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EXHIBIT 10.1
AMENDMENT NO. 1 TO
STRATEGIC AND MARKETING AGREEMENT
This AMENDMENT NO. 1 (the "Amendment") to the Strategic and Marketing
Agreement is entered into as of this 1st day of October, 2000 (the "Effective
Date"), by and among SBC Communications Inc., a Delaware corporation ("SBC"),
SBC Internet Communications, Inc., a Delaware corporation and an indirect wholly
owned subsidiary of SBC ("SBC Sub"), Prodigy Communications Corporation, a
Delaware corporation ("Prodigy"), and Prodigy Communications Limited
Partnership, a Delaware limited partnership ("Operating Partnership") (each of
SBC, SBC Sub, Prodigy, and Operating Partnership, a "Party" and collectively,
the "Parties"). Capitalized terms used but not defined herein shall have the
meaning assigned to them in the Strategic Agreement (as defined below).
WHEREAS, the Parties have entered into a Strategic and Marketing Agreement
dated as of November 19, 1999 (the "Strategic Agreement");
WHEREAS, the Parties each desire to enter into this Amendment for the
purpose of amending the Strategic Agreement;
WHEREAS, Section 10.6 of the Strategic Agreement permits the Parties to
vary, amend or extend the Strategic Agreement by written agreement executed and
delivered by duly authorized officers or representatives of the respective
Parties; and
WHEREAS, the Parties each desire that, except to the extent amended by this
Amendment, all terms of the Strategic Agreement shall remain in full force and
effect without amendment, change or modification;
NOW, THEREFORE, in consideration of the mutual agreements of the Parties
contained herein and in the Strategic Agreement, the Parties hereto agree as
follows:
1. Deferred Marketing Payments
1.1. Deferred Payments. Notwithstanding anything to the contrary contained
in Section 2.6(e) ("SBC New Subscriber Marketing Payments") of the
Strategic Agreement, the marketing fees described in Section 2.6(a)
("SBC New Subscriber Marketing Payments") of the Strategic Agreement
(each such fee, a "Bounty") shall be payable by Operating Partnership
to SBC Sub in three (3) annual payments, each equal to one third of
the Bounty (each an "Installment"), plus interest on the unpaid
portion of the Bounty at the Interest Rate (the "Interest", and,
together with the Installment, a "Payment").
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1.2. Interest Rate. The "Interest Rate" shall be the lesser of twelve
percent (12%) per annum (on the basis of a 360 day year for the
actual number of days involved) or the maximum rate permitted by New
York law; provided, however, that if Operating Partnership shall have
failed to make a scheduled Payment within seven (7) days of such
Payment coming due, the Interest Rate shall increase to the lesser of
fifteen percent (15%) per annum or the maximum rate permitted by New
York law; provided further however, that once Operating Partnership
shall have paid all Payments in arrears, the Interest Rate shall
revert to the lesser of twelve percent (12%) per annum or the maximum
rate permitted by New York law.
1.3. Interest Accrual. Interest shall begin to accrue on each Bounty on
the day following the date on which the Bounty was Earned (as defined
below) by SBC, its Affiliates or distributors of the Prodigy Service
pursuant to Section 2.6(a) ("SBC New Subscriber Marketing Payments")
of the Strategic Agreement. For purposes of Sections 1.2, 1.3, 1.4
and 1.5 hereof, a Bounty shall be deemed earned ("Earned") on the
last day of the calendar month in which SBC, its Affiliates or its
distributors of the Prodigy Service shall have procured a Subscriber
in accordance with Section 2.6(a) ("SBC New Subscriber Marketing
Payments") of the Strategic Agreement. For example, SBC shall be
deemed to have Earned Bounties as of October 31, 2000 for all
Subscribers procured by SBC, its Affiliates or its distributors of
the Prodigy Service between October 1, 2000 and October 31, 2000.
1.4. Payment Due Date. The first Payment on any Bounty Earned in a fiscal
year commencing October 1 and ending on September 30 (a "Bounty
Year") shall be due on the day that is fifteen (15) calendar days
after the end of such Bounty Year. Subsequent Payments on such
Bounties are due annually. For example, Operating Partnership must
make the first Payment for Bounties Earned between October 31, 2000
and September 30, 2001 (the "Example Bounty Year") no later than
October 15, 2001. Subsequent Payments on Bounties Earned in the
Example Bounty Year will be due on October 15, 2002 and October 2003.
1.5. Outstanding Bounties. All Bounties Earned prior to October 1, 2000
and not paid as of the Effective Date, shall have accrued Interest
as if this Amendment were in effect as of the date that such Bounty
was Earned. Notwithstanding Section 1.4 hereof, the first Payment on
all Bounties Earned prior to October 1, 2000 shall be due on
February 5, 2001.
1.6. Waiver of Additional Fees. Notwithstanding Section 2.6(d) ("SBC New
Subscriber Marketing Payments") of the Strategic Agreement, for the
term of this Amendment, SBC and SBC Sub agree to waive payment by
Operating Partnership of any CPE, installation and hardware charges
(the "Provision Fees") payable pursuant to 2.6(d) ("SBC New
Subscriber Marketing Payments") of the Strategic Agreement.
Additionally, SBC and SBC Sub agree to waive payment by
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Operating Partnership of any such Provision Fees earned but not paid
by Operating Partnership to SBC Sub prior to the Effective Date.
1.7. Prepayment. Nothing contained in this Amendment shall prohibit
Operating Partnership from making any Payment prior to the date on
which it is due hereunder.
1.8. Offset Right. Notwithstanding anything to the contrary contained in
Section 2.6(c) ("SBC New Subscriber Marketing Payments") of the
Strategic Agreement, SBC Sub shall have the right to offset any
amounts that it may owe to Operating Partnership pursuant to Section
2.6(c) ("SBC New Subscriber Marketing Payments") of the Strategic
Agreement against any Payment owed by Operating Partnership to SBC
Sub.
1.9. Termination for Non-Payment. Notwithstanding Section 2.1 hereof, if,
during the term of the Strategic Agreement, Prodigy fails to make any
Payment due to SBC or SBC Sub within sixty (60) days of such Payment
becoming due, SBC may, in its sole discretion, terminate this
Amendment upon thirty (30) days' written notice to Prodigy and
Operating Partnership. Upon termination of this Amendment in
accordance with this Section 1.9, all remaining Payments due under
this Amendment shall become immediately due and payable.
2. Term and Termination.
2.1. Termination. This Amendment shall terminate upon the termination of
the Strategic Agreement; provided, that SBC may terminate this
Amendment in its sole discretion upon sixty (60) days' written notice
to Prodigy and Operating Partnership given any day that is after the
date six months after the Effective Date (the "Amendment Termination
Date"). Upon the termination of this Amendment in accordance with the
proviso contained in this Section 2.1, all remaining Payments due
with respect to any Bounty earned prior to the Amendment Termination
Date shall be due and payable on the day that is 90 days after the
Amendment Termination Date.
2.2. No Effect on Strategic Agreement. Termination of this Amendment
pursuant to Section 2.1 hereof shall not affect the Strategic
Agreement, which shall remain in full force and effect without
amendment, change or modification, except as may otherwise be agreed
in accordance with the terms of the Strategic Agreement.
3. Other Rights
3.1. Payment Data. Operating Partnership shall provide SBC and SBC Sub
with all information, data and calculations SBC and SBC Sub may
request with respect to
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any Payments due to enable SBC and SBC Sub to verify Operating
Partnership's and Prodigy's compliance with its obligations
hereunder.
3.2. SBC Audit Rights. SBC and SBC Sub or their representatives shall have
the right to make an inspection of the business, books and records of
Operating Partnership and Prodigy related to any Payments payable
under this Amendment and the Strategic Agreement, during normal
business hours and upon five (5) days' written notice to Operating
Partnership and Prodigy, that are relevant for the purpose of
verifying Operating Partnership's and Prodigy's compliance with its
obligations under this Amendment and the Strategic Agreement.
Operating Partnership and Prodigy shall maintain business records,
books, account information, computer logs and related materials that
are sufficient to permit SBC and SBC Sub to reasonably verify that
Operating Partnership and Prodigy is in compliance with its
obligations hereunder.
4. Miscellaneous.
4.1. Each of the Parties hereto represents that this Amendment has been
duly authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to the Bankruptcy and Equity
Exception.
4.2. The provisions of Article X of the Strategic Agreement, including,
without limitation, the New York choice of law and waiver of right to
a trial by jury set forth in Section 10.2 ("Governing Law; Venue;
Waiver of Jury Trial") thereof, shall be applicable to this
Amendment.
4.3. The Parties agree that any controversy or claim arising from or
relating to this Amendment shall been resolved in accordance with
Article VI of the Strategic Agreement.
4.4. Each Party acknowledges that this Amendment was drafted by all
Parties and no provision or term shall be construed against any Party
by virtue of such Party being deemed to have drafted such term or
provision.
4.5. This Amendment may be executed in any number of counterparts, each
such counterpart being deemed to be an original instrument, and may
be executed by facsimile signature. All counterparts shall
collectively constitute one and the same Amendment.
4.6. The Strategic Agreement (including the exhibits and/or schedules
thereto), as amended by this Amendment, constitutes the entire
agreement among the Parties with regard to the subject matter of the
Strategic Agreement. Except to the extent amended by this Amendment,
all terms of the Strategic Agreement shall remain in full force and
effect without amendment, change or modification.
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IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
duly executed in its name and on its behalf, all as of the date first above
written.
SBC COMMUNICATIONS INC.
By: /s/ James S. Kahan
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Name: James S. Kahan
Title: Senior Executive Vice President-
Corporate Development
SBC INTERNET COMMUNICATIONS, INC.
By: /s/ James S. Kahan
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Name: James S. Kahan
Title: Authorized Representative
PRODIGY COMMUNICATIONS
CORPORATION
By: /s/ Charles J. Roesslein
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Name: Charles J. Roesslein
Title: President, CEO, Chairman of the Board
PRODIGY COMMUNICATIONS LIMITED PARTNERSHIP
By: Prodigy Communications Corporation,
as general partner of Prodigy
Communications Limited Partnership
By: /s/ Charles J. Roesslein
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Name: Charles J. Roesslein
Title: President, CEO, Chairman of the Board
