 8
LEBANON 13
LESOTHO 9
LIBERIA 10
LIBYA 8
LIECHTENSTEIN 3
LITHUANIA 8
LUXEMBOURG 4
MACAO 9
MACEDONIA 8
MADAGASCAR 18
MALAWI 10
MALAYSIA 5
MALDIVES 15
MALI 18
MALTA 5
MARSHALL ISLAND 9
MAURITANIA 14
MAURITIUS 15
MEXICO 4
MICRONESIA 16
MOLDOVA 10
MONACO 4
MONGOLIA 20
MONTSERRAT 15
MOROCCO 10
MOZAMBIQUE 10
NAMIBIA 8
NAURU 15
NEPAL 18
NETHERLAND ANTILLES 7
NETHERLANDS 3
NEW CALEDONIA 14
NEW ZEALAND 3
NICARAGUA 11
NIGER 15
NIGERIA 15
NIUE 23
NORFOLK ISLANDS 35
NORWAY 3
OMAN 19
PACIFIC OCEAN - ANALOG 155
22
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PACIFIC OCEAN - DIGITAL 118
PAKISTAN 12
PALAU 17
PANAMA 11
PAPAU NEW GUINEA 10
PARAGUAY 14
PERU 10
PHILIPPINES 7
POLAND 6
PORTUGAL 5
PUERTO RICO 2
QATAR 15
REUNION ISLAND 12
ROMANIA 9
RUSSIA 8
RWANDA 18
SAIPAN 9
SAN MARINO 6
SAO TOME 22
SAUDI ARABIA 16
SENEGAL REPUBLIC 17
SEYCHELLES ISLANDS 21
SIERRA LEONE 14
SINGAPORE 4
SLOVAKIA 6
SLOVENIA 5
SOLOMON ISLANDS 17
SOMALIA 17
SOUTH AFRICA 8
SPAIN 4
SRI LANKA 19
ST. HELENA 14
ST. KITTS 10
ST. LUCIA 12
ST. PIERRE & MIQUELON 6
ST. VINCENT 13
SUDAN 10
SURINAME 21
SWAZILAND 7
SWEDEN 3
SWITZERLAND 3
SYRIA 15
TAIWAN 4
TAJIKISTAN 12
TANZANIA 12
THAILAND 11
23
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TOGO 18
TONGA ISLANDS 21
TRINIDAD 11
TUNISIA 9
TURKEY 7
TURKMENISTAN 13
TURKS & CAICOS 10
TUVALU 17
UGANDA 10
UKRAINE 8
UNITED ARAB EMIRATES 12
UNITED KINGDOM 3
URUGUAY 14
US (AND INTERNATIONAL) 1
US-VIRGIN ISLANDS 2
UZBEKISTAN 13
VANUATA REPUBLIC 17
VATICAN 4
VENEZUELA 7
VIETNAM 19
WALLIS & FUTUNA 10
WESTERN SAMOA 14
YEMEN 16
YUGOSLAVIA 9
ZAIRE 13
ZAMBIA 15
ZANZIBAR 22
ZIMBABWE 8
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SCHEDULE 3.1 TELECOM DCS COMPENSATION
Compensation payments and billing for the Telecom DCS shall be made in the
following manner:
*
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SCHEDULE 3. 2 TELECOM DCS PREFERRED STATUS COMPENSATION
Section 1. TELECOM DCS PREFERRED STATUS COMPENSATION.
(a) As consideration for ZeroPlus.com's Preferred Status in the Telecom
DCS in accordance with this Agreement, ZeroPlus.com shall pay to Priceline *
dollars ($* ) in cash (the "Cash Consideration") and 345,290
shares (the "Restricted Stock") of ZeroPlus.com's common stock, par value
$0.01 per share ("Common Stock") (valued at $6.953125 per share, equaling
125% of the closing bid price for the Common Stock on NASDAQ Small Cap Market
on May 16, 2000).
(b) The Cash Consideration will be paid * or, if any such
day is not a day other than a Saturday, a Sunday, or other day on which banks
are authorized or required by law to be closed in Germantown, Maryland or
Norwalk, Connecticut (a "Business Day"), then the next succeeding Business
Day. All such payments shall be by wire transfer of immediately available
funds to an account designated by Priceline. Once due and payable, the Cash
Consideration payable under 3.2 shall not be forfeitable by Priceline.
(c) The Restricted Stock will be issued and delivered on or before the
ZeroPlus.com Launch Date. However, such Restricted Stock shall be restricted and
may not be sold, assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or by operation of law (a "Transfer"), until
vested in accordance with the following schedule, and any purported Transfer
prior to vesting shall be null and void:
The shares of Restricted Stock will vest on a daily basis commencing on
the ZeroPlus.com Launch Date in the following manner: (i) *
during the first 12 months commencing on the ZeroPlus.com Launch Date, (ii) *
during the 12 months commencing on the first anniversary of the
ZeroPlus.com Launch Date, and (iii) * during the 12 month period commencing
on the second anniversary of the ZeroPlus.com Launch Date.
(d) Notwithstanding the foregoing, should this Agreement be terminated for
any of the reasons or causes stated in the Agreement, any shares of Restricted
Stock that are subject to restriction under subsection (c) above at that time
and have not yet vested shall vest in the following manner: (i) if the Agreement
is terminated pursuant to Sections 2.2 or 2.5(c)(iii) of this Agreement,
Restricted Stock will continue to vest through the end of the financial quarter
during which such termination becomes effective, and (ii) if the termination is
effected other than pursuant to Section 2.2 or 2.5(c)(iii) of this Agreement,
shares of Restricted Stock will cease vesting on the effective date of such
termination. Notwithstanding anything herein to the contrary, any shares of
Restricted Stock not yet vested (or to vest in accordance with clause (i) of the
preceding sentence) shall immediately be forfeited by Priceline upon the
effective date of termination of this Agreement. Priceline shall promptly return
the certificate or certificates representing such shares to ZeroPlus.com,
PROVIDED that if any such certificates represent both
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<PAGE>
vested and unvested shares, then upon receipt thereof ZeroPlus.com shall
promptly issue and return to Priceline a certificate representing the vested
shares.
(e) Priceline shall, upon the issuance of the Restricted Stock, grant
ZeroPlus.com an irrevocable proxy to vote all shares of Restricted Stock that
are subject to restrictions under Section (1)(c) and have not yet vested, in the
form attached as EXHIBIT A to this Schedule 3.2. Notwithstanding the foregoing,
as shares of Restricted Stock vest, the irrevocable proxy will expire and no
longer apply to those shares of Restricted Stock that have vested.
(f) Priceline understands that the certificates representing shares of
Restricted Stock shall bear a legend substantially to the following effect, in
addition to any legends required by Section 2(f):
THE SECURITIES REPRESENTED BY THIS CETIFICATE ARE RESTRICTED AND MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF OR
ENCUMBERED, EITHER VOLUNTARILY OR BY OPERATION OF LAW, AND ARE SUBJECT TO
OTHER RESTRICTIONS ON TRANSFER, IN ACCORDANCE WITH THE INTERNET PROTOCOL
TELEPHONE SERVICE PARTICIPATION AGREEMENT DATED AS OF APRIL 7, 2000,
BETWEEN THE CORPORATION AND PRICELINE LONG DISTANCE, LLC,
Section 2. SECURITIES MATTERS.
(a) NO REGISTRATION. Priceline acknowledges that the offer and sale of the
Restricted Stock has not been registered under the Securities Act of 1933, as
amended (the "Securities Act") or under any state securities act, in reliance,
in part, on Priceline's representations, warranties and agreements herein.
(b) INTEREST IN RESTRICTED SECURITY. Priceline understands that the shares
of Restricted Stock are "restricted securities" under the Securities Act in that
such shares will be acquired from ZeroPlus.com in a transaction not involving a
public offering, that the shares of Restricted Stock may be reoffered and resold
or otherwise Transferred without registration under the Securities Act only in
certain limited circumstances, and that in the absence of an effective
registration statement under the Securities Act or an exemption under the
Securities Act, the shares of Restricted Stock must be held indefinitely. In
this connection, Priceline understands the resale limitations imposed by the
Securities Act and is familiar with Rule 144 promulgated under the Securities
Act ("Rule 144"), and the conditions which must be met in order for the
exemption from registration provided by Rule 144 to be available. ZeroPlus.com
represents that it is in compliance with the requirements to make available
adequate public information set forth in Rule 144(c) and that it will continue
to comply with Rule 144(c) as long as Priceline holds Restricted Stock.
(c) INVESTMENT REPRESENTATION. Priceline represents and warrants to
ZeroPlus.com that it is acquiring the Restricted Stock for investment and not
for resale or with a view to distribution, except pursuant to Section 3 below.
Priceline further represents that it (i) is an "accredited investor" within the
meaning of Rule 501(a) under the Securities Act, and (ii)
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<PAGE>
possesses, either alone or with its "purchaser representative" within the
meaning of Rule 501(h) under the Securities Act, such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of an investment in the ZeroPlus.com.
(d) NO OBLIGATION TO REGISTER. Priceline understands and agrees that,
except as provided below in Section 3, ZeroPlus.com is under no obligation to
register or qualify the reoffer, resale or other Transfer of any shares of
Restricted Stock under the Securities Act or under any applicable state
securities law.
(e) NO DISPOSITION IN VIOLATION OF LAW. Without limiting any other
provision in this Agreement, Priceline acknowledges that it will not make any
disposition or other Transfer of all or any part of the Restricted Stock that
will result in the violation by Priceline or ZeroPlus.com or of any applicable
law, rule or regulation, including the Securities Act or any applicable state
securities law. Without limiting the foregoing, Priceline agrees not to make any
offer, sale or other disposition or Transfer of all or any part of the
Restricted Stock unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such offer, sale or other disposition, and such
offer, sale or other disposition is made in accordance with such
registration statement and any applicable state securities laws;
(ii) Priceline has notified ZeroPlus.com of the proposed disposition
and has furnished ZeroPlus.com with a detailed statement of the
circumstances surrounding the proposed disposition and (except as provided
in Section 3(c)(xi) below) Priceline has furnished ZeroPlus.com with a
written opinion of counsel, satisfactory to ZeroPlus.com in its sole
discretion, that such offer, sale or other disposition or Transfer will not
require registration under the Securities Act, or the consent of, or a
permit from, appropriate authorities under any applicable state securities
law.
In the case of any disposition of all or any part of the Restricted Stock
pursuant to Rule 144, in addition to the matters set forth above, Priceline
shall promptly forward to ZeroPlus.com a copy of any Form 144 filed with the
Securities and Exchange Commission (the "SEC") with respect to such disposition,
a letter from the executing broker satisfactory to ZeroPlus.com in its
reasonable discretion evidencing compliance with Rule 144, and such additional
documents as ZeroPlus.com may reasonably require.
(f) LEGENDS. Priceline understands that the certificates evidencing the
Restricted Stock may bear one (1) or all of the following legends (or legends to
substantially the same effect), in addition to the legend required by Section
1(f):
(i) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
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PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES
MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT THE PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH
THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
(ii) Any legend required by applicable state securities laws.
(g) INVESTMENT RISK. Priceline acknowledges that the Restricted Stock is a
speculative investment that involves a substantial degree of risk of loss by
Priceline of its entire investment in ZeroPlus.com. Priceline understands and
takes full cognizance of the risk factors related to the acquisition of Common
Stock, including but not limited to those set forth from time to time in
ZeroPlus.com's filings under the Securities Act and under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(h) INFORMATION REVIEWED. Priceline acknowledges that it has received and
reviewed the following filings made by ZeroPlus.com under the Exchange Act:
(i) Annual Report on Form 10-KSB for the fiscal year ended March 31,
1999, filed with the SEC on June 29,1999;
(ii) Quarterly Report on Form 10-QSB for the fiscal quarter ended June
30, 1999, filed with the SEC on August 16, 1999;
(iii) Quarterly Report on Form 10-QSB for the fiscal quarter ended
September 30, 1999, filed with the SEC on November 15, 1998;
(iv) Quarterly Report on Form 10-QSB for the fiscal quarter ended
December 31, 1999, filed with the SEC on February 14, 2000;
(v) Current Report on Form 8-K, filed with the SEC on September 23,
1999;
(vi) Current Report on Form 8-K, filed with the SEC on December 14,
1999;
(vii) Current Report on Form 8-K, filed with the SEC on December 22,
1999;
(viii) Current Report on Form 8-K, filed with the SEC on February 8,
2000;
(ix) Current Report on Form 8-K filed with the SEC on February 14,
2000;
(x) Definitive Proxy Statement on Schedule 14A, filed with the SEC on
November 13, 1999;
(xi) Supplemental Definitive Proxy Materials on Schedule 14A, filed
with the SEC on November 29, 1999; and
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(xii) Description of the Common Stock contained in Form 8-A
Registration Statement, as amended, filed with the SEC on February 11,
1997, and all amendments and reports subsequently filed for the purpose of
updating that description.
Priceline also acknowledges that it has received and reviewed all other
documents and information it considers necessary and appropriate for deciding
whether to invest in Common Stock. Priceline acknowledges that it has had an
opportunity to ask questions and receive answers regarding the terms and
conditions of the investment in Restricted Stock and regarding the business,
financial affairs, and other aspects of ZeroPlus.com, and has further had the
opportunity to obtain all information (to the extent the ZeroPlus.com possesses
or can acquire such information without unreasonable expense or effort) that it
deems necessary to evaluate the investment and to verify the accuracy of
information otherwise provided to Priceline.
(i) NO REPRESENTATIONS. Priceline acknowledges that neither ZeroPlus.com
nor any other person or entity has at any time, expressly or implicitly,
represented, warranted, or guaranteed to Priceline, that: (i) Priceline may
freely transfer any shares of Restricted Stock; (ii) a percentage of profit, or
amount or type of gain or other consideration will be realized as a result of an
investment in ZeroPlus.com; (iii) past performance or experience on the part of
ZeroPlus.com or any of its officers, directors or other affiliates in any way
indicates the predictable results of the ownership of Common Stock or of the
ZeroPlus.com's overall business; (iv) any cash distributions from ZeroPlus.com
will be made to Priceline or any other holder of Common Stock by reason of such
holdings, or will be made at all; or (v) any specific tax benefits will accrue
as a result of an investment in ZeroPlus.com.
(j) CONSULTATION WITH PROFESSIONAL ADVISORS. Priceline acknowledges that it
has been advised to consult with an attorney and such other professional
advisors as it deems appropriate regarding all legal, financial and accounting
matters concerning an investment in the ZeroPlus.com and the tax consequences of
owning Common Stock (and, in particular, Restricted Stock), and has done so.
(k) TAX CONSEQUENCES. Priceline acknowledges that the tax consequences of
an investment in Restricted Stock will depend on Priceline's particular
circumstances, and neither ZeroPlus.com nor any officer, director or other
affiliate thereof, or any agent for any of them, will be responsible or liable
for the tax consequences to Priceline of an investment in ZeroPlus.com.
ZeroPlus.com will look solely to, and rely upon, its own advisors with respect
to the tax consequences of this investment.
Section 3. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION. ZeroPlus.com will, if and to the extent requested
in writing by Priceline at any time from and after the ZeroPlus.com Launch Date
(the "Commencement Date") and from time to time thereafter until two (2) years
after the third anniversary of the ZeroPlus.com Launch Date (the "Expiration
Date") (or any earlier expiration provided below), as expeditiously as is
reasonably practicable (but in any event within sixty (60) calendar days after
such request) prepare and file up to five (5) registration statements pursuant
to this Section 3(a)
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under the Securities Act, if such registration is necessary in order to permit
the sale or other disposition of any or all fully vested shares of Restricted
Stock that have been acquired by Priceline under Section 1 above, in accordance
with the intended method of sale or other disposition stated by Priceline in its
request, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision.
(b) PIGGYBACK REGISTRATION. If, during the time period from and after the
Commencement Date until the Expiration Date (or any earlier expiration provided
below), ZeroPlus.com proposes to effect a registration under the Securities Act
of Common Stock for its own account or for any other stockholders of
ZeroPlus.com (other than on Form S-4 or Form S-8, or any successor form, or on a
registration statement filed in connection with an exchange offer or other offer
of Common Stock solely to ZeroPlus.com's then-existing stockholders), it will
give Priceline written notice thereof and offer Priceline the right to include
its fully vested share of Restricted Stock in such registration. Priceline shall
have ten (10) calendar days, or such longer period as is set forth in the
notice, from the date the notice is given to deliver to ZeroPlus.com a written
request specifying the number of shares of Restricted Stock it desires to
include in the registration and its intended plan of sale or other disposition.
In the event that the proposed registration by ZeroPlus.com is, in whole or in
part, an underwritten public offering, any such request by Priceline will
contain its agreement that the Restricted Stock will be included in the
underwriting on the same terms and conditions as the shares of Common Stock, if
any, otherwise being sold through the underwriters under that registration. Upon
receipt of such a request by Priceline, ZeroPlus.com will use its best efforts
to cause all requested Restricted Stock to be included in the proposed
registration, to the extent required to permit the sale or disposition as set
forth in the request. However, if the managing underwriter of such offering
advises ZeroPlus.com in writing that in its opinion the number of shares of
Common Stock requested to be included by Priceline in such registration,
together with all other shares of Common Stock proposed to be included in such
registration, would interfere with the successful marketing thereof, including
the price at which such shares could be sold, then the number of shares of
Common Stock held by persons other than ZeroPlus.com that otherwise would be
included in the registration shall be excluded as deemed necessary by the
managing underwriter, first by excluding (to the extent necessary) shares held
by persons or entities other than those who have heretofore exercised
registration rights granted to them by ZeroPlus.com prior to the date hereof
("Prior Registration Rights"), second by excluding (to the extent necessary)
shares of Restricted Stock, and third by excluding shares held by persons or
entities who have exercised Prior Registration Rights. Notwithstanding any other
provisions hereof, ZeroPlus.com may withdraw or cease proceeding with any
proposed registration of Restricted Stock under this subsection (b) if it has
withdrawn or ceased proceeding with the registration in which such Restricted
Stock was to be included.
(c) TERMS APPLICABLE TO REGISTRATION.
The following terms and conditions shall apply to any registration of
Restricted Stock, whether under subsection (a) or (b):
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(i) ZeroPlus.com will have the exclusive right to select all underwriters
for any underwritten public offering of its Common Stock, including any desired
demand registration under subsection (a).
(ii) In connection with (and as a condition to) any registration pursuant
to this Section, ZeroPlus.com and Priceline will provide each other (and any
underwriters) with customary representations, warranties, covenants,
indemnification, and contribution in connection with such registration.
(iii) Priceline's registration rights under this Section with regard to any
shares of Restricted Stock shall expire on the earliest to occur of (A) the
Expiration Date, (B) the effectiveness of a registration statement under the
Securities Act with regard to such shares of Restricted Stock at the request of
Priceline pursuant to either subsection (a) or (b), PROVIDED that such
effectiveness is maintained for the Effective Period (as defined below), or (C)
the date on which all shares of Restricted Stock are eligible for resale under
Rule 144 without regard to the volume limitations thereof.
(iv) ZeroPlus.com may use any available form of registration statement as
it reasonably selects.
(v) ZeroPlus.com will use its best efforts to qualify the Restricted Stock
included in any registration under any applicable state securities laws in such
states and other jurisdictions as Priceline may reasonably request, PROVIDED
that ZeroPlus.com shall not be required to consent to general service of
process, qualify to do business as a foreign corporation where it would not
otherwise be required to qualify or submit to liability for state or local taxes
where it is not otherwise liable.
(vi) ZeroPlus.com will use its best efforts to cause the Restricted Stock
included in any registration to be listed on such exchanges or otherwise
designated for trading in the same manner as Common Stock is then listed or
designated.
(vii) ZeroPlus.com will use its best efforts to cause each registration
statement filed under this Section 3 to become effective, to obtain all consents
or waivers of other parties which are required therefor, and to keep such
registration statement effective for such period not in excess of one hundred
and twenty (120) calendar days from the day such registration statement first
becomes effective (or the date Priceline's registration rights hereunder expire,
whichever is shorter), as may be reasonably necessary to effect Priceline's sale
or other disposition of included Restricted Stock (the "Effective Period").
(viii) Any registration statement prepared or filed under this Section 3,
and any sale covered thereby, will be at ZeroPlus.com's expense, except for
underwriting discounts or commissions, brokers' fees and the expenses, fees and
disbursements of Priceline and its attorneys, accountants and other advisors
related thereto.
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(ix) In connection with (and as a condition to) any registration under this
Section 3, Priceline will provide (and certify the accuracy of) all information
reasonably requested by ZeroPlus.com for inclusion in any registration statement
to be filed hereunder.
(x) Notwithstanding any other provisions hereof, ZeroPlus.com may postpone
the filing of any requested registration statement for an additional period of
up to one hundred and eighty ( 120) calendar days (A) if such postponement is
necessary to avoid the necessity of preparing audited financial statements as of
a date other than the end of a fiscal year, or (B) if ZeroPlus.com's Board of
Directors determines that the filing of such registration statement would
require premature disclosure of material nonpublic information that would
materially and adversely affect ZeroPlus.com or otherwise interfere with or
adversely affect any pending or proposed offering of Common Stock or any other
material transaction involving ZeroPlus.com.
(xi) Notwithstanding any other provisions hereof, ZeroPlus.com shall not be
obligated to include Restricted Stock in a registration statement if
ZeroPlus.com delivers to Priceline an opinion of counsel selected by
ZeroPlus.com (with such opinion also addressed to, delivered to, and acceptable
to ZeroPlus.com's transfer agent), that under the circumstances in which
Priceline contemplates selling any shares of Restricted Stock an exemption from
registration under the Securities Act is available for the public distribution
of Restricted Stock by Priceline, including but not limited to the exemption
provided by Rule 144 (assuming compliance with all conditions thereof other than
ZeroPlus.com's obligation to make available adequate public information).
Priceline shall cooperate with ZeroPlus.com and its counsel in investigating and
assessing the availability of any such exemption and in preparing the relevant
opinion of counsel with reasonable and documented third party expenses of
Priceline to be reimbursed by ZeroPlus.com.
(xii) Notwithstanding any other provisions hereof, ZeroPlus.com shall not
be obligated to include Restricted Stock in a registration statement if
ZeroPlus.com has included all shares of Restricted Stock requested by Priceline
to be included in a registration statement pursuant to an earlier request by
Priceline made under this Section 3, in a filing made during the six (6) months
preceding Priceline's latest request for registration under subsection (a) or
(b), PROVIDED that such filing either became effective and was maintained
effective for Effective Period, or was withdrawn before becoming effective or
before the expiration of the Effective Period at the request of Priceline.
(xiii) Notwithstanding any other provisions hereof, ZeroPlus.com shall not
be obligated to include Restricted Stock in a registration statement during the
period (the "Lock-Up Period") commencing with the date of filing of a
registration statement under the Securities Act pertaining to an underwritten
public offering of securities to be sold for the account of ZeroPlus.com
(including such a registration statement in which Priceline participates
pursuant to subsection (b)) and ending after the time deemed necessary by the
managing underwriter in order to effect the underwritten public offering, not to
exceed one hundred and eighty (180) calendar days after the effective date of
such registration statement, PROVIDED that during such period ZeroPlus.com uses
reasonable efforts to cause such registration statement to become effective and
to complete the public offering covered by such registration statement, and
PROVIDED FURTHER that the Lock-Up Period shall be reduced to the extent that the
managing underwriter accepts
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from any other insider of ZeroPlus.com an agreement to lock up its shares of
Common Stock for a lesser period. Priceline shall execute any form of agreement
reflecting the Lock-Up Period as is reasonably requested by such managing
underwriter.
(d) TRANSFER OF REGISTRATION RIGHTS. Priceline may not transfer or assign
its registration rights under this Section without the prior written consent of
ZeroPlus.com, which may be withheld in its sole discretion; except as provided
in Section 8.5 of the Agreement or to an affiliate of Priceline.
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EXHIBIT A
TO
SCHEDULE 3.2
IRREVOCABLE PROXY
The undersigned, being the record owner of _______ shares of common stock,
par value $.01 per share (the "Restricted Stock"), of ZeroPlus.com, Inc. (the
"Company"), issued to the undersigned pursuant to the Internet Protocol
Telephone Service Participation Agreement dated May 17, 2000, between the
Company and the undersigned (the "Agreement") do hereby appoint the Company, and
any agent of the Company duly authorized thereby, as the undersigned's proxies
with full power of substitution to attend all meetings of shareholders of the
Company with full power to vote and act for the undersigned in the same manner
and extent that the undersigned might, were it personally present at same
meetings, and to vote and act for the undersigned by written consent, with
respect to all shares of Restricted Stock that are subject to restriction and
have not yet vested pursuant to Section 1(c) of Schedule 3.2 to the Agreement as
of the record date for the determination of shares of common stock eligible to
vote on matters presented to the shareholders of the Company from time to time.
This proxy is given in connection with the Agreement. This proxy shall be
irrevocable solely with respect to such Restricted Stock during the period that
such shares are not vested in accordance with Schedule 3.2 to the Agreement.
Upon any share of Restricted Stock becoming vested in accordance with Schedule
3.2 of the Agreement, this proxy shall terminate and be of no further force or
effect with respect to such share.
Dated: _________, 2000 Priceline Long Distance, LLC
By:_____________________________
Name:
Title:
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