Document:

EXHIBIT

10.3

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY

BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND

EXCHANGE COMMISSION PURSUANT TO ROLL 24B-2 OF THE SECURITIES EXCHANGE ACT OF

1934, AS AMENDED.

 

 

 

 

FIRST VIRTUAL COMMUNICATIONS

PARTNER

AGREEMENT

 

 

BETWEEN

 

Net One Systems

 

AND

 

FIRST VIRTUAL

COMMUNICATIONS

 

 

	

  VI - Effective July 2001

  	

  PARTNER AGREEMENT

  	

   

  

 

 

TABLE OF CONTENTS

 

	

  1.

  	

  DEFINITION

  
	

   

  	

   

  
	

  2.

  	

  APPOINTMENT

  
	

   

  	

   

  
	

  3.

  	

  TERM

  
	

   

  	

   

  
	

  4.

  	

  ORDER; ACCEPTANCE;

  DELIVERY

  
	

   

  	

   

  
	

  5.

  	

  OBLIGATIONS

  OF PARTNER & FIRST VIRTUAL COMMUNICATIONS

  
	

   

  	

   

  
	

  6.

  	

  OBLIGATIONS FOR THE TERM

  
	

   

  	

   

  
	

  7.

  	

  PRICES AND

  COMMERCIAL CONDITIONS/TERMS

  
	

   

  	

   

  
	

  8.

  	

  LICENSE FOR TRADEMARKS, SERVICE

  MARKS AND TRADE NAMES

  
	

   

  	

   

  
	

  9.

  	

  WARRANTIES

  
	

   

  	

   

  
	

  10.

  	

  LIMITATION OF LIABILITIES

  
	

   

  	

   

  
	

  11.

  	

  INDEMNIFICATION

  
	

   

  	

   

  
	

  12.

  	

  CONFIDENTIALITY

  
	

   

  	

   

  
	

  13.

  	

  TERMINATION

  
	

   

  	

   

  
	

  14.

  	

  COMPLIANCE WITH

  APPLICABLE LAW

  
	

   

  	

   

  
	

  15.

  	

  MISCELLANEOUS

  
	

   

  	

   

  
	

  EXHIBITS:

  
	

   

  	

  A- PRODUCTS, SALES

  COMMITMENTS AND DISCOUNT LEVELS

  
	

   

  	

  B- TRADEMARK LICENSE AGREEMENT

  
	

   

  	

  C- END-USER SOFTWARE LICENSE

  AGREEMENT

  
	

   

  	

  D- PRODUCT WARRANTY

  
	

   

  	

  E- REQUIRED SUBLICENSE

  AGREEMENT PROVISIONS

  

 

 

 

	

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  PARTNER AGREEMENT

  	

   

  

 

 

2

 

FIRST VIRTUAL COMMUNICATIONS  PARTNER AGREEMENT

 

This

FIRST VIRTUAL COMMUNICATIONS Partner Agreement (this “Agreement”) is entered

into as of April 1, 2002  (the “Effective Date”) by and between FIRST

VIRTUAL COMMUNICATIONS, Inc. a Delaware corporation with a principal

place of business at 3393 Octavius Drive, Suite 102, Santa Clara, CA 95054

(“FVC”) and Net One Systems (“ PARTNER”), a Japanese corporation with a

principal place of business at Sphere Tower Tennoz, 2-8, Higashi Shinagawa 2-Chome,

Shinagawa-Ku, Tokyo 140-8621, Japan.

 

IN

CONSIDERATION OF THE MUTUAL PROMISES CONTAINED HEREIN, THE PARTIES AGREE AS

FOLLOWS:

 

1.0          DEFINITIONS.   The definitions listed below and elsewhere in this Agreement apply to

both their singular and plural forms, as the context may require.

 

1.1          “Intellectual

Property Rights” collectively means any and all copyrights, patents, patent

registration rights, business processes, data rights, mask works, trademarks,

trade names, service marks, service names, trade secrets, know-how, or other

proprietary rights arising or enforceable under U.S. law, the laws of the

Territory, or any other jurisdiction, or international treaty regime.

 

1.2          The  “Products”

shall mean those products, components and parts thereof offered for sale by FVC

as listed in FVC’s then-current price list, which may be amended from time to

time by FVC. The current list is set forth in Exhibit A, which is attached

hereto.

 

1.3          The “Term” shall have the meaning set forth in

Section 3.1 below.

 

1.4          “End-User Customer” shall mean a customer or

second tier reseller of Partner.

 

1.5          The “Territory” shall mean the geographic area

agreed in which the Partner is authorized to resell the Products and to promote

the rich media web conferencing  market

and FVC’s trademarks and service marks. 

For purposes of this Agreement, the Territory shall be: Japan.

 

1.6          The “Software” shall

mean the software programs, in object code form, included with the Products, as

listed on Exhibit A, as amended

from time to time.

 

2.0          APPOINTMENT.

 

2.1          Distribution Rights:

Subject to Section 2.2 of the terms and conditions of this Agreement, FVC

hereby appoints Partner, during the Term, as FVC’s exclusive distributor for

the Products in the assigned Territory, and Partner hereby accepts such

appointment. Partner shall have the non-transferable right to obtain products

from FVC hereunder, and to market and distribute the Products to End-User

Customers within the assigned Territory.

 

 

 

	

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                2.2          Reservation of

Rights: FVC expressly reserves the right to distribute all Products in the

assigned Territory through local or global original equipment manufacturers (an

“OEM”) and through Tomen Cyber Systems such products as indicated in the Second

Extension Agreement dated March 25, 2002 with regard to the transaction with

Telecommunications Advancement Organization of Japan (“TAO”).

 

3.0          TERM.  This

Agreement shall commence on the Effective Date, and shall continue for a twenty

four  (24) month period  unless otherwise terminated earlier as

provided in Section 13 (the “Term”).  Upon

termination of the first year of the Term of this Agreement, the parties may

re-evaluate the terms of this Agreement, in light of the relationship between

the parties, and if the parties mutually agree to any changes to such terms and

conditions, the parties shall execute a written amendment hereto.

 

4.0          ORDER;

ACCEPTANCE; DELIVERY.

 

4.1          Partner

shall purchase the Products from FVC by issuance of its written purchase order,

signed by an authorized representative of Partner. FVC shall provide Partner,

within ten (10) days of receipt of Partner’s purchase order, with a written

acceptance or rejection of Partner’s purchase order. Absent written rejection

from FVC within ten (10) days of receipt of a purchase order, the purchase

order shall be deemed accepted. Only accepted purchase orders shall be binding;

provided, however, that acceptance shall not be unreasonably

withheld.  Partner may modify or cancel

any unaccepted purchase order(s) without obligation to FVC by providing written

notice of such modification or cancellation to FVC.  However, such cancellation or modification shall not relieve

Partner of its obligation to comply with the Minimum Purchase Commitment (as

defined in Section 6.1).

 

4.2          FVC reserves the right, at its sole discretion, from

time to time to discontinue or change any Product, or design or specifications

thereof, or enhance elements of this agreement, with thirty (30) days prior

notification in writing to Partner.

 

4.3          It is

expressly agreed that the terms and conditions of this Agreement supersede and

replace any and all pre-printed or other terms and conditions contained in any

purchase order, acceptance, confirmation or other document issued among the

parties unless otherwise agreed to in writing on a date subsequent hereto.

 

4.4          All

Products delivered pursuant to the terms of this Agreement shall be suitably

packed for shipment in FVC’s standard shipping cartons, marked for shipment to

Partner’s address set forth above or at such other address as the parties agree

upon, and delivered to the carrier agent F.O.B. FVC’s shipping location, at

which time risk of loss shall pass to Partner. 

All freight, insurance, and other shipping expenses, as well as expenses

for any special packing requested by Partner, will be paid by Partner.  Notwithstanding anything to the

contrary in this Agreement, including, without limitation, the delivery and

passing of risk, title to the Products only (the Software being licensed, not

sold, to Partner) will pass to Partner only upon full payment to FVC

therefore.  Until title in the Products

has passed, Partner shall be in possession of the Products in a fiduciary

capacity.  FVC reserves the right to

repossess and resell any Products to which it has retained title, and FVC’s

consent to Partner’s possession of the Products and any right Partner may have

to possession of the Products shall in any event cease if any sum owed by

Partner to FVC is not paid to FVC by the date when it is due, or if Partner is

otherwise in breach of this Agreement

 

	

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4

 

4.5          Software License

 

(a)           Subject to the terms and conditions

of this Agreement, FVC hereby grants to Partner a non-exclusive and

non-transferable license, without the right to sublicense except to End-User

Customers as expressly provided herein, in the assigned Territory during the

Term to use the Software and related documentation provided by FVC solely for

Partner’s internal use and solely in connection with the sale and promotion of

the Products to End-User Customers. Partner shall not disclose, furnish,

transfer or otherwise make available the Software or any portion thereof or

related documentation provided by FVC in any form to any third party (other

than to an End-User Customer) and shall not duplicate the Software or any part

thereof or any such related documentation.

 

(b)           Notwithstanding

anything to the contrary expressed or implied in this Agreement, Partner is

authorized to market, distribute or sublicense the Software only in object code

form and only to End-User Customers located in the Territory who prior to

taking possession of the Software have executed a “Sublicense Agreement” as set

forth below.   Each Sublicense Agreement

must contain the required provisions set forth in Exhibit E attached hereto,

as well as provisions which provide equivalent or greater protection of FVC’s

Intellectual Property Rights and confidential information than those

protections set forth in this Agreement. Partner shall maintain accurate

records of all End-User Customers who have received copies of the Software and

provide FVC with a copy of each executed Sublicense Agreement no later than

thirty (30) days after its execution. Partner is responsible for ensuring that

all End-User Customers abide by the Sublicense Agreement and shall promptly

inform FVC of any breach thereof by any End-User Customer and assist FVC in

enforcing its rights against any breaching End-User Customer.

 

(c)           Title to and ownership of and all

Intellectual Property Rights in or related to the Software, related

documentation provided by FVC and all partial or complete copies of such

Software and related documentation permitted to be made hereunder or under

Sublicense Agreements shall at all times remain with FVC (or its licensors).

This Agreement and Sublicense Agreements shall not be construed as a sale of

any rights in the Software, related documentation provided by FVC, any copies

thereof or any part thereof. All references in this Agreement or Sublicense Agreements

to sale, resale or purchase of the Products, or references of like effect,

shall, with respect to the Software and related documentation provided by FVC,

mean sublicenses of the Software and such related documentation to End User

Customers who have entered into Sublicense Agreements pursuant to this Section.

 

(d)           Partner may not modify, translate, or

otherwise generate any derivative works from the Products or Software.  Partner shall not, and Partner shall not

permit third parties to, disassemble, decompile or otherwise reverse engineer

the Products or Software or attempt to reveal the trade secrets, know-how,

source code, or structure underlying the Products or Software.

 

(e)           FVC SHALL HAVE NO LIABILITY TO

PARTNER OR ITS END-USER CUSTOMERS WITH RESPECT TO ANY CLAIM OF PATENT OR

COPYRIGHT INFRINGEMENT WHICH (I) ARISES FROM THE COMBINATION OR UTILIZATION OF

THE PRODUCT WITH ANY ITEM OF HARDWARE OR WITH ANY MACHINE, DEVICE, COMPUTER OR

SOFTWARE NOT FURNISHED OR APPROVED BY FVC, OR (II) BASED UPON A PRODUCT WHICH

HAS BEEN USED IN A MANNER FOR WHICH IT WAS NOT DESIGNED.

 

	

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5

 

5.0          OBLIGATIONS

OF PARTNER AND FIRST VIRTUAL COMMUNICATIONS.

 

5.1          Partner shall use its best efforts to

promote, market and distribute the Products in order to realize the maximum

sales potential for the Products in the assigned Territory. Partner will not

accept orders from outside the assigned Territory without the express written

consent of FVC. Partner shall be solely responsible for all of its costs and

expenses related to advertising, marketing, promoting, and distributing the

Products, including all taxes associated with the marketing,

distribution and delivery of the Products ordered hereunder, including but not

limited to sales, use, stamp-duty, excise, value-added, withholding and similar

taxes and all customs, duties or other governmental impositions (“Taxes”). Partner may also be eligible to receive

marketing co-op funds, in accordance with the guidelines set forth in Exhibit F.

 

5.2          To

the maximum extent allowed under applicable law, Partner shall not, during the

Term, advertise, promote, market, sell or otherwise transfer (i) the Product

outside the Territory, or (ii) any product or service which is competitive with

the Product.  Partner may advertise,

promote, market, sell or otherwise transfer a competitive product, if Partner

obtains FVC’s prior written approval on a product-by-product basis.

 

5.3          FVC shall provide Partner with

manuals for the Products free of charge via online access to the Internet.  Such access will be subject to password

protection in order to restrict access and use of such manuals to Partner or

its End-User Customers.

 

5.4          Upon execution of this Agreement and no later

than on the first day of each calendar quarter thereafter, Partner shall

provide to FVC a forecast of Partner’s anticipated quarterly requirement for

Products for the next six (6) month period. Partner agrees to provide such

forecasts in form and format as may be reasonably requested by FVC, including

machine-readable form.

 

5.5          Partner agrees to provide first and

second level support to End-User Customers and all End-User Customers’

questions shall be directed to and addressed by Partner.  Partner shall keep FVC informed as to

problems encountered and resolutions proposed and shall communicate promptly to

FVC any and all modifications, design changes or improvements to the Product

suggested by any End User, or any employee or agent of Partner.  Partner further agrees that such information

shall be deemed FVC’s Confidential Information as governed under this

Agreement.  First and second level

support is generally defined as support-related questions that can be answered

by simply reading FVC product manuals, “read me” documents, Technical Support

web page and/or by following logical debugging procedures.  Partner may request third level (more

complex) support assistance from FVC’s technical service representatives by

telephone and/or e-mail.  These

representatives are available during FVC’s normal business hours (8:00 am -

8:00 PM PT) for reasonable consultation with respect to the use of the

Products.  Only Partner’s personnel who

have been specifically authorized by FVC will request such third level support

assistance.

 

5.6          Partner agrees to send, at Partner’s sole

expense, appropriate personnel to the Product technical and sales training

offered by FVC, in order to develop such personnel’s ability to provide

pre-sales support as well as first and second level post-sales support on FVC

products to End-User Customers.

 

                5.7          If

not already in place, Partner will establish access to Internet e-mail and the

Worldwide Web to facilitate communications regarding technical and sales

information and support.

 

	

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6

 

 

 

6.0          OBLIGATIONS

FOR THE TERM.

 

Partner

and FVC agree to fulfill the following obligations during the Term:

 

6.1          Minimum Purchase 

Commitment.  Partner agrees to sell and support the complete

line of FVC’s rich media web conferencing products and services.  Partner shall purchase from FVC a

minimum purchase amount as set forth on Exhibit A (the “Minimum Purchase

Commitment”).  If Partner fails to meet this

Minimum Purchase Commitment, then FVC shall notify Partner, in writing, of such

failure (a “Failure Notice”) and Partner shall have [...***...] to purchase

Products from FVC in order to meet such Minimum Purchase Commitment.  If Partner fails to meet such Minimum

Purchase Commitment in such [...***...] period then FVC shall have the right to

renegotiation the terms and conditions of this Agreement. Partner 

agrees that [...***...] is made

in accordance with [...***...].

 

6.2          Partner shall purchase from FVC a sufficient

level of Products in order to demonstrate, test, prototype and train

staff.  Partner shall also

develop and maintain sufficient knowledge of the industry, the Products, the

Software, complementary product offerings, and competitive offerings (including

specifications, features, and functions) so as to be able to demonstrate,

differentiate and support the Products to End-User Customers.  Partner shall, at FVC’s request, take an

active part in any of FVC’s sales programs and marketing campaigns.

 

6.3          Designated representatives of Partner

and FVC shall meet on a monthly basis to discuss sales of FVC products, such

discussions shall include Point of Sale (POS) information by region into which

the sold items are delivered and installed.

 

7.0          PRICES

AND COMMERCIAL CONDITIONS/TERMS.

 

7.1          The prices of the Products and

accompanying Product support to Partner shall be subject to discount

levels as outlined in Exhibit A

off of FVC’s Recommended Selling Price List, which will be amended by FVC from

time to time.

 

7.2          Full payment for the Products (including any

freight, taxes or other applicable costs initially paid by FVC but to be borne

by Partner) shall be made by Partner to FVC net [...***...] from the date of FVC shipment of the

Products.  All billing and payments shall

be in

 

U.S. Dollars. Such payments may be made by a wire transfer to FVC’s

bank account, at the following:

 

Bank Name:

Bank Address:

CA 95054Beneficiary Name:                               [...***...]

Account #:

ABA/Routing #:

 

[*] = CONFIDENTIAL TREATMENT

REQUESTED

 

 

	

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7

 

 

7.3          Payment terms for Partner’s Sales

Commitments for the [...***...], shall

be due and payable [...***...] from the

end date of each respective [...***...].

Payment terms of installment payment shall be due net [...***...] from the date of FVC shipment of the Products.

 

7.4          Late payments shall accrue interest from the date

due until the date paid at a rate of [...***...] percent [...***...] per month or

the maximum rate permitted by applicable law, whichever is less.

 

7.5          Prices for the Products are F.O.B.

FVC’s designated facilities in the United States.  Prices are exclusive of all applicable Taxes.  Partner shall pay all Taxes associated with

the sale and delivery of all Products, and any collection costs, penalties and

interest, associated with the Taxes.

 

7.6          FVC shall be free to change the published list

prices and discount schedules for any Products sold under this Agreement at any

time. In the event that FVC increases its prices, all Products shipped after

the effective date of a price increase shall be at the new higher price except

that FVC shall honor all written Partner Purchase Orders received for Products

prior to notice of the price increase at the prices in effect at the time the

Purchase Order was received. In the event that FVC [...***...] Products

ordered.

 

7.7          Partner is free to determine

its own price for the sale of the Products and license of the Software.  Although FVC may publish suggested price

lists, they are suggestions only and are not binding in any way.  Partner’s sole compensation for its

activities under this Agreement is derived from the difference between the

prices paid by Partner for the Products and the price at which such Products

are sold and licensed by Partner to End-Users Customers.

 

8.0          LICENSE FOR

TRADEMARKS, SERVICE MARKS AND

TRADE NAMES.

 

8.1          Trademark

License.  Subject to this

Agreement and the additional provisions in Exhibit B, FVC hereby grants to

Partner a license to use and display the FVC trademarks, tradenames, service

marks and service names listed in Exhibit B (collectively, the “Trademarks”)

solely in connection with the marketing of the Products during the Term.  Partner shall also have the right to represent

that it is an authorized distributor of the Products and to advertise such

under the Trademarks.

 

8.2.         Ownership and Restrictions.  Partner acknowledges that FVC (or its

licensor) is the owner of the Trademarks and all Intellectual Property Rights

and goodwill associated therewith, and Partner agrees to do nothing

inconsistent with such ownership.  The

nature and quality of all Partner’s activities in connection with the Products,

this Agreement and the Trademarks, shall be of the highest standards and

quality and Partner shall do nothing to degrade the ownership, prestige, image,

reputation and goodwill of FVC or the Trademarks.  Partner shall comply with FVC’s instructions with respect to the

use of the Trademarks and the application of the Trademarks to any marketing

materials.  FVC, at its discretion, may

terminate this trademark license if at any time it determines that Partner is

using the Trademarks in a manner that violates FVC’s then in effect trademark

policy.  Partner may not remove any copyright,

trademark or other notice of ownership of the Intellectual Property Rights

associated with the Products which has been affixed by FVC.  Partner shall not adopt or attempt to

register the Trademarks, or any 

 

[*] = CONFIDENTIAL TREATMENT

REQUESTED

 

 

 

	

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8

 

name, design or symbol confusingly similar thereto, including without

limitation as part of, or in connection with Partner’s business, private,

substitute or other name or any design, symbol, product, service, letterhead,

business card or other means of identification.  Promptly following termination or expiration of this Agreement

for any reason, Partner shall take all actions necessary to transfer and assign

to FVC all rights, title and interest in and to the Trademarks and goodwill

related thereto which Partner may have acquired as a result of this Agreement

and shall promptly discontinue all uses of the Trademarks.  Partner shall cooperate with FVC if FVC (or

its licensor) wishes to register the Trademarks in the Territory or in any

other country, including without limitation execute appropriate documents and

provide other reasonable assistance which FVC (or its licensor) may reasonably

require to that end.

 

9.0          WARRANTIES.

 

9.1          FVC warrants, to Partner only, that the Products

sold to Partner for distribution in the assigned Territory, as to hardware

only, shall conform in all material respects to the published specifications

and shall be free from material defects in design, material and workmanship for

a period of one (1) year from shipment to End-User Customer (the “Warranty

Period”).  FVC agrees to provide the

warranty obligations with respect to the Software Products as set forth in and

in accordance with FVC’s current End-User Sublicense Agreement, a sample of

which is attached in Exhibit C.  In the event that any Product is found to be defective, FVC

shall, at its sole discretion, either replace or repair the defective Product

at its cost. Partner shall make no additional warranties on behalf of FVC.  FVC reserves the right to change its

warranty policies at any time.  Partner

acknowledges that the replacement Products provided by FVC may be fully

operational refurbished units. Under no circumstances shall the

warranties set forth in this Section 9 apply to any Product that has been sold

outside the assigned Territory, customized or modified without FVC’s written

consent, or damaged or misused

 

9.2          In

the event any Product is found nonconforming during the Warranty Period,

Partner shall notify FVC, in writing, of the serial numbers of such

nonconforming Products and reason for nonconformance and shall request from FVC

a return merchandise authorization (“RMA”) to return the nonconforming

Product.  FVC shall issue such RMA

promptly upon request.  Within

ten (10) days after receipt of the written RMA number, Partner shall

return to FVC the rejected Product in accordance with FVC’s shipping

instructions, in its original shipping carton with the RMA number displayed on

the outside of the carton.  FVC reserves

the right to refuse to accept any rejected Product that does not bear an RMA

number on the outside of the carton.  As

promptly as possible, but no later than thirty (30) days after receipt by

FVC of properly rejected Product, FVC shall, at its option and expense, either

(i) repair or replace the nonconforming Product with a functional replacement,

or (ii) refund to Partner the purchase price of such rejected Product.  FVC shall be liable for, and bear all costs

associated with, the shipment, repair, replacement or refund of all

nonconforming Products under this Section 9.2. 

Partner hereby agrees that the remedy in this Section 9.2 shall be its

sole recourse or remedy in the event of any Product nonconformity.  Warranty repairs or replacements shall not

constitute an extension of the original Warranty Period.  Any repaired or replaced Product reshipped

to Partner pursuant to this Section 9.2 shall not count toward the Minimum

Purchase Commitment...

 

9.3          Partner will expressly indicate to their End-User

Customers that they must look solely to Partner in connection with any

problems, warranty claims, or other matters concerning the Product.

 

9.4          Partner Warranties.  Partner hereby represents, warrants and

covenants the following on a continuing basis during the Term:

 

 

	

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9

 

 

(f)  Partner is and shall remain a Japanese

corporation duly organized, validly existing and in good standing under the

laws of Japan with all necessary corporate power and authority to conduct its

business and duly qualified to transact business in each jurisdiction in the

Territory and perform this Agreement to the full extent contemplated

herein.  Furthermore, the individual

executing this Agreement is an authorized representative of Partner with the

power to bind Partner to this Agreement;

 

(g)  Except as set forth in Section 14.1, no

consent, approval, license, permit, authorization, declaration, filing,

registration, or similar formality of any kind is or shall be required to be

made or obtained in the Territory by either party in order to lawfully

implement this Agreement;

 

(h)  Neither the execution or implementation of

this Agreement, nor any of the terms, conditions, warranties, liability or

warranty limitations or exclusions in this Agreement, nor the performance by

Partner of its obligations under this Agreement, does or will (i) contravene

any provision of Partner’s organizational documents; or (ii) conflict with any

agreement, understanding or obligation to which Partner is a party; or (iii) to

the best of Partner’s knowledge, any applicable law or regulation in the

Territory;

 

(i)  Partner is in good financial condition,

solvent and able to pay its bills when due and shall retain the ability to

order and pay for all Products Partner is obliged to purchase hereunder.  From time to time, on reasonable notice by

FVC, Partner shall furnish financial reports as necessary to determine

distributor’s financial condition;

 

(j)  Partner shall not make any statement,

representation, or warranty or assume any obligation or liability regarding FVC

or the Products which is not previously authorized in writing by FVC;

 

(k)  Partner

shall perform and implement this Agreement and use the licenses granted to it

by FVC under this Agreement only for lawful purposes and in accordance with

applicable law and regulations and without violating any third party rights.

 

                9.5          ALL REPRESENTATIONS, WARRANTIES AND

COVENANTS MADE BY FVC IN THIS AGREEMENT ARE MADE SOLELY TO PARTNER AND NOT TO

ANY END-USER CUSTOMER OR OTHER THIRD PARTY. 

THE FOREGOING WARRANTIES IN THIS

SECTION 9 ARE THE ONLY WARRANTIES OFFERED BY FVC HEREUNDER. TO THE

MAXIMUM EXTENT ALLOWED UNDER APPLICABLE LAW, FVC HEREBY DISCLAIMS ALL OTHER

EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTIES, INCLUDING WITHOUT LIMITATION,

ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  IF APPLICABLE LAW DOES NOT ALLOW ANY OF THE

DISCLAIMERS OR LIABILITY LIMITATION SET FORTH IN THIS AGREEMENT, THEN SUCH

DISCLAIMERS OR LIMITATIONS SHALL NOT APPLY. 

WITHOUT LIMITING THE GENERALITY OF THE FORGOING, FVC DOES NOT MAKE, AND

EXPRESSLY DISCLAIMS, ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, RELATED TO ANY

THIRD PARTY INTELLECTUAL PROPERTY, TECHNOLOGY OR INFORMATION EMBEDDED IN THE

PRODUCTS OR USED OR PROVIDED IN CONNECTION WITH THIS AGREEMENT.  FVC SHALL HAVE NO LIABILITY TO ANY END-USER

CUSTOMER FOR REPRESENTATIONS OR WARRANTIES MADE BY PARTNER TO SUCH END-USER

CUSTOMER THAT ARE INCONSISTENT WITH OR IN EXCESS OF THE WARRANTY IN SECTION

9.1.

 

	

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10

 

 

10.0        LIMITATION OF LIABILITY.   IN NO EVENT SHALL FVC BE

LIABLE TO PARTNER, AN END-USER CUSTOMER, OR ANY THIRD PARTY FROM ANY CAUSE

WHATSOEVER, AND REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT OR IN TORT

(INCLUDING NEGLIGENCE), FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL,

OR EXEMPLARY DAMAGES (INCLUDING WITHOUT LIMITATION ANY LOSS OF PROFITS,

REVENUES, SAVINGS, BUSINESS INTERRUPTION, LOSS OF DATA, OR LOSS OF USE DAMAGES)

ARISING FROM OR RELATED TO THE MANUFACTURE, SALE, OR SUPPLY OF THE PRODUCTS,

EVEN IF FVC HAS BEEN ADVISED OF THE POSSIBLITY OF SUCH DAMAGES OR LOSSES.  IN NO EVENT SHALL FVC’S CUMULATIVE LIABILITY

EXCEED THE AMOUNT PAID BY PARTNER TO FVC UNDER THIS AGREEMENT.  PARTNER UNDERSTANDS AND AGREES THAT THE

LIMITED WARRANTY, LIMITED REMEDIES AND LIMITED LIABILITY PROVISIONS OF THIS

AGREEMENT ARE FUNDAMENTAL PARTS OF THE BASIS OF FVC’S BARGAIN HEREUNDER AND

THAT FVC WOULD NOT ENTER INTO THIS AGREEMENT ON THESE TERMS IN THE ABSENCE OF SUCH

PROVISIONS.

 

11.0        INDEMNIFICATION.

 

11.1        FVC agrees to indemnify and hold Partner

harmless from and against any and all claims, actions, losses or damages,

including reasonable attorney’s fees and costs arising from a third party claim

alleging: (a) the infringement of a third party’s U.S. patent or

copyright; (b) a breach by FVC of a warranty as set forth in Section 9.1 above;

or (c) personal injury and product liability, which arise in whole or in part

from the normal and intended use of a Product hereunder by a End-User

Customer.  This indemnification

obligation is conditioned upon the following: Partner agrees to promptly notify

FVC in writing of any such claim and provide reasonable assistance at FVC’s

expense in the defense or settlement thereof, and provided further that FVC

shall have sole control of the defense and all related settlement negotiations

with respect hereto. FVC shall not be responsible for indemnification for any

settlement made without its written consent.

 

11.2        If a Product or any part thereof

becomes, or in FVC’s opinion is likely to become, the subject of a claim of

infringement of an intellectual property right of a third party, Partner shall

permit FVC, at its sole option and expense, (i) to procure for Partner or its

End-User Customers the right to continue using such Product, (ii) to replace or

modify such Product so that it becomes non-infringing, or (iii) to grant

Partner a refund for such product as depreciated in accordance with the

straight line method of depreciation for three years.  The foregoing states FVC’s total liability and Partner’s sole and

exclusive remedy for any and all claims Partner may have against FVC arising

from or relating to such infringement.

 

11.3        Notwithstanding any limitations set

forth in this Agreement, Partner shall indemnify and hold FVC harmless from and

against all claims, liabilities, damages, losses and expenses, including

reasonable attorney’s fees, which FVC may incur, arising from or relating to

third party claims based on the conduct of Partner’s operations under this

Agreement, including but not limited, to any breach by Partner of this

Agreement.

 

                11.4        NOTWITHSTANDING

ANY OTHER PROVISION OF THIS AGREEMENT, FVC SHALL HAVE NO LIABILITY TO PARTNER

OR ITS END-USER CUSTOMERS WITH RESPECT TO ANY CLAIM OF PATENT, COPYRIGHT OR ANY

OTHER INTELLECTUAL PROPERTY RIGHT INFRINGEMENT WHICH (I) ARISES FROM THE

COMBINATION OR 

 

 

	

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11

UTILIZATION OF THE PRODUCT WITH ANY ITEM OF HARDWARE OR

WITH ANY MACHINE, DEVICE, COMPUTER OR SOFTWARE NOT FURNISHED OR APPROVED BY

FVC, (II) BASED UPON A PRODUCT WHICH HAS BEEN USED IN A MANNER FOR WHICH IT WAS

NOT DESIGNED, OR (III) USE OF A SUPERSEDED OR ALTERED RELEASE OF A PRODUCT

IF SUCH INFRINGEMENT WOULD HAVE BEEN AVOIDED BY THE USE OF CURRENT UNALTERED

RELEASES OF THE PRODUCT THAT FVC PROVIDES TO PARTNER OR ITS END-USER CUSTOMERS.

 

12.0        CONFIDENTIALITY.

 

12.1        It is expected that

the parties will disclose to each other certain confidential information

(“Confidential Information”) and each party recognizes the value and importance

of the protection of the other’s Confidential Information.  All Confidential Information of one party

(the “Disclosing Party”)  disclosed to

the other party (“Recipient”) shall remain the sole property of the Disclosing

Party (or its licensors), which shall own all rights, title, interest and

Intellectual Property Right therein. 

Only information which is identified as confidential pursuant to the

next paragraph shall be deemed Confidential Information hereunder.  The pricing and other terms of this

Agreement shall be FVC’s Confidential Information.

 

12.2        A Disclosing Party may

designate information as confidential by: (a) stamping written information or

other physical media as “Confidential” prior to disclosure; (b) indicating in

the visual display of a program that the program is confidential; (c)

identifying oral information as confidential at the time of disclosure to

Recipient, or (d) notifying the Recipient in writing prior to disclosure that certain

specifically identified types of information are considered to be

confidential.  

12.3        Except as expressly

allowed in this Agreement, both parties agree not to duplicate in any manner

the other’s Confidential Information or to disclose it to any third party or to

any of their employees not having a need to know same to implement this

Agreement.  Each Recipient agrees to

keep Disclosing Party’s Confidential Information in a safe and secure place;

protect it from unauthorized use or disclosure, and monitor access to it.  Recipient shall use the other’s Confidential

Information solely for the implementation of this Agreement and for no other

purpose, whether for Recipient’s own benefit or the benefit of any third party.  Each party shall immediately notify the

other upon discovery of any loss or unauthorized disclosure of the Confidential

Information of the other party.

 

12.4        Each party’s

obligations under this Agreement with respect to any portion of the other

party’s Confidential Information shall terminate or not apply when Recipient

can prove that it: (i) is or subsequently becomes publicly available or known

to Recipient without breach of any obligation owed to the Disclosing Party;

(ii) became known to the Recipient prior to the Disclosing Party’s disclosure

of such information to the Recipient; (iii) is used by the Recipient to the

limited extent necessary to enforce any of its rights, claims or defenses

under, or as otherwise contemplated in, this Agreement; or (iv) was

communicated in response to a valid order by a court or other governmental

body, by subpoena, law or other such rules, or was necessary to establish the

rights or obligations of either party under this Agreement and such disclosure

complies with the requirements set forth below

 

                12.5        If the Recipient or

any of the Recipient’s representatives is required to disclose any of the

Disclosing Party’s Confidential Information pursuant to Section 12.3, the

Recipient will, as soon as reasonably practicable, provide the Disclosing Party

with written notice of the applicable 

 

	

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12

 

subpoena, law, or rule so that the Disclosing Party

may seek a protective order or other appropriate remedy.  The Recipient and its representatives will

cooperate fully with the Disclosing Party to obtain any such protective order

or other remedy.  If the Disclosing

Party elects not to seek, or is unsuccessful in obtaining, any such protective

order or other remedy in connection with any requirement that the Recipient disclose

Confidential Information, and if the Recipient furnishes the Disclosing Party

with a written opinion of reputable legal counsel confirming that the

disclosure of Confidential Information is required pursuant to applicable

subpoena, law or rule, then the Recipient may disclose such Confidential

Information to the extent required; provided, however, that the Recipient and

its representatives will use commercially reasonable efforts to ensure that

such Confidential Information is treated confidentially by each person or

entity to whom it is disclosed.

 

12.6        Confidential

Information shall not be reproduced or used in any form or for any purpose

except as required to implement this Agreement.  Any reproduction of any Confidential Information of the Disclosing

Party by Recipient shall remain the property of the Disclosing Party and shall

contain any and all confidential or proprietary notices or legends which appear

on the original.

 

13.0        TERMINATION.

 

13.1         This Agreement may be terminated by FVC

or by Partner upon thirty (30) days written notice to the other party in the

event that the other party materially breaches the terms and conditions hereof

and fails to cure said breach within the notice period provided herein; except

that a party may terminate this Agreement immediately, upon written notice for

a breach of Section 4.5, 4.6, 9.4, 12, 14 or 15.6.  Termination of this Agreement shall not affect the rights and

obligations, including payment or delivery obligations under any outstanding

purchase orders, of the parties accruing prior thereto.

 

13.2        If FVC or Partner shall become bankrupt

or insolvent, or if a petition of bankruptcy is filed against either party, or

if a receiver is appointed for either party, or if the ownership or control of

either party is materially changed, the other party shall have the right to

terminate this Agreement immediately upon written notice to such other party.

 

13.3        Any termination of this Agreement by FVC

or Partner under this Section 13 herein shall not constitute an election of

remedies by the terminating party and the terminating party shall, in addition,

have all other remedies provided at law.

 

13.4        Upon termination of this Agreement for

any reason or upon expiration hereof, each party shall promptly return to the

other party all Confidential Information, as defined in Section 12 herein,

provided during the Term.  Any

outstanding payment obligation and Sections 1, 4.5(b), 4.5(c), 4.5(d), 4.5(e),

9.6, 10, 11, 12, 13.4, 14, and 15 shall survive any termination or expiration

of this Agreement. Licenses to End-User Customers shall also survive.

 

14.0        COMPLIANCE WITH APPLICABLE LAW.

 

                14.1        Partner warrants, represents and covenants

to FVC, for the duration of the Term, that it will comply with all applicable

laws and regulations in the implementation of this Agreement, including (i)

obtaining any and all approvals, registrations, licenses, certifications,

permits, or other clearances required prior to the development, marketing,

sale, licensing or any other transfer or use of any Product, and otherwise

taking all necessary actions so that all 

 

	

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13

 

Products fully satisfy industry or any country

specific standards, which are applicable to any Product; and (ii) otherwise

complying with any and all applicable national, federal, regional, state, or

local law, statute, ordinance, rule, environmental, communications or other

regulation, judgment, decree, requirement, order, procedure, or public policy

of any legislative, judicial, administrative, governmental, or regulatory body,

agency, or authority of any kind, in any and all jurisdictions in the

Territory.  Without limiting the

generality of the foregoing:

 

14.2        Government

Approval and Registration. 

Partner shall take all necessary steps to gain official government and

industry acceptances required in connection with this Agreement and the use,

manufacture and sale of the Products. 

If any approval or registration of this Agreement (the “Required

Registrations”), shall be required, either initially or at any time

during the Term, in order to give this Agreement legal effect in the Territory

or otherwise fully effectuate this Agreement in accordance with its intended

purpose, Partner agrees, at its sole expense, to take whatever steps may be

necessary to secure such Required Registration, immediately and prior to

commencing any activities which are subject to such approval or registration.

 

14.3        Export

Controls.  Partner

shall not, directly or indirectly, export or re-export, or knowingly permit the

export or re-export of the Products or any component thereof, or any other

items, to any country for which the United States Export Administration Act or

any regulation thereunder, or any other similar United States law or

regulation, including without limitation the United States Arms Export Control

Act, requires an export license or other United States governmental approval,

unless the appropriate export license or approval has first been obtained.

 

14.4        Corrupt

Practices.  Partner

shall not, directly or indirectly, make, offer or agree to make or offer on

behalf of FVC, any loan, gift, donation or other payment, directly or

indirectly, whether in cash or in kind, for the benefit of or at the direction

of any candidate, committee, political party, political function or government

or government subdivision, or any individual elected, appointed or otherwise

designated as an employee or officer thereof, for the purposes of influencing

any act or decision of such entity or individual or inducing such entity or

individual to do or omit to do anything in order to obtain or retain business

or other benefits in violation of the United States Foreign Corrupt Practices

Act.

 

14.5        Boycott.  Partner shall not, directly or indirectly,

take any action that would cause FVC to be in violation of United States

anti-boycott laws under the United States Export Administration Act or the

United States Internal Revenue Code, or any regulation thereunder.

 

15.0        MISCELLANEOUS.

 

15.1        Governing

Law.  This Agreement shall be governed, construed

and enforced solely and exclusively in accordance with the laws of the State of

California, USA, without regards to its conflict of laws principles.  The parties agree that the United Nations Convention

on Contracts for the Sale of International Goods shall not apply to this

Agreement.

 

                15.2        Arbitration.  In

the event there is a dispute between the parties arising out of or otherwise

relating to this Agreement, the parties agree to promptly meet in good faith to

try to resolve such dispute, and to escalate the dispute to senior management

of each party for resolution.  Any and

all such disputes that cannot be so resolved by the parties within ten (10)

days following such meeting, shall be settled solely and exclusively by

arbitration in Santa Clara, 

 

	

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14

California, USA pursuant to the commercial rules then

in effect of the International Chamber of Commerce.  The merits of the dispute shall be resolved in accordance with

the laws of the State of California, USA. 

The arbitration shall be conducted by an arbitration panel consisting of

three (3) arbitrators, each of whom shall be knowledgeable in the subject

matter hereof.  Each party shall select

one (1) of the arbitrators, and the two (2) selected arbitrators shall select

the third arbitrator.  The arbitration

shall be conducted in the English language, and all documents shall be

submitted in English or be accompanied by an English translation.  The arbitrators will provide a written explanation

to the parties of any arbitration award. 

Any decision rendered by the arbitration panel shall be binding, final

and conclusive upon the parties, and a judgment thereon may be entered in, and

enforced by, any court having jurisdiction over the party against which an

award is entered or the location of such party’s assets, and the parties hereby

irrevocably waive any objection to the jurisdiction of such courts based on any

ground, including without limitation, improper venue or forum non-conveniens.  The parties and the arbitration panel shall

be bound to maintain the confidentiality of this Agreement, the dispute and any

award, except to the extent necessary to enforce any such award.  The prevailing party, if a party is so

designated in the arbitration award, shall be entitled to recover from the

other party its costs and fees, including attorneys’ fees, associated with such

arbitration.  Except where clearly

prevented by the subject matter of the dispute, both parties shall continue

performing their respective obligations under this Agreement while this dispute

is being resolved.

 

Notwithstanding the foregoing, nothing contained in this Agreement

shall prevent a party from seeking injunctive or other equitable relief from

any court of competent jurisdiction to protect such party’s rights under this

Agreement, regardless of whether arbitration or other legal proceedings have

commenced.

 

15.3        Rights.  The

waiver of any right accruing to any party hereunder by failure of that party to

exercise that right in a given instance, or delay in exercising that right,

shall not be deemed a waiver of said right in future instances of a similar

nature.

 

15.4        Notice.  With the

exception of notification of termination or non-renewal pursuant to Section 14

herein, which shall be made by registered air mail, return receipt requested or

other method which provides for proof of receipt, all notices, requests or

other communications which are necessary or desirable in connection with this

Agreement shall be acceptable if delivered in person or by facsimile, telex or

other telegraphic means addressed to the receiving party, at its address

appearing on the first page herein. Delivery shall be deemed effective when the

communication is received by the party to whom it is addressed.

 

15.5        Amendments.  No modification, termination, extension,

renewal or waiver of any provisions of this Agreement shall be binding upon any

party unless made in writing and signed by an authorized officer or

representative of each of the parties.

 

15.6        Independent

Contractor.  No party shall, for any purpose, be deemed

to be an agent of the other party and the relationship among the parties shall

only be that of independent contractors. 

No agency, employment, partnership, franchise, or other relationship is

created hereunder.  Except as expressly

provided in this Agreement, no party shall have any right or authority to

assume or create any obligations or to make representations or warranties on

behalf of the other party in any respect whatsoever.

 

15.7        Force

Majeure.  No party shall be liable to any other party

for failure or delay in the performance of any of its obligations under this

Agreement for the period and to the extent that such 

 

	

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15

failure or delay is caused by

riots, curtailments, civil commotion, wars, hostilities between nations,

governmental laws, orders or regulations, acts of God, storms, fires, strikes,

explosions or other similar or different contingencies beyond the reasonable

control of the respective party.

 

15.8        Non-assignability.  Partner

shall have no right to transfer or assign any rights or obligations hereunder

without the written consent of FVC, such consent not to be unreasonably

withheld or delayed.  FVC may freely

assign this Agreement provided that any such assignee agrees in writing to be

bound by the terms of this Agreement. 

Any assignment or transfer in violation of this Section 14.8 is null and

void.

 

15.9        Publicity.  Partner will not publish or otherwise

disseminate any news release or other marketing material that references FVC

without the FVC’s prior written consent, which consent will not be unreasonably

withheld or delayed.

 

15.10      Attorneys’

Fees.  In the event

that any action or proceeding is brought in connection with this Agreement, the

prevailing party shall be entitled to recover its costs and reasonable

attorneys’ fees following a final judgment or arbitration award.

 

15.11      Agreement in English.  The parties acknowledge that this Agreement

is drafted and executed in, and shall be solely governed by the English

language, which shall control, in all respects, the construction and

interpretation of this Agreement.

 

15.12      Severability.  If one or more provisions in this Agreement

are ruled entirely or partly invalid or unenforceable by any court or

governmental authority of competent jurisdiction, then: (i) the validity and

enforceability of all provisions not ruled to be invalid or unenforceable shall

remain unaffected; (ii) the effect of such ruling shall be limited to the body

making the ruling; (iii) the provision(s) held wholly or partly invalid or

unenforceable shall be deemed amended, and the Parties shall reform the

provision(s) to the minimum extent necessary to render them valid and

enforceable in conformity with the parties’ intent as manifested herein; and

(iv) if the ruling, or the controlling principle of law or equity leading to

the ruling, is subsequently overruled, modified, or amended, then the

provision(s) in question, as originally set forth in this Agreement, shall be

deemed valid and enforceable to the maximum extent permitted by the new

controlling principle of law or equity. 

WITHOUT LIMITING THE FOREGOING, IT IS UNDERSTOOD AND AGREED THAT EACH

AND EVERY PROVISION OF THIS AGREEMENT WHICH PROVIDES LIMITATION OF LIABILITY,

DISCLAIMER OF WARRANTIES OR EXCLUSION OF DAMAGES IS INTENDED BY THE PARTIES TO

BE SEVERABLE AND INDEPENDENT OF ANY OTHER SUCH PROVISION AND TO BE ENFORCED AS

SUCH.  FURTHER, IT IS EXPRESSLY

UNDERSTOOD AND AGREED THAT IN THE EVENT ANY REMEDY HEREUNDER IS DETERMINED TO

HAVE FAILED OF ITS ESSENTIAL PURPOSE, ALL LIMITATIONS OF LIABILITY AND

EXCLUSIONS OF DAMAGES SET FORTH HEREIN SHALL REMAIN IN EFFECT

 

15.13      Entire

Agreement. This Agreement

and Exhibits A, B, C, D, E, and F hereto completely and exclusively

states the agreement of the parties regarding its subject matter.  It supersedes, and its terms govern, all

prior or contemporaneous understandings, agreements, or other communications

between the parties, oral or written, regarding such subject matter.

 

 

	

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16

 

WITNESS HEREOF, the Parties hereto have executed this Agreement

as of the Effective Date hereof by a duly authorized representative.

 

	

  NET ONE SYSTEMS

  	

  FIRST VIRTUAL COMMUNICATIONS, Inc.

  
	

  (Partner)

  	

   

  
	

   

  	

   

  
	

  By:

  	

  /s/

  KAZUO SATO

  	

   

  	

  By:

  	

  /s/ TIM A. ROGERS

  	

   

  
	

   

  	

   

  
	

  Name:

  

  	

   

  	

  Kazuo Sato

  	

   

  	

  Name:

  	

  Tim

  A. Rogers

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  	

  President, CEO

  	

   

  	

  Title:

  	

  CFO

  	

   

  
	

  (Print)

  	

  (Print)

  
	

   

  	

   

  
	

  Date:

  	

   

  	

  April

  17, 2002

  	

   

  	

  Date:

  	

   

  	

   

  
												

 

	

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17

 

EXHIBIT A

 

SALES

COMMITMENT AND DISCOUNTS

 

Minimum

Purchase  Commitment:

 

[...***...]

 

In addition to the Minimum Purchase Commitments,

listed above, partner will use commercially reasonable efforts to meet the

following purchase targets:

 

[...***...]

 

DISCOUNT LEVELS

 

FVC offers the following product discounts

from its published Book Price at the time

of order.  From time to time, FVC

reserves the right to add new products to this Discount Schedule or to

adjust prices relative to market conditions

and dynamics.

 

Product Volume Discount

 

[...***...]

 

[...***...]

 

[...***...]

shall mean FVC products [...***...] for the [...***...].

 

[...***...]

FVC will provide [...***...] to be in effect until [...***...].

 

SUPPORT PRICES

 

During the Term, [...***...], beginning on the

[...***...] of the [...***...].  [...***...],

beginning on the [...***...] of the 

[...***...]. 

[...***...], beginning on the [...***...] of the [...***...].

 

[*] = CONFIDENTIAL TREATMENT

REQUESTED

 

	

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18

 

EXHIBIT B

 

LICENSE FOR

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

 

1.       Partner may use the

Trademarks listed in Section 4 below, as may be supplemented from time to time

by FVC. . Partner agrees to submit to FVC any published material not previously

reviewed by FVC containing references to the Products for FVC’s approval prior

to the publication or release of such published material. Such approval shall

not be unreasonably withheld. Partner shall not challenge FVC’s rights to use

the Trademarks that FVC may apply to or use in connection with the Products. If

Partner in the course of its business in the resale of the Products acquires

any goodwill or reputation in any of the Trademarks of FVC applied thereto,

then at the expiration or termination of this Agreement all such goodwill or

reputation automatically shall vest in FVC without any separate payment or

other consideration of any kind to Partner, and Partner agrees to take all such

actions necessary to effect such vesting.

 

2.       FVC shall have the sole

ability and responsibility to register the Trademarks in assigned Territory.

However, Partner shall, at the request and expense of FVC, do such acts or

things as FVC may reasonably require for the purpose of FVC’s obtaining,

maintaining, enforcing and preserving any of the Trademarks or other

proprietary rights of FVC in the assigned Territory, provided, however, that

Partner agrees that only FVC has the right to enjoin any infringement or

registration by a third party of the Trademarks or similar rights. In the event

that any unlawful copying of the Products, infringement of FVC’s rights in the

Products, or infringement or registration by a third party of the Trademarks or

other property rights of FVC in the assigned Territory comes to the attention

of Partner, Partner shall immediately inform FVC in writing, stating the full

facts of the infringement or registration known to it, including the identity

of the suspected infringer or registrant, the place of the asserted

infringement or registration and evidence thereof. Partner agrees to reasonably

cooperate with FVC, at the expense of FVC, if FVC sues to enjoin such

infringements or to oppose or invalidate any such registration.

 

3.       In order to comply with

FVC’s quality control standards, Partner shall (i) use the Trademarks in

compliance with all relevant laws and regulations; (ii) accord FVC the right to

inspect during normal business hours, without prior advance notice, Partner’s

facilities used in connection with efforts to sell the Products in order to

confirm that Partner’s use of such Trademarks is in compliance with this

provision; and (iii) not modify any of the Trademarks in any way and not use

any of the Trademarks on or in connection with any goods or services other than

the Products.

 

	

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19

 

4.      Trademarks, Service Marks and Trade Names:

 

FVC

Click To Meet

CUseeMe

Access NGI

I-Caster

I-Meter

I-Studio

I-Recorder

I-Relay

V-Cache

V-Conference

V-Switch

V-NIC

VC-NIC

V-Caster

V-Gate

V-Gate323

Video Access Node

(VaN)

MOS

 

	

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20

 

EXHIBIT C

 

END-USER

SOFTWARE LICENSE AGREEMENT

 

FIRST VIRTUAL COMMUNICATIONS

SOFTWARE LICENSE AGREEMENT

 

First Virtual Communication Inc. (“FVC”) is providing you a license to the

associated Software (the “Software”) and related printed or

electronic materials (the “Documentation”) subject to the terms of

this Software License Agreement (the “Agreement”).

 

IMPORTANT – PLEASE READ CAREFULLY

THIS IS A LEGAL AGREEMENT BETWEEN YOU AND FVC FOR THE SOFTWARE, WHICH

INCLUDES COMPUTER SOFTWARE AND RELATED DOCUMENTATION.  BY CLICKING ON THE “I AGREE” BUTTON BELOW, YOU ACKNOWLEDGE THAT

YOU HAVE READ AND UNDERSTAND THE FOLLOWING TERMS AND AGREE TO BE BOUND BY

THEM.  IF YOU DO NOT AGREE TO THESE

TERMS, FVC IS UNWILLING TO GRANT YOU THIS LICENSE AND YOU SHOULD CLICK ON THE

“I DO NOT AGREE” BUTTON, IN WHICH CASE: (1) IF YOU RECEIVED THIS SOFTWARE ON

MAGNETIC MEDIA OR CD-ROM, PROMPTLY RETURN THE UNUSED SOFTWARE TO THE PLACE FROM

WHICH YOU OBTAINED IT; OR (2) IF YOU RECEIVED THIS SOFTWARE VIA DOWNLOAD FROM

AN INTERNET WEB SITE, THEN YOU MUST DELETE ALL OF THE DOWNLOADED FILES AND YOU

MAY OBTAIN A REFUND IN ACCORDANCE WITH THE REFUND POLICY OF SUCH INTERNET WEB

SITE.

 

3.LICENSE

The Software and Documentation are licensed, not sold, to you.  You have a nonexclusive and nontransferable

license to install and use the associated Software and Documentation.  This Software can only be used on the number

of computers for which you have obtained a license from FVC.  You may physically transfer the Software

from one computer to another provided that the Software is used on no more than

one computer at a time.  You agree that

the Software and Documentation belong to FVC. 

You agree to keep confidential and use your best efforts to prevent and

protect the contents of the Software and Documentation from unauthorized

disclosure or use.  FVC reserves all

rights, title and interest to the Software and Documentation not expressly

granted to you under this Agreement.

 

4.SCOPE

OF LICENSE

The Software is licensed solely for your personal use or the internal

business use of your business entity. 

This license gives you the right to install and use one (1) copy of the

Software solely in combination with a single computer (the “Computer”).  The Computer must be owned by you or your

business entity, or provided to you under a third party agreement.  Each separate person or business entity is

required to obtain a separate license from FVC for each Computer upon which the

Software will be utilized.  If the

Software is installed on a network server or other system that allows shared

access to the Software, you agree to limit

use of the Software to the number of individuals for which you have acquired a

license from FVC.  In addition, you

agree to provide technical or procedural methods to prevent use of the

Software by individuals not specifically licensed to use the Software pursuant

to this Agreement.  You shall not use any software or hardware,

including, but not limited to “multiplexing” or “pooling” software or hardware,

to reduce the number of direct connections to the Software from clients,

workstations or computers.  FVC

is not required to provide any maintenance or support services with respect to

the Software under this Agreement. You may make one (1) copy of the Software

for backup purposes if FVC’s copyright notice is included.

 

5.RESTRICTIONS

You are not permitted, nor can you allow any third party, to modify,

translate, reverse engineer, decompile, disassemble (except to the extent

applicable laws specifically prohibit such restrictions) or create derivative

works based on the Software or Documentation, or any portion thereof.  You are not permitted, nor can you

 

	

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21

 

allow any third party, to copy the Software or Documentation except as

specifically provided by this Agreement.  The

Software is licensed as a single product. 

You are not permitted, nor can you allow any third party, to separate

the Software’s component parts for use on more than one (1) computer.  You are not permitted to sell,

rent, lease, lend or otherwise transfer the Software or Documentation on a

permanent or temporary basis.  You are

not permitted, nor can you allow any third party to remove any proprietary

notices, labels or trademarks on the Software or Documentation.  You are not permitted, nor can you allow any

third party, to use FVC’s or FVC’s suppliers’ name, logos, or trademarks in any

manner including, without limitation, in your advertising or marketing

materials, except to the minimum extent necessary to affix the appropriate

copyright or other proprietary notices as required herein. You may not

sublicense the Software, or assign, delegate or otherwise transfer this license

or any of the related rights or obligations for any reason.  Any attempt to make any such sublicense,

assignment, delegation or other transfer by you shall be void.

 

6.UPGRADES

If this version of the Software is an upgrade from another version or

other product, this upgrade License supersedes and replaces any previous

License.  You may use the Software only

in conjunction with the upgraded product, unless you destroy the upgraded

product.

 

7.OWNERSHIP

& COPYRIGHT

All title, ownership rights, and intellectual property rights in and to

the Software and Documentation and any copies thereof are vested in and shall

remain in FVC and/or its suppliers.  You

agree that you neither own nor hereby acquire any claim or right of ownership

to the Software and Documentation or to any related patents, copyrights,

trademarks or other intellectual property. 

You own only the magnetic or other physical media on which the Software

and related Documentation are recorded or fixed.  This license is not on sale of the original or any subsequent

copy.  The Software and the

Documentation is protected by the copyright laws and other intellectual

property laws of the United States and international treaties.  You may not copy any Documentation.  You may not copy the Software (or this

license) except to provide the permitted backup copy and to load the Software

into the computer as part of executing the Software.  ANY AND ALL OTHER COPIES OF THIS SOFTWARE AND ANY COPY OF THE

DOCUMENTATION MADE BY YOU ARE IN VIOLATION OF THIS LICENSE.

 

8.TERM

AND TERMINATION

The license is effective until terminated.  You may terminate this license at any time by destroying the

Software and Documentation and the permitted backup copy.  This license automatically terminates if you

fail to comply with its terms and conditions. You agree that, upon such

termination, you will destroy (or permanently erase) all copies of the Software

and Documentation.  You also agree that,

upon termination, you will return the original Software and Documentation to

FVC, together with any other material you have received from FVC in connection

with the Software.

 

9.LIMITED

WARRANTY

If the Software is provided on magnetic media or CD-ROM, FVC warrants

such media to be free from defects in materials and workmanship under normal

use for ninety (90) days from date that you obtain the Software.  EXCEPT FOR THIS LIMITED WARRANTY, THE

SOFTWARE AND THE DOCUMENTATION ARE PROVIDED “AS IS” WITHOUT WARRANTY OF ANY

KIND EITHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE

IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

Some jurisdictions do not allow the exclusion of implied warranties, so

the above exclusion may not apply to you. 

This warranty gives you specific legal rights and you may also have

other rights, which vary, from jurisdiction to jurisdiction.

 

	

  VI - Effective July 2001

  	

  PARTNER AGREEMENT

  	

   

  

 

 

22

 

10.LIMITATION

OF LIABILITY AND REMEDIES

TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW: (I) FVC’S ENTIRE

LIABILITY AND YOUR EXCLUSIVE REMEDY IN CONNECTION WITH THE SOFTWARE AND THE

DOCUMENTATION SHALL BE THAT YOU ARE ENTITLED TO RETURN THE DEFECTIVE MEDIA

CONTAINING THE SOFTWARE TOGETHER WITH THE DOCUMENTATION TO THE MERCHANT.  AT THE OPTION OF THE MERCHANT, YOU MAY

RECEIVE REPLACEMENT MEDIA CONTAINING THE SOFTWARE AND DOCUMENTATION THAT CONFORMS

WITH THE LIMITED WARRANTY OR A REFUND OF THE AMOUNT PAID BY YOU; AND, (II)  IN NO EVENT WILL FVC BE LIABLE FOR ANY

INDIRECT DAMAGES OR OTHER RELIEF ARISING OUT OF YOUR USE OR INABILITY TO USE

THE SOFTWARE INCLUDING, BY WAY OF ILLUSTRATION AND NOT LIMITATION, LOST

PROFITS, LOST BUSINESS OR LOST OPPORTUNITY, OR ANY SPECIAL, INCIDENTAL OR

CONSEQUENTIAL DAMAGES ARISING OUT OF SUCH USE OR INABILITY TO USE THE SOFTWARE,

EVEN FVC OR AN AUTHORIZED FVC DEALER, DISTRIBUTOR OR SUPPLIER HAS BEEN ADVISED

OF THE POSSIBILITY OF SUCH DAMAGES, OR FOR ANY CLAIM BY ANY THIRD PARTY; AND,

(III) FVC’S CUMULATIVE LIABILITY UNDER THIS AGREEMENT, UNDER ANY THEORY OF

LIABILITY, SHALL NOT EXCEED THE AMOUNT YOU PAID FOR THE SOFTWARE AND

DOCUMENTATION.

 

Some jurisdictions do not allow the exclusion or limitations of incidental

or consequential damages so the above limitation or exclusion may not apply to

you.

 

GENERAL.

 

This Agreement represents the complete and final agreement concerning

the license granted hereunder and replaces any and all prior or contemporaneous

understandings or agreements, written or oral, regarding the subject matter.

This Agreement  may be amended only by a

writing executed by both parties. THE ACCEPTANCE OF ANY PURCHASE ORDER PLACED

BY YOU IS EXPRESSLY MADE CONDITIONAL ON YOUR ASSENT TO THE TERMS SET FORTH

HEREIN, AND NOT THOSE IN YOUR PURCHASE ORDER. 

If any provision of this Agreement is held to be unenforceable, such

provision shall be reformed only to the extent necessary to make it

enforceable, and the remainder of this Agreement shall nonetheless remain in

full force and effect.  This Agreement

shall be construed, governed, and enforced solely and exclusively by the law of

the State of California, USA, excluding conflict of law provisions.  The application of the United Nations

Convention on Contracts for the International Sale of Goods is expressly

excluded. You hereby agree that the courts located in the State of California,

USA, will constitute the sole and exclusive forum for the resolution of any and

all disputes arising out of or in connection with this Agreement and you hereby

irrevocably consent to the personal jurisdiction and venue of such courts and

irrevocably waive any objections thereto. 

You may not assign this Agreement to any third party without first

obtaining the express written consent of FVC and any assignment by you without

such consent shall be null and void. FVC may freely assign this Agreement to

any third party.

 

	

  VI - Effective July 2001

  	

  PARTNER AGREEMENT

  	

   

  

 

 

23

 

EXPORT

CONTROLS.

 

The Software and related technology may not be downloaded or otherwise

exported or re-exported (i) into (or to a national or resident of) Cuba, Iraq,

Libya, North Korea, Iran, Sudan, or any other country to which the U.S. has

embargoed goods; or (ii) to anyone on the U.S. Treasury Department’s list of

Specially Designated Nationals or the U.S. Commerce Department’s Table of

Denial Orders.  By installing or using

the Software, you are agreeing to the foregoing and you are representing and

warranting that you are not located in, under the control of, or a national or

resident of any such country or on any such list.  In addition, you agree to comply with any other applicable U.S.

export control laws and any local laws in your jurisdiction that may impact your

right to import, export, or use the Software. 

By installing or using the Software, you are also representing and

warranting that you will not use, or permit or authorize others to use, the

Software in connection with the design, development, production, stockpiling or

use of any chemical or biological weapons. 

You agree to defend, indemnify and hold FVC harmless from any claims

arising out of or relating to your violation of any such export control laws.

 

U.S.

GOVERNMENT RESTRICTED RIGHTS LEGEND

The Software is a “commercial item” as that term is defined at 48

C.F.R. 2.101, consisting of “commercial computer software” and “commercial

computer software documentation” as such terms are used in 48 C.F.R.

12.212.  Consistent with 48 C.F.R.

12.212 and 48 C.F.R. 227.7202-1 through 227.7202-4, all U.S. Government end

users acquire the Software with only those rights set forth therein

 

[I AGREE]                             [I

DO NOT AGREE]

 

	

  VI - Effective July 2001

  	

  PARTNER AGREEMENT

  	

   

  

 

 

24

 

EXHIBIT D

 

PRODUCT

WARRANTY

 

FVC

warrants that FVC hardware Products conform to the published product

specifications and shall be free from material defects in design, material and

workmanship for a period of one (1) year from date of shipment to End-user

Customer. FVC agrees to provide the warranty obligations with respect to the

software Products set forth in and in accordance with FVC’s current End-User

License Agreement In the event that any Product is found to be defective, FVC

shall, at its sole discretion, either replace or repair the defective Product

at its cost. No FVC Reseller shall make additional warranties on behalf of

FVC.  FVC reserves the right to change

its warranty policies at any time.

 

Under

no circumstances shall the warranties set forth above apply to any Product

which has been sold outside the terms of the Reseller’s agreement, customized

or modified without FVC’s consent, damaged or misused. Notwithstanding any

limitations set forth in this Agreement, FVC shall not be held responsible for

any incidental, consequential or special damage which may result from a defective

part except for the repair or replacement of such part.

 

Reseller

will pass through to End-User Customers the warranties made by FVC under this

Section BUT will expressly indicate to End-User Customers that they must look

solely to Reseller in connection with any problems, warranty claims, or other

matters concerning the Product.

 

THE PROVISIONS OF THE FOREGOING WARRANTIES ARE IN

LIEU OF ANY OTHER WARRANTY, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL

(INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR

PURPOSE). IN NO EVENT SHALL FVC BE LIABLE TO RESELLER, END USER CUSTOMER, OR

ANY OTHER PERSON OR ENTITY FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES

(INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE

DAMAGES) ARISING OUT OF THE MANUFACTURE, SALE OR SUPPLY OF THE PRODUCTS, EVEN

IF FVC HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES

 

	

  VI - Effective July 2001

  	

  PARTNER AGREEMENT

  	

   

  

 

 

25

 

EXHIBIT E

 

REQUIRED SUBLICENSE AGREEMENT PROVISIONS

 

End-User Customer Sublicense Agreements:  Each Sublicense Agreement shall at a minimum

include the provisions set forth below and shall include no term which

derogates from or is inconsistent therewith. 

FVC will be referred to as Partner’s supplier in the Sublicense Agreements.

 

1.       The Software is only

licensed to End-User Customer for End-User Customer’s internal,

non-transferable and non-exclusive use (without the right to sublicense) at the

facilities of End-User Customer in the Territory and only on those computers

owned or leased and used, by End-User Customer;

 

2.       No right, title or interest

to the Software, or any Intellectual Property Rights therein or the media on

which it is provided, is transferred to End-User Customer;

 

3.       End-User Customer shall not

copy the Software except for up to two (2) copies for back-up or archival

purposes and only as necessary to use the Software on the designated computer

and all such backup copies shall contain all copyright and other proprietary

notices or legends of FVC that are on the Software as delivered to the End-User

Customer.  No copies of the applicable

Documentation may be made by the End-User Customer;

 

4.       End-User Customer agrees

not to modify, translate, generate derivative works from, or reverse assemble,

decompile, or otherwise attempt to derive source code of the Software;

 

5.       The Software is subject to

FVC’s copyright.  FVC owns all

Intellectual Property Rights in and to the Software.  Software programs, although copyrighted, are unpublished and contain

proprietary and confidential information of FVC and are considered by FVC to be

trade secrets, and the End-User Customer agrees to hold the Software in

confidence.  End-User Customer agrees to

take all reasonable precautions to safeguard the confidentiality of such Software.  The End-User Customer further agrees not to

use the Software, except for its own internal business needs.  End-User Customer shall not use the Software

to develop any software or product which competes with the Software;

 

6.       The End-User Customer’s

rights with respect to the Software programs may be terminated should the

End-User Customer breach any term of the Sublicense Agreement and fail to cure

such breach within thirty (30) days after written notice;

 

7.       Upon any termination or

expiration of the Reseller Agreement between FVC and Partner, the Sublicense

Agreement shall automatically be assigned to FVC or its designee for the

remaining duration of the Sublicense Agreement.  Upon the termination of the Sublicense Agreement, the End-User

Customer shall return all Software and Documentation to Partner; and

 

8.       FVC IS AN EXPRESSLY

INTENDED THIRD PARTY BENEFICIARY OF THE SUBLICENSE AGREEMENT AND SHALL HAVE THE

RIGHT TO ENFORCE IT DIRECTLY AGAINST THE END-USER CUSTOMER.

 

	

  VI - Effective July 2001

  	

  PARTNER AGREEMENT

  	

   

  

 

 

26Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT

is made as of the 1st day of April, 2002, between NetBank, Inc. (the

“Company”), a Georgia corporation, and Theodore

Brauch (the “Executive”), a resident of the State of Florida, to be effective as of the date

described in Section 1.10 hereof.

 

RECITALS:

 

The Company desires to employ the Executive and the Executive desires

to accept such employment.

 

In consideration of the

above premises and the mutual agreements hereinafter set forth, the parties

hereby agree as follows:

 

1.     Definitions.

Whenever used in this Agreement, the following terms and their

variant forms shall have the meaning set forth below:

 

1.1           “Agreement” shall mean this

Agreement and any Annexes and Exhibits incorporated herein together with any

amendments hereto made in the manner described in this Agreement.

 

1.2           “Affiliate” shall mean any

business entity that controls, is controlled by, or is under common control

with, the Company.

 

1.3           “Average Monthly

Compensation” shall mean the quotient determined by dividing (A) the sum of

(i) the Executive’s Base Salary and (ii) Executive maximum Incentive

Compensation (as defined in Section 4.2(a)) for the year of termination by (B)

twelve (12).

 

1.4           “Base Salary”

shall have the meaning set forth in Annex A. 

 

1.5           “Business of the Company” shall mean the business

conducted by the Company and its Affiliates, which is currently banking,

residential mortgage lending, commercial lending and leasing and provision of

other financial services.

 

1.6           “Cause” shall mean:

 

1.6.1        With respect to  termination by the Company,

 

(a) a material

breach of the terms of this Agreement by the Executive (including, without

limitation, failure by the Executive to perform his duties and responsibilities

in the manner and to the extent required under this Agreement, or a breach of

any representation or warranty of the Executive set forth herein); which breach

remains uncured after the expiration of thirty (30) days following 

 

 

the delivery of written notice

of such breach to the Executive by the Company; or

 

(b)

conduct by the Executive that amounts to personal dishonesty, willful

misconduct, breach of fiduciary duty involving personal profit, intentional

failure to perform stated duties, willful violation of any law, rule or

regulation (other than traffic violations or similar offenses), or willful

violation of any final cease and desist order applicable to the Executive.

 

1.6.2        With respect to

termination by the Executive,

 

(a) a material diminution in the powers, responsibilities or duties of

Executive;

 

(b)  a material breach of the

terms of this Agreement by the Company that remains uncured after the

expiration of thirty (30) days following the delivery of written notice of such

breach to the Company by the Executive; or

 

(c)  any requirement by the

Company that the Executive’s services be rendered primarily at a location or

locations other than the Business Location set forth in Annex A.

 

1.7           “Change in Control” has the

meaning set forth in Annex B attached hereto.

 

1.8           “Permanent Disability” shall

mean the total inability of the Executive to perform his duties under this

Agreement for a period of ninety (90) consecutive days as certified by a

physician chosen by the Company and reasonably acceptable to the Executive;

provided, however, if the Executive is  covered

by a disability insurance policy, the term “Permanent Disability” shall have

the meaning set forth in such policy.

 

1.9           “Proprietary Information” shall mean:

 

(a)           Information

related to the Company or any Affiliate,

 

(i)

which derives economic value, actual or potential, from not being generally

known to or readily ascertainable by other persons who can obtain economic

value from its disclosure or use; and

 

(ii) which is the subject of efforts that are reasonable under the

circumstances to  maintain its

secrecy; and

 

(b) All tangible reproductions or embodiments of such information.

 

Assuming the criteria in (a)(i) and (a)(ii) above are satisfied,

Proprietary Information includes, but is not limited to, technical and

non-technical data related to the compilations, programs, methods, techniques,

finances, actual or potential customers and suppliers, existing and future

products, and employees of the Company or its Affiliates. Proprietary

Information also includes 

 

2

 

information which has been disclosed to the Company or its Affiliates

by a third party and which the Company or any Affiliate is obligated to treat

as confidential.

 

1.10         “Term” means the period commencing on the date on

which the Merger (as defined in the Agreement and Plan of Merger dated as of

November 18, 2001 by and between the Company, Resource Bancshares Mortgage

Group, Inc. and Palmetto Acquisition Corp.) is consummated and ending on the

second anniversary of such date. 

Notwithstanding the foregoing, in the event the Merger does not occur,

this Agreement shall be void.

 

2.  Duties.

 

2.1           The

Executive is employed in the position set forth in Annex A and, subject to the

direction of the Chief Executive Officer of the Company, shall perform and

discharge well and faithfully the duties which may be assigned to him from time

to time by the Company in connection with the conduct of its business. The

duties and responsibilities of the Executive are include those set forth on

Annex A attached hereto as well as such other duties from time to time

established by the Chief Executive Officer.

 

2.2           In addition to the duties and responsibilities

specifically assigned to the Executive pursuant to Section 2.1 hereof, the

Executive shall: (a) devote substantially all of his time, energy and skill

during regular business hours to the performance of the duties of his

employment (reasonable vacations and reasonable absences due to illness

excepted), and faithfully and industriously perform such duties; (b) diligently

follow and implement all management policies and decisions communicated to him

by the Chief Executive Officer of the Company; and (c) timely prepare and

forward to the Chief Executive Officer of the Company all reports and

accounting as may be requested of the Executive.

 

2.3           The Executive shall devote substantially his entire

business time, attention and energies to the Business of the Company and shall

not during the term of this Agreement be engaged (whether or not during normal

business hours) in any other business or professional activity which is

competitive in nature; or interferes with his ability to perform his duties

fully; or which promotes an activity inconsistent with the nature or status of

the Company, whether or not such activity is pursued for gain, profit or other

pecuniary advantage; but this shall not be construed as preventing the

Executive from (a) investing his personal assets in businesses which (subject

to item (b) below) are not in competition with the Business of the Company and

which will not require any services on the part of the Executive in their

operation or affairs and in which his participation is solely that of an

investor, (b) purchasing securities in any corporation whose securities are

regularly traded provided that such purchase shall not result in his

collectively owning beneficially at any time five percent (5%) or more of the

equity securities of any business in competition with the Business of the

Company, and (c) participating in civic and professional affairs and

organizations and conferences, preparing or publishing papers or books or

teaching so long as such activity does not materially interfere with the

performance of his duties hereunder.

 

3

 

3.  Term and Termination.

 

3.1           Term. This Agreement shall

remain in effect for the Term.  However,

notwithstanding the provisions of Section 1.10, this Agreement shall terminate

upon the death or Permanent Disability of Executive.

 

3.2           Termination. 

During the Term, the employment of the Executive under this Agreement

may  be terminated only as follows:

 

3.2.1

By the Company:

 

(a)  For Cause, with no prior notice except as

provided in Section 1.6.1; or

 

(b) Without Cause at any time, provided that

the Company shall give the Executive thirty (30) days prior written notice of

its intent to terminate.

 

3.2.2 By the Executive:

 

(a)  For Cause, with no prior notice except as

provided in Section 1.6.2; or

 

(b) Without Cause, provided that the Executive shall give the Company

thirty (30) days prior written notice of his intent to terminate.

 

3.2.3

        By the Executive following a Change in Control of the Company,

provided that the Executive shall give written notice to the Company of his  intention to terminate this Agreement and

terminates employment prior to the expiration of the Term.

 

3.2.4        At

any time upon mutual, written agreement of the parties.

 

3.3           Effect of Termination. The effect of termination of

the employment of the  Executive

pursuant to Section 3.2 shall be as set forth in this Section 3.3:

 

3.3.1

       In the event of termination by the

Company:

 

(a)  For Cause, pursuant to Section 3.2.1(a), the

Company shall have no further obligation to the Executive except for the

payment of any amounts due and owing under Section 4 on the effective date of

termination;

 

(b) Without Cause, pursuant to Section 3.2.1(b), the Company shall be

required to meet its obligations to the Executive under Section 3.4 below.

 

3.3.2

       In the event of termination by the

Executive:

 

4

 

(a)  For Cause, pursuant to

Section 3.2.2(a), the Company shall be required to meet its obligations to the

Executive under Section 3.4 below.

 

(b) Without Cause, pursuant to  Section

3.2.2(b), the Company shall have  no

further obligation to the Executive, except for the payment of any amounts due

and owing under Section 4 on the effective date of termination.

 

3.3.3        In the event of

termination by the Executive in connection with a Change in Control pursuant to

Section 3.2.3, the Company shall be required to meet its obligations to the

Executive under Section 3.4 below.

 

3.3.4

       In the event of termination upon

mutual agreement of the parties pursuant to Section 3.2.4, the Company shall

have no further obligation to the Executive except for the payment of any

amounts due and owing under Section 4.1 on the effective date of termination

unless otherwise set forth in the written agreement.

 

                3.3.5        Notwithstanding

anything in this Section 3.3 to the contrary, following any termination of the

Executive’s employment, the Executive shall be entitled to receive benefits

pursuant to the employee benefit plans in which the Executive participated

during his employment with Company in accordance with the terms of such plans.

 

3.4           Termination Payments. In the event Executive’s

employment is terminated under this Agreement prior to the expiration of the

Term pursuant to Section 3.3.1(b), Section 3.3.2(a), or Section 3.3.3, the

Company shall pay to the Executive as severance pay and liquidated damages a

lump sum amount equal to the product of the (a) Average Monthly Compensation

multiplied by (b) Twenty-Four (24), which amount shall be in lieu of any other

severance benefits that the Executive might otherwise have been entitled to

under any other plan, practice, arrangement or agreement of the Company.  In addition, for a period of twenty-four

months following the effective date of the termination (the “Severance

Period”), the Company may continue to provide to the Executive, to the extent

practicable, the benefits described in Section 4.3; provided, however, that in

lieu of providing health benefits, the Company shall pay the Executive an

amount equal to the difference between (x) the cost of COBRA health

continuation coverage that would be charged by the Company to a former employee

and eligible dependents for the greater of the Severance Period or the period

during which the Executive and his eligible dependents are entitled to COBRA

health continuation coverage from the Company and (y) the amount for which the

Executive would have been responsible to pay under the health benefit plans in

effect for the Executive immediately prior to his termination.  To the extent the Company determines that

the continuation of any other benefits by the Company is not practicable, the

Company shall pay the Executive an amount equal to what would have been the

Company’s cost of providing the coverage for such benefits during the Severance

Period to the Executive and his eligible dependents as if the coverage had

continued.  Notwithstanding the above

provisions of this Section 3.4, the Company may elect to retain the Executive

on the payroll of the Company or an Affiliate (with existing benefits

continuing through standard payroll deduction) for all or any part of the

Severance Period in lieu of the payment of a lump sum; provided that such

election by the Company shall not reduce the total amount due to Executive by

the Company pursuant to this Section 3.4.

 

5

 

Notwithstanding any other

provision of this Agreement to the contrary, if the aggregate of the payments

provided for in this Agreement and the other payments and benefits which the

Executive has the right to receive from the Company (the “Total Payments”)

would constitute a  “parachute payment,” as defined in

Section 28OG(b)(2) of the Internal Revenue Code, as amended (the “Code”), the

Executive shall receive the Total Payments unless the (a) after-tax amount that

would be retained by the Executive (after taking into account all federal,

state and local income taxes payable by the Executive and the amount of any

excise taxes payable by the Executive pursuant to Section 4999 of the Code (the

“Excise Taxes”)) if the Executive were to receive the Total Payments has a

lesser aggregate value than (b) the after-tax amount that would be retained by

the Executive (after taking into account all federal, state and local income

taxes and Excise Taxes payable by the Executive) if the Executive were to

receive the maximum amount of the Total Payments that the Executive could

receive without being subject to the Excise Tax (the “Reduced Payments”), in

which case the Executive shall be entitled only to the Reduced Payments. If the

Executive is to receive the Reduced Payments, the Executive shall be entitled

to determine which of the Total Payments, and the relative portions of each,

are to be reduced.

 

3.5           Vesting in Executive Benefits.  In the event the Executive’s employment is terminated under this

Agreement prior to the expiration of the Term pursuant to Section 3.2.1(b),

Section 3.2.2(a), or Section 3.2.3, all benefits and entitlements of Executive

under any plan established for executives of the Company shall fully vest at

the end of the Severance Period, unless otherwise prohibited by law.

 

4.  Compensation.  The

Executive shall receive the following salary and benefits:

 

4.1           Base Salary. During the Term, the Executive shall

be compensated at an annual rate equal to the Base Salary set forth in Annex A.

The Base Salary and performance shall be reviewed by the Chief Executive

Officer annually, and the Executive shall be entitled to receive annually an

increase in such amount, if any, as may be determined by the Chief Executive

Officer. Such salary shall be payable in accordance with the Company’s normal

payroll practices.

 

4.2           Incentive Compensation.

 

(a)           The Executive shall be eligible for

an annual incentive bonus determined in accordance with the provisions of Annex

A attached hereto (the “Incentive Compensation”).

 

(b)           The Executive shall

be entitled to participate in such stock option programs as are made available

to senior management of the Company from time to time. Any options granted will

comply in all respects with the terms of the NetBank, Inc. Stock Option Plan.

 

4.3           Benefits.

 

(a)           In addition to the Base Salary and

Incentive Compensation, the Executive shall be entitled to such other benefits

as may be available from time to time for 

 

6

 

employees of the

Company.  All such benefits shall be

awarded and administered in accordance with the Company’s standard policies and

practices. Such benefits may include, by way of example only, profit sharing

plans, retirement or investment funds, dental, health, life and disability

insurance benefits, and such other benefits as the Company deems appropriate.

 

(b)           The Company

specifically agrees to reimburse the Executive for reasonable business expenses

incurred by him in performance of his duties hereunder, as approved from time

to time by the Chief Executive Officer; provided that the Executive shall, as a

condition of reimbursement, submit verification of the nature and amount of

such expenses in accordance with reimbursement policies from time to time

adopted by the Company and in sufficient detail to comply with Internal Revenue

Service regulations.

 

(c)           On a non-cumulative basis the

Executive shall be entitled to four weeks of vacation each year, during which

his compensation shall be paid in full, and which shall be taken as approved in

advance by the Company, taking into account the requirements of the Company.

 

4.4           Withholding. The Company may deduct from each

payment of compensation hereunder all amounts required to be deducted and

withheld in accordance with applicable federal and state income, FICA and other

withholding requirements.

 

5.  Proprietary Information.

 

5.1           Treatment of Proprietary

Information.  As a management

official of the Company, the Executive has access to Proprietary Information.

The Executive agrees to maintain the confidentiality of all Proprietary

Information throughout the Term and after the termination of this Agreement.

 

5.2           Obligations of Executive.  During the period described in Section 5.1, the Executive will

hold the Proprietary Information in trust and strictest confidence, and will

not use, reproduce, distribute, disclose or otherwise disseminate the

Proprietary Information except to the extent necessary to perform the duties

assigned to him by the Company.

 

5.3           Delivery upon Termination.

Upon termination of his employment with the Company, the Executive will

promptly deliver to the Company all property belonging to the Company,

including, without limitation, all Proprietary Information then in his possession

or control.

 

6.  Non-Solicitation.  The Executive agrees that during his

employment by the Company and, in the event of his termination, other than

pursuant to Sections 3.2.1(b) or 3.2.2(a), for a period of twelve (12) months

thereafter, he will not (except on behalf of or with the prior written consent

of the Company) on his own behalf or in the service or on behalf of others, do

any of the following:

 

6.1           Customers.  Solicit, divert or appropriate, or  attempt to solicit, divert or appropriate,

directly or by assisting others, any business from any of the Company’s

customers, 

 

7

 

including actively-sought

prospective customers, with whom the Executive has or had material contact

during the last two (2) years of his employment, for purposes of providing

products or services that are competitive with those provided by the Company or

its Affiliates.

 

6.2           Vendors.  Solicit, divert or appropriate, or  attempt to solicit, divert or appropriate,

directly or by assisting others, any products any products or services

being provided to the Company from any of its vendors with whom the Executive

has or had material contact during the last two (2) years of his employment to

the extent such solicitation, diversion or appropriation would interfere with

any such vendor’s ability to continue to provide the products or services to

the Company or its Affiliates in the same manner and to the same extent as

those provided to the Company or its Affiliates immediately prior to the

Executive’s actions.

 

6.2           Employees.  Solicit, recruit or hire away, or

attempt to solicit, recruit or hire away, directly or by assisting others, any

employee of the Company or its Affiliates, whether or not such employee is a

full-time employee or a temporary employee of the Company or its Affiliates,

and whether or not such employment is pursuant to written agreement and whether

or not such employment is for a determined period or is at will.

 

7. 

Non-Competition.  The Executive agrees that during his employment by the Company

and, in the event of his termination, other than pursuant to Sections 3.2.1(b)

or 3.2.2(a), for a period of twelve (12) months thereafter, he will not (except on behalf of or with the prior

written consent of the Company), within the Non-Competition Area (as defined in

Annex A), either directly or indirectly, on his own behalf or in the service or

on behalf of others, in any capacity which involves duties and responsibilities

similar to those undertaken for the Company, engage in any business which is

the same as or essentially the same as the Business of the Company.

 

8.  Remedies. 

The Executive agrees that the covenants

contained in Sections 5 through 7 of this Agreement are of the essence of this

Agreement; that each of the covenants is reasonable and necessary to protect

the business, interests and properties of the Company; and that irreparable

loss and damage will be suffered by the Company should he breach any of the

covenants. Therefore, the Executive agrees and consents that, in addition to

all the remedies provided by law or in equity, the Company shall be entitled to

a temporary restraining order and temporary and permanent injunctions to

prevent a breach or contemplated breach of any of the covenants. The Company and

the Executive agree that all remedies available to the Company or the

Executive, as applicable, shall be cumulative.

 

9.  Severability.  The parties agree that each of the

provisions included in this Agreement is separate, distinct, and severable from

the other provisions of this Agreement, and that the invalidity or

unenforceability of any Agreement provision shall not affect the validity or

enforceability of any other provision of this Agreement. Further, if any

provision of this Agreement is ruled invalid or unenforceable by a court of

competent jurisdiction because of a conflict between the provision and any

applicable law or public policy, the provision shall be redrawn to make the

provision consistent with and valid and enforceable under the law or public

policy.

 

10.    Notice.   

All notices and other communications required

or permitted under this Agreement shall be in writing and, if mailed by prepaid

first-class mail  or certified

mail, return 

 

8

 

receipt requested, shall be

deemed to have been received on the earlier of the date shown on the receipt or

three (3) business days after the postmarked date thereof.  In addition, notices hereunder may be

delivered by hand, facsimile transmission or overnight courier, in which event

the notice shall be deemed effective when delivered or transmitted.  All notices and other communications under

this Agreement shall be given to the parties hereto at the following addresses:

 

(i)

If to the Company, to it at:

NetBank, Inc.

Royal Centre Three

Suite 100

Alpharetta, Georgia 30022

Attn:  Chief Human Resources

Executive

 

(ii)

If to the Executive, to  him

at:

 

                                                                      

                                                                      

                                                                      

 

11.  Assignment. 

Neither party

hereto may assign or delegate this Agreement or any of its rights and

obligations hereunder without the written consent of the other party hereto.

 

12.  Waiver. 

A waiver by the Company of any breach of this

Agreement by the Executive shall not be effective unless in writing, and no

waiver shall operate or be construed as a waiver of the same or another breach

on a subsequent occasion.

 

13.  Attorneys’ Fees.   In the event of litigation between the

parties concerning this Agreement, the party prevailing in such litigation

shall be entitled to receive from the other party all reasonable costs and

expenses, including without limitation attorneys’ fees, incurred by the

prevailing party in connection with such litigation, and the other party shall

pay such costs and expenses to the prevailing party promptly upon demand by the

prevailing party.

 

14.  Applicable Law.  This Agreement shall be construed and

enforced under and in accordance with Federal law, where applicable, and then

with the laws of the State of Georgia.

 

15.  Entire Agreement; No Additional

Benefit.  This Agreement

embodies the entire and final  agreement

of the parties on the subject matter stated in the Agreement.  No amendment or modification of this

Agreement shall be valid or binding upon the Company or the Executive unless

made in writing and signed by both parties. All prior understandings and

agreements relating to the subject matter of this Agreement are hereby

expressly terminated.   The Executive

and the Company acknowledge that, as of the date on which the Term commences,

this 

 

9

 

Agreement supersedes any employment agreement

between the Executive and Resource Bancshares Mortgage Group, Inc. and/or any

Affiliate thereof (collectively, “RBMG”) and any other agreement between them

concerning the subject matter hereof, including any change in control agreement

between the Executive and RBMG.  The

Executive and the Company also acknowledge that even though the Executive may

be paid from the payroll of a direct or indirect subsidiary of the Company, the

Executive is entitled to no additional employment benefits than those from the

Company as set forth herein.

 

16.  Rights of Third Parties.  Nothing herein

expressed is intended to or shall be construed to confer upon or give to any

person, firm or other entity, other than the parties hereto and their permitted

assigns, any rights or remedies under or by reason of this Agreement.

 

17.  Survival. The

obligations of the Executive pursuant to Sections 5, 6 and 7 shall survive the

termination of the employment of the Executive hereunder.

 

IN WITNESS WHEREOF, the

Company and the Executive have executed and delivered this Agreement as of the

date first  shown above.

 

	

   

  	

  THE COMPANY:

  
	

   

  	

   

  
	

   

  	

  NETBANK, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Douglas K. Freeman

  
	

   

  	

  Name:

  Douglas K. Freeman

  
	

   

  	

  Title:  Chief Executive Officer

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  THE

  EXECUTIVE:

  
	

   

  	

   

  
	

   

  	

   

  	

  /s/ Theodore Brauch

  
	

   

  	

   

  	

  Theodore Brauch

  
				

 

10

 

Annex A

 

Position:                                                                                                                                                                                             Chief

Risk Management Executive

 

Duties and Responsibilities:                                                                                           Responsible

for the management of the Company’s non- credit risks on an enterprise wide

basis, including Market

(Interest Rate, Liquidity, and Pricing), Operational (Systems, Reputation, Compliance, Transaction and

Strategic); Oversee and protect the interests of Management, Shareholders,

Employees and Customers by establishing an enterprise risk management approach

in the Company, analyzing/reviewing risk management activities and helping

business units adopt best practices;

 

Base Salary:                                                                                                                                                                               $150,000.00

 

Incentive Compensation:                                                                                                           Potential

of $112,500.00

 

Business Location:                                                                                                                                          Other

than for periods spent traveling in connection with the performance of the

Executive’s duties hereunder, the Executive shall be based in Jacksonville,

Florida.

 

Non-Competition Area:                                                                                                                    Within

a radius of one hundred (100) miles

from the location of the Business Location.

 

11

 

Annex B

 

“Change in Control” means any

one of the following events:

 

(1)           the acquisition by any individual,

entity or “group”, within the meaning of Section 13(d) (3) or Section 14(d) (2)

of the Securities Exchange Act of 1934, as amended, (a “Person”) of beneficial

ownership (within the meaning of Rule 13d-3 promulgated under the Securities

Exchange Act of 1934) of voting securities of the Company where such

acquisition causes any such Person to own twenty-five percent (25%) or more of

the combined voting power of the then outstanding voting securities then

entitled to vote generally in the election of directors (the “Outstanding

Voting Securities”); provided, however, that for purposes of this paragraph (1)

of this definition, the following shall not be deemed to result in a Change in

Control, (i) any acquisition directly from the Company, unless such a Person

subsequently acquires additional shares of Outstanding Voting Securities other

than from the Company, in which case any such subsequent acquisition shall be

deemed to be a Change in Control; (ii) any acquisition by any employee benefit

plan (or related trust) sponsored or maintained by the Company or any

corporation controlled by the Company; or (iii) any acquisition by merger,

consolidation, share exchange, combination, reorganization, sale or transfer or

like transaction that is NOT otherwise described in paragraph (2) or (4) below

as long as no Person (other than an employee benefit plan or related trust

sponsored or maintained by the Company, any corporation controlled by the

Company or any company resulting from such business combination) obtains

beneficial ownership of twenty-five percent (25%) or more of the then

Outstanding Voting Securities;

 

(2)           a merger, consolidation, share

exchange, combination, reorganization or like transaction involving the Company

in which the stockholders of the Company immediately prior to such transaction

do not own at least fifty percent (50%) of the value or voting power of the

issued and outstanding capital stock of the Company or its successor

immediately after such transaction;

 

(3)           the sale or transfer (other than as

security for the Company’s obligations) of more than fifty percent (50%) of the

assets of the Company in any one transaction, a series of related transactions

or a series of transactions occurring within a one (1) year period in which the

Company, any corporation controlled by the Company or the stockholders of the

Company immediately prior to the transaction do not own at least fifty percent

(50%) of the value or voting power of the issued and outstanding equity

securities of the acquiror immediately after the transaction;

 

(4)           the sale or transfer of more than

fifty percent (50%) of the value or voting power of the issued and outstanding

capital stock of the Company by the holders thereof in any one transaction, a

series of related transactions or a series of transactions occurring within a

one (1) year period in which the Company, any corporation controlled by the

Company or the stockholders of the Company immediately prior to the transaction

do not own at least fifty percent (50%) of the value or voting power of the

issued and outstanding equity securities of the acquiror immediately after the

transaction; or

 

(5)           the dissolution or liquidation of the

Company.

 

12

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