Binding Term Sheet ("Term Sheet") Between Afilias, LLC ("Afilias") and Tucows Inc. ("Tucows")
1 . Background
Afilias is submitting a bid (the "Bid") to ICANN on October 2, 2000 to act as a registry operator for an unrestricted TLD (the "awarded TLD"). In the event that Afilias is awarded the right to operate the registry, Tucows will provide Afilias with certain registry functions ("the Contract Functions") as set forth in Appendix A to this Term Sheet.
2. Definitive Contract
2.1 Once effective, this Term Sheet and all Appendices hereto shall represent the binding agreement of the parties. The term of this Term Sheet shall be two years from the date that the Contract Functions are first made available to the general public for domain name registration services (the "Term").
2.2 Tucows intends to form a joint venture to provide the contract functions. Upon formation of the joint venture, Tucows may assign this term sheet to such venture.
Except with respect to non-disclosure, non-compete, and cooperative development obligations, all as more fully set forth herein, which shall become effective upon execution of this Term Sheet, the remainder of the obligations of the parties hereto shall not commence until a contract is executed between ICANN and Afilias authorizing Afilias to operate a registry for the awarded TLD ("ICANN Contract").
4. Non-Disclosure and Confidentiality
Afilias and Tucows have entered into a nondisclosure agreement ("NDA") which is incorporated herein by reference, in connection with the negotiation and execution of this Term Sheet. The terms of such NDA shall be extended during the Term and shall be incorporated herein by reference.
5. The Bid Process
5.1 Afilias shall prepare and submit the Bid to ICANN.
5.2 Tucows and Afilias shall jointly prepare information for inclusion in the Bid application to meet the requirements for providing technical information to ICANN. Tucows shall also provide Afilias with financial, technical and management resource information for inclusion in the Bid. Tucows shall only provide financial information for review by Rita A. Rodin and Richard Lindsay. Afilias will request that ICANN treat all such financial information as confidential.
6. Registry Service Offering
6.1 Tucows will perform the Contract Functions initially in accordance with the service levels and other criteria and commitments ("SLA's") commensurate with industry standards and otherwise unplanned downtime of 30 minutes per month, total downtime of 1 hour, roundtrip lookup time is 400 milliseconds, roundtrip registration in 800 milliseconds, registration capacity is 150,000 registrations per day. As soon as possible after execution of this Term Sheet, (i) the parties shall agree on SLA's to apply to additional functional areas of the registry (e.g. Whois); and (ii) general penalties for failure to meet any of the SLAs, which will be commensurate with industry standards.
6.2 Tucows will make the Contract Functions available in accordance with the specifications in Appendix A within six months after execution of the ICANN Contract. In the event that Tucows fails to make the Contract Functions available on this date, then on such date (i) Tucows shall grant Afilias a perpetual, irrevocable, worldwide, royalty-free license to use the Software as if it were the owner thereof; and (ii) this Term Sheet shall terminate.
6.3 Within thirty (30) days after execution of this Term Sheet, Tucows shall provide Afilias with an executable copy of the Software for evaluation purposes.
7. Price; Payment Mechanism
During the Term, Afilias shall pay Tucows fees for domain names under management within the registry for the awarded TLD at a maximum rate of $2.95 USD per domain name per year. Tucows will also provide volume discounts to be negotiated hereafter, Afilias's suggested schedule being the following:
|Number of domain names
|Under 5,000,000||$2.95 per domain name|
|5,000,000 to 9,999,999||$2.85 per domain name|
|10,000,000 to 14,999,999||$2.75 per domain name|
|15,000,000 to 19,999,999||$2.65 per domain name|
|20,000,000 to 24,999,999||$2.55 per domain name|
|25,000,000 to 29,999,999||$2.45 per domain name|
|30,000,000 to 34,999,999||$2.35 per domain name|
|35,000,000 to 39,999,999||$2.25 per domain name|
|40,000,000 to 44,999,999||$2.15 per domain name|
|45,000,000 to 49,999,999||$2.05 per domain name|
|50,000,000 or more||$1.95 per domain name|
Any fees payable to ICANN shall be borne exclusively by Afilias. Multiple-year registrations shall be paid for on an annual basis. Afilias shall pay Tucows on a net 30 days basis upon monthly bills supplied by Tucows.
8. Privacy, Information Segregation and Neutrality
8.1 Tucows shall maintain all data received in connection with the provision of the Contract Functions in accordance with the (i) Contract Functions requirements; (ii) applicable laws; and (iii) other restrictions or requirements imposed on Afilias by ICANN, registrars or other third parties and provided by Afilias to Tucows in writing.
8.2 Tucows will establish and adhere to neutrality policies to insure separation of Tucows registrar functions and JV registry functions.
9. Intellectual Property
9.1 Tucows shall own the software source code used to provide the Contract Functions (the "Software"). At any time during the Term, Afilias may license on a worldwide, perpetual, royalty-free, basis, the Software for a one time fee of $1 million USD for the purpose of running the awarded TLD. Afilias may thereafter use the Software as if it were the owner thereof, including to create modifications or derivative works and to grant sublicenses to third parties to operate the registry system for the awarded TLD. The license to Afilias shall be irrevocable unless Afilias sells or distributes the software to unauthorized third parties.
9.2 Nothing contained herein shall prevent Afilias from building a system to enable it to provide the Contract Functions or similar services. All intellectual property contained in such system shall be owned by Afilias.
9.3 To the extent that Afilias requests Tucows to develop any enhancements to, or derivative works of the Software, Tucows shall provide the enhancements or derivative works upon payment terms to be negotiated hereafter. Intellectual property rights in any such enhancements shall be jointly owned by Afilias and Tucows, without a duty of accounting. Afilias shall pay Tucows for time and expenses for services rendered by Tucows professional staff, with such time to be billed on a per diem basis as follows:
|Services Description||Price per diem not including expenses
|Senior Consultant (SME)||$ 2500.00|
|Project Manager||$ 2000.00|
|Project Leader||$ 1500.00|
|QA Team Leader||$ 1500.00|
|Technical Writer||$ 800.00|
|QA Analyst||$ 800.00|
10.1 Afilias shall have a right to terminate this Term Sheet immediately upon written notice if a Default (as hereinafter defined) by Tucows has occurred and is continuing under this Term Sheet.
10.2 Tucows shall have a right to terminate this Term Sheet immediately upon written notice if a Default (as hereinafter defined) by Afilias has occurred and is continuing under this Term Sheet.
10.3 Upon any termination or expiration of this Term Sheet, Tucows shall assist Afilias for up to twelve (12) months, or such other time period as the parties may mutually agree upon, in the orderly transition of provision of the Contract Functions from Tucows to any successor provider of the Contract Functions. Tucows shall provide continued Contract Functions upon the price and payment terms provided in this Term Sheet.
10.4 In the event that Afilias desires to extend the contract for an additional two-year term, Tucows shall agree to such extension on the price and other terms and conditions to be mutually agreed between the parties.
10.5 In the event that the Term or any subsequent renewal term is not renewed, Tucows shall refund to Afilias a portion of registry service fees attributable to domain name registrations whose registration terms extend beyond the Term or any such renewal term. Such portion to be calculated for each unexpired registration by multiplying the number of months remaining on the unexpired registration by 25% of the registry service fee paid for that registration, the date from which the remaining number of months shall be determined being the date of the last registration made before the expiration of the Term or any subsequent renewal term, as the case may be.
The parties shall each bear their respective costs and expenses including, without limitation, expenses of all attorneys, accountants, advisors and brokers retained by or representing them in connection with the transactions contemplated by this Term Sheet ("the Proposed Transaction").
A "Default" shall be deemed to have occurred in the event that (a) a party fails to perform any of its material obligations and such failure continues for a period of thirty (30) days following receipt of written notice of such failure from the other; or (b) a party becomes bankrupt. A party shall be deemed to be bankrupt if (i) a receiver, trustee, administrator, or administrative receiver is appointed for that party or its property, (ii) if the party makes an assignment for the benefit of creditors, (iii) any proceedings are commenced against that party under any bankruptcy, insolvency or debtor's relief law and such proceedings are not vacated or set aside within ninety (90) days from the date of commencement thereof, or (iv) the party is liquidated or dissolved.
13.1 During the pendency of the Bid application and the award process contemplated by the Bid, Tucows will not, for itself or on behalf of or for any third party, bid on or in connection with operation of registration functions for an unrestricted TLD. Following execution of the ICANN Contract, Tucows will not, for itself or on behalf of or for any third party, bid on or compete with Afilias for any renewal term to be the registry operator for the awarded TLD.
Tucows will cooperate with Afilias in negotiations with ICANN as reasonably requested by Afilias. In the course of negotiations with ICANN, in the event that Tucows does not agree to, or cannot meet, changes or requirements requested by ICANN or Afilias, then Afilias shall be free to negotiate and contract with other technology providers to provide the same or similar services as the Contract Functions.
15. Prior Arrangements
This Term Sheet replaces all prior contracts, understandings and arrangements among Afilias and Tucows with regard to the subject matter of this Term Sheet.
Tucows shall deposit the Software and related documentation into an escrow account pursuant to an escrow agreement to be entered into among Afilias, Tucows, and an escrow agent. If this Agreement is terminated for a Default by Tucows, other than pursuant to section 6.2 hereof, the escrow agreement shall authorize release of the Software to Afilias to use as if it were the owner thereof upon payment by Afilias of 1 million USD to Tucows. If this Agreement is terminated by Afilias pursuant to section 6.2, the escrow agreement shall authorize release of the Software to Afilias to use as if it were the owner thereof without any payment to Tucows.
17. Liability Limitation
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE, BUSINESS INTERRUPTION, LOSS OF DATA OR PUNITIVE OR EXEMPLARY, OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, WHETHER ALLEGED AS A BREACH OF CONTRACT OR TORTIOUS CONDUCT, INCLUDING RESTITUTION OR NEGLIGENCE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
OTHER THAN IN CONNECTION WITH TUCOWS'S OBLIGATIONS TO INDEMNIFY SET FORTH SECTION HEREIN, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT IN AN AMOUNT IN EXCESS OF FEES PAID BY AFILIAS TO TUCOWS FOR THE PRIOR SIX MONTH PERIOD PROVIDED THAT THIS LIMITATION SHALL NOT APPLY TO AFILIAS'S PAYMENT OBLIGATIONS HEREUNDER.
Tucows shall defend or, at its option, settle, any claim or proceeding brought against Afilias, and its agents, officers and employees, either in their individual capacities or by reason of their relationship to Afilias, and its successors, to the extent that such claim or proceeding is based on an assertion that the Software or any portion of the Software or the Contract Functions infringes any existing (i) patent, (ii) copyright, (iii) trademark, or (iv) trade secret, and shall indemnify Afilias against all costs, damages or expenses (including without limitation, reasonable attorney's fees), which result from any such claim or proceeding. Afilias shall promptly notify Tucows in writing of any such claim or proceeding and Tucows shall have sole control of any defense, compromise or settlement of such claim. Afilias shall reasonably assist Tucows, at Tucows's sole cost and expense, in connection with any such claim.
19. Governing Law
This Term Sheet and the Contract will be governed and construed under the laws of New York without regard to conflicts of laws principles. This Term Sheet may only be amended or otherwise modified in a writing signed by the parties.
20.1 Counterparts. This Term Sheet may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall together constitute one and the same instrument. This Term Sheet shall become binding when one or more counterparts hereof, individually, or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Execution may be effected by delivery of facsimiles of signature pages (and the parties shall follow such delivery by prompt delivery of originals of such pages).
20.2 Notices. Any notice required or permitted under the terms of this Term Sheet or required by law must be in writing and must be (a) delivered in person; (b) sent by first class registered U.S. mail, or air mail, as appropriate; or (c) sent by overnight courier, in each case properly posted to the appropriate address set forth herein. Any party may change its address for notice by notice to the other parties given in accordance with this Section 20. Notices will be considered to have been given at the time of actual delivery in person, three (3) business days after deposit in the U.S. mail as set forth above, or one (1) day after delivery to an overnight courier service, except for a notice changing a party's address which shall be deemed given at the time of receipt thereof.
(a) In the case of notice to Afilias, notice shall be addressed:
(b) In the case of notice to Tucows, notice shall be addressed:
20.3 Separability. In the event any provision hereof, or the application thereof in any circumstances, is held to be invalid, illegal or unenforceable by a final or unappealable order, decree or judgment of any court, the provision in question shall be deemed replaced with a valid and enforceable provision most closely reflecting the intent and purpose of the original provision within the jurisdiction of such court and the Agreement shall otherwise remain in full force and effect in such jurisdiction and in its entirety in other jurisdictions.
20.4 Force Majeure. Neither party shall be responsible for any failure to perform any obligation or provide service hereunder because of any act of God, strike, work stoppage, governmental acts or directives, war, riot or civil commotion, or other similar forces beyond such party's reasonable control.
Name: Richard Lindsay
Title: On behalf of Afilias, LLC