Distributor Agreement [Amendment No. 1] - Qwest Communications Corp. and Juno Online Services Inc.
AMENDMENT NO. 1 TO THE DISTRIBUTOR AGREEMENT
This Amendment No. 1 (this "Amendment") to the DISTRIBUTOR AGREEMENT (the
"Agreement") by and between QWEST COMMUNICATIONS CORPORATION, successor in
interest to LCI International Telecom Corp. ("Qwest") and JUNO ONLINE SERVICES,
INC., as successor in interest to JUNO ONLINE SERVICES, L.P. ("Juno"), dated as
of March 12, 1998, is made and entered into as of June 19, 2000, by and between
Qwest and Juno. Any capitalized terms not defined herein shall have the meaning
given them in the Agreement.
WHEREAS, Qwest is contemplating a merger (the "Merger") with US West; and
WHEREAS, immediately after the date the Merger is consummated (the "Merger
Date"), Qwest will not be legally able to offer the Marketed Services in the
following states: Arizona, Colorado, Iowa, Idaho, Minnesota, Montana, North
Dakota, Nebraska, New Mexico, Oregon, South Dakota, Utah, Washington and Wyoming
(individually an "In-Region State", collectively the "In-Region States"); and
WHEREAS, Qwest will continue to offer the Marketed Services in the remainder of
the Region in which Juno markets and sells the Marketed Services (collectively,
the "Out-of-Region States"); and
WHEREAS, Qwest and Juno are parties to the Agreement; and
WHEREAS, Qwest and Juno desire to amend and modify the Agreement as set forth
below, to become effective upon the Merger Date;
NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged,
Qwest and Juno agree as follows:
1. AMENDMENT. The Agreement is amended as follows:
a. Article 3 (Commission Compensation) is amended to add the
following new Articles 3.7 and 3.8:
3.7 OBLIGATIONS OF PARTIES WITH RESPECT TO OUT-OF-REGION STATES.
(a) Juno's Obligation to Promote Market Services. Juno's obligations
under the Agreement to promote, market and sell the marketed Services on
the Juno Network shall remain in full force and effect, except that Juno
shall have no obligation to conduct such activities outside of the
Out-of-Region States after the Merger Date.
(b) Qwest's Obligations to Pay Commissions and Commission Tail. After
the Merger Date, [****]% of the Billed Revenue of Users which are acquired
Out-of-Region after the Merger Date and submitted by Juno under a new
channel code shall be acknowledged as being earned commission and shall be
deducted from the Commission Guarantee detailed in Section 3.3(a) until
same is exhausted. At the point when the Commission Guarantee has been
fully earned by Juno (from Billed Revenue relating to both In-Region and
Out-of-Region states) as described above, Qwest shall begin paying Juno a
monthly commission of [****]% of the Billed Revenue of Users which are
acquired Out-of-Region after the Merger Date and submitted by Juno under a
new channel code. For such Users, Qwest shall also pay a residual
commission of [****]%,
----------
[****] Confidential treatment has been requested for this portion pursuant to
Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.
The omitted portion has been filed separately with the Securities Exchange
Commission.
<PAGE>
[****]% and [****]% of the Billed Revenue of such Users, respectively,
during the three-year period immediately following expiration or
termination of this Agreement.
(c) Exclusivity. Even though Qwest will not be authorized to offer the
Marketed Services in the In-Region States, Qwest will retain
exclusivity, as described in Article 1.2, in connection with
Out-of-Region and with the In-Region States. Such right of
exclusivity will not be transferred or assigned with the other
rights transferred or assigned to Touch America, Inc. ("Touch
America") in connection with the Merger; provided, however, that the
exclusivity requirement will not be breached if Juno does business
with Touch America in the In-Region States.
(d) Authorization to Subsequently Provide Marketed Services In-Region.
Qwest anticipates that it will eventually be legally able to offer the
Marketed Services in all of the In-Region States. When Qwest is authorized
to offer, and begins offering, the Marketed Services in an In-Region
State, Qwest shall provide notice to Juno and Touch America, and,
effective 10 days after receipt of such notice by Juno, such In-Region
State will be included in the definition of Out-of-Region for purposes of
the Agreement and will no longer be considered an In-Region State. If such
authorization is revoked for any reason, or if Qwest declines to begin
offering, or ceases offering, Marketed Services in an In-Region State,
such state shall no longer be included in the definition of In-Region
States and shall be considered an Out-of-Region State for purposes of this
Agreement.
(i) First Authorization Date. Beginning ten days after the date when
Juno and Touch America have received notice from Qwest that Qwest is
authorized to offer, and begins offering, the Marketed Services in seven
of the fourteen In-Region States ("First Authorization Date"), [****]% of
the Billed Revenue of Users which are acquired in the Out-of-Region States
after the First Authorization Date shall be acknowledged as being earned
commission and shall be deducted from the Commission Guarantee detailed in
Section 3.3(a) until same is exhausted. At the point when the Commission
Guarantee has been fully earned by Juno as described above, Qwest shall
begin paying Juno a monthly commission of [****]% of the Billed Revenue of
Users which are acquired in the Out-of-Region States after the First
Authorization Date. For such Users, Qwest shall also pay a residual
commission of [****]%,[****]% and [****]% of the Billed Revenue of such
Users, respectively, during the three-year period immediately following
expiration or termination of this Agreement.
(ii) Second Authorization Date. Beginning on the date when Qwest is
authorized to offer, and begins offering, the Marketed Services in all of
the In-Region States ("Second Authorization Date"), [****]% of the Billed
Revenue of Users which are acquired in the Out-of-Region States after the
Second Authorization Date shall be acknowledged as being earned commission
and shall be deducted from the Commission Guarantee detailed in Section
3.3(a) until same is exhausted. At the point when the Commission Guarantee
has been fully earned by Juno as described above, Qwest shall begin paying
Juno a monthly commission of [****]% of the Billed Revenue of Users which
are acquired in the Out-of-Region States after the First Authorization
Date. For such Users, Qwest shall also pay a residual commission of
[****]%,[****]% and [****]% of the Billed Revenue of such Users,
respectively, during the three-year period immediately following
expiration or termination of this Agreement.
(e) Qwest's Compensation to Juno. As compensation to Juno for the
assignment of contract rights as described herein, Qwest shall make a
one-time non-refundable payment on the Merger Date equal to $[****]. Such
payment shall not affect the calculation of Commission Guarantees.
----------
[****] Confidential treatment has been requested for this portion pursuant to
Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.
The omitted portion has been filed separately with the Securities Exchange
Commission.
<PAGE>
3.8 OBLIGATIONS OF THE PARTIES WITH RESPECT TO IN-REGION STATES
(a) Juno's Obligation to Market Services. Juno shall have no obligations
under the Agreement to promote, market, and sell the Marketed
Services on the Juno Network in the In-Region States after the
Merger Date.
(b) Touch America's Obligations to Pay Commission and Commission Tail.
After the Merger Date, Touch America shall assume the payment obligations
set forth in Sections 3.1 and 3.2, with respect to Marketed Services
provided in the In-Region States. For purposes of Section 3.3(b), [****]%
of the Billed Revenue of Users located in the In-Region States shall be
acknowledged as being earned commission and shall be deducted from the
Commission Guarantee detailed in Section 3.3(a) until the same is
exhausted. At the point when the Commission Guarantee has been fully
earned by Juno (from Billed Revenue relating to both In-Region and
Out-of-Region States), Touch America shall begin paying Juno a monthly
commission of [****]% of the Billed Revenue of Users in the In-Region
states. For such Users, Touch America shall also pay a residual commission
of [****]%,[****]% and [****]% of the Billed Revenue of such Users,
respectively, during the three-year period immediately following
expiration or termination of this Agreement.
(c) Exclusivity. Touch America acknowledges and agrees to the terms set
forth in Section 3.7(c) above relating to exclusivity.
(d) Authorization to Subsequently Provide Marketed Services In-Region.
Touch America acknowledges and agrees to the terms set forth in
Section 3.7(d) above relating to provision of Marketed Services in
the In-Region States.
2. EFFECT OF AMENDMENT. Except as expressly set forth herein, the Agreement
shall continue in full force and effect in accordance with its terms as
originally written, and shall constitute the legal, valid, enforceable and
binding obligations of Qwest and Juno. Qwest and Juno do hereby reaffirm and
ratify the Agreement, as amended.
3. CONSENT TO ASSIGNMENT. With the execution of this Amendment, Juno agrees
that it shall give its formal consent to the assignment by Qwest to Touch
America of Qwest's contractual rights with regard to the Marketed Services sold
in the fourteen state US West region and the assumption by Touch America of
Qwest's obligations thereunder, such consent to become effective only upon the
consummation of the Merger and to be memorialized in a separate agreement
substantially in the form of Exhibit A hereto.
4. EFFECTIVE DATE. This Amendment shall be effective only when executed by
all parties hereto.
AGREED TO AND ACCEPTED BY:
Juno Online Services, Inc. Qwest Communications Corporation
1540 Broadway, New York, NY 10036 555 17th St., Denver, CO 80202
---------------------------------- ------------------------------
Address Address
/s/ Charles Ardai /s/ Mark Pitchford
----------------- ------------------
Authorized Signature Authorized Signature
Charles Ardai, President Mark Pitchford
------------------------ --------------
Print Name and Title Print Name and Title
----------
[****] Confidential treatment has been requested for this portion pursuant to
Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.
The omitted portion has been filed separately with the Securities Exchange
Commission.
<PAGE>
Touch America, Inc.
130 North Main, Butte, MT 59701
---------------------------------------
Address
/s/ Michael J. Meldahl
---------------------------------------
Authorized Signature
Michael J. Meldahl, President
---------------------------------------
Print Name and Title