Telecommunications Marketing Agreement [Amendment No. 1] - Tel-Save Inc. and America Online Inc.
AMENDMENT NO. 1
This AMENDMENT NO. 1 (the "Amendment"), dated as of January 25, 1998
(the "Amendment Effective Date"), by and among Tel-Save, Inc. ("TS"), a
Pennsylvania corporation, and Tel-Save Holdings, Inc. ("Holdings"), a Delaware
corporation, with their principal offices at 6805 Route 202, New Hope,
Pennsylvania 18938, on the one hand, and America Online, Inc., a Delaware
corporation with its principal offices at 22000 AOL Way, Dulles, Virginia 20166
("AOL"), on the other hand (each a "party" and, collectively, the "parties").
INTRODUCTION
TS, Holdings and AOL are parties to the Telecommunications Marketing
Agreement, dated as of February 22, 1997, as heretofore corrected and amended by
letter, dated April 23, 1997 (as so corrected and amended to the date hereof,
but without giving effect to this Amendment, the "Agreement"). Capitalized terms
used in this Amendment without other definition are defined as in the Agreement.
The parties have since considered further the marketing and advertising
expenditures provided in the Agreement, and, in light of both parties' desire to
increase the number of End Users of the Long Distance Telecommunications
Services, hereby agree as follows:
TERMS
1. The Agreement is amended to provide that references in the Agreement to
"this Agreement" or "the Agreement" (including indirect references such as
"hereunder," "hereby," "herein" and "hereof") shall be deemed to be
references to the Agreement as amended hereby.
2. Section I.A of the Agreement is hereby amended to add the following
definitions:
"1.A. "Additional Promotion Period" means the period from the
Amendment Effective Date through March 31, 1998 (as such period may be
shortened as provided herein).
"5.A. "Amendment" means the Amendment No. 1 to the Agreement dated as
of the Amendment Effective Date.
"5.B. "Amendment Effective Date" means January 25, 1998."
3. Section I.A.19 of the Agreement is amended to read in its entirety as
follows:
"19. "Gross Revenues" for any calendar quarter shall mean the sum of
(a) total billings by TS to End Users for the provision of Services
during such quarter and (b) if such billings are in a material amount,
total billings by TS to any other end users of telecommunications
services provided by TS that would meet the definition of "Restricted
Services," which such other end users became such as a direct result
of marketing by TS that used the AOL Marks or any variation of the
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AOL name (whether or not such marketing has been approved by AOL or is
otherwise in compliance with this Agreement, and without waiver of
AOL's rights hereunder with respect to such approval or compliance)
("Other End Users"), less * * * "
4. Section III.A.1 of the Agreement is amended to add "(a)" before "During
each" at the beginning of such section and to add the following at the end
of such section:
"(b) Notwithstanding anything to the contrary in this Agreement, the
parties agree that, commencing February 1, 1998 and until the end of
the Additional Promotion Period, AOL shall provide TS with additional
online promotions and advertisements, including Pop-Up Ads, in form
and substance as determined pursuant to the foregoing portion of this
Section III.A.1, with an Ad Value of at least * * * per month (or the
pro-rata amounts thereof for portions of months) in addition to the Ad
Values to be provided pursuant to Section III.A.1(a) (the "Additional
Promotions"). Pop-Up Ads during the Additional Promotion Period shall
be made available onscreen for at least * * * days (instead of the
number required pursuant to Section I.A.31 hereof), and any Pop-Up Ads
included by AOL during the Additional Promotion Period in excess of *
* * Pop-Up Ads per month and any Pop-Up Ads included by AOL with TS's
approval during the remainder of the Introductory Period in excess of
* * * per month shall be counted toward AOL's satisfaction of the * *
* monthly requirement set forth in Section III.A.1(a) above. Following
the expiration of the Additional Promotion Period, AOL shall not be
obligated to provide any promotions or advertisements other than those
promotions or advertisements that were required of AOL pursuant to the
Agreement, but without regard to this Section III.A.1.(b).
(c) In the event that AOL has not delivered each of the "AOL
Deliverables" (as set forth in Attachment A) in accordance with the
terms hereof or has not delivered the Ad Values of promotions and
advertisements required by Sections III.A.1(a) and (b) to be provided
during the Additional Promotion Period, in each case, on or before
February 28, 1998, TS may elect in its sole discretion that the
Additional Promotion Period end as of February 28, 1998 so long as TS
has provided AOL with written notice of such election by fascimile to
the attention of David Colburn (fax no. 703-265-1202) no later than
5:00 p.m. EST on February 28, 1998. In such case: (i) TS will be
relieved of any obligation to pay AOL the bounties provided for
hereunder with respect to any customers who first signed up for
Services subsequent to February 28, 1998, (ii) the additional
guaranteed amount to be paid by TS pursuant to this Amendment shall be
as adjusted as described below and (iii) AOL will not deliver the
additional promotions contemplated hereunder thereafter.
(d) Except for those AOL Deliverables noted as "ongoing" obligations
on Attachment A ("Ongoing Deliverables"), an AOL Deliverable shall be
deemed delivered in the event AOL completes delivery of the AOL
Deliverable on or before the due date specified on Attachment A;
provided that AOL shall be
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entitled to a cure period of five (5) business days following such due
date within which to complete its delivery. Any Ongoing Deliverable
shall be deemed delivered if AOL has commenced delivery of such item
and is continuing without default its delivery as of February 28,
1998; provided that AOL shall be entitled to a cure period of five (5)
business days following any interruption in delivery of such AOL
Deliverable within which to restore its ongoing delivery of such item.
Notwithstanding the foregoing, the cure periods with respect to the
AOL Deliverable relating to * * * requirements and the AOL Deliverable
relating to * * * shall be only one (1) day. AOL shall be entitled to
only one (1) cure period with respect to each AOL Deliverable;
provided that (i) AOL shall be entitled to two (2) one-day cure
periods with respect to the AOL Deliverable relating to * * * and (ii)
there shall be no cure period with respect to the AOL Deliverable
relating to* * *.
(e) In the event that TS fails to deliver any "TS Deliverable" (as set
forth in Attachment A), AOL may extend the due date set forth on
Attachment A for any AOL Deliverable that (as indicated in Attachment
A) depends on receipt of a TS Deliverable specified in Attachment A
for a period equal to the number of days by which TS's delivery is
overdue. AOL may toll its delivery of any Ongoing Deliverable until TS
has delivered the TS Deliverable specified on Attachment A as
necessary for the delivery of such AOL Deliverable. In the event that
TS has not delivered any TS Deliverable as of February 28, 1998, any
AOL Deliverable specified on Attachment A as corresponding to such TS
Deliverable shall be deemed delivered by AOL as of such date. Except
as otherwise expressly provided herein, (a) either party's failure to
deliver its respective deliverables set forth in Attachment A shall
not be deemed a breach of the Agreement and (b) following the
expiration of the Additional Promotion Period, neither party shall be
obligated with respect to any deliverables set forth on Attachment A
other than (x) those deliverables that were required of such party
pursuant to the Agreement (other than by reason of the Amendment) and
(y) the * * * or the * * * program (each, as described herein), if
any, that may be provided in the Extended Offline Promotion Period (as
defined in Section V.C.1)."
(f) Notwithstanding anything to the contrary herein, in connection
with any * * * efforts directed to subscribers to the AOL Service that
may be provided hereunder, AOL reserves the right to (i) approve all
procedures, scripts and other materials used in connection with any
such effort, such approval not to be unreasonably withheld, (ii)
subject to the proviso at the end of this clause (ii), cease, or
otherwise limit the amount, duration or frequency of, any such effort
in the event AOL determines in its reasonable discretion that such
effort (including, without limitation, any statement or claim made by
TS in connection with such effort or the Services (e.g., comments made
during a * * *call) is false or inaccurate or misrepresents or
mischaracterizes the true nature of the Services or of any party's
role in providing the Services and has resulted or is resulting in
significant complaints by recipients of such efforts or material
disruptions of AOL's relations with existing and potential customers,
provided that AOL shall
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have provided to TS at least five (5) days prior written notice of its
intention so to cease or limit such effort, which notice shall include
a specific statement of the basis for such action, including
reasonable evidence of such basis, and TS shall not have, within five
(5) days of such notice, modified the terms of such effort or taken
such other actions as shall be reasonably likely, in AOL's discretion,
to (x) prevent a continuation or recurrence of the circumstances
forming the basis of such notice or (y) remedy material harm to AOL's
business arising from such prior occurrence (as the case may be); and
(iii) monitor such efforts for quality assurance and for compliance
with the terms and conditions hereof.
5. Section III.A.2 of the Agreement is amended to add at the end thereof the
following:
"Notwithstanding anything to the contrary in this Agreement, the
parties agree that any Pop-Up Ads included by AOL with TS's approval
subsequent to the Introductory Period and during the Term in excess of
* * * shall be counted toward AOL's satisfaction of the * * * monthly
requirement set forth in this Section III.A.2. The total Ad Value of
all promotions and advertisements to be provided by AOL pursuant to
this Section III.A.2 during the period from July 1, 1999, through June
30, 2000, shall be reduced by the amount of the Ad Value of the
Additional Promotions provided by AOL pursuant to Section III.A.1
above, such reduction to be applied ratably to the Ad Value to be
provided during such period."
6. Section III.A.4(a) of the Agreement is amended to add at the end thereof
the following:
"Notwithstanding the preceding sentence, during the Additional
Promotion Period, AOL shall not deploy Pop-Up Ads having * * * ."
7. Section III.A.4 of the Agreement is amended to add the following new
Section III.A.4(d):
"(d) Notwithstanding anything to the contrary in this Agreement, the
parties agree that AOL may in its sole discretion replace any Pop-Up
Ad required hereunder (or otherwise scheduled to be provided by AOL)
with * * * (e.g., for purposes of fulfilling requirements of law or
court order or issuing announcements regarding AOL members or AOL
policies) (each an "Excluded Pop-Up"); provided that AOL delivers the
replaced Pop-Up Ad as soon as reasonably possible thereafter (without
resulting in simultaneous Pop-Up Ads) * * * ."
8. Section V of the Agreement is amended to add the following new Section
V.B.6:
"6. TS shall provide AOL biweekly with information with respect to any
* * * efforts during the Additional Promotion Period and the Extended
Offline Promotion Period (as defined herein) which is reasonably
required for (a) measuring TS's efforts hereunder or (b) delivery of
the applicable AOL Deliverable (and any other information mutually
agreed upon by the parties), but
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in no event less information than would be required of TS pursuant to
Section V.B.4 hereof."
9. Section V of the Agreement is amended to add the following new Section V.C:
"C. Additional Promotion Period.
1. In addition to any other payments required hereunder (and in addition
to any Warrant Shares due AOL pursuant to the Supplemental Warrant and
any amendments thereto), TS shall pay to AOL Bounty Fees (as defined
below) as follows:
a. TS shall pay to AOL the applicable Bounty Fee for each Qualified
End User (as defined below) who subscribes to the Long Distance
Telecommunications Services (i) during the Additional Promotion
Period or (ii) following the Additional Promotion Period but only
insofar as such subscription following the Additional Promotion
Period is the result of * * * efforts directed to subscribers to
the AOL Service that may be provided hereunder; provided however,
that, from and after the total number of Qualified End Users for
which TS has paid AOL a Bounty Fee pursuant to this Amendment
equals one million (1,000,000), , TS shall not, subsequent to
such date, be required to pay any further Bounty Fees with
respect to End Users acquired as a result of any such * * *
efforts.
b. A "Qualified End User" is an End User who remains an End User for
at least thirty (30) consecutive days.
c. On the first day of each month commencing March 1, 1998, TS shall
pay AOL the aggregate amount of such Bounty Fees owing to AOL
with respect to the preceding month (or the preceding 35 days, in
the case of the first such payment).
2. "Bounty Fee" means (i) with respect to any Qualified End User who
subscribed to the Services on or before the Change Time (as defined below),
$* * * and (ii) with respect to any Qualified End User who subscribed to
the Services after the Change Time, $* * * , provided that the amount of
any Bounty Fee payable to any Qualified End User (i) whose subscription is
the result of * * * efforts directed to subscribers to the AOL Service and
(ii) who subscribes to any Services at any time after the 120th day after
the commencement of such * * * efforts will be one-half (1/2) of the amount
set forth in clause (i) or (ii), as the case may be. "Change Time" means
the time at which an aggregate of * * * persons or entities shall have
subscribed to the Services since the Effective Date and become End Users
(and regardless of whether such persons or entities shall then be End
Users).
3. In addition to any other payments required hereunder (and in
addition to any Warrant Shares due AOL pursuant to the Supplemental Warrant
and any amendments thereto) and provided that AOL shall have delivered the
Ad Values of promotions and advertisements required by Sections III.A.1(a)
and (b)
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to be provided during the Additional Promotion Period, on April 3, 1998, in
consideration of the Additional Promotions and any additional promotion or
marketing provided by AOL to TS during the Additional Promotion Period, TS
shall pay to AOL a guaranteed, non-refundable amount (the "Excess Amount")
equal to (i) $10,000,000 (or $3,000,000 in the event that the Additional
Promotion Period is terminated as of February 28, 1998 pursuant to Section
III.A.1(c) hereof) less (ii) the sum of (x) the aggregate Bounty Fees, if
any, paid to AOL by TS prior to April 3, 1998, and (y) the product of (i)
the Adjustment Value (as defined below) times (ii) the number of the
Warrant Shares, if any, that shall have vested pursuant to the Supplemental
Warrant as of March 31, 1998, with respect to the period between the
Amendment Effective Date and the end of the Additional Promotion Period.
"Holdings Share Price" shall mean the average of the closing prices (as
defined in Section 6(d) of the Supplemental Warrant) for one (1) share of
Holdings' Common Stock during each of the four (4) consecutive business
days prior to April 3, 1998. The "Adjustment Value" shall mean the dollar
figure that shall be determined using the schedule set forth in Attachment
B. The Excess Amount shall be credited against any subsequent TS
obligations to pay Bounty Fees pursuant to the Agreement on or after April
3, 1998 until the full amount of such Excess Amount shall have been so
credited and, following payment of the Excess Amount to AOL, TS shall not
be required to pay the Bounty Fees otherwise payable to AOL hereunder until
such time as the aggregate amount of otherwise payable Bounty Fees equals
the Excess Amount. TS shall thereafter commence payment of Bounty Fees to
AOL as otherwise provided herein."
10. The following new Section V.D is added to Section V of the Agreement:
"D. Offline Marketing Costs. TS shall be responsible for all costs and
expenses associated with (a) any * * * efforts by TS or AOL or either
party's agents, (b) any * * * efforts by AOL or its agents (including,
without limitation, any related * * * efforts) and (c) any * * * efforts by
AOL or its agents (specifically including Incentive Payments, as defined
below, if any, and specifically excluding any television or print media
marketing campaigns) (collectively, the "Offline Marketing Costs");
provided that all Offline Marketing Costs incurred by AOL shall be approved
in writing in advance by TS. The Offline Marketing Costs shall not be
included in the calculation of Actual Services Costs. Except with respect
to the Estimated * * * Costs (as defined below), TS shall pay AOL within
thirty (30) days of receipt of a monthly invoice from AOL detailing the
Offline Marketing Costs for the preceding month. Subject to TS' right to
approve in advance all Offline Marketing Costs, as provided above, TS shall
pay AOL in advance with respect to the Offline Marketing Costs for any * *
* efforts in an amount equal to AOL's reasonable estimate for the costs of
each effort that AOL provides to TS reasonably in advance of the dates
payments are due (such estimated costs, the "Estimated * * * Costs"). which
Estimated * * * Costs shall be payable on the first day of each month
(subject to AOL's having provided the estimate for such month), commencing
March 1, 1998, with respect to Estimated * * * Costs for such
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month. As promptly as reasonably possible after the end of each month, AOL
shall provide TS with a statement detailing the Offline Marketing Costs
incurred for any * * * efforts in such month and, to the extent the
aggregate Costs included on such statement are less than the Estimated * *
* Costs previously paid by TS to AOL with respect to such month, AOL shall
promptly pay to TS the amount of such difference and, to the extent the
aggregate Costs included on such statement are greater than the Estimated *
* * Costs previously paid by TS to AOL with respect to such month, TS shall
promptly pay to AOL the amount of such difference. The parties will
mutually agree on how to allocate any costs and expenses other than the
Offline Marketing Costs associated with any further offline marketing and
promotional activities occurring during the remainder of the Term,
including, without limitation, any joint promotional offers with respect to
both the AOL Service and the Long Distance Telecommunications Services."
"Incentive Payments" shall mean such payments as TS may elect to fund, at
its option, pursuant to incentive programs to be implemented for * * *
agents, which programs will be in form and substance to be mutually agreed
upon by the parties.
11. The following new Sections V.F.1 and V.F.2 are added to Section V of the
Agreement:
"1. Substantially concurrently herewith, TS and Holdings are entering
into a written agreement with CompuServe Interactive Services, Inc.
("CompuServe") with respect to the exclusive marketing of TS's
telecommunications services by CompuServe (the "CompuServe Agreement") on
the CompuServe Service (as defined in the CompuServe Agreement). In the
event a Change Event occurs, AOL shall pay, or shall cause CompuServe to
pay, TS within thirty (30) days of such Change Event an amount (the
"Repayment Amount") which shall be calculated in accordance with Attachment
E hereto; provided that, with respect to that portion of the Repayment
Amount allocable to the Base Payment (the "Base Payment Portion"),, AOL
may, at its option, elect, in lieu of paying the Base Payment Portion, to
provide TS with an additional amount of promotion and marketing with
respect to either the AOL Service or the CompuServe Service (as mutually
agreed upon by the parties) (the "Change Event Promotions") with a value,
as measured and calculated using the Ad Value, as defined herein, if the
parties elect to deliver the Change Event Promotions with respect to the
AOL Service, and the "Ad Value" (as defined in the CompuServe Agreement),
if the parties elect to deliver such promotions with respect to the
CompuServe Service, equal to (a) * * * times (b) the amount of the Base
Payment Portion. For purposes of Attachment E: (i) "Credit Amount" shall
mean, as of the date of the Change Event, the aggregate amounts theretofore
credited to TS pursuant to Sections V.C.1(b) and (c); (ii) "Measurement
Date" means the date sixty (60) days subsequent to the Effective Date; and
(iii) "Change Event" means * * *. Immediately following the Change Event,
the parties shall cause the CompuServe Agreement to be terminated; provided
that such termination shall not affect the advertising to be delivered
pursuant to Section V.F.1 (in the event AOL elects to deliver such
advertising in lieu of paying the Base Payment Portion due to TS in
connection with a Change Event). TS hereby expressly
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acknowledges and agrees that neither the CompuServe online service (however
defined in this Agreement or the CompuServe Agreement) nor the end users
thereof (including, without limitation, "End Users" as defined in the
CompuServe Agreement) are or shall be deemed to be within the scope of this
Agreement (including, without limitation, the exclusivity provisions set
forth in Section VI.A hereof), (i) by reason of the consummation of AOL's
recent acquisition of CompuServe Interactive Services, Inc. (or the fact of
such acquisition) or (ii) based on the facts known to TS existing as of the
execution date of this Amendment.
3. Unless and until a Change Event shall have occurred, (a) no user of
the TS telecommunications services marketed thereunder pursuant to the
CompuServe Agreement (the "TS/CS Services") shall for any purposes of this
Agreement (excluding any purpose related to the Supplemental Warrant) be,
or be deemed to be, an "End User" as defined and used herein, (b) the TS/CS
Services shall not be, or be deemed to be, "Services" as defined and used
herein, (c) no revenues generated under or by reason of the CompuServe
Agreement shall form a part of, or in any respect be included in, "Gross
Revenues" as defined and used herein, and (d) TS's exclusivity rights set
forth in Section VII.A herein shall not apply in any manner to CompuServe's
marketing of the TS/CS Services.
4. From and after the date a Change Event shall have occurred, (a)
each user of the TS/CS Services shall for all purposes of this Agreement
and the Warrants be, and shall be deemed to be, an "End User" as defined
and used herein, (b) the TS/CS Services shall be, and shall be deemed to
be, "Services" as defined and used herein, (c) all revenues generated under
or by reason of the CompuServe Agreement shall form a part of, and be
included in, "Gross Revenues" as defined and used herein, and (d) TS's
exclusivity rights set forth in Section VII.A herein shall apply to
CompuServe's marketing of the TS/CS Services; provided that, to the extent
that the CompuServe Service shall be operated as a separately accessible
online service (e.g., subscribers are not required to access the service by
first accessing the America Online brand service) (and without
acknowledgment or agreement by AOL that such CompuServe Service satisfies
the definition of AOL Service set forth Section I.A.9 hereof), AOL agrees
that TS shall continue to have the access, linkage, designated area,
display and other similar rights within and with respect to such CompuServe
and the billing and servicing of any End Users thereon that are provided in
the CompuServe Agreement."
5. AOL hereby consents to TS' and Holdings' entering into, and
performing under, the CompuServe Agreement and agrees that, in and of
itself, such conduct shall not constitute a breach by TS or Holdings of
Section VII.A.6 of this Agreement or require the payment of any override
pursuant thereto.
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12. The following clause (iv) is added to the end of Section XI.A.2 of the
Agreement:
"and (iv) any claim relating to (a) the content of any statement or
claim made by TS in connection with the Services or (b) the content of
any promotion, advertisement or other marketing (whether offline or
online, including * * *) relating to the Services (excluding any
content that was submitted by AOL), which content AOL (x) advised TS
that it was not reviewing, (y) did not receive from TS or was not
otherwise provided a reasonable opportunity to review or (z) reviewed
and provided comments, suggestions or input that were not reflected by
TS in the content (and the claim is based on the content that was not
reflected)."
13. The parties hereby agree to execute an amendment to the Supplemental
Warrant (the "Warrant Amendment"), as soon as reasonably practicable
following the Amendment Effective Date, which shall provide that each "End
User" (as defined in the CompuServe Agreement) acquired through the
CompuServe Service shall be included in the calculation of Warrant Shares
pursuant to Section 1(a) of the Supplemental Warrant. Until such time as
the parties have executed the Warrant Amendment, this paragraph shall serve
as a valid amendment to the Supplemental Warrant and shall be fully
self-executing in all respects.
14. The parties hereby agree that (a) the number of End Users who subscribed to
the Long Distance Telecommunications Services between the Effective Date
and December 31, 1997, is a minimum of * * * and (b) the number of End
Users who subscribed to the Long Distance Telecommunications Services
between December 31, 1997, and January 25, 1998 is * * *. The parties
acknowledge that AOL is utilizing the figure of * * * net End Users as of
December 31, 1997 for purposes of calculating the number of Warrant Shares
due to AOL as of such date; provided that, to the extent the actual number
of net End Users from the period between the Effective Date and December
31, 1997 is greater than * * * (the "Excess End Users"), then TS shall
continue to be responsible to provide AOL Warrant Shares in consideration
of such actual Excess End Users as of December 31, 1998.
15. This Amendment does not, and shall not be construed to, modify any term or
condition of the Agreement (including, without limitation, any payment
obligations under the Agreement) other than those specific terms and
conditions expressly referenced in this Amendment. Except as herein
provided, the Agreement shall remain unchanged and in full force and
effect. In the event of any inconsistency or discrepancy between the
Agreement and this Amendment, the terms and conditions set forth in this
Amendment shall control. Neither party shall be bound by, and each party
specifically objects to, any term, condition or other provision that is
different from or in addition to the provisions of this Amendment and the
Agreement (whether or not it would materially alter this Amendment or the
Agreement) and which is proffered by the other party in any correspondence
or other document, unless the party to be bound thereby specifically agrees
to such provision in writing in accordance with the terms of the Agreement.
This Amendment may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same document. This
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Amendment shall be governed by the internal laws of the State of New York,
without giving effect to the principles of conflict of laws thereof.
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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be signed
on their behalf as of the Amendment Effective Date.
AMERICA ONLINE, INC.
By /s/ David M. Colburn
----------------------------
Name: David M. Colburn
Title: Senior Vice-President
TEL-SAVE, INC.
By /s/ Daniel Borislow
----------------------------
Name: Daniel Borislow
Title: Chairman & CEO
TEL-SAVE HOLDINGS, INC.
By /s/ Daniel Borislow
----------------------------
Name: Daniel Borislow
Title: Chairman & CEO
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ATTACHMENT A
DELIVERABLES DURING THE ADDITIONAL PROMOTION PERIOD
AOL Deliverables
Date Description Status as of Signing
* * * * * * * * *
TS Deliverables
Date Description Status as of Signing
* * * * * * * * *
[Endnotes* * * ]
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Attachment B
Adjustment Value Schedule
The "Adjustment Value" shall mean, as of any date of calculation thereof,
the average of the amounts set forth in the TS column and the AOL column below
with respect to the Holdings Share Price as of such calculation date, provided
that such Adjustment Value with respect to a Holdings Share Price between the
prices set forth in the column below shall be determined by interpolation.
<TABLE>
<CAPTION>
SHARE
PRICE
HOLDINGS TS AOL AVERAGE
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
$ 15.00 $ 8.93 $ 8.13 $ 8.53
$ 16.00 $ 9.77 $ 8.98 $ 9.38
$ 17.00 $ 10.62 $ 9.83 $ 10.23
$ 18.00 $ 11.48 $ 10.68 $ 11.08
$ 19.00 $ 12.35 $ 11.54 $ 11.95
$ 20.00 $ 13.22 $ 12.39 $ 12.81
$ 21.00 $ 14.11 $ 13.29 $ 13.70
$ 22.00 $ 15.00 $ 14.21 $ 14.61
$ 23.00 $ 15.89 $ 15.12 $ 15.51
$ 24.00 $ 16.79 $ 16.04 $ 16.42
$ 25.00 $ 17.70 $ 16.96 $ 17.33
$ 26.00 $ 18.61 $ 17.87 $ 18.24
$ 27.00 $ 19.53 $ 18.79 $ 19.16
$ 28.00 $ 20.45 $ 19.70 $ 20.08
$ 29.00 $ 21.37 $ 20.62 $ 21.00
$ 30.00 $ 22.30 $ 21.57 $ 21.94
$ 31.00 $ 23.23 $ 22.53 $ 22.88
$ 32.00 $ 24.17 $ 23.48 $ 23.83
$ 33.00 $ 25.11 $ 24.44 $ 24.78
$ 34.00 $ 26.05 $ 25.40 $ 25.73
$ 35.00 $ 26.99 $ 26.35 $ 26.67
</TABLE>
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Attachment E
The Repayment Amount shall be calculated as the sum of the amounts with respect
to the Initial Payment, the Base Payment and the Midterm Payment, as each are
determined as follows (and subject to Section __ of the Agreement):
Initial Payment
With respect to any date on which the Change Event occurs:
1. If before MD IA
2. If after MD but before CL IA x [1 - ((#M GREATER THAN MD) /22)] - CA
3. If after CL IA x [1 - ((#M GREATER THAN MD) /22)] - CA
Base Payment
With respect to any date on which the Change Event occurs:
1. If before MD and after CL BP
2. If after MD and after CL BP x [1 - ((#M GREATER THAN CL) / (24 - #M@CL)]
Midterm Advance
With respect to any date on which the Change Event occurs:
1. At all times: MA x [1 - (#M GREATER THAN MA) / 12]
Key:
IA = Initial Advance
BP = Base Payment
MA = Midterm Advance
CE = Change Event
CA = Credit Amount
CL = Commercial Launch Date
MD = Measurement Date
#M GREATER THAN = Number of months (or portions of months) since [X]
#M@cl = Number of months (or portions of months) since
Effective Date in which CL occurs