OEM License & Distribution Agreement

Confidential Materials omitted and filed separately with the Securities

and Exchange Commission. Asterisks denote omissions.



DISTRIBUTION AND LICENSING AGREEMENT

(CPU-Standard Point and Click/ With or Without Insert)



THIS AGREEMENT (the "Agreement"), effective as of October 1, 1996 (the "Effective Date"), sets forth a distribution, licensing and joint promotional program by and between Packard Bell NEC, Inc., with an address of 6041 Variel Avenue, Woodland Hills, CA 91367 ("MPC Manufacturer"), and Prodigy Services Corporation, a Delaware corporation with an address of 445 Hamilton Avenue, White Plains, N.Y. 10601 ("Prodigy").



WHEREAS, the Prodigy lnternet Service is an interactive information, communication and transactional service of Prodigy (the "Service," which shall include the current and future versions of the Service, regardless of the de livery platform(s), method(s), or media, now or hereafter selected by Prodigy, at its sole discretion, during the term of this Agreement), and which Prodigy provides to individuals and businesses authorized by Prodigy to use the Service ("Members");



WHERE AS, Prodigy designs, develops and licenses a line of computer software known as the Prodigy Internet software (which, together with all enhancements, revisions, versions, modifications, demonstration versions and regardless of the hardware platform(s) use d, is referred to herein as the "Software"), which, when utilized in conjunction with the appropriate multimedia computer or personal computer and modem, will enable Members to gain access to the Service; and



WHEREAS, Prodigy and PC Manufacturer desire (i) to terminate the distribution and licensing agreement between Prodigy and PC Manufacturer (Contract Number 3744, which commenced January 1, 1994, as amended) and the distribution and licensing agreement between Prodigy and NEC Technologies, Inc., whose b u siness related to personal computers was acquired by PC Manufacturer and as a result of that acquisition, PC Manufacturer assumed NEC Technologies, Inc.'s rights and obligations pursuant to its contract with Prodigy (Contract Number 6102, which is dated J une 23, 1995); and (ii) to enter into a joint promotional program to increase the sales of their respective products and services;



NOW, THEREFORE, in consideration of the mutual promises and conditions contained herein, and for good and valuable considerat ion the receipt and sufficiency of which are hereby acknowledged, Prodigy and PC Manufacturer agree as follows: 1. TERM AND TERMINATION.



1.1 The term of this Agreement (the "Term") shall be one year from the Effective Date and shall automatically rene w for additional one year terms unless earlier terminated as provided herein. Either party may terminate this Agreement for any reason upon thirty (30) days' prior written notice. Either party may terminate this Agreement immediately because of the othe r's material breach of this Agreement, upon ten (10) days' written notice.



1.2 All obligations of the parties under Sections 3.6 and 3.10 (each for the periods specified therein) and Sections 5, 6, 8, 9 and 10 shall survive expiration or termination of this Agreement.



1.3 Notwithstanding anything to the contrary contained herein, upon termination other than for breach by Packard Bell, Packard Bell may continue to distribute its existing inventory of Product.



2. LICENSE GRANT.



2.1 Prodigy hereby grants to PC Manufacturer, and PC Manufacturer hereby accepts from Prodigy during the Term, subject to the terms and conditions contained herein, a non-exclusive license ("License"):



2.1.1 to pre-install a copy of the most current version of the Software

provided by Prodigy hereunder on the hard disk of certain of PC

Manufacturer's computers (each such computer onto which the Software has

been installed pursuant to this Agreement being a "Computer" and which may

include PC Manufacturer's computers sold under the NEC, Zenith Data Systems

and Packard Bell labels and any other labels agreed to by Prodigy) by

duplication from one or more Master Disk(s) (as defined in Section 3.1

below);



2.1.2 to market and distribute the Software, as installed in Computers

equipped with a minimum of 14.4 bps (28.8 recommended) internal modem (each

such Computer, together with the Software and modem being a "Package"), in

the United States and, upon written authorization by Prodigy, in those

countries in which access to the Service is available locally;





2.1.3 to use and reproduce the "Prodigy(R) Internet mark, together with

such other trademarks and service marks of Prodigy or third parties

attached hereto as Attachment A (collectively, the "Trademarks"); and



2.1.4 to sublicense the Software to Third Party Distributors solely to

grant to such Third Party Distributors the right to market and distribute

the Software as included in Packages in accordance with Section 2.1.2, and

to sublicense to Third Party Distributors the right to use the Trademarks

solely in accordance with Section 2.1.3, all in accordance with the terms

and conditions set forth in this Agreement. For purposes of this Agreement,

a "Third Party Distributor" shall mean any entity who has the right,

pursuant to an agreement with PC Manufacturer that complies with and is

consistent with the applicable terms and conditions of this Agreement, to

distribute Packages to the public. The terms and conditions stated in this

Agreement shall apply to all sublicenses made hereunder during the Term.



2. 2 PC Manufacturer agrees that the License does not permit PC Manufacturer to use, copy, modify or reproduce, distribute, or make available the Software or any other material provided or licensed hereunder except as expressly provided in Section 2.1. Notw i thstanding the foregoing, PC Manufacturer is licensed to distribute the Software directly and through its third party service providers to its customers if the media on which the Software was originally distributed becomes corrupted or is defective. PC M anufacturer shall not make any changes or modifications to the Software, and shall not decompile, disassemble, or reverse engineer the Software.



3. OBLIGATIONS OF PRODIGY.



3.1 Prodigy shall provide to PC Manufacturer one or more master disk(s) (each a "Master Disk"), which shall include the most current release of the Software, to be used by PC Manufacturer for hard disk installation of the Software under Section 2.1.1 above. Prodigy shall have the right, in its sole discretion, at any time, to modify a ny technical specifications or other technical matters relating to the installation and/or operation of the Software, including the hardware requirements for Computers, or other technical specifications or matters relating to the Software that affect the o peration of the Software on Computers. PC Manufacturer shall not be obligated to start installing any updated or new Software on Computers until its next major product launch, unless Prodigy requests PC Manufacturer to commence installation of an updated or new Software prior to PC Manufacturer's next major product launch because the then current version of the Software contains material that infringes or may infringe the rights of a third party. Major product launches normally occur every six to eight mo nths.



3.2 Prodigy shall provide on a master disk to PC Manufacturer end-user membership documentation (the "Documentation") for inclusion in each Package. The Documentation shall inform the end-user regarding access to, and enrollment in the Service, and will include a special code which will identify the Service and the PC Manufacturer under the introductory membership, subject to such conditions of Service membership as Prodigy may impose in its sole discretion.



3.3 Prodigy may provide PC Manufacturer end-user membership inserts ("Inserts") for inclusion with each Computer, containing information regarding access to the Service.



3.4 Prodigy will list PC Manufacturer's Web site in and establish a link to PC Manufacturer's Web site from an appropriate area on the Service.



3.5 For each calendar year during the Term Prodigy shall pay to PC Manufacturer the amount described below for each potential Prodigy Internet Member (as defined in the Prodigy Internet Service Membership Agreement) who becomes a Con verted Membership Holder during such calendar year. For purposes of this Agreement, a "Converted Membership Holder" is a Member who has (a) used the procedure set forth in the Documentation to enroll in the Service, and (b) fully paid membership fees, as determined by Prodigy, for one month of membership following the end of any trial offer period provided by Prodigy. Each Converted Membership Holder shall be counted only once under this Section 3.5 regardless of the duration of his/her membership in the Service. Notwithstanding anything in this Agreement to the contrary, (i) a Converted Membership Holder does not include members of the Prodigy Classic Service ("Prodigy Classic," which is another interactive, information, communication and transaction se r vice offered by Prodigy) who choose to convert their membership from Prodigy Classic to Prodigy Internet or who maintain their Prodigy Classic membership and enroll in Prodigy Internet, as well; (ii) a Member cannot become a Converted Membership Holder on or after the effective date of termination of this Agreement, regardless of any reason for such termination, unless the Agreement is terminated for breach by Prodigy, in which case a Member may become a Converted Membership Holder for six months after ter m ination and Prodigy will pay PC Manufacturer the amounts listed below for each such Converted Membership Holder; (iii) Prodigy will not owe PC Manufacturer any fee for any person or entity who becomes a Member using any registration mechanism other than t he Documentation specially coded to identify PC Manufacturer; and (iv) the fee payable by Prodigy hereunder is limited to one Converted Membership Holder per household, regardless of the number of Converted Membership Holders who





Confidential Materials omitted and filed separately with the Securities

and Exchange Commission. Asterisks denote omissions.



reside in the same household. Payments to PC Manufacturer hereunder for each calendar year during the Term shall be payable as follows:



3.5.1 No later than July 31 of the applicable year, Prodigy will report

to PC Manufacturer the number of Converted Membership Holders obtained

between January 1 and June 30 of that year, and pay to PC Manufacturer the

amount applicable to such Converted Membership Holders.



3.5.2 No later than January 31 of the immediately following year, Prodigy

will report to PC Manufacturer the number of Converted Membership Holders

obtained in the applicable year, and pay to PC Manufacturer the amount

applicable to such Converted Membership Holders, less the amount of any

payments previously made for Converted Membership Holders for that year.



3.5.3 The amount payable to PC Manufacturer for each Converted Membership

Holder in a calendar year, shall be calculated according to the following

table:



Number of Converted Membership

Holders obtained in such calendar year Amount

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[**] [**]

[**] [**]

[**] [**]

[**] [**]

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3.6 Prodigy and PC Manufacturer, as amended, commenced January 1, 1994 (the "Classic C ontract"), and hereby agree to terminate the Classic Contract, effective December 31, 1996. In addition, Prodigy and PC Manufacturer acknowledge that Agreement No. 6102 between Prodigy and NEC Technologies, Inc., dated June 23, 1995 (the "NEC Contract") c ommenced in 1995, and hereby agree to terminate the NEC Contract, effective December 31, 1996. Notwithstanding the termination of the Classic Contract and the NEC Contract, Prodigy shall continue to pay PC Manufacturer the amount set forth in



the Classic Contract or NEC Contract, as applicable, for each Membership Holder (as defined in the Prodigy Service Membership Agreement for Prodigy Classic) who becomes a Prodigy Classic Converted Membership Holder until December 31, 1997. For purposes of this Agree m ent, a "Prodigy Classic Converted Membership Holder" is a Membership Holder who has (a) used the procedure set forth in the documentation provided to PC Manufacturer (or to NEC Technologies, Inc. before its business related to personal computers was acqui r ed by PC Manufacturer) to enroll in Prodigy Classic, and (b) fully paid membership fees, as determined by Prodigy, for one month of Prodigy Classic membership following the end of any trial offer period provided by Prodigy. Each Prodigy Classic Converted M embership Holder shall be counted only once under this Section 3.6 regardless of the duration of his/her membership in Prodigy Classic. Payments to PC Manufacturer hereunder for each Prodigy Classic Converted Membership Holder during the period from Janua ry 1, 1997 through December 31, 1997 Prodigy and PC Manufacturer acknowledge that Agreement No. 3744 between shall be payable as follows:



3.6.1 On or about July 31, 1997, Prodigy will report to PC Manufacturer

the number of Prodigy Classic Membership Holders who have become Prodigy

Classic Converted Membership Holders between January 1 and June 30 of that

year, and pay to PC Manufacturer (a) the amount set forth in the Classic

Contract for each such Prodigy Classic Converted Membership Holder who

became a Prodigy Classic Converted Membership Holder under the Classic

Contract and (b) the amount set forth in the NEC Contract for each such

Prodigy Classic Converted Membership Holder who became a Prodigy Classic

Converted Membership Holder under the NEC Contract.



3.6.2 No later than January 31, 1998, Prodigy will report to PC

Manufacturer the number of Prodigy Classic Membership Holders who have

become Prodigy Classic Converted Membership Holders between July 1, 1997

and December 31, 1997, and pay to PC Manufacturer (a) the amount set forth

in the Classic Contract for each Prodigy Classic Converted Membership

Holder who became a Prodigy Classic Converted Membership Holder under the

Classic Contract and (b) the amount set forth in the NEC Contract for each

such Prodigy Classic Converted Membership Holder who became a Prodigy

Classic Converted Membership Holder under the NEC Contract.



3.7 Prodigy shall provide PC Manufacturer during the Term of this Agreement continued access to its server to allow purchasers of PC Manufacturer's computers the ability to register the warranty associated with their computer online through Prodigy's 800 number. Prodigy shall downlo ad the purchaser's data information and forward it to PC Manufacturer. Prodigy shall filter the names of the purchasers of the PC



Manufacturer's computers who complete the warranty registration process online, which it obtains from PC Manufacturer, to e liminate the names of those purchasers who are already enrolled in the Service. Prodigy may then use the remaining names to issue direct mail, encouraging the purchasers to enroll in the Service, and for no other purpose.



3.8 Subject to the following se ntence, Prodigy shall provide to PC Manufacturer on a quarterly basis during the Term of this Agreement the email address of each Converted Membership Holder, except for those Converted Membership Holders about whom Prodigy does not release information ba s ed on Prodigy's privacy policy, customer agreement and email etiquette policy in effect at the time of delivery. The date of commencement of Prodigy's obligations under this Section 3.8 and the details concerning Prodigy's obligations and PC Manufacturer' s rights with respect to the manner and frequency of use of the information provided by Prodigy shall be set forth in an addendum to this Agreement to be negotiated in good faith by the parties hereto.



3.9 The parties acknowledge that this Agreement does not preclude either party from entering into bounty-type agreements for membership acquisition similar to this Agreement with other entities, including other personal computer manufacturers or online service providers and competitors of PC Manufacturer o r Prodigy.



3.10 Each statement provided by Prodigy under Sections 3.5 and 3.6 above shall be deemed to have been accepted by PC Manufacturer unless PC Manufacturer provides Prodigy with written notice, objecting to the statement, embodying, with specifici ty, the reason or reasons for the objection within one (1) year of the date such statement is due. Provided PC Manufacturer provides such written notice of objection as set forth above, upon at least fifteen (15) days' written notice, PC Manufacturer may c onduct an audit on its behalf by an independent certified public accountant of Prodigy records pertaining solely to this Agreement. Such audit shall be conducted by an independent certified public accountant, of PC Manufacturer's choosing, subject to Pro d igy's reasonable approval, and which is not then conducting an audit of Prodigy's books for any other person, firm or corporation, during normal business hours and not more than once per year and shall review the immediately preceding one year period only . The cost of the audit shall be borne by PC Manufacturer; provided, however, that should any audit reveal the amount paid by Prodigy to PC Manufacturer pursuant to this Agreement for any year has been understated by more than five percent (5%) of the amo u nt actually owed, then the reasonable cost of such audit, shall be paid by Prodigy. Within 30 days after completion of an audit, PC Manufacturer shall provide Prodigy with a copy of the audit report and, if there is a discrepancy between the amount owed and the amount actually paid by Prodigy during the audited period, the party benefited by such



discrepancy shall reimburse the other party for the difference not later than thirty (30) days following delivery of the audit report to Prodigy. Any action to be commenced in connection with such audit must be commenced within two years of the date each statement is due.



4. OBLIGATIONS OF PC MANUFACTURER.



4.1 PC Manufacturer shall provide to Prodigy, for a reasonable period, a representative sample of each of its computer configurations onto which it intends to copy the Software, to ensure proper functioning of the Software and Service in conjunction with such computers. Prodigy shall have the right t ...