Common use of Business Credit Clause in Contracts

Business Credit. Vonage shall have a personal and non-transferable (notwithstanding Section 9.10) option to reduce the payment(s) that becomes due during the months following the third year of the Term pursuant to Section 4.1 through the application of a “Credit Amount” earned by Vonage as a result of New Business. Although, by definition, New Business is limited to services and products purchased under and pursuant to the terms of the AT&T Network Connections Service Agreement to be executed within 180 days of the signing of this Settlement Agreement, Vonage and AT&T may agree to include other service agreements as New Business (“Additional Business”) but AT&T is not obligated to consider Additional Business or to include Additional Business on the same formula as the Credit Amount defined herein. A Credit Amount reduces the required payment on a dollar for dollar basis. The Credit Amount shall be calculated as follows: For each calendar year, the Credit Amount shall be 10% of the New Business. The following examples illustrate how the Credit Amounts will be calculated and applied. (a) If New Business from Vonage and its Affiliates in the calendar year 2008 totals $1,000,000, the Credit Amount would be $100,000 (10% of $1,000,000). This Credit Amount would be applied to reduce the outstanding monthly payments beginning in the first month following the third year of the Term o. The $650,000 payment due in January 2011 would be reduced from $650,000 to $550,000. (b) Then, if the New Business from Vonage and its Affiliates in calendar year 2009 totals $2,000,000, the Credit Amount for that year would be $200,000 (10% of $2,000,000). This Credit Amount would be applied to reduce the outstanding monthly payments beginning in January 2011. The $550,000 payment due in January 2011 (resulting from the reduction applied in Section 4.7(a)) would be reduced from $550,000 to $350,000. For Vonage to exercise this option, it shall provide to AT&T within ninety (90) days of the close of each calendar year during the Term sufficient documentation to establish the amount of New Business made in that calendar year. Vonage agrees to allow AT&T, pursuant to non-use and non-disclosure obligations between the Parties, to share with its Affiliates any such New Business documentation that Vonage elects to provide to AT&T, and permit AT&T and its Affiliates to use any such information for the purpose of addressing matters regarding the Credit Amount. Within ninety (90) days of receipt of such documentation, AT&T will provide Vonage with a written statement specifying the Credit Amount associated with that calendar year, the payment month of the Term to which the Credit Amount will be applied, and the revised amount due under Section 4.1 for that month. No payments are owed by AT&T or its Affiliates to Vonage or its Affiliates under this Agreement. This Agreement does not reflect an obligation on the part of Vonage or its Affiliates to continue doing business with AT&T or its Affiliates or to increase such business. Vonage acknowledges that discontinuation of such business will not relieve Vonage of the obligation to make the payments set forth in Section 4.1, provided however that such payments may be reduced by any Credit Amount earned but unapplied at the time of such discontinuation. This Agreement does not obligate AT&T or its Affiliates to provide products or services to Vonage or its Affiliates.