EXHIBIT 10.36
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
Contract #3284
SOFTWARE DEVELOPMENT AND PROCESSING SERVICES AGREEMENT
This Agreement (the "Agreement"), effective as of January 1, 1992 (the
"Effective Date"), is made by and between First Data Resources Inc., a Delaware
corporation, having its principal place of business at 0000 Xxxxxxx Xxxxxx,
Xxxxx, Xxxxxxxx 00000 ("FDRI"), with one of its business units being Cable
Services Group ("CSG"), and Prodigy Services Company, a partnership established
under the laws of New York, having its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx 00000 ("PRODIGY").
WHEREAS, FDRI and PRODIGY (under its former partnership name "TRINTEX")
entered into a Software Development and Processing Services Agreement dated May
26, 1987, as amended a First Amendment dated May 1, 1990 (the "Prior
Agreement"); and
WHEREAS, pursuant to the Prior Agreement, FDRI developed, tested,
implemented and enhanced a Subscription Management System (the "SMS Product")
for PRODIGY capable of obtaining information and billing individuals and
entities for subscription to the on-line computer services provided by PRODIGY
and used such system to provide processing services to PRODIGY in connection
with PRODIGY's member billing operations; and
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WHEREAS, PRODIGY desires to engage FDRI to continue to provide full
life cycle systems development, data processing services and other services for
PRODIGY in connection with PRODIGY'S member billing operations and to create a
software development team at FDRI dedicated to the development of a Member
Administrative System (the "MAS System") for PRODIGY;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein, the parties hereto agree as follows:
1. SERVICES
1.1 SOFTWARE DEVELOPMENT
1.1.1 The Systems
1.1.1.1 SMS System. The "SMS System" (or "SMS") means the SMS Product as
defined in Exhibits 15 and 25, together with those System Enhancements
and Maintenance to the SMS Product which FDRI furnishes to PRODIGY from
time to time during the term of this Agreement.
FDRI shall develop, test and implement each SMS System Enhancement
and/or Maintenance Change to substantially perform in accordance with
this Agreement and the
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operational guidelines for development and maintenance as set forth in
Exhibits 1-29. Each SMS System Enhancement and/or Maintenance
Change shall be jointly prioritized by FDRI and PRODIGY, and
implemented in accordance with each SMS Joint Detailed Project Plan
that results from Exhibit 1 Section 2 and with the SMS Implementation
Plans that result from Exhibit 5 Section 5.
1.1.1.2 MAS System. The "MAS System" (or "MAS") means and includes all modules
and subsystems of the MAS System to be developed and implemented from
time to time during the term of this Agreement by FDRI for PRODIGY as
described in the MAS Request For Information (Exhibit 20), the MAS
Level Zero Requirements Specification Documentation (Exhibit 21) and
the MAS Level One Requirements Specification Documentation (Exhibit
22).
FDRI shall develop, test and implement each module and subsystem of
the MAS System to substantially perform in accordance with this
Agreement and the operational guidelines for development and
maintenance as set forth in Exhibits 1-29. MAS shall be developed,
tested and implemented in modules and subsystems, which shall be
jointly prioritized by FDRI and PRODIGY, and implemented in accordance
with each MAS Joint Detailed Project Plan that
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results from Exhibit 1 Section 2 and with the MAS Implementation Plans
that result from Exhibit 5 Section 6.
1.1.2 Project Managers and Key Personnel. FDRI and PRODIGY agree to assign
and make available one Project Manager each and other key personnel
for the duration and completion of the MAS systems development, MAS
maintenance, SMS operations, SMS maintenance and MAS operations, under
the direction of the Project Managers to ensure the completion of the
SMS and MAS projects as specified in the Joint Detailed Project Plan.
In the event either or both of the Project Managers or other key
personnel are reasonably unavailable to FDRI or PRODIGY during the
duration and completion of the above tasks, then FDRI or PRODIGY may
assign a new individual upon prior written notice to the other party
designating such new individual by name and function. The Project
Managers shall be responsible for the day-to-day management and
successful completion of the MAS and SMS projects (as set forth in
Exhibit 1) and of the Joint Detailed Project Plans required under
Exhibit 1 Section 2. The Project Managers shall also establish a MAS
Design Baseline that shall be mutually agreed to by FDRI and PRODIGY,
having been reviewed and approved by appropriate management. The MAS
Design Baseline shall consist of the Functional and Data Specifi-
cations from the respective Business Area Analysis Units designated
by the parties during the Logical Phase of the MAS system
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development life cycle. The Logical Phase work product deliverables
that will define the MAS Design Baseline will be: Process and Data
Definitions; Process Decomposition Diagrams (Logical Process Model);
Data Flow Diagrams; Entity Relationship Diagrams (Logical Entity
Model); and Association Matrices.
1.1.3 Change Control. All proposed changes to SMS and MAS shall be
prioritized by PRODIGY; provided, however, that all changes to SMS
and/or to the MAS Design Baseline shall be mutually agreed upon and no
changes shall be built into either SMS or MAS without prior estimation
by FDRI of any cost and/or time frame implementation impact on the
respective Joint Detailed Project Plans for SMS and/or MAS; and
provided, further, that wherever costs of development or time-frames
are at issue, the parties shall negotiate in good faith to reconcile
the differences between them to reach, as soon as practicable, a
mutually agreeable project plan to accommodate the implementation of
any change. Change Control shall be administered for SMS and the MAS
Design Baseline according to the methodologies and standards resulting
from Exhibit 3 Section 10.
1.1.4 Hardware and Configuration.
1.1.4.1 SMS. In accordance with the requirements set forth in
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Exhibit 8, FDRI will provide PRODIGY with an initial description and
periodic description updates of the hardware, systems software and
associated systems configuration equipment (the "Equipment") necessary
to execute SMS in compliance with the performance standards set forth
in Article 3 of this Agreement. FDRI and PRODIGY understand and agree
that FDRI may, at its sole expense upon notice to PRODIGY, change any
such Equipment that is located on FDRI's premises and/or the
configuration thereof; provided that such changes shall not alter the
scope of the work agreed to by the parties or the work plan therefor.
FDRI and PRODIGY also understand and agree that except upon ninety
(90) days' prior written notice to PRODIGY of its intentions, and
PRODIGY's written consent thereto, FDRI will not make any change to
its Equipment that will have a material adverse impact on the
processing capacity or performance level of SMS.
1.1.4.2 MAS.
(a) Equipment Located at FDRI's Locations. Upon the completion of
the physical design for MAS, in accordance with the requirements
set forth in Exhibit 8, FDRI will provide PRODIGY with an initial
description and periodic description updates of the Equipment (as
that term is defined in Section 1.1.4.1
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above) necessary to execute MAS in accordance with the
performance standards set forth in Article 3 of this Agreement.
FDRI and PRODIGY understand and agree FDRI may, at its sole
expense upon notice to PRODIGY, change any such Equipment that is
located on FDRI's premises and/or the configuration thereof;
provided that such changes shall not alter the scope of the work
agreed to by the parties or the work plan therefor. FDRI and
PRODIGY also understand and agree that except upon ninety (90)
days' prior written notice to PRODIGY of its intentions, and
PRODIGY's written consent thereto, FDRI will not make any change
to its Equipment that will have a material adverse impact on the
processing capacity or performance level of SMS.
(b) Equipment Located or PRODIGY's Locations. FDRI and PRODIGY
understand and agree that until MAS is more completely designed
and FDRI understands which subsystems PRODIGY wishes to run at
PRODIGY's locations, FDRI will be unable to tell PRODIGY what
Equipment and configurations will be necessary to permit PRODIGY
to run each MAS subsystem. FDRI will be able to designate the
required Equipment and configurations within a reasonable period
of time. PRODIGY understands and agrees that all such Equipment
that is located on PRODIGY's premises, or the premises
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of any designated agent of PRODIGY, will be at PRODIGY's expense.
1.1.5 Responsibilities of FDRI and PRODIGY.
FDRI and PRODIGY shall develop mutually agreed upon Joint Detailed
Project Plans in accordance with Exhibit 1 Section 2, and
Implementation Plans for SMS and MAS in accordance with Exhibit 5
Sections 5 and 6 respectively. FDRI will put forth good faith efforts
to ensure the quality of SMS and MAS.
1.1.6 Progress Reports and Meetings for SMS and MAS. FDRI and PRODIGY agree
to meet regularly as described in Exhibit 1 Section 3 to review
progress of the MAS and SMS Systems Development and Maintenance. Such
meetings shall be held as needed, but in any event not less frequently
than quarterly and shall be documented in writing and signed by the
Project Managers, and reflect all questions discussed and decisions
made.
1.1.7 SMS Enhancements and Maintenance Team. As of the date of this
Agreement, FDRI employs certain individuals (referred to in Exhibit 6
as the "SMS Enhancements and Maintenance Team") who are and/or shall
be assigned exclusively to work
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[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
Contract #3284
on enhancements and maintenance for the SMS Product in the following
capacities:
Personnel Rates/Per Day/Per Person
One Team Leader (Development Manager) [**]
Two Systems Analysts [**]
Six Programmers [**]
One Technical Support Person [**]
One Product Integrity (Testing/Quality
Assurance) Person [**]
FDRI will be responsible for the payment of all salary and benefits
for personnel comprising the SMS Enhancements and Maintenance Team.
Changes in personnel shall be agreed upon in writing by both Project
Managers, as provided below.
FDRI shall retain the SMS Enhancements and Maintenance Team during the
period from January 1, 1992 through December 31, 1995, and PRODIGY
shall be responsible for the payment to FDRI of [**] per month to
fund such Team upon the submission of monthly invoices by FDRI. During
the period between January 1, 1992 and December 31, 1995, FDRI will
not substantially change the quality, quantity or skill levels of the
SMS Enhancements and Maintenance Team without the prior written
consent of PRODIGY. In the event at any time after January 1, 1992
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PRODIGY desires an increase in personnel for the SMS Enhancements and
Maintenance Team above the levels designated above in this Section
1.1.7, PRODIGY must provide FDRI written notice of such increase,
including the reasons for requiring such increase. All such requests
shall designate the job category such personnel should be hired into.
FDRI agrees to respond to all such requests promptly, provided,
however, that any increase in personnel shall be made only upon FDRI's
written consent. Upon FDRI's consent, which shall not be unreasonably
withheld or conditioned, FDRI shall use reasonable efforts to staff
all such additional personnel. Any additional personnel for the SMS
Enhancements and Maintenance Team requested by PRODIGY and agreed to
by FDRI will be invoiced to PRODIGY at the rates set forth in this
Section 1.1.7. Such rates shall not be amended or modified during the
Original Term, as defined in Section 7.1 of this Agreement.
1.1.8 MAS Development and Maintenance.
1.1.8.1 MAS System Development. In consideration of the financial and
technical resources committed hereunder by PRODIGY for the
development/enhancement of SMS, FDRI agrees to provide for the
development of MAS a level of support equivalent to that identified in
Section 1.1.7 above. Therefore, except
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where otherwise required or permitted under this Section 1.1.8.1, FDRI
shall employ, in the requisite positions and at the requisite skill levels,
eleven (11) individuals who will be dedicated by FDRI to the development of
the MAS System (the "MAS Development Team"). FDRI shall train such persons
in the skill sets required for their individual MAS Development tasks,
e.g., CASE tools, database design, realtime on-line processing. If
----
necessary, FDRI may contract with third parties to fulfill the required MAS
development tasks. In all cases, FDRI will be responsible for the payment
of the salaries, benefits and project-related expenses for all personnel
comprising the MAS Development Team.
FDRI will begin employing personnel for the MAS Development Team
immediately and will have the eleven (11) individuals employed by no later
than December 31, 1992 with the goal of completing the MAS System by
December 31, 1995, in accordance with the MAS Joint Detailed Project Plans.
If despite FDRI's good faith efforts, satisfactory progress is not being
made towards the completion of the MAS System by December 31, 1995, then
the representatives for PRODIGY and FDRI designated pursuant to Section 9.9
shall meet and attempt to agree upon such additional measures as may be
necessary to achieve completion by the scheduled date of December 31, 1995.
If additional personnel are needed for
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reasons other than as described below, payment of these expenses shall be
separately negotiated and agreed upon by the Project Managers and their
immediate management and approved by CSG's Vice President Client Services
and PRODIGY's Vice President, Systems Operations and Telecommunications.
FDRI agrees to bear the full responsibility for hiring and funding any
additional personnel as may be necessary to achieve the scheduled
completion date for MAS as reflected in the initial MAS Design Baseline
approved by the parties. If any changes in the MAS Design Baseline which
are agreed to by PRODIGY and FDRI pursuant to Section 1.1.3 of this
Agreement shall result in the need for any additional personnel, then the
funding for such additional personnel shall be determined by mutual
agreement of the parties to this Agreement. Notwithstanding the foregoing,
if any additional personnel are needed due to changes unilaterally required
by PRODIGY either: (i) to accelerate the completion schedule set forth in
the MAS Joint Detailed Project Plans, or (ii) to significantly expand the
project beyond the scope of the MAS Design Baseline agreed to by the
parties, then PRODIGY shall bear the full cost of all personnel added to
the project in response to PRODIGY's requirement.
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1.1.8.2 Ownership of the SMS and MAS Systems.
(a) FDRI's Ownership Rights.
(i) SMS. The SMS System developed by FDRI pursuant to this
Agreement shall be the sole and exclusive property of FDRI, and,
subject to any rights PRODIGY may have to license such System pursuant
to this Agreement, PRODIGY acknowledges and agrees that all rights,
title and interests in and to the SMS System, including, without
limitation maskworks, firmware, computer programs, algorithms,
subroutines, methods, processes, concepts, designs, know-how,
techniques, data or other information of or concerning the SMS System
are and shall remain the sole and exclusive property of FDRI;
provided, however, that any Confidential Information of PRODIGY used
by FDRI in developing the SMS System shall be subject to the
Confidentiality Agreement between the parties dated June 5, 1986; and
provided, further, that during the Original Term and any Renewal
Period, FDRI shall not license or sell the SMS System, including any
modules or subsystems of the SMS System, nor use the SMS System, or
any modules or subsystems thereof, to provide data processing services
to any third party that is a direct competitor of PRODIGY in a line of
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business provided on a commercial basis by PRODIGY, whether on-line or
otherwise, domestically or internationally. Except for any patent,
copyright, trademark or other proprietary right retained by PRODIGY in any
Confidential Information of PRODIGY disclosed to FDRI under the terms of
the above-referenced Confidentiality Agreement and used by FDRI to develop
the SMS System, FDRI shall be the exclusive owner of all copyrights,
patents, patent application rights, corporate name and trademarks embodied
in or applicable to or noted in the SMS System or any components or
subsystems thereof. In the event of a conflict between this subsection
l.1.8.2(a)(i) and any provision of the above-referenced Confidentiality
Agreement, the language contained herein shall prevail.
(ii) MAS. The MAS System developed by FDRI pursuant to this Agreement shall
be the sole and exclusive property of FDRI, and, subject to any rights
PRODIGY may have to license such System pursuant to this Agreement, PRODIGY
acknowledges and agrees that all rights, title and interests in and to the
MAS System, including, without limitation maskworks, firmware, computer
programs, algorithms, subroutines, methods, concepts, designs, know-how,
techniques, data or other information of or concerning the MAS System
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are and shall remain the sole and exclusive property of FDRI; provided,
however, that all Confidential Information of PRODIGY used by FDRI to
develop the MAS System shall be subject to the Confidentiality Agreement
between the parties dated August 8, 1991; and provided, further, that
during the Original Term and any Renewal Period, FDRI shall not license or
sell the MAS System, including any modules or subsystems of the MAS System,
nor use the MAS System, or any modules or subsystems thereof, to provide
data processing services to any third party that is a direct competitor of
PRODIGY in a line of business provided on a commercial basis by PRODIGY,
whether on-line or otherwise, domestically or internationally. Except for
any patent, copyright, trademark or other proprietary right retained by
PRODIGY in any Confidential Information of PRODIGY disclosed to FDRI under
the terms of the above-referenced Confidentiality Agreement and used by
FDRI to develop the MAS System, FDRI shall be the exclusive owner of all
copyrights, patents, patent application rights, corporate name and
trademarks embodied in or applicable to or noted in the MAS System or any
components or subsystems thereof. In the event of a conflict between this
subsection 1.1.8.2(a)(ii) and any provision of the above-referenced
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Confidentiality Agreement, the language contained herein shall prevail.
(iii) CASE Encyclopedia. The CASE encyclopedia used by FDRI to develop the
MAS System (the "CASE Encyclopedia") shall be the sole and exclusive
property of FDRI, and, subject to any rights PRODIGY may have to license
the CASE Encyclopedia pursuant to this Agreement and any other rights
PRODIGY has under this subsection, PRODIGY acknowledges and agrees that all
rights, title and interest in and to the CASE Encyclopedia are and shall
remain the sole and exclusive property of FDRI.
FDRI acknowledges and agrees that the CASE Encyclopedia contains data
and/or information that describes certain PRODIGY Processes as defined in
subsection 1.1.8.2(b). During the term of this Agreement, prior to: (i)
using the MAS System (inclusive of the CASE Encyclopedia) to provide data
processing services to any third party, or (ii) using the CASE Encyclopedia
to generate software code for computer software programs or systems (other
than the MAS System) to be used for or by any third party, FDRI will notify
PRODIGY, in writing, of its intent to so use the CASE Encyclopedia, and
PRODIGY shall be given a reasonable period of time following
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receipt of such notification, not to exceed fifteen (15) days, in which to
designate to FDRI, in writing, those specific PRODIGY Processes identified
in the Index referred to in subsection 1.1.8.2(b) (iii) of this Agreement
which PRODIGY desires to protect from disclosure to, or use by or for, such
third party. Following such designation, FDRI, at its sole expense, shall
remove all data and information describing such PRODIGY Processes from the
CASE Encyclopedia prior to use for or by the third party in question.
Within thirty (30) days following the effective date of termination of this
Agreement, or the expiration of the Original Term or the Renewal Period,
PRODIGY shall designate to FDRI, in writing, those specific PRODIGY
Processes identified as the Index referred to in subsection l.1.8.2(b)(iii)
which PRODIGY desires to protect from disclosure to, or use by or for,
third parties. Following such designation, FDRI, at its sole expense, shall
remove all data and information describing such PRODIGY Processes from the
CASE Encyclopedia. Following the removal of all data and information
describing the PRODIGY Processes designated by PRODIGY, FDRI shall be free
to use the MAS System and/or the CASE Encyclopedia without further
restriction.
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(iv) FDRI Processes. FDRI has originally developed certain proprietary
processes that have been or will be described in the data and information
which forms a part of the CASE Encyclopedia, but excluding any process: (i)
mutually recognized by FDRI and PRODIGY under subsection 1.1.8.2(b) as a
PRODIGY Process; or (ii) generally known to the public prior to any
disclosure by PRODIGY; or (iii) disclosed to PRODIGY by a third party that
is rightfully in possession of such information and free of any obligation
to maintain its confidentiality at the time of disclosure; or (iv)
generally known to PRODIGY prior to its disclosure by PRODIGY (the "FDRI
Processes"). All FDRI Processes are subject to the terms of the
Confidentiality Agreement between the parties dated August 8, 1991. PRODIGY
acknowledges and agrees that [XXXXX] right, title and interest in and to
the FDRI Processes, including, without limitation algorithms, methods,
concepts, designs, know-how, computer programs, subroutines, techniques,
data or other information of or concerning the FDRI Processes, are and
shall remain the sole and exclusive property of FDRI. FDRI shall be the
exclusive owner of all copyrights or patent or trademark rights available
with respect to the FDRI Processes or any components thereof. PRODIGY shall
have no proprietary rights in the FDRI Processes other
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than those expressly granted by FDRI in this Agreement, and, except upon
FDRI's prior written consent, PRODIGY shall not use the FDRI Processes in
any manner other than as expressly provided in this Agreement. In the event
of a conflict between this Section 1.1.8.2(a) (iv) and any provision of the
above-referenced Confidentiality Agreement, the language contained herein
shall prevail.
(b) PRODIGY's Ownership Rights.
(i) The PRODIGY Processes. During the term of this Agreement, PRODIGY has
and will continue to submit to FDRI certain processes that have been or
will be described in the data and information which forms a part of the
CASE Encyclopedia, including but not limited to, processes that are
generally known to the public. For the purposes of this Agreement, the term
"PRODIGY Process" shall each process described in the data and information
contained in the CASE Encyclopedia that has been originally developed by
PRODIGY, and which, the parties agree: (A) has a specific applicability to
the conduct of PRODIGY's business that is or will be recognized in the
design and/or operation of the MAS System, as developed; and (B) is not
normally or routinely used by other businesses.
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(ii) Designation of the PRODIGY Processes. During the term of this
Agreement, PRODIGY will notify FDRI, in writing, of its intent to designate
a particular process as a PRODIGY Process. FDRI shall be given thirty (30)
days following receipt of such notification to contest the proposed
designation and to explain why FDRI believes that the process in question
does not constitute a PRODIGY Process. If FDRI does not respond within the
required time period, then FDRI shall be deemed to have agreed that the
process is a PRODIGY Process and the process shall be so identified. If
FDRI timely responds to PRODIGY's notice, then the designated
representatives of PRODIGY and FDRI shall negotiate in good faith to
resolve the issue as soon as practicable. If the parties are unable to
reconcile their differences within fifteen (15) days following FDRI's
timely response to PRODIGY, then the matter shall be escalated to the
respective functional vice presidents of the parties. If these individuals
are unable to agree on the characterization of the process at issue within
ten (10) days after the matter has been escalated to them, then the matter
will be settled by binding arbitration conducted before a single arbitrator
at a time and place mutually agreed to by the parties. Such arbitrator
shall be a person who is knowledgeable in the field of computer software
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development and intellectual property rights, and
acceptable to both parties. The decision of such
arbitrator shall be binding upon the parties. Each
party will bear its own costs and expenses, including
fees and expenses of counsel, if any, associated with
the arbitration.
(iii) Index of the PRODIGY Processes. At any time
during the term of this Agreement, PRODIGY may choose
to remove the PRODIGY Process designation from any
process for any reason, either upon FDRI's request or
at its own discretion. The parties shall attach as an
appendix to this Agreement an Index listing all
processes currently designated as PRODIGY Processes,
which Index shall be subject to change from time to
time to reflect the procedures set forth herein.
(iv) Ownership of the PRODIGY Processes. All PRODIGY
Processes, and related written documentation, shall be
marked as PRODIGY "Confidential" or "Proprietary" and
provided to FDRI under the terms of the Confidentiality
Agreement between the parties dated August 8, 1991.
Subject to the rights of FDRI to describe the PRODIGY
Processes in the CASE Encyclopedia and to use the
PRODIGY Processes to develop the MAS System, FDRI
acknowledges and agrees that all right, title and
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interest in and to the Processes, including, without
limitation algorithms, methods, concepts, designs,
know-how, techniques, data or other information of or
concerning the Processes, are and shall remain the sole
and exclusive property of PRODIGY. PRODIGY shall be the
exclusive owner of all copyrights or patent or
trademark rights available with respect to the PRODIGY
Processes or any components thereof. FDRI shall have no
proprietary rights in the PRODIGY Processes other than
those expressly granted by PRODIGY in this Agreement.
In the event of a conflict between this Section
1.1.8.2(b) (iv) and any provision of the
above-referenced Confidentiality Agreement, the
language contained herein shall prevail.
1.3 Travel Expenses. Travel expenses required for either SMS or MAS shall
be handled as follows: travel expenses incurred for air fare and
lodging by FDRI up to $25,000.00 per calendar year shall be at FDRI's
sole expense. Any travel required by FDRI above $25,000.00 in any
calendar year shall be billable to PRODIGY. PRODIGY must approve any
travel in excess of $25,000.00 in any calendar year. FDRI will report
travel expenses to PRODIGY monthly. The Vice President of Client
Services, the General Manager of SMS/MAS, the MAS Software Development
Manager and all FDRI and/or CSG staff sent for non-development
purposes shall be exempt from above
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travel criteria; the travel expenses for these individuals shall be
the sole responsibility of FDRI.
1.1.10 Termination of Prior Agreement. The Prior Agreement shall terminate as
of the effective date of this Agreement.
1.2 PROCESSING SERVICES
1.2.1 Description of Processing Services. FDRI shall perform data processing
and other services for PRODIGY in connection with PRODIGY's member
billing operations. The processing services to be made available to
PRODIGY by FDRI shall include the services for SMS as described in
Exhibits 15 and 17, and such services as shall be provided via the MAS
System as developed by FDRI in accordance with the specifications set
forth in Exhibits 20, 21 and 22.
1.2.2 Telecommunications. The processing services to be provided to PRODIGY
hereunder shall be delivered through a "gateway" connection between
the FDRI and PRODIGY systems (and the systems of PRODIGY's sub-
contractors and agents, as appropriate). Accordingly, FDRI shall
provide access to PRODIGY, at the FDRI data processing facility, to
telecommunications lines owned or leased by PRODIGY (at least one
operating line and one testing line), and, subject
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to approval by the FDRI technical staff (which approval shall not be
unreasonably withheld, conditioned or delayed), to telecommunications
lines owned or leased by PRODIGY's subcontractors or designated
agents. Any modem(s) or other specialized telecommunications equipment
designated by PRODIGY for location at the FDRI data center and
dedicated to communications for PRODIGY shall be installed and
maintained by FDRI or its designated agents at PRODIGY's expense with
the prior written approval by PRODIGY. In all cases, PRODIGY shall
bear the cost of repairs to its modems and owned or leased
telecommunications lines, absent damage due to FDRI's negligence or
willful misconduct.
All telecommunications equipment referred to above will be configured
initially as set forth in Exhibit 8.
1.2.3 Security. FDRI shall maintain the necessary levels of security
precautions to ensure at least the following, in accordance with
Exhibit 14:
Physical Site Security
Systems Security
Applications Security
Data Security
User Security
Audit Trails
Privacy of Member Data
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1.2.4 Disaster Recovery. Prior to the end of the first calendar quarter of
1993, FDRI shall have in place a new Disaster Recovery Plan that will
provide a connection at the Business Recovery Center for a tele-
communications line (owned or leased by PRODIGY or PRODIGY's
subcontractor or designated agent) to PRODIGY's network. The new Plan
shall provide protection substantially similar to that provided under
FDRI's existing Disaster Recovery Plan, described in Exhibit 16.
1.2.5 Maintenance. During any period in which FDRI runs the SMS and/or MAS
Systems on its own hardware on behalf of PRODIGY, FDRI shall, at no
additional charge, provide maintenance and troubleshooting with regard
to any defects in the SMS or MAS Systems.
During any period in which FDRI runs the SMS and/or MAS Systems on its
own hardware on behalf of PRODIGY -- FDRI shall, at no additional
charge, incorporate all SMS and/or MAS System enhancements,
maintenance, corrections and production fixes made by FDRI, and shall
update and provide to PRODIGY all User Guide and technical
documentation on a prompt and regular schedule and in any event not
less than semiannually. Hard copy notifications (via bulletins) of the
changes, as well as on-line help, shall be made available to PRODIGY
for use upon implementation of said
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changes. In addition, FDRI shall make updated Systems Operations
documentation available for PRODIGY's use upon change implementation.
FDRI will assist in troubleshooting any problems detected either by
FDRI or PRODIGY (or PRODIGY's designated subcontractor's or agent's)
with the gateway connection to the Systems, and assist PRODIGY in
implementing preventative or corrective measures, agreed to in advance
by PRODIGY, at PRODIGY's expense; provided, however, that the problem
is not attributable to the Systems, or to procedural errors caused by
or under the control of FDRI, or to FDRI's computer or
telecommunications equipment, in which case the necessary maintenance
shall be performed at FDRI's expense. If PRODIGY elects to run on
computers owned or leased by PRODIGY certain MAS such systems
developed by FDRI, PRODIGY shall be responsible for any additional
maintenance costs that may arise because such subsystems are no longer
located on FDRI computers.
1.2.6 Audit Rights. FDRI shall maintain for a period of four (4) years after
the end of each Processing Year, documentation of sufficient detail to
enable PRODIGY to verify all charges and all services provided to
PRODIGY under the terms of this Agreement during said Processing Year.
In addition, CSG agrees to maintain for ninety (90) days after the
conclusion
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of any month evaluated the data used to document the performance
standard results specified in Section 3.1.2 below, and to retain
summary performance standard results for one (1) year after the
conclusion of any month evaluated. PRODIGY shall have the right, at
PRODIGY's cost and expense, upon sixty (60) days' prior written
notice, to use internal or external auditors, during FDRI's normal
business hours, to review such data and all operations and records
relating to FDRI's performance under this Agreement. FDRI shall
cooperate fully with any such audits, which shall not be conducted
more frequently than once per year. If such an audit discloses an
overcharge by FDRI, or failure by FDRI to remit a performance failure
credit, of more than $10,000, FDRI shall reimburse PRODIGY for the
cost of the audit, and shall be liable to PRODIGY for the overcharges
and performance failure credit together with interest on such overage
or unremitted credit at the rate of twelve percent (12%) per year.
2. COST OF PERFORMANCE AND PAYMENT
2.1 PROCESSING SERVICES
2.1.1 Prices. The prices for processing services performed under this
Agreement are set forth in this Article and Exhibit 17.
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2.1.2 Price Increases. For each Processing Year after the first Processing
Year, during the Original Term and any Renewal Period, FDRI shall be
allowed to increase the prices charged during the immediately
preceding Processing Year for Ancillary Fees, which, for the purposes
of this Agreement, shall mean the fees charged for those items listed
under the heading "Ancillary Fees" in Exhibit 17 Section 3. Such
Ancillary Fees may be increased annually by an amount equal to the
rate of change in the CPI for such immediately preceding Processing
Year; provided that if the rate of change in the CPI is less than two
percent (2%), FDRI shall be permitted to raise such prices by two
percent (2%); and further provided that if the rate of change in the
CPI is greater than seven percent (7%), FDRI shall be permitted to
raise such prices by seven percent (7%). For the purposes of this
Section 2.1.2, the percentage change in the CPI during a Processing
Year shall be calculated by subtracting the CPI for the September
immediately preceding a Processing Year (the "Base CPI") from the CPI
for September of the Processing Year, multiplying by 100 and dividing
the result by the Base CPI.
For the purpose of this calculation "CPI" shall mean the Consumer
Price Index for all Urban Consumers as published by the U.S.
Department of Labor's Bureau of Labor Statistics (1967=100).
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2.1.3 Postage. FDRI agrees to purchase the postage required to mail account
statements, past due notices, letters and other materials mailed by
FDRI on behalf of PRODIGY. The amount charged by FDRI while this
Agreement is in effect will be (i) the then-current first-class
postal rate for each piece of mail not qualifying for the presorted
rebate or (ii) the regular first class mail charge less a discount of
$.042 per piece for each piece qualifying for the presorted discount.
If the discount allowed by the U.S. Postal Service for mail qualifying
for a pre-sorted discount shall change, PRODIGY and FDRI shall
negotiate a revised discount taking into account the amount of the
change and FDRI expenses in obtaining such discount. PRODIGY agrees to
establish and maintain a deposit with FDRI equal to the monthly
estimated expenses for postage. FDRI shall estimate the amount of
these fees for each month based upon the projected volume of services
involving postage to be performed by FDRI during the following
processing month. FDRI shall, from time to time, based upon the actual
postage paid by PRODIGY during the most recent month, request that
PRODIGY add additional amounts to this deposit if the quantity of
postage required increases and shall allow PRODIGY to decrease the
deposit if the quantity of postage required decreases. Upon the
expiration or termination of this Agreement, this deposit shall be
returned to PRODIGY; except that any interest
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earned on this deposit while it is maintained with FDRI, shall be
retained by FDRI.
FDRI will charge PRODIGY for all pieces of mail sorted and bundled in
ZIP Code order, at the rate of $.0046 per piece, with an additional
charge of $.0064 per piece for each piece which qualifies for the
presorted discount.
2.1.4 Data Exchange. PRODIGY, FDRI and third parties designated by PRODIGY,
may exchange information by magnetic tapes/cartridges/disks, tape
transmission units in computer-to-computer transmission. PRODIGY shall
pay all costs of delivery service if magnetic tape/cartridges are
shipped to FDRI's data center. FDRI may charge PRODIGY for tape
handling, at the rates shown in Exhibit 17, for magnetic tape/
cartridges/disks delivered to PRODIGY or third parties designated by
PRODIGY.
2.1.5 Courier Expenses. PRODIGY shall pay only for the courier expenses
associated with the transportation of special requests of reports and
documents from PRODIGY to FDRI and when requested by PRODIGY, from
FDRI to PRODIGY. PRODIGY shall retain the right to investigate, and
with FDRI implement, automated alternatives for the transfer of
special request and standard reports and documents between the
parties.
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2.1.6 Change orders. Day-to-day operational changes in the processing
services specified in Exhibit 15 and otherwise provided for
under this Agreement (e.g., print suppression; operational
----
schedule changes) may only be made with approval of the Project
Managers. Substantial changes in the processing services
provided under this Agreement (e.g., eliminating the microfiche
----
provided for in Exhibit 17; processing changes requiring
coding) may only be made by written amendment hereto.
2.1.7 Third Party Access. FDRI shall allow third parties access to
member, order and account information for the purpose of
verifying PRODIGY'S data, as requested by PRODIGY and at
PRODIGY's expense, subject to procedures agreed upon between
the parties and in accordance with PRODIGY'S Policy on
Protecting Member Privacy as set forth in Exhibit 14 Section 5.
2.2 PAYMENT
2.2.1 Invoices. PRODIGY agrees to pay FDRI monthly for services
provided and charges incurred pursuant to this Agreement and
for reimbursement of expenses permitted and agreed to by
PRODIGY under this Agreement. FDRI shall provide PRODIGY with a
single monthly itemized invoice with appropriate documentation
and support for all amounts due
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from PRODIGY under this Agreement. Such invoices shall be paid
by PRODIGY within thirty (30) days of the invoice's receipt by
PRODIGY; provided that all invoices shall be deemed received by
PRODIGY on the first business day after Such invoices are
delivered by FDRI to a reputable overnight delivery service
properly addressed and marked for next-day delivery. If payment
has not been received by FDRI within thirty (30) days following
PRODIGY's receipt of invoice, then there shall be a late charge
equal to twelve percent (12%) per year on the unpaid balance
for the period of time from the expiration of such thirty (30)
days until payment is received by FDRI.
In the event that PRODIGY, in good faith, reasonably disputes
any charges on any invoice, the parties shall make reasonable
efforts to resolve such disputes. PRODIGY shall not be
obligated to remit any late charges for any disputed items;
provided, however, that PRODIGY agrees promptly to remit all
amounts set forth on the invoices provided by FDRI pursuant to
this Section 2.2.1 that are not disputed by PRODIGY. Amounts in
reasonable dispute that cannot be resolved in time to avoid a
late charge, will be deducted from each invoice and be rebilled
by FDRI.
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2.2.2 Termination.
2.2.2.1 PRODIGY may cause this Agreement to terminate at the end of
the Original Term (as that term is defined in Section 7.1
below) upon written notice to FDRI given at any time prior
to June 30, 1996.
2.2.2.2 PRODIGY may terminate this Agreement immediately upon written
notice to FDRI in the event that: (i) in accordance with
Section 3.1.1(c) FDRI's failure perform in accordance with any
3 of the performance standards identified as "Critical" in
Section 3.1.1 results in a 50% reduction in PRODIGY'S
processing services bills; and (ii) such 50% reduction remains
in effect for nine or more consecutive calendar months. If this
Agreement is terminated pursuant to this Section 2.2.2.2,
PRODIGY's sole and total financial liability to FDRI shall be
as set forth in Section 2.2.3 below.
2.2.2.3 FDRI may terminate this Agreement for material breach of this
Agreement by PRODIGY on ninety (90) days' prior written notice
to PRODIGY, which notice shall specify the term or terms
allegedly breached; provided, however, that if PRODIGY shall
cure and remedy such breach within such ninety (90) day period,
such notice of termination shall be null and
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void, and this Agreement shall continue in full force and
affect.
2.2.2.4 Either party may terminate this Agreement upon written notice
to the other party if the other party suffers an insolvency
proceeding, either voluntary or involuntary, or is adjudicated
bankrupt or makes an assignment for the benefit it of
creditors.
2.2.2.5 No termination of this Agreement under Section 2.2.2.3 or
2.2.2.4 shall relieve either party from liability for the
performance of its obligations arising prior to such
termination, nor shall such termination supersede, nullify or
otherwise adversely effect any other rights or remedies the
terminating party may have available to it at law or in equity.
2.2.2.6 Except where the context expressly provides to the contrary,
Sections 1.1.8.2, 1.2.6, 2.2.1, 2.2.2.5, 2.2.3, 4.1.3, 6.1,
6.4, 8.1 and 9.5 shall survive the expiration or termination of
this Agreement.
2.2.3 Minimum. PRODIGY agrees that during each Processing Year of the
Original Term and any Renewal Period, PRODIGY shall pay, or be
responsible for payment of, Processing Fees to FDRI in an
amount equal to at least seventy-five percent
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(75%) of the Processing Fees paid to FDRI for the processing
services provided to PRODIGY under this Agreement during the
immediately preceding Processing Year ("Minimum Fees");
provided that for Processing Year 1 such minimum amount shall
equal at least seventy-five percent (75%) of the Processing
Fees paid by PRODIGY under the Prior Agreement for processing
services rendered by FDRI during the period from January 1,
1991 through December 31, 1991. The term "Processing Fees"
shall include only those amounts specifically described as
processing fees in Exhibit 17 Section 1. In the event PRODIGY
terminates this Agreement up to Section 2.2.2.2, PRODIGY shall
not be required to pay Minimum Fees with respect to any
Processing Years or portions thereof which remain in the
Original Term or, if applicable, the Renewal Period, provided
that, if this Agreement is terminated at a time other than the
end of a Processing Year, the Minimum Fees for the Processing
Year in which termination occurs shall be prorated by
multiplying the Minimum Fees otherwise applicable for such
Processing Year by a fraction the numerator of which is the
number of days between the beginning of the Processing Year and
the date of termination and the denominator of which is 365.
Any amount of Minimum Fees which remains unpaid for any
Processing Year, or portion thereof, shall be paid to FDRI
notwithstanding the termination of this Agreement.
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Contract #3284
3.1 PERFORMANCE STANDARDS - SMS and MAS
3.1.1 FDRI Responsibilities. FDRI shall maintain the computer
capacity and staff necessary to provide services in accordance
with the performance standards set forth in this Article 3
(NOTE: Unless otherwise stated, all attainment measurements to
be calculated based on calendar days in a calendar month):
(a) As measured by the FDRI host computer, on-line system
downtime shall not exceed [**] during the period from 6:00
a.m. to 3:00 a.m. Central Time for any calendar month. For
purposes of this item (a), downtime does not include
telecommunications lines or individual terminals,
controllers or modems on PRODIGY property. (Critical) (NOTE:
for the purposes of the provisions of this Section 3.1.1,
"on-line system" shall mean a system in which the input data
enters the computer directly from the point of origin (e.g.,
----
computer terminal or workstation) and the output is
transmitted directly to its ultimate destination (e.g.,
----
computer terminal or workstation) without any intermediate
stops or manual intervention.
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Contract #3284
(b) The FDRI on-line system shall not experience more
than [**] downtime occurrences during a calendar
month. This downtime does not include FDRI nightly
downtime to update the data base or any scheduled
off-hours maintenance. (Critical)
(c) The on-line system shall be updated with batch
monetary and non-monetary transactions by 6:00 a.m.
Central Time next business day [**] of the time and by
6:00 a.m. the second business day [**] of the time.
(Critical)
(d) All daily reports printing at the local business
sites shall be available to begin printing by 6:00 a.m.
Central Time [**] of the time and by 6:00 a.m. the
following day [**] of the time.
(e) Statement mailings shall be completed and mailed
[**] of the time within five (5) business days
following applicable cycle completion and [**] of the
time within seven (7)
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Contract #3284
business days following applicable cycle completion.
(Critical)
(f) Delinquency notices shall be mailed [**] of the time
within five (5) business days following applicable cycle
completion and [**] of the time within seven (7) business
days following applicable cycle completion.
(g) Computer letters shall be mailed [**] of the time
Within three (3) business days following applicable cycle
completion and [**] of the time within five (5) business
days following applicable cycle completion. FDRI shall
require at least five (5) days notice to meet this
guideline with respect to one-time mailings of more than
fifty thousand (50,000) letters.
(h) Account Holder create/update and monetary transactions
provided to FDRI on magnetic tape or computer-to-computer
transmissions, if received at FDRI by 6:00 p.m. Central
Time, shall be posted to the
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Contract #3284
appropriate accounts on the date of receipt [**] of the
time and [**] of the time by the completion of the next
day's cycle. (Critical)
(i) Statement (billing transactions) transmissions to
credit card processors or to electronic funds transfer
("EFT") processing shall be sent to the prescribed
location one (1) business day after the completion of that
day's cycle [**] of the time, and [**] of the time by the
end of the second business day after the completion of the
original cycle date. (Critical)
(j) Account Holder create/update transactions and
transaction history to PRODIGY-designated third parties or
to PRODIGY shall be sent to the prescribed location one
business day after the completion of that day's cycle [**]
of the time, and [**] of the time by the end of the
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Contract #3284
second business day after the completion of the original
cycle date.
(k) As measured by the FDRI host computer, on-line system
response time shall average three (3) seconds or less
[**] of the time. (Critical) This response time is based
on all categories of transactions existing as of Effective
Date. From and after the Effective Date any new
transaction developed on either SMS or MAS that exceeds
three (3) seconds will be measured and reported separately
when such new transaction is still in the Design Phase of
the Systems Development Cycle, and will be covered by a
separate response time agreement negotiated in good faith
by the parties based on the requirements of that
transaction.
On-line system response time shall mean the time between
the receipt of a transaction (including without limitation
real-time inquiries and updates) to the on-line system at
the FDRI data center and the delivery of the response to
the communications network at the FDRI data center.
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Contract #3284
3.1.2 SMS and MAS Performance Reporting and Remedies.
(a) During each calendar month, FDRI agrees to provide PRODIGY
with a monthly report listing the performance standards set forth
in this Article 3 and FDRI's performance during the just
concluded calendar month relative to those performance standards.
Within fifteen (15) business days after the end of said calendar
month, FDRI shall then review this report with PRODIGY. Included
in each such report shall be an analysis of the data used to
derive FDRI's performance experience.
(b) If FDRI fails [**] to perform in accordance with any 3 of the
performance standards set forth in Section 3.1.1 and not
identified as "critical," FDRI shall credit PRODIGY with a [**]
reduction on its xxxx for processing services during the [**]
such month. If such failure continues with respect to such
standards for a [**] such month, FDRI shall credit PRODIGY with
a [**] reduction on its xxxx for processing services during such
[**] month. If such failure continues with respect to such
standards for a [**] such month, FDRI shall credit PRODIGY with
a [**] reduction on its xxxx for processing services
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Contract #3284
during such [**] month. If such failure continues with respect
to such standards for a [**] such month, FDRI shall credit
PRODIGY with a [**] reduction on its xxxx for processing services
during such [**] month and on the processing services bills for
any and all consecutive, succeeding months in which such failure
continues.
(c) If FDRI fails [**] to perform in accordance with any 3 of the
performance standards set forth in Section 3.1.1 and identified
as "Critical", FDRI shall credit PRODIGY with a [**] reduction on
its xxxx for processing services during the [**] such month.
Continuous failure in any and all consecutive, succeeding months
shall result in a [**] reduction on the applicable xxxx(s) for
processing services until the failure is rectified.
(d) FDRI's failure to meet a performance standard due to any
cause beyond its reasonable control and not unique to FDRI such
as, but not limited to, the malfunction or failure of any entity
from which FDRI must obtain information or have electronic
contact in order to perform the services set forth in this
Agreement shall not be considered to be a
42 CONFIDENTIAL
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failure for which FDRI shall be responsible under this Agreement.
(e) PRODIGY agrees that due to the difficulty of determining and
calculating its damages upon FDRI's failure to perform in
accordance with the performance standards included in this
Article 3, the remedies set forth in this Article 3 and Section
2.2.2.2 of this Agreement shall be PRODIGY's sole and exclusive
remedies, and PRODIGY hereby elects to waive any and all other
remedies to which PRODIGY may be entitled under this Agreement,
for any claim based on FDRI's failure to perform in accordance
with such performance standards.
3.1.3 Disputes. In the event that the Project Managers and their immediate
management cannot resolve disputes within five (5) business days, this
shall be so documented and escalated to CSG's Vice President Client
Services and PRODIGY's Vice President Systems Operations and Telecom-
munications for resolution by the tenth business day. It shall be the
duty of the Project Managers, their immediate management and CSG's
Vice President Client Services and PRODIGY's Vice President Systems
Operations and Telecommunications to take the necessary action to
resolve any such dispute immediately.
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4. LICENSE OF SOFTWARE
4.1.1 License for MAS System. During the term of this Agreement, PRODIGY may
elect to run certain completed Offer Interface and Order modules
and/or subsystems of the MAS System on computers owned or leased by
PRODIGY. PRODIGY shall provide FDRI with 60 calendar days written
notice of its desire to obtain a license from FDRI for a completed
Offer Interface or Order subsystem or module of the MAS System. Within
20 calendar days after receiving written notice from PRODIGY of its
desire to license one or more specifically-identified completed Offer
Interface or Order subsystems and/or modules, FDRI shall grant PRODIGY
a non-exclusive, royalty-free license in the form of the license
agreement attached as Exhibit 18, to use such subsystem(s) and/or
module(s) and related technical and user documentation for so long as
FDRI continues to provide processing services to PRODIGY pursuant to
this Agreement; provided that prior to the commencement of PRODIGY's
use of any such subsystem or module to perform services contemplated
by this Agreement, FDRI and PRODIGY shall jointly agree upon methods
and maintenance requirements (including, without limitation,
maintenance costs) for such subsystem or module, and shall agree upon
the coordination of any information or data which must be transferred
between FDRI and PRODIGY to permit the use of such subsystem or module
in conjunction with the
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remaining subsystems/modules of the MAS System. PRODIGY shall be
responsible for such additional costs to FDRI directly related to the
transfer of such subsystem(s) or module(s) to computers owned or
leased by PRODIGY, provided that such costs are supported by
reasonable documentation. Except as set forth in the immediately
preceding sentence, no grant of a license by FDRI to PRODIGY under
this Section 4.1.1 or use of the software by PRODIGY to run certain
Offer Interface or Order subsystems and/or modules of the MAS System
on computers owned or leased by PRODIGY shall eliminate, change or
reduce the Processing Fees payable to FDRI pursuant to this Agreement
during any Processing Year of the Original Term or the Renewal Period.
4.1.2 License for SMS System. During the term of this Agreement, PRODIGY may
elect to run certain completed Offer Interface and Order modules and/
or subsystems of the SMS System on computers owned or leased by
PRODIGY. PRODIGY shall provide FDRI with 60 calendar days written
notice of its desire to obtain a license from FDRI for a completed
Offer Interface or Order subsystem or module of the SMS System. Within
20 calendar days after receiving written notice from PRODIGY of its
desire to license one or more specifically-identified completed Offer
Interface or Order subsystems and/or modules, FDRI shall grant PRODIGY
a non-exclusive, royalty-free license in the form of the license
agreement
45 CONFIDENTIAL
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attached as Exhibit 19, to use such subsystem(s) and/or module(s) and
related technical and user documentation for so long as FDRI continues
to provide processing services to PRODIGY pursuant to this Agreement;
provided that prior to the commencement of PRODIGY's use of any such
subsystem or module to perform services contemplated by this
Agreement, FDRI and PRODIGY shall jointly agree upon methods and
maintenance requirements (including, without limitation, maintenance
costs) for such subsystem or module, and shall agree upon the
coordination of any information or data which must be transferred
between FDRI and PRODIGY to permit the use of such subsystem or module
in conjunction with the remaining subsystems/modules of the SMS
System. PRODIGY shall be responsible for such additional costs to FDRI
directly related to the transfer of such subsystem(s) or module(s) to
computers owned or leased by PRODIGY, provided that such costs are
supported by reasonable documentation. Except as set forth in the
immediately preceding sentence, no grant of a license by FDRI to
PRODIGY under this Section 4.1.2 or use of the software by PRODIGY to
run certain Offer Interface or Order subsystems and/or modules of the
SMS System on computers owned or leased by PRODIGY shall eliminate,
change or reduce the Processing Fees payable to FDRI pursuant to this
Agreement during any Processing Year of the Original Term or the
Renewal Period.
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Contract #3284
4.1.3 Options for FDRI System License.
(a) If at the end of the Renewal Period, FDRI and PRODIGY are
unable to agree upon a new processing agreement, PRODIGY shall
have the option to acquire a license to use the System which FDRI
is then using to supply PRODIGY services under the terms and
conditions of this Agreement for a one time license fee of [**].
If PRODIGY elects to terminate this Agreement as of the end of
the Original Term, as provided in Section 2.2.2.1, or to
terminate this Agreement prior to the end of the Original Term
pursuant to Section 2.2.2.2, PRODIGY shall have the option to
acquire a license, as of the effective date of termination, to
use the System which FDRI is then using to supply PRODIGY
services under the terms and conditions of this Agreement for a
one time license fee of [**]. In each case, the license agreement
shall be in the form of Exhibit 23 to this Agreement and shall
grant PRODIGY a perpetual, non-exclusive license and right to use
such System, including the CASE Encyclopedia, at PRODIGY's
computer facilities to furnish PRODIGY with a data processing
system for PRODIGY's own operation.
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(b) If: (i) FDRI and PRODIGY are unable to agree upon a new
processing agreement at the end of the Renewal Period, or (ii)
PRODIGY elects to terminate this Agreement as of the end of the
Original Term as provided in Section 2.2.2.1, or (iii) PRODIGY
terminates this Agreement prior to the end of the Original Term
pursuant to Section 2.2.2.2, then PRODIGY shall have the option
to acquire a license, as of the effective date of expiration or
termination as the case may be, to use the System which FDRI is
then using to supply PRODIGY services under the terms and
conditions of this Agreement for a one time license fee of [**].
The license agreement shall be in the form of Exhibit 23 to this
Agreement and shall grant PRODIGY a perpetual, non-exclusive
license and right to use such System, including the CASE
Encyclopedia, at PRODIGY's computer facilities to furnish PRODIGY
with a data processing system for PRODIGY's own operations. In
addition, by its terms, the license shall prohibit FDRI, for a
period of five (5) years following the date that such license
enters into effect, from using such System to provide data
processing services to any third party that is a direct
competitor of PRODIGY in any line of business provided on a
commercial basis by PRODIGY, whether on-line or otherwise,
domestically or internationally.
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(c) It is understood that PRODIGY shall use any System licensed
to PRODIGY pursuant to Section 4.1.3(a) or 4.1.3(b) at its
computing facilities only on its owned, leased or operated
computers. PRODIGY agrees to hold in confidence the design and
documentation of such programs and to use the same only in the
conduct of PRODIGY's business. PRODIGY may disclose such programs
or any documentation related to such programs to an auditor or
consultant selected by PRODIGY, provided that FDRI is assured by
PRODIGY that such disclosure shall be made pursuant to
confidentiality agreements as required by the license agreement
attached as Exhibit 23. The intent of this Section 4.1.3(c) is to
allow PRODIGY to perform its own data processing and record
keeping, on its owned, leased or operated equipment, but not to
allow PRODIGY to use the license for the programs developed by
FDRI to go into business as a service bureau in direct
competition with FDRI in FDRI's business of providing data
processing services for subscriber billing or franchise
operations.
(d) In the event PRODIGY exercises any option under Section
4.1.3(a) or 4.1.3(b) to acquire a license to use the System which
FDRI is then using to supply services to PRODIGY under the terms
and conditions of this Agreement, FDRI shall grant the license
rights
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described therein and shall provide full cooperation to assure a
smooth transition to PRODIGY's operation of the applicable System
without interruption to PRODIGY's member billing operations.
5. LIABILITY
5.1 Liability of FDRI. FDRI shall use due diligence in processing the
materials received from PRODIGY, and the performance by FDRI under
each provision of this Agreement shall be consistent with current
industry standards and established internal quality standards, as
applicable to similar functions; provided that in the event that any
such industry or internal standard is lower than any analogous
performance or internal quality standard set forth in the Exhibits of
this Agreement, the latter shall supersede the former as respects
FDRI's performance under this Agreement. FDRI shall indemnify PRODIGY
against any and all liability, loss or damage PRODIGY may suffer as a
result of claims, demands, costs or judgments against PRODIGY arising
out of FDRI's negligent performance under any provision of this
Agreement (except for FDRI's breach of Section 6.1.1); provided, that
FDRI's obligation to indemnify PRODIGY as aforesaid shall be limited
to:
50 CONFIDENTIAL
Contract #3284
(a) The actual cost of reprocessing to correct any such negligent
performance;
(b) The actual net revenue or profit lost by PRODIGY resulting directly
from the negligent performance; and
(c) The additional expenses caused by such negligent performance is
incurred by PRODIGY in maintaining its operation as nearly normal as
possible (normal shall mean conditions as they would have existed if
no negligent performance had occurred).
In no event shall, however, shall FDRI's cumulative liability to PRODIGY during
any one Processing Year under any provision of this Agreement exceed the amount
of the Processing Fees paid by PRODIGY to FDRI pursuant to this Agreement for
processing services provided in the immediately preceding Processing Year;
except that during the first Processing Year, said liability limit shall in no
event exceed the amount of Processing Fees paid for processing services provided
during the period from January 1, 1991 through December 31, 1991, pursuant to
the Prior Agreement. FDRI shall in no event be obligated for any exemplary or
punitive damages.
51 CONFIDENTIAL
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5.2 Liability of PRODIGY. PRODIGY shall indemnify and hold harmless FDRI and
its employees from and against all claims, damages, losses and expenses
arising out of FDRI's performance under any provision of this Agreement, to
the extent that such claim, damage, loss or expense is caused by the
negligence of PRODIGY, or employees of PRODIGY. PRODIGY shall have no
obligation to indemnify FDRI against any liability, loss or damage FDRI
might suffer arising out of FDRI's negligent performance under any
provision of this Agreement.
5.3 Force Majeure. If the performance of this Agreement or any obligation
hereunder is prevented, restricted or interfered with by reason of fire or
other casualty or accident; strikes or labor disputes; war or other
violence; any law, order, proclamation, regulation, ordinance, demand or
requirement of any governmental agency; or any other act or condition
whatsoever beyond the reasonable control of the parties hereto, excluding
weather conditions other than catastrophic weather conditions, the party
whose performance is so affected, upon giving prompt notice to the other
party, shall be excused from such performance to the extent of such
prevention, restriction or interference; provided, however, that the party
so affected shall take all reasonable steps to avoid or remove such causes
of
52 CONFIDENTIAL
Contract #3284
nonperformance and shall immediately continue performance hereunder
whenever such causes are removed.
6. WARRANTIES AND REPRESENTATION
6.1 Original Development. FDRI represents and warrants that the SMS and MAS
Systems produced hereunder shall be of original development by FDRI, and
shall be specifically developed for the fulfillment of this Agreement and
shall not infringe upon or violate any United States patent, United States
copyright, trade secret or other proprietary right of any third party,
provided that PRODIGY acknowledges that certain licenses, as set forth on
Exhibit 29, were used by FDRI in the development of the SMS and MAS
Systems, and such licenses may be required to use the SMS and MAS Systems
if PRODIGY acquires a license from FDRI pursuant to Section 4.1.1, 4.1.2 or
4.1.3 of this Agreement. FDRI shall indemnify and hold PRODIGY harmless
from and against any loss, cost, liability or expense (including reasonable
attorneys' fees) arising out of any breach or claimed breach of this
warranty, provided that PRODIGY promptly notifies FDRI of any claim made to
PRODIGY hereunder and provides FDRI with an opportunity to control the
defense of the action and all negotiations for settlement or compromise.
53 CONFIDENTIAL
Contract #3284
6.2 Performance. FDRI represents and warrants that, as developed and accepted
under this Agreement, the SMS System Enhancements and Maintenance Changes
and the MAS System shall substantially perform in accordance with all
applicable Exhibits and shall be free of any defects which substantially
affect the performance of the SMS System, as developed under the Prior
Agreement. FDRI represents and warrants that those MAS System Enhancements
developed by FDRI in furtherance of this Agreement shall be free of any
defects which substantially affect the performance of the SMS System, as
updated by the SMS System Enhancements.
6.3 Notification. PRODIGY will use reasonable efforts during the period within
ninety (90) days after the release of the SMS System Enhancements and/or
Maintenance Changes and/or any subsystem of the MAS System to discover any
defects. At any time during the period when FDRI is operating the Systems
on behalf of PRODIGY, or when PRODIGY is operating one or more subsystems
as provided in Sections 4.1.1 or 4.1.2, PRODIGY shall promptly notify FDRI
of any defects it discovers and FDRI shall promptly and diligently attempt
to remedy such defects in furtherance of its maintenance obligations under
Section 1.2.5 of this Agreement.
54 CONFIDENTIAL
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6.4 Limitation of FDRI Warranties. THE WARRANTIES SET FORTH IN SECTIONS 6.1,
6.2 AND 6.3 HEREOF ARE LIMITED WARRANTIES AND THEY ARE THE ONLY WARRANTIES
MADE BY FDRI. FDRI MAKES AND PRODIGY RECEIVES NO WARRANTY, EXPRESS OR
IMPLIED, EXCEPT AS SET FORTH IN SECTIONS 6.1, 6.2 AND 6.3 HEREOF, AND THERE
ARE EXPRESSLY EXCLUDED ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. EXCEPT FOR REMEDIES PURSUANT TO SECTION 6.1 OF THIS
AGREEMENT, FDRI SHALL HAVE NO LIABILITY WITH RESPECT TO OBLIGATIONS UNDER
THIS AGREEMENT FOR INCIDENTAL, CONSEQUENTIAL, OR EXEMPLARY DAMAGES, EVEN IF
FDRI HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
7. TERM OF AGREEMENT
7.1 Original Term. This Agreement is effective from the date hereof and, unless
sooner terminated in accordance with Section 2.2.2.1 or 2.2.2.2, shall
expire at the end of the fifth Processing Year, unless renewed in
accordance with the terms hereof ("Original Term").
"Processing Year" means the twelve (12) month period commencing on the
first day of Processing Year 1 and on each anniversary of such date during
the Original Term or any Renewal Period of this Agreement. Processing Year
1 shall begin on January 1, 1992.
55 CONFIDENTIAL
Contract #3284
7.2 Automatic Renewal. This Agreement shall automatically be extended for two
(2) additional Processing Years (i.e., the Renewal Period), unless sooner
terminated pursuant to Section 2.2.2.1 or 2.2.2.2.
8. CONFIDENTIAL NATURE OF DATA
8.1 Return of Data. It is understood that the data and information contained in
the files maintained by FDRI on behalf of PRODIGY are the sole and
exclusive property of PRODIGY. Such data shall be deemed to constitute
Confidential Information within the meaning of the Confidentiality
Agreements between the parties dated June 5, 1986 and August 8, 1991, which
agreements shall remain in effect during the term of this Agreement,
including renewals hereof. FDRI agrees that in view of the confidential
nature of the information regarding the members of PRODIGY contained in the
documents and files which it is required to prepare, process or maintain
under this Agreement, FDRI shall perform its duties in such a manner as to
prevent the disclosure to any persons not having a need to know or not
employed or contracted by FDRI at its EDP Center of any such documents or
other information proprietary or confidential to PRODIGY. In addition, FDRI
shall perform processing services under this Agreement so as not to violate
or cause PRODIGY to violate the PRODIGY Policy on Protecting Member
56 CONFIDENTIAL
Contract #3284
Privacy attached as Exhibit 14 Section 5 of this Agreement. FDRI further
agrees to return to PRODIGY upon termination or expiration of this
Agreement or upon written request from PRODIGY all or any proprietary
information or Confidential Information, provided that PRODIGY agrees to
reimburse FDRI for all costs, including postage, of returning such data.
FDRI acknowledges and agrees that it shall have no right to access the
contents of the data it stores and processes on behalf of PRODIGY other
than for purposes of providing services to PRODIGY pursuant to this
Agreement. Notwithstanding the foregoing, FDRI and PRODIGY may disclose the
existence of this contractual relationship for purposes of disclosing that
PRODIGY is a customer of FDRI and that FDRI is providing services to
PRODIGY with prior written approval between the parties.
9. GENERAL
9.1 Assignment. All the terms and provisions of this Agreement shall be
binding upon, will enure to the benefit of, and shall be enforceable by the
successors and assigns of FDRI and PRODIGY. Neither party shall assign,
transfer, or convey this Agreement without the other party's written
consent, which shall not unreasonably be withheld; provided, however, that
nothing in this Agreement will be construed to prevent, or to
57 CONFIDENTIAL
Contract #3284
require prior approval for, any transfer or succession, whether by
operation of law or otherwise, in which the transferee or successor
(including any successor partnership of PRODIGY after the withdrawal or
substitution of any one or more of its general partners or a partnership or
corporation that is wholly owned by PRODIGY or by one or more of its
general partners) succeeds to all, or substantially all, of the business
and assets of the transferor or predecessor, serving as the transferee or
successor agrees to be bound by the terms of this Agreement; provided that
notwithstanding any such transfer or succession, the transferor or
predecessor shall not be released from any obligations under this
Agreement.
9.2 Applicable law. This Agreement shall be governed and construed in
accordance with the laws of the State of Nebraska, without regard to its
conflict of law rules.
9.3 Waiver. No delay or omission by either party hereto to exercise any right
or power accruing upon any noncompliance or default by the other party with
respect to the terms of this Agreement shall impair any such right or power
or be construed to be a waiver thereof. A waiver by either of the parties
hereto of any of the covenants, conditions or rights under this Agreement
58 CONFIDENTIAL
Contract #3284
shall not be construed to be a waiver of any succeeding breach thereof or
of any other covenant, condition or right hereunder.
9.4 Entire Agreement. This Agreement, including all Exhibits, which are
incorporated and made a part hereof, sets forth all of the promises,
agreements, conditions and understandings between the parties respecting
the subject matter hereof and supersedes all negotiations, conversations,
discussions, correspondence, memorandums and agreements between the parties
concerning such subject matter.
9.5 Notice. Any notice required to be given by PRODIGY to FDRI shall be sent
to:
First Data Resources Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Vice President, Client Services
Cable Services Group
and any notice required to be given by FDRI to PRODIGY shall be given to:
59 CONFIDENTIAL
Contract #3284
Prodigy Services Company
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Vice President,
Systems Operations and Telecommunications.
All such notices shall be given in writing by certified mail, return
receipt requested and shall be deemed given on the date shown on the
applicable return receipt. Either party may change its address or addressee
set forth above by giving the other notice of such change in accordance
with the provisions of the section.
9.6 Headings. The title or headings of various paragraphs, Sections and
Articles hereof are intended solely for convenience of reference and shall
not be construed for any purpose whatsoever to modify or explain or place
any construction upon any of the provisions of this Agreement.
9.7 Modification. This Agreement may not be amended, changed, modified or
altered except in writing and signed by the appropriate authority for both
parties.
9.8 Representations. PRODIGY represents to FDRI that it is a partnership
between International Business Machines and
60 CONFIDENTIAL
Contract #3284
Sears Xxxxxxx & Company established under the laws of the State of New
York, and it has full authority to enter into and fully perform this
Agreement. FDRI represents that it is a corporation established under the
laws of the State of Delaware, and it has full authority to enter into and
fully perform this Agreement.
9.9 Designated Representative. Each corporation or partnership which is a party
to this Agreement shall designate, in writing, a representative who shall
be authorized to act under this Agreement, for and on behalf of such party.
Any act, approval or consent of a representative so designated shall be
deemed to be the act, approval or consent of the party which designated
such representative and the other party to this Agreement shall not be
required to inquire into the authority of such representative as to such
act, approval or consent on behalf of the party which designated such
representative. Any party may designate an alternate representative to act
for it if its primary representative is unavailable, and any act, approval
or consent of the alternate representative so designated shall have the
same force and effect as any act, approval or consent of the primary
representative, and the other party to this Agreement shall not be required
to inquire as to the unavailability of the primary representative. Any such
representative may be replaced by a successor representative by notice to
the other party and designation of a substitute
61 CONFIDENTIAL
Contract #3284
for such representative. Until further notice, the designated
representatives of the parties shall be:
For FDRI Designee: Xxx Xxxxx
Alternate: Xxx Xxxxxxx
For PRODIGY Designee: Xxxxx Xxxxxxx
Alternate: Xxxxx Xxxxxxx
Upon execution of this Agreement by both parties in duplicate, with each
being an original, this Agreement shall be effective as of January 1st, 1992.
FIRST DATA RESOURCES INC. PRODIGY SERVICES COMPANY
By: /s/ Xxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxx
------------------------------- -----------------------------
Name: Xxx X. Xxxxx Name: Xxxx X. Xxxxxxx
--------------------------------- ---------------------------
Title: President - Cable Services Group Title: President & CEO
-------------------------------- --------------------------
Date: 12/30/92 Date: 12/23/92
--------------------------------- ---------------------------
[SEAL APPEARS HERE]
62 CONFIDENTIAL
CONTRACT #3284
CONSENT TO ASSIGNMENT AND DELEGATION
Reference is made to that certain Software Development and Processing
Services Agreement by and between FIRST DATA RESOURCES INC., ("FDR") and PRODIGY
SERVICES COMPANY (the "Undersigned") with an effective date of January 1, 1992,
as the same may thereafter have been amended, modified or supplemented (such
contact and any and all amendments, modifications, or supplements thereto being
referred to collectively hereafter as the "Agreement").
WITNESSETH:
WHEREAS, FDR desires to assign all of its rights and interests in, and to
delegate all of its duties and obligations under, the Agreement to Cable
Services Group, Inc., a wholly-owned subsidiary of FDR ("CSG").
WHEREAS, by submission of this Consent to Assignment and Delegation, FDR
hereby notifies the Undersigned of FDR's intent to assign its rights and
interests in, and to delegate all of its duties and obligations under, the
Agreement to CSG.
NOW, THEREFORE, pursuant to the terms of the Agreements, by execution
hereof, the Undersigned consents to the assignment by FDR of all of FDR's rights
and interests in, and delegation of duties and obligations under, the Agreement
to CSG, which assignment is to be effective as of January 1, 1994.
PRODIGY SERVICES COMPANY
By: /s/ [ILLEGIBLE SIGNATURE]
--------------------------------------
Title: Vice President, Marketing & Sales
-----------------------------------
DATE: 7/18/94
----------------
[SEAL APPEARS HERE]
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
FIRST AMENDMENT
TO
SOFTWARE DEVELOPMENT AND
PROCESSING SERVICES AGREEMENT
BETWEEN
CSG SYSTEMS, INC.
AND
PRODIGY SERVICES CORPORATION
This First Amendment (the "Amendment") is executed this 27th day of
October, 1996, and is made by and between CSG Systems, Inc., a Delaware
corporation ("CSG"), formerly Known as Cable Services Group, Inc., as successor
in interest to First Data Resources, Inc. and Prodigy Services Corporation, a
Delaware corporation, as successor in interest to Prodigy Services Company
("PRODIGY"). CSG and PRODIGY entered into a certain Software Development and
Processing Services Agreement dated January 1, 1992 (the "Agreement"), and now
desire to amend the Agreement in accordance with the terms and conditions set
forth in this Amendment. If the terms and conditions set forth in this Amendment
shall be in conflict with the Agreement, the terms and conditions of this
Amendment shall control. Any terms in initial capital letters or all capital
letters used as a defined term but not defined in this Amendment, shall have the
meaning set forth in the Agreement. Upon execution of this Amendment by the
parties, any subsequent reference to the Agreement between the parties shall
mean the Agreement as amended by this Amendment. Except as amended by this
Amendment, the terms and conditions set forth in the Agreement shall continue in
full force and effect according to their terms.
IN CONSIDERATION of the above, CSG and PRODIGY agree as follows:
1. Section 7.1 of the Agreement is amended to add eighteen months to the
Original Term of the Agreement. The Original Term of the Agreement shall expire
on June 30, 1998.
2. Section 7.2 of the Agreement is deleted and replaced with the following:
This Agreement shall automatically be extended eighteen months (the "Renewal
Period"), unless PRODIGY provides CSG with written notice by January 2, 1998,
that it does not wish for such Renewal Period to take effect, in which case the
Agreement shall terminate at the end of the Original Term on June 30, 1998.
3. Effective January 1, 1997, Section 17.1 of Exhibit 17 is deleted and replaced
with the following:
CSG agrees that the monthly Processing Fees include processing of data received
from PRODIGY and Third Parties selected by PRODIGY. PRODIGY agrees to pay CSG
Processing Fees of [**].
4. Effective January 1, 1997, Section 1.1.7 of the Agreement is amended to
provide that PRODIGY shall pay CSG [**] from the SMS Enhancement and Maintenance
Team. If the number of hours provided by the SMS Enhancement and Maintenance
Team exceeds [**] in any one month, PRODIGY shall be billed for additional hours
incurred in that month at the rate of [**] per hour. Beginning on the first day
of the calendar month following sixty (60) days written notice from PRODIGY,
PRODIGY shall pay CSG [**] hours of service per month from the SMS Enhancement
and Maintenance Team. If the number of hours provided by the SMS Enhancement and
Maintenance Team exceeds [**] in any one month, PRODIGY shall be billed for
additional hours incurred in that month at the rate of [**] per hour. Once
PRODIGY has decreased the minimum number of hours of service provided by the SMS
Enhancement and Maintenance Team as described above, it may not make any further
modifications to the minimum number of hours of service to be provided by the
SMS Enhancement and Maintenance Team. Additionally, the first full paragraph on
page 9 of the Agreement shall be deleted and replaced with "The SMS Enhancement
and Maintenance Team personnel shall consist of one-third of a project manager,
one analyst, four programmers and one tester." Furthermore the last two
sentences of this Section shall be deleted and replaced with "Any additional
personnel for the SMS Enhancement and Maintenance Team requested by PRODIGY and
agreed to by CSG will be billed to PRODIGY at the rate of [**] per hour if
PRODIGY is paying [**] for the SMS Enhancement and Maintenance Team and [**] per
hour if PRODIGY is paying [**] for the SMS Enhancement and Maintenance Team."
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
5. The first sentence of Section 2.2.3 of the Agreement is deleted and replaced
with the following:
PRODIGY agrees that during each Processing Year of the Original Term and any
Renewal Period, PRODIGY shall pay, or be responsible for payment of Processing
Fees to CSG in an amount equal to at least [**] per month ("Minimum Fees").
6. CSG shall be PRODIGY's sole and exclusive external provider of billing
services in the United States. PRODIGY shall continue to build software as
required to process and interface with CSG in connection with the services
provided to PRODIGY by CSG under this Agreement. PRODIGY shall not sell, license
or otherwise transfer to any third party any rights to use any of the software
created by PRODIGY in connection with this Agreement, but shall be free to use
it for its own account.
THIS AMENDMENT is executed on the day and year first shown above.
CSG SYSTEMS, INC. ("CSG") PRODIGY SERVICES CORPORATION
("PRODIGY")
By: /s/ [ILLEGIBLE SIGNATURE] By: /s/ [ILLEGIBLE SIGNATURE]
-------------------------------- ---------------------------------
Title: President Title: CEO
----------------------------- ------------------------------
Date: 11/25/96 Date: 11/21/96
------------------------------ -------------------------------
CSG SYSTEMS INC.
----------------
Approved as APPROVED PRODIGY
to form and GENERAL COUNSEL
legality
11/23/96 11/21/96
LAW DEPARTMENT ---------------
[LETTERHEAD OF PRODIGY APPEARS HERE]
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
February 19, 1997
Xx. Xxxxx Xxxxxx
CSG Systems, Inc.
0000 X. 000xx Xxx.
Xxxxx, XX 00000
Dear Xxxxx,
Pursuant to Section 4. of the "FIRST AMENDMENT TO SOFTWARE DEVELOPMENT AND
PROCESSING SERVICES AGREEMENT BETWEEN CSG SYSTEMS, INC. AND PRODIGY SERVICES
CORPORATION" executed October 27, 1996, this letter serves as written notice
that Prodigy Services Corporation hereby exercises its option to reduce the
minimum number of hours of service provided under the agreement by the SMS
Enhancement and Maintenance Team from [**] hours per month to [**] hours per
month. This reduction shall take effect on May 1, 1997, which is this first day
of the calendar month which follows sixty days from the date of this notice.
Please note that any hours in excess of the minimum number of hours of service
provided to Prodigy by the SMS Enhancement and Maintenance Team must be
authorized by Prodigy in writing.
Sincerely,
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Senior Manager, Financial Systems
cc: X. Xxxxxxxx
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
SECOND AMENDMENT
TO
SOFTWARE DEVELOPMENT AND
PROCESSING SERVICES AGREEMENT
BETWEEN
CSG SYSTEMS, INC.
AND
PRODIGY SERVICES CORPORATION
This Second Amendment (the "Amendment") is executed this 31st day of December,
1997, and is made by and between CSG Systems. Inc., a Delaware corporation
("CSG") and Prodigy Services Corporation, as successor in interest to Prodigy
Services Company ("PRODIGY"), CSG and PRODIGY entered into a certain Software
Development and Processing Services Agreement dated January 1, 1992, (the
"Agreement") and that certain First Amendment thereto dated October 27, 1996
(the "First Amendment"), and now desire to amend the Agreement and the First
Amendment in accordance with the terms and conditions set forth in this
Amendment. If the terms and conditions set forth in this Amendment shall be in
conflict with the Agreement or the First Amendment, the terms and conditions of
this Amendment shall control. Any terms in initial capital letters or all
capital letters used as a defined term but not defined in this Amendment, shall
have the meaning set forth in the Agreement. Upon execution of this Amendment by
the parties, any subsequent reference to the Agreement between the parties shall
mean the Agreement as amended by this Amendment. Except as amended by this
Amendment, the terms and conditions set forth in the Agreement shall continue in
full force and effect according to their terms.
CSG and PRODIGY agree as follows:
1. The Original Term of the Agreement shall be extended until June 30, 2001.
Section 2 of the First Amendment and Section 7.2 of the Agreement are deleted,
and, except as provided in paragraph 2 below, any renewal of the Agreement's
term shall be mutually agreed upon by CSG and PRODIGY. After the second
anniversary of the date of this Amendment, PRODIGY may convert from the SMS
System to another billing system of CSG, upon terms mutually agreed upon by CSG
and PRODIGY and subject to CSG's then current prices.
2. PRODIGY shall have an option to extend the Original Term of the Agreement
until June 30, 2003; provided, however, that PRODIGY shall notify CSG in writing
of its intent to exercise its right under this paragraph 2 within ninety (90)
days of the date of execution of this Amendment.
3. The first Sentence of Section 6 of the First Amendment shall be deleted in
its entirety and replaced with the following:
CSG shall be PRODIGY's sole and exclusive provider of billing services for
Prodigy Internet and Prodigy Classic Services in the United States.
"Billing services" refers only to the membership plans billed directly to
Prodigy Internet and Prodigy Classic Services members; it does not include
premium services (e.g., games, specialized
-1-
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES
FOR THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR
OUTSIDE THEIR RESPECTIVE COMPANIES
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
content, merchandise purchases, etc.) offered on those Services or any
other billing services unless agreed to in advance in an express writing
signed by both parties.
4. The first sentence of Section 1.1.8.2(a)(i) of the Agreement shall be
deleted in its entirety and replaced with the following:
The SMS System developed by FDRI pursuant to this Agreement shall be the
sole and exclusive property of FDRI, and, subject to any rights PRODIGY may
have to license such System pursuant to this Agreement, PRODIGY
acknowledges and agrees that all rights, title and interests in and to the
SMS System, including, without limitation maskworks, firmware, computer
programs, algorithms, subroutines, methods, processes, concepts, designs,
know-how, techniques, data or other information of or concerning the SMS
System are and shall remain the sole and exclusive property of FDRI;
provided, however, that any Confidential Information of PRODIGY used by
FDRI in developing the SMS System shall be subject to the Confidentiality
Agreement between the parties dated June 5, 1986. CSG may license or sell
the SMS System, including any modules or subsystems of the SMS System, and
use the SMS System and any modules or subsystems thereof, to provide data
processing services to any third party. PRODIGY shall be entitled to a
royalty (the "Royalty") of any license fees to which CSG may be entitled
from such third party sales or licenses; provided, however, that PRODIGY
shall be entitled to the Royalty only after CSG has fully recovered the
Year 2000 Costs (as defined in paragraph 4 below) from license fees under
any such third party sales or licenses. The Royalty only shall be equal to
[**] of any license fees to which CSG may be entitled (after CSG has
recovered such costs as provided above).
5. The following language shall be added to Section 6.2 of the Agreement:
Subject to the terms of Section 6.3 and 6.4 below, CSG shall supplement and
update the SMS System such that the SMS System shall be capable of reading,
interpreting and processing invoices beyond the Year 2000. CSG shall assume
all costs (the "Year 2000 Costs") associated with modifying the SMS System
such that it operates in accordance with the performance standard contained
in this section.
6. The following language shall be added to Paragraph 3 of the First
Amendment:
Between January 1, 1998 and December 31, 1998, PRODIGY's Processing Fees
shall be at [**]. If, by [**] PRODIGY has [**] the [**]. Otherwise,
Prodigy's [**]. Notwithstanding the foregoing, during the term of this
Agreement following December 31, 1999, PRODIGY shall pay Processing Fees
adjusted in accordance with Section 2.1.2 of the Agreement. Throughout the
term
-2-
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES
FOR THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR
OUTSIDE THEIR RESPECTIVE COMPANIES
[Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.]
hereof, Prodigy shall be responsible for minimum monthly fees based upon
the applicable Processing Fees pursuant to the terms of this paragraph,
multiplied by [**].
THIS AMENDMENT is executed on the day and year first shown above.
CSG SYSTEMS, INC. ("CSG") PRODIGY SERVICES
CORPORATION ("PRODIGY")
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------ -----------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
---------------------------- ---------------------------
Title: V.P. & General Counsel Title: VP, Support Services
--------------------------- --------------------------
-3-
CONFIDENTIAL AND PROPRIETARY INFORMATION - FOR USE BY AUTHORIZED EMPLOYEES
FOR THE PARTIES HERETO ONLY AND IS NOT FOR GENERAL DISTRIBUTION WITHIN OR
OUTSIDE THEIR RESPECTIVE COMPANIES
