NARROWBAND INTERNET SERVICE
SALES AGENCY AGREEMENT
By and Among
SBC COMMUNICATIONS INC.
SBC INTERNET COMMUNICATIONS, INC.
PRODIGY COMMUNICATIONS CORPORATION
and
PRODIGY COMMUNICATIONS LIMITED PARTNERSHIP
Dated as of January 1, 2001
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TABLE OF CONTENTS
Page
---- Article I DEFINITIONS.......................................................... 2
ARTICLE II AMENDMENT AND RESTATEMENT OF THE STRATEGIC AND MARKETING AGREEMENT.. 9 2.1 Generally................................................................. 9 2.2 Single Point of Contact and Escalation Process............................ 10
ARTICLE III MARKETING.......................................................... 10 3.1 Generally................................................................. 10 3.2 Branding.................................................................. 11 3.3 License to Marketing Materials............................................ 12 3.4 Exclusivity and Limits on Exclusivity..................................... 12 3.5 Marketing Commitments..................................................... 13 3.6 SBC New Subscriber Marketing Payments..................................... 13 3.7 Telecommunications Services............................................... 16 3.8 DSL Preference............................................................ 17 3.9 Packaging................................................................. 17 3.10 Access to Residential Customer Information............................... 18 3.11 Access to Arrangements................................................... 18
ARTICLE IV INTELLECTUAL PROPERTY............................................... 19 4.1 License Grants............................................................ 19 4.2 Portal Intellectual Property.............................................. 20 4.3 Future Products........................................................... 21
ARTICLE V PRODUCT DEVELOPMENT; PORTAL.......................................... 22 5.1 Development of Client Software............................................ 22 5.2 Prodigy Portal............................................................ 22 5.3 Product Development Details............................................... 25
ARTICLE VI NETWORK SERVICES.................................................... 26 6.1 SBC Preference for Network Services....................................... 26 6.2 Qualifications on Preference.............................................. 26 6.3 Favored Pricing; Third Party Agreements................................... 26 6.4 Day-to-Day Business Operations of Prodigy................................. 26 6.5 Technical Assistance by SBC............................................... 27 6.6 Global Services Provider.................................................. 27
ARTICLE VII DISPUTE RESOLUTION................................................. 27 7.1 Negotiation............................................................... 27 7.2 Arbitration............................................................... 27
ARTICLE VIII ADDITIONAL AGREEMENTS............................................. 29 8.1 Additional Agreements..................................................... 29 8.2 Customer Care............................................................. 30
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ARTICLE IX TERMINATION......................................................... 30 9.1 Termination of Agreement.................................................. 30
ARTICLE X REPRESENTATIONS AND WARRANTIES....................................... 32 10.1 Representations and Warranties of Prodigy and Operating Partnership...... 32 10.2 Representations and Warranties of SBC and SBC Sub........................ 32
ARTICLE XI MISCELLANEOUS....................................................... 33 11.1 Assignment............................................................... 33 11.2 Governing Law; Venue; Waiver of Jury Trial............................... 34 11.3 Counterparts............................................................. 34 11.4 Notices.................................................................. 35 11.5 Entire Agreement......................................................... 36 11.6 Amendment................................................................ 37 11.7 Severability............................................................. 37 11.8 Headings; Recitals....................................................... 37 11.9 No Waiver of Rights...................................................... 37 11.10 Remedies Cumulative..................................................... 37 11.11 No Agency............................................................... 38 11.12 No Third Party Beneficiaries............................................ 38 11.13 Force Majeure........................................................... 38 11.14 Further Assurances; Affiliates.......................................... 38 11.15 Export Controls......................................................... 38 11.16 Negotiated Terms........................................................ 39 11.17 Principles Of Construction.............................................. 39 11.18 Confidentiality......................................................... 39 11.19 Taxes................................................................... 39 11.20 Treatment in Accordance with Future Transactions........................ 40
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NARROWBAND INTERNET SERVICE SALES AGENCY AGREEMENT
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This Narrowband Internet Sales Agency Agreement (the "Agreement"), which is an amendment and restatement of the Strategic and Marketing Agreement (as defined below) is made to be effective as of the first day of January, 2001 (the "Effective Date") by and among SBC Communications Inc., a Delaware corporation ("SBC"), and SBC Internet Communications, Inc., a Delaware corporation and an indirect wholly-owned subsidiary of SBC ("SBC Sub"), on the one hand, and Prodigy Communications Corporation, a Delaware corporation ("Prodigy"), and Prodigy Communications Limited Partnership, a Delaware limited partnership ("Operating Partnership"), on the other hand. Capitalized terms used but not defined herein shall have the meaning assigned to them in the Investment Agreement (as defined below).
WITNESSETH:
WHEREAS, as of the 19th day of November, 1999, SBC, SBC Sub, Prodigy, Prodigy Transition Corporation, a Delaware corporation and a wholly owned subsidiary of Prodigy ("PTC"), and Operating Partnership entered into the Strategic and Marketing Agreement (the "Strategic and Marketing Agreement"), and the Investment, Issuance, Contribution and Assumption Agreement (the "Investment Agreement"), pursuant to which SBC, SBC Sub, Prodigy and PTC combined Prodigy's Internet operations with SBC's consumer and small business Internet operations;
WHEREAS, SBC, SBC Sub, Prodigy and PTC acknowledge and agree that it is in their respective best interests to amend and restate the Strategic and Marketing Agreement as provided in this Agreement and the Internet Service Resale Agreement by and between the Parties hereto of even date herewith (the "Resale Agreement"), that the Strategic and Marketing Agreement and any and all agreements and plans adopted pursuant to the Strategic and Marketing Agreement will be of no further force and effect (except as provided herein) and the Strategic and Marketing Agreement shall be replaced in all respects by this Agreement and the Resale Agreement;
WHEREAS, SBC Sub wishes to sell, as a sales representative for Prodigy and Operating Partnership, the Prodigy Service to residential customers of SBC and its Affiliates' who desire Narrowband Access Retail ISP Services thereby assisting Prodigy and Operating Partnership in acquiring new Narrowband Access subscribers for the Prodigy Service and provide certain network and other services to Prodigy and Operating Partnership;
WHEREAS, Prodigy, Operating Partnership, SBC and SBC Sub (each a "Party" and collectively the "Parties") wish for Prodigy and Operating Partnership to become a leading ISP in the United States; and
WHEREAS, the Parties desire that SBC and its Affiliates be the preferred provider of Network Services used to Deliver the Prodigy Service.
NOW, THEREFORE, in consideration of the premises, agreements, representations, covenants and warranties herein contained, the Parties agree as follows.
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ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms will have the meaning ascribed to them below:
"Advertisement" means an interactive advertisement, promotion, link, banner, pointer or sponsorship.
"Affiliate" of any specified Person means any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with such specified Person. For the purposes of this Agreement, SBC Sub is an Affiliate of SBC, each of Operating Partnership and PTC is an Affiliate of Prodigy, and Cingular Wireless LLC shall not be considered an Affiliate of SBC, provided, however, SBC shall use commercially reasonable efforts to cause Cingular Wirelss LLC to comply with the provisions of this Agreement as if Cingular Wireless LLC were an Affiliate of SBC.
"Affinity and OEM Marketing Plan" has the meaning set forth in Section 8.1(d).
"Arbitration Notice" has the meaning set forth in Section 7.2(a).
"Assume" has the meaning set forth in the Investment Agreement.
"Bankruptcy and Equity Exception" has the meaning set forth in Section 10.1(a).
"Base Wholesale Price" has the meaning set forth in Section 3.4(c) of the Resale Agreement.
"Brand" or "Branding" means the trademarks, tradenames, service marks or logos of one Person and its Affiliates that are used to identify a particular product or service.
"Broadband" or "Broadband Access" means Internet connectivity between an Internet subscriber's location and up to and including the backbone and any GSP through DSL access or other forms of high speed access with one or more speeds at least one of which is at least 144 kilobits per second downstream, including connectivity by means of coaxial cable, wireless and satellite transmissions.
"Broadband Access Subscriber Commitment" has the meaning assigned to such term in Section 3.6(d).
"Business Day" means any day other than Saturday, Sunday or a day on which banks in the City of Austin, Texas are authorized or obligated by law or executive order to close.
"Business Customer" means a customer of SBC that is subscribing to a business class of telephone service.
"Business Customer Narrowband Wholesale Price" shall have the meaning assigned to such term in Section 3.4(c) of the Resale Agreement.
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"Category I Work Products" has the meaning set forth in Section 4.3(a).
"Category II Work Products" has the meaning set forth in Section 4.3(c).
"Claim" has the meaning set forth in Section 7.1.
"Client Documentation" means the documentation included with the Commercial Client and the Licensed Client, including any Upgrades thereto.
"Closing" has the meaning set forth in Section 3.1 of the Investment Agreement.
"Closing Date" has the meaning set forth in Section 3.1 of the Investment Agreement.
"Co-Brand" means a composite mark or other combination of the Brands of two or more Persons.
"Commercial Client" means the English and Spanish language versions (and other versions as agreed by SBC Sub and Operating Partnership in writing) of the Internet browser client software utilized by Prodigy and Operating Partnership at the Effective Date for the Apple Macintosh OS and Microsoft Windows platforms (and other platforms as agreed by SBC Sub and Operating Partnership in writing), in executable object-code version only, and any Upgrades or replacements thereto in executable object-code version only, including any Third Party software embedded therein.
"Connectivity Software" means software drivers and small applications, in some cases unseen by the user, typically provided by Microsoft, SBC Sub, and Third Party vendors to allow networking drivers on the user's PC to communicate with the network being used, as mutually agreed by SBC Sub or Operating Partnership.
"Content" means text, images, video, audio (including music included in synchronous or timed relation with visual displays) and other data, Products, Advertisements and software, including any modifications, upgrades, updates, enhancements and related documentation for any of the foregoing.
"Control," including its various tenses and derivatives (such as "Controlled"), means, with respect to any Person, the presence of one of the following: (i) the legal, beneficial or equitable ownership, directly or indirectly, of more than 50% of the capital or voting stock (or other ownership or voting interest, if not a corporation) of such Person or (ii) the ability, directly or indirectly, to direct the voting of a majority of the directors of such Person's board of directors or, if the Person does not have a board of directors, a majority of the positions on any similar body, whether through appointment, voting agreement or otherwise.
"CPE" means customer premises equipment.
"Customized Client" means versions of the Licensed Client which may be modified by or for Prodigy or Operating Partnership and are Marketed and distributed as a part of the Prodigy Service.
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"Deliver" including its various tenses and derivatives (such as "Delivered"), means providing a Retail Internet Service to an Internet service subscriber and distributing the appropriate client software to such Prodigy Subscriber.
"Development Plan" has the meaning set forth in Section 5.3(a).
"Development Projects" has the meaning set forth in Section 5.3(a).
"Documentation" means the Client Documentation and Tools Documentation.
"DSL" means digital subscriber line.
"Escalation Process" has the meaning set forth in Section 2.2(b).
"Excess Narrowband Subscribers" shall have the meaning assigned to such term in Section 3.6(b).
"Exclusivity Termination Date" means the earliest to occur of (i) December 31, 2009, and any successive one year anniversary of such date, at which one Party shall have delivered to the other Party in writing at least 180 days prior to such date a notice stating that it does not wish to continue this Agreement (as it may be amended) and (ii) the occurrence of any Exclusivity Termination Event and the delivery by SBC of a notice terminating its exclusivity obligations hereunder.
"Exclusivity Termination Event" means (x) any action by Prodigy or any of its Subsidiaries that facilitates or encourages any direct or indirect acquisition by a SBC Designated Entity of beneficial ownership of shares in Prodigy or any of its Affiliates entitling the holder to cast 15% or more of the votes in any election of directors in Prodigy or any of its Affiliates (other than through the issuance of shares), (y) the occurrence of an event referred to in Section 5.2(h)(ii), or (z) any material breach by Prodigy or Operating Partnership of any covenant or agreement contained in this Agreement as determined in accordance with Section 9.1(b) of this Agreement.
"Executive Steering Committee" means a special committee of the Prodigy Board, which is established by Prodigy in accordance with its Amended and Restated Certificate of Incorporation and the Amended and Restated By-Laws and which consists of four members, two of whom are selected by the SBC Directors and two of whom are selected by Telefonos de Mexico, S.A. de C.V. and Carso Global Telecom, S.A. de C.V. The purpose of the Executive Steering Committee is to evaluate certain corporate actions of Prodigy, which are specified in the Amended and Restated By-Laws and which require the approval of the Executive Steering Committee prior to being submitted for the approval of the Prodigy Board.
"GSP" means global services provider.
"Home Page" means the first screen appearing to a user accessing a Retail ISP Service, including any personalized versions of such first screen customized by a user.
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"Intellectual Property" means all (i) patents and patent applications, (ii) copyrights and registrations thereof, (iii) mask works and registrations and applications for registration thereof, (iv) computer software, data and documentation, (v) know-how, manufacturing and production processes and techniques, research and development information, copyrightable works, trade secrets, tangible or intangible proprietary information or materials, (vi) trademarks, service marks, trade names and applications and registrations therefor and (vii) other proprietary rights relating to any of the foregoing.
"ISDN" means integrated service digital network.
"ISP" means Internet service provider.
"Legacy Subscribers" means each subscriber of SBC's Retail ISP Services (e.g., Pacific Bell Internet, SW Bell Internet, Nevada Bell Internet, SNET Internet and Ameritech.net) as of the Closing Date.
"Licensed Client" means versions of the Commercial Client modified, in executable object-code version only, including any Third Party software embedded therein, by or for Prodigy or Operating Partnership to remove (including by disabling access to, or the user interface of, without actually removing the code for) any functionality, Advertising, Brands and other references that would violate the exclusive rights granted to SBC in Section 3.7 of this Agreement, unless Operating Partnership determines, with the approval of SBC, that certain such functionality, Advertising, Brands or other references should not be removed, together with the Licensed Connectivity.
"Licensed Connectivity" means the functionality, including drivers, data link library, Winsock, dialers and configuration files, necessary to provide connectivity for the Licensed Client through dial-up, local area network and Broadband Access connections as developed by or for Prodigy or Operating Partnership prior to the Closing Date for versions of the Licensed Client initially developed from the Commercial Client and existing at the Closing Date, in executable object-code version only.
"Licensed Tools" means any and all software provided by Prodigy (whether produced by Prodigy or licensed to Prodigy by a Third Party) that facilitates the modification (either in appearance, performance or content) of the Customized Client.
"Losses" means all direct losses, liabilities, suits, claims, costs, expenses (including reasonable attorneys' fees) and disbursements and costs of investigation, litigation, settlement, judgment and interest), penalties, fines, judgments and/or damages, and in no event shall include any indirect, consequential or special damages.
"Market," including its various tenses and derivatives (such as "Marketed"), means, in any medium, to market, offer, advertise, promote, distribute, register a subscriber (including fulfilling an order), or complete a sale, as applicable given the context.
"Marketing Plan" has the meaning set forth in Section 3.1(b).
"Marks" means the Prodigy Marks and SBC Marks.
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"Narrowband" or "Narrowband Access" means Internet connectivity between an Internet service subscriber's location up to and including the backbone and any GSP with one or more speeds all of which are less than 144 kilobits per second downstream.
"Network Services" means Broadband Access and Other Network Services.
"Non-SBC Telecommunications Offering" has the meaning set forth in Section 3.7(b).
"Nonsubscriber Revenue Performance Standard" shall have the meaning assigned to such term in Section 5.2(g).
"Notice Period" has the meaning set forth in Section 7.2(a).
"Other Network Services" means all types of connectivity and transport services required to Deliver the Prodigy Service between an Internet service subscriber's location and up to and including the backbone and any GSP, including but not limited to dial-up access, backbone, transport, and network management and integration services, but specifically excluding Broadband Access.
"Participating Parties" has the meaning set forth in Section 7.1.
"Performance Standards" has the meaning set forth in Section 5.2(g).
"Person" means a natural person, a corporation, a limited liability company, a general or limited partnership, a trust, an estate, a joint venture, any Governmental Entity, or any other entity or organization.
"Portal" means an interactive, browser based series of web sites featuring a broad selection of aggregated interactive Content (or navigation thereto) (e.g., an online service or search and directory service) and/or marketing a broad selection of Products across numerous interactive commerce categories (e.g., an online mall or other online commerce site other than electronic yellow pages), and all functionality included within such interactive site.
"Pre-existing Commitments" means the contracts, licenses and other obligations or undertakings to which Prodigy and/or Operating Partnership is subject as set forth in various Schedules to the Strategic and Marketing Agreement.
"Prodigy Board" means the Board of Directors as established pursuant to the Amended and Restated Certificate of Incorporation and the Amended and Restated By-Laws and any successor board of directors or similar governing body of Prodigy.
"Prodigy Marks" means the Prodigy and Prodigy Affiliate Brands set forth on Exhibit 4.1(a) to the Strategic and Marketing Agreement, together with any others adopted by Prodigy or Operating Partnership and used for the Prodigy Service from time to time. Operating Partnership shall notify SBC promptly in writing of any such other Prodigy Marks.
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"Prodigy Portal" means the English version of the portal currently accessible by the public via the Internet at the URL http://www.prodigy.net and/or such other URL or location(s) as Prodigy or Operating Partnership may designate for the Prodigy Service, including any successor or replacement implemented by Prodigy or Operating Partnership (on its own or through a Third Party) for such site(s), from time to time and all pages directly or indirectly linked to such address to the extent controlled by Prodigy or Operating Partnership and which include or could include any Prodigy or Operating Partnership branding and any successors or replacements for such address and pages.
"Prodigy Service" means all Retail ISP Services offered from time to time by Prodigy or Operating Partnership to their customers.
"Prodigy Subscriber" means any Person that subscribes to the Prodigy Service, either directly from Prodigy or Operating Partnership (including its distributors) or from SBC or it's Affiliates (including their respective distributors), on behalf of Prodigy or Operating Partnership.
"Product" means any product, good or service offered, sold, provided, distributed, or licensed directly or indirectly through: (a) a Portal (including through any interactive site linked to a Portal); (b) any other electronic means directed at subscribers who receive a Retail ISP Service (e.g., e-mail offers); or (c) an "offline" means (e.g., toll-free number) for receiving orders related to specific offers made electronically to Internet users requiring purchasers to reference a specific promotional identified or tracking code.
"Resale Agreement" shall have the meaning assigned to such term in the preamble to this Agreement.
"Residential Customer" means any non-Business Customer who is a Narrowband Access Subscriber of the Prodigy Service acquired on behalf of Prodigy or Operating Partnership by SBC, its Affiliates or any their distributors.
"Retail ISP Service" means any service for consumers and small businesses using any transport, any speed, via any device providing connectivity to the Internet anywhere in the United States via a single IP address at any one time, integrated with the provision of e-mail services, access to Usenet newsgroups, chat or instant messaging and a default screen linking to an aggregation of a broad variety of Internet based Content and excludes any Web hosting services.
"SBC Brand Names" means the Brands utilized by SBC, Pacific Bell, Southwestern Bell, Nevada Bell, Ameritech, SNET and SBC Telecom. In the event SBC initiates a new brand name or a national brand of voice Telecommunications Service that utilizes a new brand name, the term "SBC Brand Names" shall include such new brand name(s). SBC shall notify Prodigy promptly in writing of any such other brand names.
"SBC Designated Entity" means AOL, AT&T, MCI WorldCom, Sprint, Microsoft, BellSouth, US West/Qwest and Verizon and any of their respective Affiliates and any Person in which any of such companies or Affiliates owns a 25% or greater equity interest.
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"SBC Marks" means the SBC and SBC Affiliate Brands set forth on Exhibit 5.1(b) to the Strategic and Marketing Agreement, together with any others adopted by SBC or its Affiliates and used for the Prodigy Service from time to time. SBC shall notify Prodigy promptly in writing of any such other SBC Marks.
"SBC Territory" means the states of California, Nevada, Connecticut, Texas, Missouri, Arkansas, Oklahoma, Kansas, Illinois, Indiana, Ohio, Michigan, Wisconsin and any other state in which SBC acquires 40% or more of the incumbent local exchange carrier lines.
"Smart Pages" means the Internet site at the URL http://www.SmartPages.com.
"Subscriber" means, with respect to any Retail ISP Service, a subscriber that has remained a subscriber for at least one monthly billing cycle (excluding any unpaid trial period) and has paid at least one monthly bill.
"Telecommunications Advertisement" means an Advertisement related primarily to Telecommunications Services.
"Telecommunications Services" means any of the following products or services: (a) long distance phone service, local phone service, wireless phone services, paging services, and any successors thereto; (b) all current and future ancillary services offered in conjunction with any of the services listed in (a), including voice mail, caller ID, call waiting, call ...
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