Telecommunications Marketing Agreement [Amendment No. 3] - Tele-Save Inc., Tele-Save.com Inc. and America Online Inc.
AMENDMENT NO. 3
This AMENDMENT NO. 3 (this "Amendment"), effective as of October 1,
1998, by and among Tel-Save, Inc. ("TS"), a Pennsylvania corporation, and
Tel-Save.com, Inc. (formerly, Tel-Save Holdings, Inc.), a Delaware corporation
("Holdings"), 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, and amended by an Amendment No. 1, dated January
25, 1998, and an Amendment No. 2, dated May 14, 1998 (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. In light of both parties' desire to increase
the number of End Users of the Services, the parties 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 amended as follows:
a. Section I.A.7. of the Agreement is amended to read in its entirety
as follows: "'AOL Marks' means, collectively, the AOL LD Marks and the AOL
Wireless Marks. `AOL LD Marks' means the service mark `AOL Long Distance' owned
by AOL under which the LD Services may be marketed and operated under the terms
of this Agreement during the LD Exclusivity Period. `AOL Wireless Marks' means
any service mark, which will be owned by AOL, that includes a reference to the
AOL name therein and which may be used in the marketing of Wireless Services
under the terms of this Agreement, during the Wireless Exclusivity Period, which
service marks, if any, shall be mutually agreed to in writing by the parties
prior to or simultaneous with the parties entering into the Wireless
Arrangement."
b. Section I.A.9 of the Agreement is amended to read in its entirety as
follows:
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"AOL Service" means AOL's online service provided to subscribers
(including, without limitation, individuals and businesses) in the United States
under the America Online(R) brand name, including, without limitation,
electronic mail, conferencing, news, sports, weather and stock quotes, accessed
by consumers through computers using AOL's proprietary software, as it exists on
the Effective Date and any online service provided by AOL or any of its
affiliates that is a successor thereto or substitute therefor; provided,
however, that the AOL Service shall expressly exclude, without limitation, (i)
the CompuServe(R) brand service and any other CompuServe products or services,
(ii) Netscape Netcenter and any other Netscape products or services, (iii)
"ICQ(TM)," "Digital City(TM)," "Netmail," Yellow pages, white pages, classified
or other search or directory or review services; (iv) any property, feature,
product or service which AOL or its affiliates may acquire subsequent to the
Effective Date, except insofar as such property, feature, product or service is
a successor to, or substitute for, the then existing AOL Service; and (v) PDAs,
palmtops and other hand-held devices and AOL TV, provided that each uses
separate client software and separate (from a personal computer) hardware.
Section I.A.13. is amended to change the reference therein to
"Services" to "LD Services".
c. Section I.A.39 is amended to read in its entirety as follows:
"Services" means the telecommunications services, including the
Restricted Services, provided, from time to time, pursuant to this Agreement by
TS, as the carrier in the case of LD Services, and marketed by AOL as herein
provided under the AOL Marks or other brand names as permitted by and in
accordance with Section III.E.1; provided, however, that "Services" shall not
include (a) Internet Telephony (except for the communications components of such
telephony which are other Services; e.g., a private line) or (b) paging services
not offered in conjunction with another Commercial Mobile Radio Service.
d. Section I.A.41. of the Agreement is amended in its entirety as
follows: "'Term' means the period commencing on the date hereof and ending on
the last to occur of the last day of any Period hereunder, unless such period is
sooner terminated pursuant to the terms of this Agreement, in which event such
period shall end at such earlier termination date."
e. The following definitions are added in alphabetical order:
"Amendment No. 3" means Amendment No. 3 to this Agreement, effective as
of October 1, 1998.
"Amendment 3 Effective Date" means October 1, 1998.
"AOL Election" means the election by AOL, if no TS Election has been
made by the 30th day before the termination or expiration of the LD
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Exclusivity Period, by written notice to TS at least ten (10) days before the
termination or expiration of the LD Exclusivity Period, to provide the marketing
and promotions that would be required to be provided by the terms of this
Agreement from and after the termination or expiration of the LD Exclusivity
Period if an Election has been made, subject to the terms of this Agreement.
"Election" means both an AOL Election and a TS Election.
"Exclusivity Periods" means, collectively, the LD Exclusivity Period
and the Wireless Exclusivity Period, and each, an "Exclusivity Period".
"Initial Wireless Expiration Date" means the earlier of June 30, 2003
and the calendar quarter end that is fourteen full calendar quarters after the
Wireless Launch Date.
"Interactive Service Provider" means an entity offering one or more of
the following (each, an "Interactive Service"): (i) online or Internet
connectivity services, whether narrow band or broadband (e.g., an Internet
service provider); (ii) a broad selection of aggregated third party interactive
content (or navigation thereto) (e.g., an online service or search and directory
service) and/or marketing a broad selection of products and/or services across
numerous interactive commerce categories (e.g., an online mall or other leading
online commerce site); and (iii) communications software capable of serving as
the principal means through which a user creates, sends and receives electronic
mail or real time online messages.
"LD Services" means the Services provided hereunder that are Long
Distance Telecommunications Services.
"LD End User" means an End User of the LD Services.
"LD Exclusivity Period" means the period commencing on the date of this
Agreement and ending on June 30, 2003, subject to extension by AOL as provided
in Section X.B.1., in which case the LD Exclusivity Period shall mean the period
ending on such later date to which it may have been so extended, and subject to
termination of such Period by AOL as provided in Section VII.A.2. or VII.A.9. or
Article X (and it is understood and agreed that the LD Exclusivity Period shall
terminate upon any termination of this Agreement (or the Term) pursuant to the
terms of this Agreement) in which case the LD Exclusivity Period shall mean the
period ending on such earlier termination date.
"LD Marginable Revenue" for any calendar quarter shall mean the total
billings during such quarter by TS (a) to LD End Users (other than Unbillable
End Users) for the provision (whether provisioned under the AOL LD Marks or
under another brand in accordance with Section III.E.1.) of LD Services under
this Agreement and (b) to End Users (other than Unbillable End Users) for the
provision of Local Services under this Agreement with respect to whom AOL is not
paid an override pursuant to Section VII.A.3, but in any case, less taxes and
fees imposed by federal, state and local authorities that TS is required to
collect from End Users, less billings by TS for directory assistance
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charges to End Users less bad debt, determined in accordance with generally
accepted accounting principals, but not greater than ***, and less all PICC
charges and excluding credits and other adjustments.
"LD Mark" means a service mark (including the AOL LD Marks) that is
used in the marketing of LD Services under the terms of this Agreement, which
service mark is the AOL LD Marks to the extent required pursuant to Section
III.E.1 and, to the extent not so required, shall be another service mark
mutually agreed to in writing by the parties hereto prior to their use in
connection with the provision of LD Services hereunder, provided that,
notwithstanding the foregoing, the use of any service mark that is set forth on
Schedule X hereto is agreed to by AOL, subject to the terms of Section III.E.1.
"LD Non-Exclusive Period" means the period commencing on the first day
after the last day of the LD Exclusivity Period and ending on June 30, 2003,
subject to extension by AOL as provided in Section X.B.2., in which case the LD
Non-Exclusive Period shall mean the period ending on such later date to which it
may have been so extended, and subject to termination of such Period by AOL as
provided in Article X (and it is understood and agreed that the LD Non-Exclusive
Period shall terminate upon any termination of this Agreement (or the Term)
pursuant to the terms of this Agreement), in which case the LD Non-Exclusive
Period shall mean the period ending on such earlier termination date.
"Long Distance Residual" shall have the meaning set forth in Section
V.B.II.(e).
"Local Non-Exclusive Period" means the period commencing on the
Amendment 3 Effective Date and ending on June 30, 2003, subject to termination
of such Period by AOL as provided in Section Article X (and it is understood and
agreed that the Local Non-Exclusive Period shall terminate upon any termination
of this Agreement (or the Term) pursuant to the terms of this Agreement), in
which case the Local Non-Exclusive Period shall mean the period ending on such
earlier termination date.
"Local Services" means the Services provided hereunder that are Local
Telecommunications Services.
"Non-Exclusive Periods" means, collectively, the LD Non-Exclusive
Period, the Local Non-Exclusive Period and the Wireless Non-Exclusive Period,
and each, a "Non-Exclusive Period".
"Periods" means, collectively, the Exclusivity Periods and the
Non-Exclusive Periods, and, each, a "Period".
"TS Election" means the election by TS, by written notice to AOL at
least thirty (30) days before the termination or expiration of the LD
Exclusivity Period, to require AOL to provide the marketing and promotions that
would be required to be provided by the terms of this Agreement from and after
the termination or expiration of the LD Exclusivity Period if an Election has
been made, subject to the terms of this Agreement.
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"Unbillable End User" means any End User or subscriber with respect to
whom the credit card, debit card or checking account, as the case may be,
on-file information provided to TS by AOL upon such End User or subscriber
subscribing to the Services was not provided or was inaccurate by reason of such
End User or subscriber having cancelled his or her subscription to the AOL
Service.
"Wireless Arrangement" shall have the meaning set forth in Section
II.F.
"Wireless Services" means the Services provided hereunder that are
Commercial Mobile Radio Services.
"Wireless Exclusivity Period" means the period commencing on the
Amendment 3 Effective Date and ending on the Initial Wireless Expiration Date,
subject to extension by AOL as provided in Section X.B.1., in which case the
Wireless Exclusivity Period shall mean the period ending on such later date to
which it may have been so extended, and subject to termination of such Period by
AOL as provided in Section VII.A.2. or X (and it is understood and agreed that
the Wireless Exclusivity Period shall terminate upon any termination of this
Agreement (or the Term) pursuant to the terms of this Agreement) in which case
the Wireless Exclusivity Period shall mean the period ending on such earlier
termination date .
"Wireless Launch Date" means the date on which the Wireless Services
are first made generally available to subscribers of the AOL Service, which date
shall be agreed to in writing by the parties (provided that if the parties are
unable to agree on a date, the date shall be the date after the execution of the
Wireless Arrangement on which the Wireless Services have been offered to at
least *** of the subscribers to the AOL Service, as certified in a writing by
AOL to TS).
"Wireless Mark" means any service mark (including the AOL Wireless
Mark) that is used in the marketing of Wireless Services under the terms of this
Agreement, which service marks, if any, shall be mutually agreed to in writing
by the parties hereto prior to or simultaneous with the parties' entering into
the Wireless Arrangement and provided that, during the Wireless Exclusivity
Period, the Wireless Mark shall be the AOL Wireless Mark if AOL shall so elect
on or before the parties' entering into the Wireless Agreement.
"Wireless Non-Exclusive Period" means the period commencing on the
first day after the last day of the Wireless Exclusivity Period and ending on
June 30, 2003, subject to extension by AOL as provided in Section X.B.2., in
which case the Wireless Non-Exclusive Period shall mean the period ending on
such later date to which it may have been so extended, and subject to
termination of such Period by AOL as provided in Article X (and it is understood
and agreed that the Wireless Exclusivity Period shall terminate upon any
termination of this Agreement (or the Term) pursuant to the terms of this
Agreement), in which case the Wireless Non-Exclusive Period shall mean the
period ending on such earlier termination date.
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3. Section II.F. is amended by adding the following at the end thereof:
"TS and AOL shall jointly explore opportunities and offerings for
Commercial Mobile Radio Services to be provided by a private label service on an
agency or resold basis. Each party shall be given reasonable advance notice of,
and an opportunity to attend, all meetings with prospective service providers
and the parties shall keep each other reasonably informed of their progress. The
service offering and provider shall be selected by mutual agreement of AOL and
TS; provided, however, that AOL shall not be required to consider any offering
if (a) the offering of any such Services to End Users is not competitive (as to
End Users) with other generally available offerings of such Services to End
Users by other providers, (b) the inclusion of such offering in the Services
would, in and of itself, be materially detrimental to AOL's business or (c) the
provider of such offering does not agree to meet the requirements regarding AOL
wireless data services set forth on Schedule Y in accordance with a schedule
reasonably acceptable to AOL. Notwithstanding anything herein, it is expressly
understood and agreed that the data services required to be included in Wireless
Services need not be included in any marketing under, or otherwise marketed
through, any of the marketing provided by AOL hereunder. Neither AOL nor TS
shall unreasonably delay informing the other of whether a particular provider is
acceptable to such party, and each party agrees that * * * are acceptable
providers, provided the offering of such provider complies with clauses (a), (b)
and (c) of the immediately preceding sentence and subject to acceptable terms
and conditions on which such service will be offered. If the parties mutually
agree upon an offering and provider for Commercial Mobile Radio Services
hereunder, then the parties shall mutually agree upon the terms and conditions
upon which the Commercial Mobile Radio Services shall be offered and the rollout
and performance lists applicable to the provision thereof, and the parties shall
enter into an arrangement with such provider to so provision Commercial Mobile
Radio Services to be marketed by AOL under the Wireless Marks over the AOL
Service (the foregoing arrangement, the "Wireless Arrangement") with a term that
extends until the expiration or termination of the Wireless Non-Exclusive
Period, as such term may be extended pursuant to Section X.B.2. The parties
shall use their commercially reasonable best efforts to cause the Wireless
Launch Date to occur as soon as reasonably practicable but at least by April 1,
1999, provided that neither the failure to reach agreement with a Commercial
Mobile Radio Services provider as provided above nor the failure to launch the
Wireless Services shall permit AOL to terminate the Wireless Exclusivity Period
prior to June 30, 2000. During the Wireless Exclusivity Period, AOL and TS shall
each receive *** percent *** of all proceeds from the provision of Wireless
Services not retained by the service provider under the Wireless Arrangement,
other than cost reimbursements and other similar payments ("Wireless Proceeds"),
provided that AOL shall first receive, but only during the Wireless Exclusivity
Period, at least a mutually agreed upon guaranteed quarterly minimum payment
from the Wireless Arrangement and TS shall then receive, but only during the
Wireless Exclusivity Period, at least a mutually agreed-upon per-subscriber fee
for each subscriber to such Wireless Services. After the expiration or
termination of the Wireless Exclusivity Period and during the Term, TS shall no
longer receive the foregoing per-subscriber fee, AOL shall no longer receive the
foregoing guaranteed quarterly minimum
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payments, and AOL's share of the Wireless Proceeds shall be fifty percent (50%)
for the first year of the Wireless Non-Exclusive Period, forty percent (40%) for
the second year thereof, thirty percent (30%) for the third year thereof, twenty
percent (20%) for the fourth year thereof and ten percent (10%) for the fifth
year thereof; provided, however, that if AOL either (x) enters into, without
TS's prior written consent, any other arrangement with the provider of the
Commercial Mobile Radio Services under the Wireless Arrangement to provide
Commercial Mobile Radio Services on the AOL Service (other than an arrangement
permitted pursuant by Section VII.A.1.) or (y) does not make available to TS the
marketing required to be provided by AOL pursuant to Sections III.A.1, then AOL
shall be entitled to no further share of Wireless Proceeds. It is understood and
agreed that the Data Requirements shall apply to, and TS and any service
provider for Wireless Services shall comply with the Data Requirements with
respect to, any offering of Wireless Services hereunder, whether during the
Wireless Exclusivity Period or the Wireless Non-Exclusive Period.
4. The Agreement is amended to delete Schedule X in its entirety and to add as a
new Schedule X thereto the Schedule X attached to this Amendment and to add as
Schedule Y thereto the Schedule Y attached to this Amendment.
5. Sections III.A.1.(a) - (e), III.A.2, III.A.4. and III.A.5 of the Agreement
are deleted in their entirety and the parties acknowledge that all of AOL's
obligations thereunder have been fully discharged and AOL shall have no further
liability or obligation thereunder.
6. The following new subsections (a) - (e) are added to Section III.A.1 of the
Agreement:
[MARKETING AND PROMOTIONAL SERVICES TO BE DELIVERED]
***
7. A new Section III.A.1(h) is added to the Agreement as follows:
"(h) Except as expressly provided in Section III. A.1 and Section
III.A.7, the marketing provided by AOL under this Section III.A.1. and Section
III.A.7. may be used by TS so long as such marketing is so provided, but only to
promote the Services then offered by TS under this Agreement, whether on an
unbundled basis or bundled with any other Services then offered by TS under this
Agreement or on an exclusive or non-exclusive basis (provided that Local
Services shall be promoted solely on a bundled basis with the LD Services during
the LD Exclusivity Period), except that TS may utilize the marketing provided by
AOL under Section *** that is not dedicated to promotion of Wireless Services to
promote products or services of AOL or AOL's Partners (which products and
services shall be limited to products and services that are the same in
substance as the primary products and services marketed by *** under its ***)
subject to the terms of this Section, provided that any such products or
services of an *** and the content of any marketing
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and promotion thereof shall be approved by AOL, said approval not to be
unreasonably withheld. *** shall mean a *** with whom *** has *** a *** in
connection with *** conducted over the ***, which agreement includes *** based
on *** or other measure of *** of *** or *** of *** thereunder or provides the
*** with any *** or *** with respect to *** or the ***. Any such marketing of
*** products or services shall utilize solely the marketing commitments set
forth in Sections *** that is not dedicated to promotion of Wireless Services
and shall comply with all AOL's then standard policies governing such marketing
and AOL's exclusivities and other contractual preferences to third parties. Any
*** products or services so marketed by TS hereunder shall be on an *** basis
(i.e. *** or *** basis) pursuant to a *** with *** and TS shall not re-sell any
of the marketing commitments hereunder to a *** or any ***. If TS utilizes any
of the marketing provided by AOL pursuant to Section *** *** to market ***
products or services, the product or service being offered shall be offered as a
bundle with LD Services or, during the Wireless Exclusivity Period and to the
extent mutually agreed upon by the parties and the service provider under the
Wireless Arrangement, Wireless Services (provided that this provision shall not
preclude the bundling of other services permitted to be offered hereunder with
LD Services or Wireless Services), as a special offer in connection with
subscribing to such Services. Any *** services utilized by TS to promote a ***
products or services shall utilize TS's *** *** and shall be subject to all
other terms and conditions of this Agreement, including payment of ***. As a
condition to TS being permitted to utilize any marketing provided by AOL to
market a *** products or services, such *** shall agree in writing that (i)
sales of such *** products or services utilizing such marketing shall be counted
toward all *** and *** contained in such *** with *** and such *** shall pay ***
in accordance with such *** with *** for all such sales once such *** or *** are
met (or if such agreement does not contain *** or ***) and (ii) all such
marketing shall count against *** *** commitments to such *** contained in such
*** with ***. To the extent TS desires to enter into arrangements with *** to
utilize the marketing commitments set forth in Sections *** or to advertise such
*** products or services within the Dedicated Area pursuant to Section ***, TS
shall notify AOL of *** TS desires to enter into such arrangements and the
specific products and/or services that TS desires to market or advertise. To the
extent there is more than one *** *** providing the products and/or services
that TS desires to advertise or market, then TS may determine with which *** it
will enter into an arrangement, provided that TS shall have offered in good
faith such opportunity to all such ***. TS shall provide AOL with a 30-day
marketing plan for advertising or marketing the products and/or services of any
*** at least thirty (30) days in advance of the period to which such marketing
plan applies. *** TS shall jointly solicit any *** with which TS desires to
enter into such an arrangement; provided, however, that if *** participation in
such solicitations is having a detrimental effect on solicitations of a ***,
then TS may solicit such *** without *** participation after giving
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*** at least one (1) business day's prior notice of such detrimental effect and
an opportunity to correct the actions by *** that give rise to such detrimental
effect. AOL shall be given reasonable advance notice prior to any solicitations
of *** by TS and such solicitations during any period of time shall be limited
to a reasonable number given the parties' respective availability to conduct
such solicitations. Notwithstanding any of the foregoing, nothing herein gives
TS the right to use any of the *** of any of the ***."
9. A new Section III.A.1(i) is added to the Agreement as follows:
***
10. A new Section III.A.1(j) is added to the Agreement as follows:
"In connection with the marketing and promotion efforts provided in
this Agreement, including those provided in this Section ***, AOL will continue
to make *** to the AOL Service subscriber base available to the telemarketing
vendors and/or verification agents but only to the extent, for the purposes, and
to the vendors, that *** is provided by AOL in connection with marketing and
promotions provided to TS as of December 31, 1998; provided, however, that all
*** shall be subject to AOL's then current policies, including, without
limitation, the Terms of Service for subscribers to the AOL Service and AOL's
privacy policies, and subject to the confidentiality provisions of this
Agreement."
11. Sections III.A.2., III.A.4. and III.A.5 of the Agreement shall each read in
their entirety "Intentionally Deleted."
12. Section III. A.3. of the Agreement is amended to apply to Commercial Mobile
Radio Services and Local Telecommunications Services, to the extent offered by
TS on the AOL Service, in addition to Long Distance Telecommunications Services.
13. Section III. A.7. of the Agreement is amended to read in its entirety as
follows:
"AOL commits to provide, in connection with its activities described in
Sections III.A.1., III.A.6., III.C. and III.D hereof, keywords on the AOL
Service (which shall be at least (i) any keyword that TS has linking to the
Dedicated Area as of the Amendment 3 Effective Date, which keywords shall link
to an area on which TS has a presence, (ii) any other keyword that is listed on
Schedule X hereto and is non-generic, which keywords shall link to the Dedicated
Area or other mutually agreed upon area, and (iii) any keyword approved by AOL)
or hyperlinks on the AOL Service to a dedicated area on the AOL Service (the
"Dedicated Area") in order to facilitate ease of location and access to the
Dedicated Area for End Users and prospective customers. From and after October
1, 1998 and during the LD Exclusivity Period, (i) *** (except that in no event
shall ***
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except on a bundled basis with LD Services or, if the parties mutually agree
with the service provider under the Wireless Arrangement, Wireless Services. AOL
may sell advertising within the Dedicated Area, subject to TS's approval in its
sole discretion. TS may enter into arrangements with any third party (including
***, but subject, in any case, to any applicable exclusivities or contractual
preferences granted by AOL of which AOL shall have advised TS) to advertise such
party's products or services within the Dedicated Area during the Term, which
advertising shall be subject to AOL's then standard advertising policies and the
terms of Section III.A.1(h). Revenues from such advertising (net of third party
commissions and, in the case of advertising sold directly by AOL, *** percent
***, and, in the case of advertising sold directly by TS, *** percent ***),
shall be divided evenly between TS and AOL."
14. Section III.B.1 is amended by adding the following at the end thereof:
"In satisfaction of its obligations under this Section III.B.2., AOL
shall continue to provide (to the extent it is currently providing such reports)
the following: monthly reports of total *** and numbers of *** provided,
however, that within sixty (60) days after the end of any period for which
payment is to be made pursuant to Section III.A.7., AOL shall deliver to TS a
statement of the advertising revenues for such period, and the amount, if any,
payable to TS with respect to such period, showing the manner in which it was
determined, and such statement shall be accompanied by a payment of any such
amount. To the extent AOL is not currently providing any of the foregoing
information, AOL shall use commercially reasonable best efforts to do so, so
long as such information is relevant to AOL's then current obligations under
this Agreement.
15. The first sentence of Section III.B.2 is deleted in its entirety and the
following is inserted in lieu thereof:
"AOL shall keep for two (2) years from the date of each marketing service or
promotion provided pursuant to Section III.A.1 above complete and accurate
records in sufficient detail to allow TS to determine if AOL has provided the
marketing and promotions required thereunder."
16. Section III.B.3. is amended in its entirety as follows: "Intentionally
Deleted."
17. Section III.E.1. is amended by adding the following at the end thereof:
"Notwithstanding anything to the contrary in this Section III.E. or elsewhere in
this Agreement:
(a) Until the later to occur of December 31, 1999 and the end of the last
period as to which AOL exercises its option under paragraph (b) below, the
LD Services shall be offered under the AOL LD Mark; provided, however, that
TS may display with the AOL LD Mark, subject to the terms of this Section,
a TS owned brand name approved by AOL in writing (the "TS Co-Brand"), which
approval shall not be
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unreasonably withheld; provided, further, that the brand names appearing on
Schedule X are hereby approved by AOL. If TS elects to use the TS Co-Brand
with the AOL LD Mark, the TS Co-Brand shall be displayed as ingredient
branding and not as the primary brand, i.e., the AOL LD Mark shall always
be displayed first and *** more prominently and appear more frequently than
the TS Co-Brand, the TS Co-Brand shall always appear with the phrase
"powered by", "service(s) provided by", "service(s) by", "as an agent of"
or "agent of" or with another similar phrase approved by AOL in writing,
which approval shall not be unreasonably withheld. TS represents and
warrants that the TS Co-Brand, including those brand names appearing on
Schedule X, does not and will not infringe on AOL's or any third party's
rights of which TS has notice or violate any applicable law.
(b) At any time during a year that TS is required to offer the LD Services
under the AOL Mark pursuant to paragraph (a) above, AOL may elect, at its
option, by giving TS written notice of such election, to require TS to
continue to offer the LD Services under the AOL Mark during the one (1)
year period beginning (x) January 1, 2000, provided that, upon making such
election, AOL shall not be permitted to terminate the LD Exclusivity Period
pursuant to Section VII.A.2 prior to June 30, 2001, (y) January 1, 2001,
provided that, upon making such election, AOL shall not be permitted to
terminate the LD Exclusivity Period pursuant to Section VII.A.2 prior to
June 30, 2003, and (z) January 1, 2002, provided that, upon making such
election, AOL shall not be permitted to terminate the LD Exclusivity Period
pursuant to Section VII.A.2 prior to June 30, 2003.
(c) From and after the later to occur of January 1, 2000 and January 1 of any
year as to which AOL did not exercise its option pursuant to paragraph (b)
above and during the LD Exclusivity Period, the LD Services may, but need
not be, offered under the AOL LD Mark, provided that TS may elect to offer
LD Services under any LD Mark other than the AOL LD Mark, including
simultaneously with the offering thereof under the AOL LD Mark. An LD Mark
that is not the AOL Mark may be co-branded with the primary provider of the
resold services underlying the LD Services, provided that the brand of such
service provider shall be displayed as ingredient branding and not as the
primary brand, i.e., the LD Mark shall always be displayed first and ***
more prominently and appear more frequently than the service provider's
brand, the service provider's brand shall always appear with the phrase
"powered by", "service provided by", "service by", "as an agent of" or
"agent of" or with another similar phrase approved in writing by AOL, which
approval shall not be unreasonably withheld, and it shall be clear from
such branding that the LD Services are offered by TS; provided, further,
that TS shall not in any event use the brand name of an Interactive Service
Provider that is the brand name of an Interactive Service (e.g., *** in the
case of ***) or a brand name that is in any way false, deceptive or
misleading. TS represents and warrants that any LD Mark that is not an AOL
Mark, including any co-branding
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with a service provider, does not and will not infringe on AOL's or any
third party's rights of which TS has notice or violate applicable law.
(d) Notwithstanding the foregoing, if the LD Exclusivity Period has not
terminated, AOL shall have the right to terminate TS's rights to use the
AOL LD Mark as of or after June 30, 2000, by giving TS written notice of
such election at least 180 days prior to the date of such termination
(including, without limitation, with respect to End Users existing as of
the date of termination or expiration), in which event TS shall have no
further rights to use of the AOL LD Mark from and after the date of such
termination. In addition, if TS ceases to offer the LD Services under the
AOL LD Mark for a period of ten (10) consecutive days, AOL may terminate
TS's rights to use the AOL LD Mark at any time thereafter upon written
notice to TS thereof, in which event TS shall have no further rights to use
of the AOL LD Mark from and after the date of such termination (provided
that such rights shall continue until June 30, 2000 solely with respect to
billing, provisioning and servicing the Services to End Users existing at
the date of such termination). From and after the expiration or termination
of the LD Exclusivity Period, TS shall have no further rights to use of the
AOL LD Mark from and after the date of such expiration or termination
(including, without limitation, with respect to End Users existing as of
the date of expiration or termination). From and after termination of TS's
rights to use of the AOL LD Mark pursuant to any of the foregoing, during
the remainder of the Term, TS shall offer LD Services under any LD Mark
other than the AOL LD Mark, subject to and in accordance with the terms of
paragraph (c) above relating to an LD Mark that is not the AOL LD Mark.
(e) During the Local Non-Exclusive Period, the Local Services shall be offered
under either (i) an LD Mark (including the AOL LD Mark so long as TS has
the right to use the AOL LD Marks pursuant to this Section III.E.1) when
Local Services are offered on a bundled basis with LD Services, or (ii)
under a TS owned brand name approved by AOL in writing (the "TS Local
Brand"), which approval shall not be unreasonably withheld; provided,
however, that the brand names appearing on Schedule X are approved by AOL.
The TS Local Brand may be co-branded with the primary provider of the
agented or resold services underlying the Local Services, provided that the
brand of such service provider shall be displayed as ingredient branding
and not as the primary brand, i.e., the TS Local Brand shall always be
displayed first and *** more prominently and appear more frequently than
the service provider's brand, the service provider's brand shall always
appear with the phrase "powered by" "service provided by", "service by",
"as an agent of" or "agent of" or with a similar phrase approved in writing
by AOL, which approval shall not be unreasonably withheld, and it shall be
clear from such branding that the Local Services are offered by TS;
provided, further, that TS shall not in any event use the brand name of an
Interactive Service Provider that is the brand name of an Interactive
Service (e.g., *** in the case of ***) or a brand name that is in any way
false, deceptive or misleading. TS represents and
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warrants that the TS Local Brand (including any co-branding with a service
provider) does not and will not infringe on AOL's or any third party's
rights of which TS has notice or violate applicable law.
(f) During the Term, the Wireless Services shall be offered under the Wireless
Marks and the parties shall mutually agree upon the Wireless Marks in
connection with entering into the Wireless Arrangement; provided, however,
that, at AOL's option, the Wireless Marks shall be the AOL Wireless Marks
during the Wireless Exclusivity Period. If AOL does not elect to use the
AOL Wireless Marks for the Wireless Services as provided in the immediately
preceding sentence, and in any case from and after the termination or
expiration of the Wireless Exclusivity Period, TS shall have no further
rights to use of the AOL Wireless Marks (including, without limitation,
with respect to End Users existing as of the date of termination or
expiration). If the Wireless Mark is not an AOL Wireless Mark, then the
Wireless Mark shall be a TS owned brand approved in writing by AOL, which
approval shall not be unreasonably withheld; provided, however, that the
brand names appearing on Schedule X are hereby approved by AOL. A Wireless
Mark that is not an AOL Wireless Mark may be co-branded with the primary
provider of the resold services underlying the Wireless Services, provided
that the brand of such service provider shall be displayed as ingredient
branding and not as the primary brand, i.e., the Wireless Mark shall always
be displayed first and *** more prominently and appear more frequently than
the service provider's brand, the service provider's brand shall always
appear with the phrase "powered by", "service provided by", "service by",
"as an agent of" or "agent of" or with a similar phrase approved in writing
by AOL, which approval shall not be unreasonably withheld, and it shall be
clear from such branding that the LD Services are offered by TS; provided,
further, that TS shall not in any event use the brand name of an
Interactive Service Provider that is the brand name of an Interactive
Service (e.g., *** in the case of ***) or a brand name that is in any way
false, deceptive or misleading. TS represents and warrants that any
Wireless Mark that is not an AOL Wireless Mark (including any co-branding
with a service provider) does not and will not infringe on AOL's or any
third party's rights of which TS has notice or violate applicable law.
(g) In connection with any change in the branding of a Service that may occur
hereunder, TS shall work together with AOL to avoid confusion of the End
Users and subscribers to the AOL Service with respect to such change in
brands.
18. The last sentence of Section IV.A.1 is deleted in its entirety and the
following is inserted in lieu thereof:
"Subject to the terms of this Agreement, the Services to be provided by TS
hereunder are expanded to include Local Telecommunications Services and
Commercial Mobile Radio Services as and to the extent offered by TS."
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19. Section IV.C.1. is deleted in its entirety and the following is inserted in
lieu thereof:
"As and to the extent described in, and subject to the terms of, Section
III.E.1, the Services will be offered by TS (in the case of the LD Services, as
the carrier) under the AOL Marks or other brand names as permitted by this
Agreement."
20. Each of Section V.B.1.a. and Section V.B.1.b. is deleted and amended to read
in its entirety as follows: "Intentionally Deleted", and the parties acknowledge
that all of TS's obligations thereunder have been fully discharged and TS shall
have no further liability or obligation thereunder. The following new
subsections c., d., e. and f. are added to Section V.B.1. of the Agreement:
(c) TS shall pay AOL during (but only until the termination or
expiration of) the LD Exclusivity Period as follows:
(i) For the calendar quarter beginning October 1,
1998, TS shall pay AOL the amount of Six Million
Dollars ($6,000,000), which payment shall be made on or
before January 15, 1999.
(ii) For each of the calendar quarters beginning
January 1, 1999, April 1, 1999, July 1, 1999 and
October 1, 1999, TS shall pay to AOL the amount of Ten
Million Dollars ($10,000,000).
(iii) For each of the calendar quarters beginning
January 1, 2000 and April 1, 2000, TS shall pay to AOL
the amount of Twelve Million Dollars ($12,000,000).
(iv) For each of the calendar quarters beginning July
1, 2000, October 1, 2000, January 1, 2001 and April 1,
2001, TS shall pay to AOL (x) the amount of Fifteen
Million Dollars ($15,000,000), or (y), if AOL, in its
sole discretion, actually allocates to the *** vendors
for the TS Services substantially all *** during such
quarter (subject to the terms of Section *** with
respect to ***), the amount of Nineteen Million Dollars
($19,000,000).
(v) For each of the calendar quarters beginning on or
after July 1, 2001, TS shall pay to AOL an amount equal
to (a) 5% of the LD Marginable Revenue for such quarter
plus (b) twenty-five percent (25%) of any mark-up by TS
on directory assistance or PICC charges included in the
billings for LD Services or Local Services but excluded
from LD Marginable Revenue by the definition thereof.
(d) Beginning January 1, 1999 and until the termination or expiration
of the LD Exclusivity Period, TS shall pay AOL One Dollar ($1.00) per month for
each LD End
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User in excess of two million (2,000,000) LD End Users. Each such payment shall
be made within thirty (30) days following the end of the month for which such
payment is due and shall be calculated based on the number of LD End Users
existing as of the last day of such month."
(e) After the termination or expiration of the LD Exclusivity Period
and during the LD Non-Exclusive Period and provided that an Election has been
made and that, during any of the following periods, including those that occur
after June 30, 2003, AOL shall be making available, during such period, the
marketing and promotions required to be provided pursuant to Section III.A.1.
during the LD Non-Exclusive Period, TS shall pay AOL as follows (collectively,
the "Long Distance Residuals"):
(i) For each of the calendar quarters in the first
year after such expiration or termination, an amount
equal to (a) 5% of the LD Marginable Revenue for such
quarter plus (b) twenty-five percent (25%) of any
mark-up by TS on directory assistance or PICC charges
included in the billings for LD Services or Local
Services but excluded from LD Marginable Revenue by the
definition thereof.
(ii) For each of the calendar quarters in the second
year after such expiration or termination, an amount
equal to (a) 4% of the LD Marginable Revenue for such
quarter plus (b) twenty-five percent (25%) of any
mark-up by TS on directory assistance or PICC charges
included in the billings for LD Services or Local
Services but excluded from LD Marginable Revenue by the
definition thereof.
(iii) For each of the calendar quarters in the third
year after such expiration or termination, an amount
equal to (a) 3% of the LD Marginable Revenue for such
quarter plus (b) twenty-five percent (25%) of any
mark-up by TS on directory assistance or PICC charges
included in the billings for LD Services or Local
Services but excluded from LD Marginable Revenue by the
definition thereof.
(iv) For each of the calendar quarters in the fourth
year after such expiration or termination, an amount
equal to (a) 2% of the LD Marginable Revenue for such
quarter plus (b) twenty-five percent (25%) of any
mark-up by TS on directory assistance or PICC charges
included in the billings for LD Services or Local
Services but excluded from LD Marginable Revenue by the
definition thereof.
(v) For each of the calendar quarters in the fifth and
subsequent years after such expiration or termination,
an amount equal to (a) 1% of the LD Marginable Revenue
for such quarter plus (b) twenty-five percent (25%) of
any mark-up by TS on directory assistance or PICC
charges included in the billings for LD Services or
Local Services but excluded from LD Marginable Revenue
by the definition thereof.
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(f) The payment pursuant to the foregoing clause (c) for each calendar
quarter beginning on or after January 1, 1999 and before July 1, 2001 shall be
paid in three (3) equal monthly installments prior to the end of each of the
calendar months falling within such calendar quarter; provided, however, that
the quarterly payments for each calendar quarter after any calendar quarter in
which Holdings and its subsidiaries (including TS), have at least *** in ***
and/or *** of all *** and other ***, on a GAAP consolidated balance sheet basis
(the "Cash Threshold"), shall be payable to AOL in advance on or before the end
of the fifth (5th) business day of such quarter; provided, however, that the
quarterly payment for the first calendar quarter after the calendar quarter in
which the Cash Threshold is met shall be paid prior to the end of the first
month of such calendar quarter. For each calendar quarter for which TS is
required to pay AOL an amount based on the LD Marginable Revenue, TS shall pay
such amount to AOL within thirty (30) days after the end of the calendar quarter
for which such amount is due. All amounts paid by TS to AOL, including amounts
paid prior to October 1, 1998, shall be non-refundable and shall not be subject
to offset except as expressly set forth in this Agreement.
21. The reference in Section V.B.2. to "Articles X and XI" is amended to read as
follows: "Article XI".
22. The first sentence of Section V.B.3. of the Agreement is deleted in its
entirety and the following is inserted in lieu thereof:
"Within thirty (30) days (sixty (60) days in the case of a payment to be made
pursuant to Section III.A.7) after the end of any period for which payment is to
be made pursuant to Section II.F., III.A.7., V.B.1, or VII.A.3. hereof, TS
shall, to the extent any such payment is based thereon, deliver to AOL a
statement of the LD Marginable Revenue for such period and the components
thereof, End Users, and relevant revenue, profit and End User information in
connection with payments due in respect of the Wireless Services for such period
and the amounts payable to AOL with respect to such period, showing the manner
in which they were determined and certified as correct by the Chief Financial
Officer of TS."
23. The first two sentences of Section V.B.4. of the Agreement are deleted in
their entirety and the following is inserted in lieu thereof:
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"TS shall keep for two (2) years from the date of each payment to AOL
pursuant to Section II.F., Section III. A.7, Section V.B.1 or Section
VII.A.3 for any period after the Amendment 3 Effective Date, complete
and accurate records in sufficient detail to allow AOL to determine if
TS has computed LD Marginable Revenue and components thereof, End
Users, relevant revenue, profit and Wireless End User information in
connection with payments due in respect of the Wireless Services
accurately; provided, however, that nothing herein shall require TS to
maintain records as to any of LD Marginable Revenue or the Wireless
Services information with respect to any period prior to the time TS is
required to make payments based on LD Marginal Revenue or the Wireless
Services information. AOL shall have the right for a period of two (2)
years after receiving any report or statement with respect to payment
due to inspect such records."
24. Sections V.B.7. and V.C. of the Agreement are deleted in their entirety, and
the following is inserted in lieu thereof: "Intentionally Deleted" and the
parties acknowledge that all of TS's obligations thereunder have been fully
discharged and TS shall have no further liability or obligations thereunder.
25. Section V.D. of the Agreement is amended by adding the following at the end
thereof:
"Notwithstanding the foregoing, during the period commencing on October 1, 1998
and ending on the earlier of June 30, 2001 and the date of termination of the LD
Exclusivity Period:
(i) TS shall not be required to pay Estimated ***
Costs in advance.
(ii) AOL shall for each calendar quarter pay (or
reimburse TS for the payment of) Covered Offline
Marketing Costs (as defined below) in such quarter in
an amount up to the applicable AOL Cost Contribution
Amount (as defined below) for such quarter, and TS
shall not be required to pay such Covered Offline
Marketing Costs, provided that TS shall continue to be
responsible, to the extent provided in this Section
V.D., for the payment of all Offline Marketing Costs in
any quarter in excess of such amounts required to be
paid by AOL.
(iii) "Covered Offline Marketing Costs" in a quarter
means and includes the actual cost (to TS) of all
Subscriber Incentives in the form of "AOL Rewards"
points purchased by TS to be provided to End Users
subscribing to the Services during such quarter as a
result of the *** services provided under this
Agreement, and all Offline Marketing Costs incurred by
AOL in such quarter and for which, absent this
provision, TS would be responsible for reimbursing AOL
for the payment or incurrence of, as provided above in
this Section V.D., including, without limitation, (w)
the actual cost of *** services incurred in connection
with *** services, (x) the actual cost (to TS) of
Subscriber Incentives in the form of
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*** points or *** of AOL Service to be provided to End
Users subscribing to the Services during such quarter
as a result of the *** services provided under this
Agreement, (y) Rep Incentives to AOL's ***
representatives for *** to the *** vendors for the
Services and (z) payments to vendors contracted by AOL
to perform the *** services provided for in this
Agreement.
(iv) "AOL Cost Contribution Amount" shall mean (A) for
the calendar quarter beginning October 1, 1998, Four
Million Five Hundred Thousand Dollars ($4,500,000);
(ii) for each calendar quarter thereafter, either (x)
Four Million Dollars ($4,000,000); or (y), if TS pays
AOL $19,000,000 pursuant to Section V.B.1.a for such
quarter, Six Million Dollars ($6,000,000).
(v) If in any quarter AOL funds less than the
applicable AOL Cost Contribution Amount for such
quarter in Offline Marketing Costs, AOL shall pay to TS
the amount by which the applicable AOL Cost
Contribution Amount exceeds the amount of Offline
Marketing Costs so funded by AOL in such quarter but in
no event more than Two Million Dollars ($2,000,000) (or
Six Million Dollars ($6,000,000) if the AOL Cost
Contribution Amount for such quarter was $6,000,000).
(vi) AOL shall use commercially reasonable efforts to
reduce telecommunications costs associated with the
Transfer Plus program.
26. Sections V.F.1, V.F.2, V.F.3, V.F.4 and V.F.5 are deleted in their entirety
and the following new Section V.E. is added to the Agreement:
"E. TS and Holdings entered 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). TS hereby expressly
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 Article
VII. hereof), (i) by reason of the consummation of AOL's acquisition of
CompuServe (or the fact of such acquisition) or (ii) based on the facts known to
TS existing as of the Amendment 3 Effective Date. 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 be, or
be deemed to be, an "End User" as defined and used herein, the TS/CS Services
shall not be, or be deemed to be, "Services" as defined and used herein, no
revenues generated under or by reason of the CompuServe Agreement shall form a
part of, or in any respect be included in, "LD Marginable Revenue" as defined
and used herein, and TS's exclusivity rights set forth in Article VII. herein
shall not apply in any manner to CompuServe's
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marketing of the TS/CS Services. 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."
27. Sections VII.A.1, VII.A.2, VII.A.3, VII.A.4 and VII.A.5 of the Agreement are
deleted in their entirety and the parties acknowledge that all of AOL's
obligations thereunder have been fully discharged and AOL shall have no further
liability or obligation thereunder. The following new Sections VII.A.1, VII.A.2,
VII.A.3, VII.A.4 and VII.A.5. are inserted in lieu thereof:
1. (a) Except as otherwise specifically provided in this Agreement, during the
LD Exclusivity Period, TS shall be the exclusive provider of Long Distance
Telecommunications Services marketed by AOL (or its affiliates, provided that
this reference to affiliates shall not be deemed to provide TS rights under this
Agreement with respect to any site, location or property that is not otherwise
part of the AOL Service) on the AOL Service to the AOL Service subscribers.
Except as otherwise specifically provided in this Agreement, during the Wireless
Exclusivity Period, TS shall be the exclusive provider of Commercial Mobile
Radio Services marketed by AOL (or its affiliates, provided that this reference
to affiliates shall not be deemed to provide TS rights under this Agreement with
respect to any site, location or property that is not otherwise part of the AOL
Service) on the AOL Service to the AOL Service subscribers. In addition, AOL
shall not provide to any other providers of telecommunications services (i) any
*** of subscribers to the AOL Service from the *** for purposes of *** any
telecommunications services, or (ii) *** of *** to the AOL Service for purposes
of *** or *** of any telecommunications services, in each case as to which TS is
then the exclusive provider under this Agreement; provided, however, that, such
restrictions shall not apply with respect to the *** of Broadband Services
permitted to be marketed by AOL pursuant to Section VII.A.1(b) except with
respect to *** prior to ***. Notwithstanding the foregoing or anything to the
contrary in this Agreement, and without limiting any actions which may be taken
by AOL without violation of TS's rights hereunder, (a) AOL shall be permitted to
enter into arrangements to market Bundled Online Services and offer and market
Broadband Services (each an "Excepted Service" and, collectively, "Excepted
Services") in accordance with Section VII.A.1(b) without compensation to TS
other than as expressly provided below.
(b) (1) AOL shall be permitted to enter into any arrangement with other
provider(s) of telecommunications services (each, an "Other Provider") to market
a Bundled Online Service; provided that AOL may not enter into such an
arrangement with *** prior to *** with respect to Local Telecommunications
Services or Commercial Mobile Radio Services and prior to *** with respect to
Long Distance Telecommunications Services. "Bundled Online Service" shall mean
the AOL Service co-marketed in conjunction with any telecommunications
service(s) or in conjunction with the brand of any Other Provider. Any Bundled
Online Service may be co-branded
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with an Other Provider and may also be a Broadband Service. AOL's exclusivity
and marketing obligations (including, without limitation, any obligation of AOL
to include links, key words, a dedicated area or any other presence or materials
on the AOL Service) under this Agreement shall not extend to any Bundled Online
Service; provided, however, that during the LD Exclusivity Period, (X) AOL shall
continue to include Switched Subscribers in the offline marketing subscriber
pool made available to TS and (Y) no Long Distance Telecommunications Services
shall be promoted on any Bundled Online Service that is not a Broadband Service,
by any Other Provider or by AOL, except that (i) AOL may, at its option, promote
the LD Services on such Bundled Online Service and operational, billing and
other non-promotional functions related to Long Distance Telecommunications
Services may be included on such Bundled Online Service and (ii) the Other
Provider shall be permitted to offer on its own web site Long Distance
Telecommunications Services which may be promoted through links on the Bundled
Online Service. Notwithstanding the foregoing, prior to July 31, 1999, (I) no
links to the area on the Other Provider's web site where Long Distance
Telecommunications Services are offered shall be promoted through the Bundled
Online Service to Switched Subscribers, and (II) the Other Provider for such
Bundled Online Service shall not be permitted to target market Long Distance
Telecommunications Services to Switched Subscribers. "Switched Subscribers"
shall mean any subscriber to the Bundled Online Service who switched their
subscription from the AOL Service to the Bundled Online Service. As a condition
to AOL entry into such arrangement, to the extent TS is unable to continue to
bill a Switched Subscriber who is an End User as a result of such Switched
Subscriber switching its subscription from the AOL Service to the Bundled Online
Service, AOL shall ensure that the Other Provider provides to TS satisfactory
billing of LD Services provided by TS to any Switched Subscriber who is an End
User at a cost to TS no greater than the cost to it of billing such Services
through a credit card and shall provide, if TS shall so request, standard call
detail on such bills at no additional expense. AOL shall not be required to pay
TS an override under Section VII.A.3 with respect to any subscriber to Local
Telecommunications Services billed through any Bundled Online Service. During
the LD Exclusivity Period, AOL shall not be permitted to market any Bundled
Online Service that is not a Broadband Service over the AOL Service or use AOL's
Transfer Plus, telemarketing, direct mail Service or other marketing channels to
target market any Bundled Online Service to subscribers to the AOL Service.
(2) AOL shall be permitted to offer to subscribers to the AOL Service broadband
(i.e., 128k or more in either direction) version(s) of the AOL Service (each, a
"Broadband Service") and AOL may market Broadband Services over the AOL Service
and otherwise target market Broadband Services to subscribers to the AOL
Service. Any Broadband Service(s) may be co-branded with an Other Provider
(other than, prior to January 1, 2000, AT&T if bundled with Local
Telecommunications Services or Commercial Mobile Radio Services) and may also be
a Bundled Service. AOL's marketing and exclusivity obligations shall not extend
to any Broadband Service. AOL's marketing and exclusivity obligations
(including, without limitation any obligation of AOL to include links, keywords,
a dedicated area or any presence or materials on the AOL Service) under this
Agreement shall not extend to any Broadband Services; provided, however, that
during
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the LD Exclusivity Period, AOL's online marketing obligations (including,
without limitation any obligation of AOL to include links, keywords, a dedicated
area or any presence or materials on the AOL Service) under this Agreement and,
with respect to Switched Subscribers until June 30, 1999, AOL's exclusivity
obligations with respect to Long Distance Telecommunications Services shall
extend to any Broadband Service that is not a Bundled Service. AOL's exclusivity
obligations (including, without limitation any obligation of AOL to include
links, keywords, a dedicated area or any presence or materials on the AOL
Service) with respect to Commercial Mobile Radio Services shall not extend to
Broadband Services; provided that Commercial Mobile Radio Services provided by
an Other Provider and promoted over a Broadband Service that is not a Bundled
Service shall not be billed on the bill for such Broadband Service or using
on-file billing information provided by AOL to charge the credit or debit card
or checking account, as the case may be, used for the bill for such Broadband
Service , other than through AOL's *** or *** service or other similar ***
methods; provided however, that, prior to ***, AOL shall not provide its *** or
*** services to subscribers to such Broadband Service for purposes of billing
Commercial Mobile Radio Services of an Other Provider unless AOL shall have
first provided TS with the opportunity to ***.
(3) During the LD Exclusivity Period, AOL shall pay to TS an override in the
amount of *** per month for each subscriber (A) in excess of *** to any single
Excepted Service bundled with any telecommunications services in the nature of
any of the Services and (B) in excess of *** in the aggregate for all Excepted
Services bundled with tele-communications services in the nature of the
Services; provided, however, that any overrides to which TS is entitled pursuant
to clause (B) of this sentence shall be reduced by any overrides paid for the
same period pursuant to clause (A) of this sentence. Each of such threshold
amounts shall be increased on each ***, commencing ***, by an amount equal to
the product of (a) the then threshold (without giving effect to such increase)
times (b) *** the percentage increase in the number of the *** the *** as of
such date over the number of such *** on the next preceding *** provided that
such threshold amounts on and after *** shall be at least *** with respect to
any single Excepted Service and at least *** with respect to all Excepted
Services in the aggregate. Notwithstanding the foregoing, no override shall be
payable pursuant to this Section VII.A.1(b) if, within *** following the end of
a month in which an applicable threshold is exceeded either (i) the LD
Exclusivity Period terminates or expires or (ii) the number of subscribers to
the Excepted Service or Excepted Services that exceeded the threshold has
declined below the threshold that was exceeded; provided, that if, at the end of
such *** month period, neither of such conditions has been met, AOL shall pay
such override for each month thereafter at the end of which the number of
subscribers to such Excepted Service exceeds an applicable threshold.
Notwithstanding the foregoing, with respect to any Bundled Online Service that
is bundled with Local Telecommunication Services, AOL may elect, at its option,
to pay TS an override in accordance with SectionVII.A.3. for each subscriber to
such Bundled Online Service, in which event such Bundled Online Service shall
not be counted against any of the thresholds set forth in this Section. For
purposes of clause (A) of the preceding sentence, (1) any Bundled Online Service
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shall not be counted as a Broadband Service, (2) Bundled Online Services are
considered separately from Broadband Services and (3) any Excepted Service
bundled with or promoting telecommunications services in the nature of any of
the Services is considered separately from another Excepted Service promoting
different telecommunications services or the same telecommunications services
offered by a different Other Provider. For purposes of this Section, subscribers
to each separate Excepted Service shall be counted on the basis of paid
subscribers existing as of the end of each applicable calendar month.
"2. As of June 30, 2000, or as of any subsequent anniversary thereof,
AOL may, at its option but subject to any election made pursuant to Section
III.E.1., terminate the LD Exclusivity Period by giving TS written notice of
such election at least sixty (60) days prior to the date of such termination. In
addition, as of (i) the earlier to occur of (a) the date that is eighteen (18)
months after the Wireless Launch Date and (b) June 30, 2000 if the Wireless
Launch Date shall not have occurred and September 30, 2000 if the Wireless
Launch Date shall have occurred and (iii) June 30, 2001 or any subsequent
anniversary thereof, AOL may, at its option, terminate the Wireless Exclusivity
Period by giving TS written notice of such election at least sixty (60) days
prior to the date of such termination. However, notwithstanding termination of
the LD Exclusivity Period, AOL shall not commence any marketing of Long Distance
Telecommunications Services under any AT&T brand on the AOL Service (including
bundled with any Excepted Service) prior to June 30, 2000.
"3. Notwithstanding anything in this Agreement to the contrary, AOL
shall have no exclusivity obligations with respect to Local Telecommunications
Services. TS shall have the right to offer (and promote) Local
Telecommunications Services on the AOL Service during the Local Non-Exclusive
Period solely utilizing the marketing hereunder, subject to the terms of this
Agreement, including, without limitation, Sections II, III.E. and IV and shall
have the rights with respect to such Local Services as are provided in this
Agreement; provided, however, that, during the LD Exclusivity Period, Local
Services shall be offered solely on a bundled basis with LD Services (i.e.,
offered as ancillary additional service for use in conjunction with LD
Services); provided, further, that if TS is not offering Local
Telecommunications Services on the AOL Service to subscribers of the AOL Service
as of the date of any termination of the LD Exclusivity Period, then the Local
Non-Exclusive Period shall terminate and all TS's rights under this Agreement to
offer (and utilize the marketing provided hereunder to promote) Local
Telecommunications Services on the AOL Service shall terminate as of such date
of termination. If AOL enters into any arrangement to market Local
Telecommunications Services on the AOL Service (other than with respect to a
Bundled Service), then AOL shall pay TS an override in the amount of One and
50/100 Dollars ($1.50) per month for each subscriber to such Local
Telecommunications Services who is billed using on-file billing information
provided by AOL to charge the credit or debit card or checking account, as the
case may be, or billed on the same bill as the AOL Service and who subscribes
prior to June 30, 2000, for so long as AOL is receiving revenue from such
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Local Telecommunications Services in respect of such subscriber but not later
than June 30, 2005; provided, however, that if such marketing of Local
Telecommunications Services is under any AT&T brand, then the amount of such
override shall be Three Dollars ($3.00) and such override shall be paid with
respect to each subscriber to such Local Telecommunications Services who is
billed using on-file billing information provided by AOL to charge the credit or
debit card or checking account, as the case may be, or billed on the same bill
as the AOL Service and who subscribes prior to June 30, 2000 for so long as AOL
is receiving revenue from such Local Telecommunications Services in respect of
such subscriber, but not later than June 30, 2005. If TS offers or enters into
any arrangement to offer Local Telecommunications Services on the AOL Service,
TS shall pay AOL an override in the amount of One and 50/100 Dollars ($1.50) per
month for each subscriber (other than an Unbillable End User) to such Local
Telecommunications Services who subscribes prior to June 30, 2000, for so long
as such subscribers are End Users of Local Services, but not later than June 30,
2005; provided, however, that if such offer of Local Telecommunications Services
is under any AT&T brand, then the amount of such override shall be Three Dollars
($3.00) and such override shall be paid with respect to each subscriber to such
Local Telecommunications Services (other than an Unbillable End User) who
subscribes prior to June 30, 2000 for so long as such subscribers are End Users
of Local Services, but not later than June 30, 2005. In addition, AOL will use
all reasonable efforts to convince the provider of such Local Telecommunications
Services to use TS's billing services in connection therewith, provided that AOL
shall have no liability hereunder if such provider elects not to use TS's
billing services.
"4. Nothing contained in this Agreement shall prohibit or restrict AOL
in any manner from selling online advertising to telecommunications service
providers other than TS, provided, however, that AOL shall not sell online
advertising on the AOL Service (other than on a Bundled Service or a Broadband
Service) to market any Broadband Service as permitted under Section VII.A.1(b))
(i) for Long Distance Telecommunications Services to any other provider during
the LD Exclusivity Period or (ii) for Commercial Mobile Radio Services to any
other provider during the Wireless Exclusivity Period; provided, however, that
AOL shall not be deemed in breach of this Section as a result of any advertising
as to which AOL has not received written notice from TS provided AOL shall
comply with its obligations under Section VII.A.11.
"5. Except as otherwise specifically provided in this Section VII.A.5,
during and after the Term, AOL shall have the exclusive right to target market
products and services, including the Services, to subscribers to the AOL Service
and to End Users and TS shall not, directly or indirectly (through subsidiaries,
affiliates or otherwise), knowingly target market subscribers to the AOL Service
or the End Users. Notwithstanding the foregoing, AOL shall not target market to
LD End Users (i) prior to ***, (ii) more than *** per calendar year for any year
after *** during the Term, or (iii) for the promotion of Long Distance
Telecommunications Services, Commercial Mobile Radio Services or Local
Telecommunications Services ***; provided, however, that in no event shall AOL
be restricted from target marketing
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to the "buyers" category of subscribers to the AOL Service notwithstanding that
such buyers may also be LD End Users. Notwithstanding the foregoing, TS shall be
permitted to target market to End Users solely by utilizing the telemarketing
commitments set forth in Section *** or the *** commitments set forth in Section
***, other than those commitments dedicated to the promotion of Wireless
Services; provided, that any such target marketing shall promote solely the
Services or products and services permitted to be promoted by TS pursuant to,
and shall be subject to the terms of, Section ***; provided, further, that this
provision does not provide TS with any additional marketing commitments
hereunder and any marketing commitments utilized to target market End Users
shall count toward satisfying AOL's marketing obligations hereunder.
Notwithstanding the foregoing, nothing shall prevent TS, (i) during and after
the Term, from communicating with End Users, by e-mail or otherwise, in
connection with provisioning, operating and billing the Services; provided that
no such communications shall contain any promotional, marketing or advertising
materials or messages of any nature with respect to any product or service,
including, without limitation, the Services, and shall not request or encourage
End Users to take any action inconsistent with the purpose of this Agreement
(e.g., without limitation, purchasing telecommunications in the nature of the
Services at a different location or site than the AOL Service); provided,
further, that any such communications shall comply with AOL's then standard
policies, including without limitation, its privacy policies, Terms of Service
for the AOL Service and policies regarding unsolicited or bulk e-mail (as
applicable), and (ii) after the Term, target marketing *** to the End Users."
28. The second sentence of Section VII.A.6. of the Agreement is amended to read
in its entirety as follows:
"After such first anniversary date and during the Term, TS may so contract
without paying AOL any override or other compensation; provided, however, that
if such services are then being offered by TS on the AOL Service under this
Agreement on an exclusive basis, TS must first offer AOL the right to market
such services under the AOL Marks. If AOL exercises such right, then the parties
shall mutually agree upon compensation to AOL and the terms and conditions of
the service offering and use of the AOL Marks in connection therewith; provided,
however, that if AOL and TS cannot agree on appropriate compensation or terms
and conditions after negotiating in good faith for a reasonable amount of time,
TS may market or provide such services without paying AOL any override or other
compensation and TS shall not utilize the AOL Marks in connection therewith."
29. Section VII.A.6. is further amended to add the following at the end thereof:
"If TS shall so contract with an AOL competitor with respect to, or offer on its
own behalf, a consumer (non-commercial) offering of telecommunications services
in the nature of the LD Services, TS will offer the LD Services to End Users
under this Agreement at regular rates that are better than or equal to those
offered customers by TS on its own behalf or under such other contract, provided
that, for purposes hereof, such
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regular rates need not reflect any promotions or other like special or temporary
rates (which special or temporary rates shall be limited in time, scope and
duration) that may be offered to such customers by TS on its own behalf or under
such other contract; provided, that subscribers to the AOL Service receive
reasonably comparable special or temporary rates during the same time periods."
30. The first sentence of Section VII.A.9. of the Agreement is amended to read
in its entirety as follows:
"AOL may elect to terminate the LD Exclusivity Period if TS's overall pricing
for the LD Services exceeds overall prices for such services which are generally
available from major carriers so as to be non-competitive with those carriers'
offerings."
31. Section VII.A. is amended to add the following Sections 10 and 11:
"10. Notwithstanding that the *** content area available through the
America Online brand service (the ***) is excluded by definition from the AOL
Service, (i) during the *** period beginning on ***, AOL shall not collect more
than *** in advertising revenues from advertising sold on the *** to providers
of telecommunication services with respect to which TS is then entitled to
exclusivity hereunder, (ii) during the *** month period beginning on ***, AOL
shall not collect more than *** in advertising revenues from advertising sold on
the *** to providers of telecommunication services with respect to which TS is
then entitled to exclusivity hereunder, (iii) during the LD Exclusivity Period,
AOL shall not sell advertising on the *** promoting Long Distance
Telecommunications Services on behalf of any national provider of Long Distance
Telecommunications Services in connection with a *** (i.e., including at least
*** covered by the ***) other than in connection with marketing a Broadband
Service in compliance with the provisions of Section VII.A.1. and (iv) during
the Wireless Exclusivity Period, AOL shall not sell advertising on the ***
promoting Commercial Mobile Radio Services on behalf of any national provider of
Commercial Mobile Radio Services in connection with a *** (i.e., including at
least *** covered by the ***) other than in connection with marketing a
Broadband Service. It is understood and agreed that the *** does not include the
*** web site and the *** web site is not limited in any way hereunder.
11. AOL will use commercially reasonable best efforts, consistent with
past practices, to encourage (i) its significant partners to observe TS's
exclusivity rights under this Agreement in partner Rainman areas and other
partner areas within the AOL Service but not controlled by AOL, and (ii) any
provider of Local Telecommunications Services under an arrangement with AOL to
offer Local Telecommunications Services on the AOL Service (other than a Bundled
Online Service or Broadband Service that is offered pursuant to, and subject to
the terms of, Section VII.A.1.), from promoting to subscribers to the AOL
Service on such provider's web site linked directly to from the AOL Service
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(1) Long Distance Telecommunications Services during the LD Exclusivity Period
and/or (2) Commercial Mobile Radio Services during the Wireless Exclusivity
Period (provided, however, that such provider may provide online billing for any
services, including any telecommunications services, on such web site) but AOL
can provide no assurance that such partners will comply and AOL shall have no
liability hereunder if such partners do not comply nor will AOL have any
liability for a failure to encourage in all instances so long as AOL is acting
on an overall basis in good faith. AOL shall, consistent with past practices,
promptly remove any advertising or links that violate TS's exclusivity rights
under this Agreement from areas within the AOL Service that are controlled by
AOL.
32. Section X.A.1. is amended to add the following at the end thereof as a new
sentence: "However, notwithstanding any provision to the contrary herein, after
the termination or expiration of the Term, TS shall use all commercially
reasonable efforts to transition its billing operations and provisioning of the
Services off the AOL Service and on to the Internet and AOL will provide such
reasonable assistance in effecting such transition as TS shall reasonably
request, and, if the aggregate number of End Users (using any Service) shall
thereafter be fewer than ***, AOL shall have the right, upon *** prior written
notice to TS, to cease providing to TS billing information regarding such End
Users and all services under Section III.D.1, the Credit Card Processing
Services Agreement and the Electronic Payment Processing Services Agreement
between the parties."
33. Sections X.B.1. and X.B.2. of the Agreement are deleted their entirety and
the following is inserted in lieu thereof:
"1. If the LD Exclusivity Period shall not previously have been
terminated or expired, AOL shall have the right, by irrevocable written notice
to TS at least ninety (90) days prior to the end of such Period (as it may have
been extended previously), to extend the term of the LD Exclusivity Period, in
each case for at least one (1) four-calendar-quarter period, for up to three (3)
successive four-calendar-quarter periods, on the terms and conditions herein
provided. Furthermore, if the Wireless Exclusivity Period shall not previously
have been terminated or expired, AOL shall have the right, by irrevocable
written notice to TS at least ninety (90) days prior to the end of such Period
(as it may have been extended previously), to extend the term of the Wireless
Exclusivity Period, in each case for at least one (1) four-calendar-quarter
period, for up to three (3) successive four-calendar-quarter periods, on the
terms and conditions herein provided. Each such notice shall be binding on AOL
and TS for all purposes hereof."
"2. If the LD Non-Exclusive Period shall not previously have been
terminated or expired, AOL shall have the right, by irrevocable written notice
to TS at least ninety (90) days prior to the end of such Period (as it may have
been extended previously), to extend the term of the LD Non-Exclusive Period, in
each case for at least one (1) four-calendar-quarter period, for successive
four-calendar-quarter periods, but not beyond the later to occur of (a) the
fifth anniversary of the termination or expiration for the LD Exclusivity Period
and (b) June 30, 2006 on the terms and conditions herein provided. Furthermore,
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if the Wireless Non-Exclusive Period shall not previously have been terminated
or expired, AOL shall have the right, by irrevocable written notice to TS at
least ninety (90) days prior to the end of such Period (as it may have been
extended previously), to extend the term of the Wireless Non-Exclusive Period,
in each case for at least one (1) four-calendar-quarter period, for successive
four-calendar-quarter periods, but not beyond the later to occur of (a) the
fifth anniversary of the termination or expiration of the Wireless Exclusivity
Period and (b) June 30, 2006 on the terms and conditions herein provided. Each
such notice shall be binding on AOL and TS for all purposes hereof."
"3. AOL shall have the right (the "Buyout Right"), by written notice to
TS by not later than September 30, 2001, to terminate all Non-Exclusive Periods
as of June 30, 2002 and all of AOL's obligations to provide online marketing
(including, without limitation, *** and all other advertising or promotion on
the AOL Service) to TS from and after December 31, 2001, and, upon such notice,
all Non-Exclusive Periods shall be terminated as of June 30, 2002 and AOL's
online marketing obligations shall terminate as of December 31, 2001. If AOL
does not terminate the LD Exclusivity Period prior to June 30, 2001, then, if
AOL exercises the Buyout Right, AOL shall pay TS, on or before February 28,
2002, two (2) times the total amount received by AOL from the Long Distance
Residual during the six (6) month period ending December 31, 2001 (the "12 Month
Amount"). If AOL terminates the LD Exclusivity Period before June 30, 2001,
then, if AOL exercises the Buyout Right, AOL shall pay TS, on or before February
28, 2002, the total amount received from the Long Distance Residual during the
eighteen (18) month period ending December 31, 2001 (the "18 Month Amount"). At
AOL's option, by written notice to TS by not later than September 30, 2001, in
lieu of exercising the Buyout Right, AOL may elect to terminate all of AOL's
obligations to provide online marketing from and after December 31, 2001 but not
the Non-Exclusive Periods, in which event, AOL shall pay TS fifty percent (50%)
of (a) the 12 Month Amount or (b) the 18 Month Amount, as applicable." During
any period that AOL is not providing the online marketing under this Agreement
pursuant to this Section X.B.3., the Long Distance Residual for such period
shall be reduced by fifty percent (50%).
34. Section X.C.1.(b) of the Agreement is amended to read in its entirety as
follows:
"Either TS or AOL may terminate this Agreement at any time upon written
notice to the other upon a material breach by the other in the performance of
its agreements and obligations hereunder and such other party's failure to cure
such breach within 30 days after written notice thereof (the "Cure Period");
provided, however, that in the case of a scheduled payment hereunder, the Cure
Period shall be five (5) business days after written notice thereof.
Notwithstanding the foregoing, no party shall have the right to terminate this
Agreement for a material breach of this Agreement pursuant to this Section
X.C.1.b based on any asserted breach unless such breach shall not have been
cured during the applicable Cure Period and it is determined by an arbitration
proceeding convened under Section XI.D that the breach was a material breach as
referenced in the preceding sentence and the breaching party fails to comply
with the arbitrators' order, or any portion thereof, in which event the
non-breaching party may terminate this Agreement
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immediately upon written notice to the other party; provided, however, that this
sentence shall not apply in the event of any recurrence of the same breach or
the occurrence of any substantially similar breach by the previously breaching
party if such further asserted breach shall be material and the foregoing notice
and opportunity to cure shall have been given and such breach shall continue
uncured. Nothing in this provision is intended to impair the right of any party
to contest a termination by invoking the dispute resolution procedures of this
Agreement, provided that in the event that the breaching party fails to comply
with an order issued by an arbitration panel or in the event of a recurrence of
a breach or occurrence of any substantially similar breach, a notice of
termination from the non-breaching party shall take effect immediately and all
performance obligations of the non-breaching party shall be immediately
suspended (provided that, if such terminating party shall be determined not to
have been entitled so to terminate, the other party shall be entitled to damages
for wrongful termination and suspension of such performance obligations)."
35. Section X.C.1.d. of the Agreement is amended to add after the phrase
"AT&T ceases to provide long distance telecommunications services to
TS" the following: "and TS shall not then be utilizing services
provided by another provider with long distance telecommunications
services of substantially equivalent quality or be providing such
services of substantially equivalent quality itself, provided that it
is hereby agreed by the parties that the long distance
telecommunications service of each of * * * and OBN (as currently
operated) are of substantially equivalent quality for purposes of this
Section X.C.1.d."
36. Section X.C. of the Agreement is amended by adding Section X.C.1.f. and
Section X.C.1.g. at the end of that section:
"f. If TS breaches any of its payment obligations under the
Investment Agreement, dated as of December 31, 1998 (together with all
other documents, agreements and instruments referenced therein, the
"Investment Agreement"), by and between TS and AOL, and such breach
continues beyond any applicable cure period under the Investment
Agreement, then AOL may terminate this Agreement immediately upon
written notice to TS and such termination shall not be subject to the
provisions of X.C.1.b.
g. If a voluntary or involuntary case or other proceeding is
commenced by or against any party or any of its subsidiaries seeking
liquidation, reorganization or other similar relief with respect to it
or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment or a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its properties, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of
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the foregoing, or an order for relief shall be entered against any
party or any of its subsidiaries under applicable bankruptcy,
insolvency or other similar laws or hereafter in effect (each, an
"Insolvency Event"), then AOL may terminate this Agreement immediately
upon written notice to the other parties in the case of an Insolvency
Event by TS or Holdings and TS may terminate this Agreement immediately
upon written notice to AOL in the event of an Insolvency Event by AOL."
37. Each of Section X.D.2., Section X.D.4 and Section X.D.6 of the
Agreement is deleted in its entirety and the following is inserted in
lieu thereof: "Intentionally Deleted."
38. The first sentence of Section XI.D.1. of the Agreement is deleted in
its entirety and the following is inserted in lieu thereof:
"If the parties are unable to resolve any dispute, controversy or claim arising
under this Agreement (each a "Dispute"), such Dispute will be submitted to the
following senior executive officer of each of the parties: specifically, J.
Michael Kelly, the Chief Financial Officer of AOL, and Gabriel Battista, the
Chief Executive Officer of TS; for resolution, which designated senior executive
officer of either party may be changed by mutual agreement of the parties if
such persons are no longer serving in such capacity."
39. Section XI.D. of the Agreement is amended by adding Section XI.D.11 at
the end of that Section:
"11. Notwithstanding anything to the contrary in this Agreement, either
party may, without inconsistency with this agreement to arbitrate or the dispute
resolution provisions of this Agreement, seek from a court of competent
jurisdiction any provisional remedy that may be necessary to protect such party
from irreparable harm. The parties agree that any violation by TS of AOL's
privacy policies (as set forth at keyword "TOS" on the AOL Service) or of the
provisions of Section 40 of Amendment No. 3 (entitled "Public Disclosures") or
any violation of law or regulations by TS that exposes AOL to legal liability,
in each case that causes injury to AOL, would cause continuing irreparable
injury to AOL for which money damages would not adequately compensate AOL
(provided that the foregoing agreement does not constitute an acknowledgment by
any party, and there shall be no implication or statement arising from or by
reason of such agreement, as to the extent of any such injury or that any such
injury or any such event or circumstance is material or that any such event or
circumstance should result in any remedy from any court).
40. Public Disclosures
The timing, content and procedure of any press release or other public
announcement regarding the parties' entering into of this Amendment or the terms
of this Amendment shall be mutually agreed upon in advance by the parties. TS
shall not make
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any public disclosure regarding the existence or substance of any dispute,
litigation, arbitration proceeding or other conflict between the parties except
to the extent required by law, in which event TS shall use commercially
reasonable best efforts to disclose the minimum amount of information necessary
or appropriate to comply with law; provided, however, that TS may disclose the
existence of any litigation initiated by AOL that has previously been, and to
the same extent as, disclosed by AOL. TS shall not issue or permit to be issued
on its behalf any press release or other public announcement, or make or permit
to be made any public statement which intentionally impugns, maligns or
disparages AOL, its business practices or its directors, officers or employees.
Neither AOL nor Daniel Borislow shall, make, or permit to be made, any
communications with or to the press or statement to investment analysts, fund
managers or other members of the investment community, which intentionally
impugns, maligns or disparages the other, its business practices, or its
directors, officers or employees. During the *** period following the date of
this Amendment, AOL shall not issue any press release or other public
announcement announcing that AOL has entered into (i) any agreement to market
Long Distance Telecommunications Services, which agreement would violate TS's
exclusivity rights hereunder if the LD Exclusivity Period had not expired or
terminated at the time of performance under such agreement and/or (ii) any
agreement to market Commercial Mobile Radio Services over the AOL Service, which
agreement would violate TS's exclusivity rights hereunder if the Wireless
Exclusivity Period had not expired or terminated at the time of performance
under such agreement. During the *** following the date of this Amendment, in
any press release issued by AOL announcing that AOL has entered into an
agreement to market a Broadband Service, AOL shall use commercially reasonable
best efforts not to disclose the fact that AOL has the right to market
Commercial Mobile Radio Services on such Broadband Service. AOL represents that
it is not currently engaged, on the date of this Amendment, in negotiations
arising from a bona fide offer to merge with or be acquired by any third party.
41. License
(a) License. TS hereby grants to AOL a perpetual and irrevocable
(subject to clause (f)), non-exclusive, worldwide license,
(including the right to sublicense) to use, store, distribute,
display, perform communicate, transmit, promote, upgrade, enhance,
maintain, support, copy, modify and make derivative works from the
TS Technology (as defined below) in connection with the use by AOL
and/or its partners in connection with an AOL, AOL-branded or
AOL-owned or -controlled affiliated property or service; provided,
however, that such license shall be subject to any restrictions
that may be imposed by third party licensors of the TS Technology
or portions thereof, provided that TS shall use all commercially
reasonable efforts (which shall include efforts to facilitate
direct negotiations between AOL and such licensor) to secure
complete pass-through rights to all TS Technology for AOL, with
respect both to TS Technology currently licensed by TS and TS
Technology hereafter licensed by TS (provided, and so long as, TS
does not incur any costs in connection therewith that AOL does not
agree to pay). "TS
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Technology" shall mean, collectively, all technology currently
owned or licensed by TS or acquired, developed or licensed by TS
during the Term, including, without limitation, TS's online
billing, call detail record, customer service and database
technology, software and functionality, including without
limitation any tools, both in object code and source code form,
which TS develops, acquires or licenses and which are utilized in
connection with the development, navigation, use, management,
editing, updating, maintenance or upgrading of such technology,
software and functionality and any other related materials and
works, including, without limitation, Upgrades, subject to clause
(c), and documentation, designs, technical specifications and all
elements and components of the user interface, and all parts
thereof in whatever media or form.
(b) Royalties. The license granted in clause (a) shall be royalty
free; provided, however, that to the extent the TS Technology is
used or licensed by AOL in connection with the provision of any
telecommunications services in the nature of the Services, AOL
shall pay TS a mutually agreed upon royalty not to exceed the then
lowest royalty charged by TS to any unaffiliated third party for
licensing the TS Technology; and provided further that the license
granted with respect to Upgrades is subject to the payment
provisions and other restrictions set forth in clause (c).
(c) TS Upgrades. From time to time, if TS develops or acquires any
Upgrade to the TS Technology, TS shall deliver all configurations
of the then-current versions of the TS Technology to AOL, subject
to the provisions of subparagraph (a) above. For the purposes of
this license, "Upgrade" shall mean, with respect to any software
or other product, any update, upgrade, error correction, bug fix,
maintenance release, enhancement, addition, improvement,
extension, modification, configuration, replacement, substitute,
functional equivalent or successor version or product, and all
related documentation. TS shall provide such Upgrades to AOL
royalty-free, unless, if TS incurred any out-of-pocket costs at
the request of AOL in developing any such Upgrades or any costs in
providing such Upgrades to AOL as required herein, AOL shall
reimburse TS for all such costs.
(d) Representations and Warranties. TS represents and warrants that
the TS Technology shall not infringe or violate any copyright,
trademark, patent or any other third party right, or violate any
applicable law or regulation. If AOL pays royalties to TS pursuant
to clause (b) or (c), TS further represents and warrants that the
TS Technology shall be free from defects in manufacturing and
workmanship.
(e) Term. The license granted in clause (a) shall survive the
expiration or termination of the Term of the Agreement, provided
that such license may be terminated by TS if AOL fails to make any
royalty payments required pursuant
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to Section (a) or (c) after thirty (30) days following written
notice to AOL thereof.
42. As a condition to AOL's entering into this Amendment, TS shall pay to AOL
all amounts due and owing under the Agreement as of December 31, 1998,
including, without limitation, all bounties and Offline Marketing Costs
(including, without limitation, all vendor invoices and call representative
incentives), which amounts the parties hereby agree for all purposes of the
Agreement total $11,780,694 (except for amounts referred to in the last sentence
of paragraph 44 of this Amendment), provided that such amount shall be offset by
any reduction in the vendor charges included in such amount, which reduction
occurs by way of a settlement of a dispute between TS and such vendor over such
charges. TS shall pay AOL an installment of $6,000,000 upon execution of this
Amendment and the balance on or before January 31, 1999. If TS fails to make
either of the payments described in the immediately preceding sentence within 24
hours after written notice thereof, AOL shall have the right to terminate this
Agreement by giving TS written notice thereof. All such amounts, and all amounts
previously paid by or on behalf of TS or Holdings under the Agreement shall be
non-refundable and shall not be subject to any offsets.
43. In consideration of, and as a condition to, AOL entering into this
Amendment, contemporaneously with this Amendment, TS and CompuServe shall enter
into an amendment to the CompuServe Agreement in the form attached to this
Amendment as Attachment A (the "CompuServe Amendment").
44. In consideration of, and acknowledging that the Waiver (as defined below) is
a condition to, the parties' entering into this Amendment, as of January 5,
1999, each party hereby irrevocably waives and releases all claims, suits,
demands, actions and rights, whether known, unknown, contingent or fixed,
against the other parties and their respective current and former affiliates,
successors, assigns, directors, officers, agents and employees arising prior to
January 5, 1999 and arising out of or in any way related to the Agreement or the
CompuServe Agreement or the negotiation, performance or nonperformance thereof
or the negotiation of the Agreement or the CompuServe Agreement or this
Amendment or the CompuServe Amendment, other than third party claims that are
subject to indemnification under the Agreement and of which the indemnified
party has given the indemnifying party notice prior to the date this Amendment
is executed (the "Waiver"). The Waiver shall be effective notwithstanding any
terms to the contrary contained in the Agreement, the CompuServe Agreement, this
Amendment or the CompuServe Amendment. The parties further agree that no
documentary, verbal, e-mail, electronic or other evidence relating to the
negotiation, performance or nonperformance of the Agreement or the CompuServe
Agreement prior to January 5, 1999 shall be offered or admitted in any
arbitration or related proceeding between the parties with respect to the
negotiation, performance or nonperformance of this Agreement or the CompuServe
Agreement after the date of execution of this Amendment after January 5, 1999 in
connection with any dispute involving circumstances or actions or inactions
arising prior to January 5, 1999. The Waiver shall
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not apply to any claims, suits, demands, actions and rights of AOL in connection
with approved costs actually incurred by AOL that are to be reimbursed by TS
under this Agreement and that are not yet invoiced, are under dispute by TS
(other than with AOL) or that are not otherwise covered by the provisions of
paragraph 42 of this Amendment.
45. With respect to End Users who are End Users as of the expiration or
termination of the Agreement or any Period thereunder, for so long as such End
Users continue to be End Users and subscribers to the AOL Service and subject to
Section X.A.1 of the Agreement, AOL will provide all information available to
AOL that is necessary for TS to perform payment processing in respect of such
End Users in accordance with the terms of the Credit Card Processing Services
Agreement, as amended, and the Electronic Payment Processing Services Agreement,
between the parties, subject to the terms of each such agreement. In
consideration of and as a condition to AOL entering into this Amendment, the
parties shall enter into the Amendment to Credit Card Processing Services
Agreement (the "Credit Card Amendment") and into the Electronic Payment
Processing Services Agreement (the "EFT Agreement") in the forms attached hereto
as Attachment B and Attachment C, respectively.
46. If any term, provision, covenant or restriction of this Amendment is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants, and restrictions of this
Amendment shall remain in full force and effect and shall in no way be affected,
impaired or invalidated and the parties shall negotiate in good faith to modify
this Agreement to preserve, to the fullest extent legally permitted, each
party's anticipated benefits and obligations under this Amendment. If the
parties are unable to so agree, the matter shall be resolved pursuant to Article
XI.D of the Agreement.
47. 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) except as expressly provided 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. 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 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.
48. If at any time during the period from January 6, 1999 until June 30, 1999,
Daniel Borislow is employed by Holdings, TS or any affiliate in the capacity of
an executive officer, it shall be deemed a material breach of the Agreement by
TS and AOL shall have an immediate right to terminate the Agreement upon written
notice to TS, without regard to any of the dispute resolution provisions of the
Agreement.
[Signatures appear on the next page]
33
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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be signed on
their behalf as of the date first written above.
AMERICA ON LINE, INC.
By: /s/ J. Michael Kelly
---------------------
Name: J. Michael Kelly
Title: Senior Vice-President and CFO
TEL-SAVE, INC.
By: /s/ Edward B. Meyercord
------------------------
Name: Edward B. Meyercord
Title: Executive Vice President
TEL-SAVE.COM, INC.
By: /s/ Edward B. Meyercord
------------------------
Name: Edward B. Meyercord
Title: Executive Vice President
S-1
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CONFIDENTIAL
SCHEDULE X
* * *
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CONFIDENTIAL
SCHEDULE Y
* * *
<PAGE>
CONFIDENTIAL
SCHEDULE Z
* * *
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CONFIDENTIAL
Attachment A
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CONFIDENTIAL
Attachment B
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CONFIDENTIAL
Attachment C
***
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