EXHIBIT 10.9
NET2PHONE SERVICES AGREEMENT
NET2PHONE SERVICES AGREEMENT, dated as of May 7, 1999 (this "Agreement"),
by and between IDT Corporation, a Delaware corporation ("IDT"), and Net2Phone,
Inc., a Delaware corporation ("Net2Phone").
WHEREAS, Net2Phone is currently a subsidiary of IDT and provides certain
services to IDT;
WHEREAS, Net2Phone and IDT expect that equity interests in Net2Phone may be
sold to additional investors; and
WHEREAS, IDT desires to continue to obtain services from Net2Phone pursuant
to the terms hereof and Net2Phone desires to continue to provide such services
pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and mutual promises and
representations contained herein, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto do mutually
covenant, stipulate and agree as follows:
Section 1. Services.
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(a) Net2Phone shall render to IDT the services described in Exhibit 1
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hereto (collectively, the "Services"). The Services shall be rendered by
Net2Phone in conformity with good commercial practice, the terms and conditions
of this Agreement and the reasonable instructions of IDT as set forth in this
Agreement.
(b) IDT shall provide to Net2Phone when required all funds, if any,
necessary to perform the Services.
(c) Net2Phone shall have no authority pursuant to this Agreement to
commit IDT to any obligation in any manner whatsoever with respect to third
parties, to use IDT's name in any way or to enter into any contracts on behalf
of IDT.
(d) In the event that IDT requests services in addition to the Services
provided for herein, and if Net2Phone agrees to provide such services, IDT and
Net2Phone shall negotiate in good faith a fee for such services, which
compensation shall be covered by the final sentence of Section 2(a) hereof;
provided, however, that the fee payable by IDT for such services shall be no
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less favorable to IDT than the charges for comparable services from unaffiliated
third parties. In the event that the parties agree to additional services, the
scope and duration of such services, and any termination provisions with
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respect thereto, shall be described in an addendum to Exhibit 1 and thereafter
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such services shall be considered Services hereunder. If and to the extent the
parties agree to cancel or terminate any of the Services, such services shall be
deemed deleted from Exhibit 1, with the remaining services thereafter
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constituting the Services hereunder.
Section 2. Compensation.
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(a) IDT shall pay to Net2Phone a fee for each of the Services equal to
the amount set forth in Exhibit 1 corresponding to such service. In the event
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IDT terminates any Service in accordance with the final sentence of Section 3
hereof, the fee for such Service shall no longer be payable for any period
subsequent to the effective date of such termination. In the event the parties
agree to additional services, such fee shall be payable as provided herein.
(b) Within 15 days following the end of each calendar month, Net2Phone
shall submit to IDT for payment a billing invoice setting forth the amount of
fees payable by IDT to Net2Phone for Services rendered during such calendar
month. IDT shall pay the invoiced amount to Net2Phone within thirty (30) days
following receipt of such invoice by IDT.
Section 3. Term.
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The term of this Agreement shall commence on the date hereof and shall
continue for a period of one (1) year (the "Initial Term") and, at the end of
the Initial Term and of each year thereafter, shall automatically renew for an
additional one (1) year period unless one party has given the other party thirty
(30) days' prior written notice terminating this Agreement. Following the
Initial Term, this Agreement may be terminated at any time at the option of
either IDT or Net2Phone upon thirty (30) days' prior written notice. Specific
categories of Services may be cancelled as set forth in Exhibit 1.
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Section 4. Records and Accounts.
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Net2Phone shall maintain accurate records and accounts of all
transactions relating to the Services performed by it pursuant to this
Agreement. Such records and accounts shall be maintained separately from
Net2Phone's own records and accounts and shall reflect such information as would
normally be examined by an independent accountant in performing a complete audit
pursuant to United States generally accepted auditing standards for the purpose
of certifying financial statements, and to permit verification thereof by
governmental agencies. IDT shall have the right to inspect and copy, upon
reasonable notice and at reasonable intervals during Net2Phone's regular office
hours, the separate records and accounts maintained by Net2Phone relating to the
Services.
Section 5. Directors and Officers of Net2Phone and IDT.
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(a) Nothing contained in this Agreement shall be deemed to relieve the
officers and directors of IDT from the performance of their duties or limit the
exercise of their powers in accordance with IDT's Certificate of Incorporation
or the laws of the State of Delaware. The services of Net2Phone's officers and
employees which are rendered to IDT under this Agreement shall at all times be
in accordance with the reasonable instructions of IDT's officers and in
accordance with Net2Phone's historical business practice.
(b) Nothing in this Agreement shall limit or restrict the right of any
of Net2Phone's directors, officers or employees to engage in any other business
or devote their time and attention in part to the management or other aspects of
any other business, whether of a similar nature, or to limit or restrict the
right of Net2Phone to engage in any other business or to render services of any
kind to any corporation, firm, individual, trust or association.
Section 6. Liability; Indemnification.
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(a) Net2Phone shall have no liability whatsoever to IDT for any error,
act or omission in connection with the services to be rendered by Net2Phone to
IDT hereunder unless any such error, act or omission derives from willful
misconduct or gross negligence. The parties acknowledge that Article VIII of the
Separation Agreement between the parties hereto, dated the date hereof (the
"Separation Agreement") provides for indemnification obligations relating to
this Agreement and confirm their agreement to be bound by the terms thereof. IN
NO EVENT SHALL NET2PHONE BE LIABLE TO IDT FOR ANY SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, REVENUES
OR DATA), WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR
OTHERWISE, WHETHER OR NOT NET2PHONE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGE. THE LIABILITY OF NET2PHONE FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER,
WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, IS LIMITED TO, AND WILL NOT
EXCEED, IDT'S DIRECT DAMAGES.
(b) Net2Phone is an independent contractor and when its employees act
under the terms of this Agreement, they shall be deemed at all times to be under
the supervision and responsibility of Net2Phone; and, notwithstanding any
reimbursement of labor costs as provided herein or otherwise, no person employed
by Net2Phone and acting under the terms of this Agreement shall be deemed to be
acting as agent or employee of IDT or any customer of IDT for any purpose
whatsoever.
Section 7. Other Agreements.
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From time to time, IDT may find it necessary or desirable either to enter
into agreements covering services of the type contemplated by this Agreement to
be provided by parties other than Net2Phone or to enter into other agreements
covering functions to be performed by Net2Phone hereunder. Nothing in this
Agreement shall be deemed to
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limit in any way the right of IDT to acquire such services from others or to
enter into such other agreements; provided that in no such event shall the
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compensation to be paid to Net2Phone pursuant to Section 2 hereof be reduced on
account thereof unless and until this Agreement is terminated, or the applicable
category of Services set forth in Exhibit 1, is cancelled in accordance with
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Section 3 and Exhibit 1 hereto.
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Section 8. Confidentiality.
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Net2Phone agrees to hold in strict confidence, and to use reasonable
efforts to cause its employees and representatives to hold in strict confidence,
all confidential information concerning IDT furnished to or obtained by
Net2Phone in the course of providing the Services (except to the extent that
such information has been (a) in the public domain through no fault of Net2Phone
or (b) lawfully acquired by Net2Phone from sources other than IDT); and
Net2Phone shall not disclose or release any such confidential information to any
person, except its employees, representatives and agents who have a need to know
such information in connection with Net2Phone's performance under this
Agreement, unless (i) such disclosure or release is compelled by the judicial or
administrative process, or (ii) in the opinion of counsel to Net2Phone, such
disclosure or release is necessary pursuant to requirements of law or the
requirements of any governmental entity including, without limitation,
disclosure requirements under the Securities Act of 1933 or the Securities
Exchange Act of 1934, in each case as amended.
Section 9. Miscellaneous.
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(a) This Agreement may not be transferred or assigned by either party,
whether voluntarily or by operation of law, without the prior written consent of
the other which consent may be withheld in such party's sole discretion. This
Agreement shall inure to the benefit of and be binding upon all permitted
successors and assigns.
(b) This Agreement shall be governed by the laws of the State of New
York (regardless of the laws that might otherwise govern under applicable
principles of conflicts of law) as to all matters, including, but not limited
to, matters of validity, construction, effect, performance and remedies.
(c) This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which together shall be deemed to be one and
the same instrument.
(d) All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or by facsimile
transmission or mailed (certified or registered mail, postage prepaid, return
receipt requested):
If to IDT, to: IDT Corporation
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
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Attention: Chief Financial Officer
Fax No.: (000) 000-0000
If to Net2Phone, to: Net2Phone, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which hand
delivered, upon transmission of the facsimile transmission by the sender and
issuance by the transmitting machine of a confirmation slip confirming that the
number of pages constituting the notice have been transmitted without error, or
on the third business day following the date on which so mailed, except for a
notice of change of address, which shall be effective only upon receipt thereof.
In the case of a notice sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided for above. However, such mailing shall in no way alter the time at
which the facsimile notice is deemed received. In no event shall the provision
of notice pursuant to this Section 9(d) constitute notice for service of
process.
(e) This Agreement and those provisions of the Separation Agreement
specifically referred to herein contain the entire understanding of the parties
hereto with respect to the subject matter of this Agreement. This Agreement and
such referenced provisions of the Separation Agreement supersede all prior
agreements and understandings, oral or written, with respect to the subject
matter of this Agreement.
(f) The provisions of Sections 6 and 8 hereof shall survive any
termination of this Agreement.
(g) In the event that any one or more of the provisions contained herein
is held invalid or unenforceable in any respect, the parties shall negotiate in
good faith with a view toward substituting therefor a suitable and equitable
solution in order to carry out the intent and purpose of such invalid provision;
provided, however, that the validity and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not
be in any way impaired thereby, it being intended that all of the rights and
privileges of the parties hereto shall be enforceable to the fullest extent
permitted by law.
(h) The Section headings contained in this Agreement are for reference
only and shall not affect the meaning or interpretation of this Agreement.
(i) Any dispute, controversy or claim arising out of or relating to this
Agreement or the breach, termination or validity hereof, or any transaction
contemplated hereby shall be settled in accordance with the procedures set forth
in Article VIII of the Separation
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Agreement as if such Article VIII were set forth herein in its entirety.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.
IDT CORPORATION
By: /s/ Xxx Xxxxxxx
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Name: Xxx Xxxxxxx
Title: Chief Operating Officer
NET2PHONE, INC.
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
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Exhibit 1
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Services to be Provided by Net2Phone to IDT
Debit Card Platform Services
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Net2Phone shall support IDT's Debit Card Platform including: (1) providing
technical support for the debit card platform; (2) ordering lines to handle
calls (WorldCom, Piscataway, etc.); (3) managing database for the platform; and
(4) monitoring network, 24 hours per day, seven days per week. IDT shall be
responsible for the cost of any and all additional or replacement equipment
needed for the Debit Card Platform and shall be responsible for the cost of
maintaining and supporting all existing or new equipment required for the Debit
Card Platform. IDT shall reimburse Net2Phone for any cost incurred by Net2Phone
in the acquisition, maintenance or support of such equipment.
This category of Services may be cancelled by either party on thirty (30) days'
prior written notice and may be renewed by mutual agreement of the parties.
Amount to be paid by IDT:
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(a) Direct Costs: reimbursement of Net2Phone's direct costs as set forth
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above; plus
(b) On a monthly basis, the greater of:
(i) (A) Employee Cost: for each Net2Phone employee assigned to
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render the foregoing services, such employee's salary for the month
multiplied by the percentage of such employee's work month actually
spent rendering such Services (such percentage to be calculated based
upon time-cards or some other mutually agreed upon system) plus (B)
Overhead Factor of 20% of each product calculated in the foregoing
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clause (A) or
(ii) Usage of Debit Card Platform: $.0025 per minute of IDT use of
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the Debit Card Platform during such month.
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