Exhibit No. 10.5
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Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
CONFIDENTIAL
THIRD AMENDMENT TO DIRECTORY AND LOCAL ADVERTISING PLATFORM
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SERVICES AGREEMENT
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THIS THIRD AMENDMENT to the Directory and Local Advertising Platform
Services Agreement (this "Third Amendment"), effective as of August 21, 2002
(the "Third Amendment Effective Date"), is made and entered into by and between
America Online, Inc. ("America Online" or "AOL"), a Delaware corporation with
its principal offices at ▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and Switchboard
Incorporated ("SB" and collectively with AOL, the "Parties"), a Delaware
corporation, with its principal offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇. Defined terms that are used but not defined herein shall be as defined in
the Directory and Local Advertising Platform Services Agreement between AOL and
SB effective as of December 11, 2000 (the "Original Agreement"), as amended by
that certain letter agreement dated February 23, 2001 (the "Letter Agreement"),
by that certain First Amendment to Directory Services and Local Advertising
Platform Services Agreement, dated November 15, 2001 (the "First Amendment"),
and by that certain Second Amendment to Directory Services and Local Advertising
Platform Services Agreement dated April 25, 2002 (the "Second Amendment").
WHEREAS, the Parties desire to modify and amend certain provisions of the
Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the Parties hereby agree
as follows:
1. The Parties agree to amend the Agreement to add a new Section 3.5.3 as
follows:
3.5.3 In addition to the foregoing, in the event that SB ceases to
make available certain Level I Data Enhancements on all SB
Interactive Sites, then SB shall be required to continue to
provide such Level I Data Enhancements to AOL for inclusion
within the YP Databases and for distribution via the DLA
Platform for a minimum of twelve (12) additional months
thereafter (but not later than the termination of this
Agreement) (the "Extended LIDE Period"); provided, however,
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that if AOL requests that SB update such Level I Data
Enhancements during such Extended LIDE Period, the updates
shall be made at AOL's expense and at a commercially
reasonable rate to be mutually agreed upon by the Parties.
Notwithstanding the foregoing, in the event that (a) SB is
contractually or legally prevented from continuing to so
provide such Level I Data Enhancements, or (b) in SB's
reasonable opinion, SB would be unable to continue to so
provide such Level I Data Enhancements to AOL without
violating a third party's intellectual property rights or
incurring other substantially similar third party liability
("Restrictive Conditions"), then SB shall not be required to
continue to provide such Level I Data Enhancements to AOL for
so long as such Restrictive Conditions exist.
2. The Parties hereby agree to delete Section 7.1.1 of the Agreement in
its entirety and replace it with the following:
7.1.1 SB. As between the Parties, except as otherwise provided in
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this Agreement, SB shall own (i) all aspects of the DLA
Platform (x) developed by SB prior to the Effective Date and
integrated into the DLA Platform, and/or (y) developed by SB
outside the scope of this Agreement, (ii) all SB Features or
Functionality and all SB APIs and tools which are owned or
licensed by SB or were developed by SB outside the scope of
this Agreement, (iii) SB Features or Functionality and/or any
other feature or functionality owned or licensed by SB and
used hereunder that permits AOL Users to perform searches on
or through the YP Databases (e.g., SB's "Matrix" or other
similar search functionality made available by SB on any SB
Interactive Site), (iv) all SB Data, and (v) (consistent with
and subject to the restrictions set forth in Section 5.3 with
respect to [**] and/or Threaded AOL Modifications as the case
may be) any [**] and any [**] (collectively, the "SB Platform
Components").
3. The Parties hereby agree to delete Section 11.1 of the Agreement in
its entirety and replace it with the following:
11.1 All-In Services. As part of this Agreement, SB shall perform
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(at no cost to AOL): (i) the Included SB Services, and (ii)
300 Hours per month of Engineering Hours work during each Year
of the License Period (the "Monthly 300-Hour Threshold," which
together with the Included SB Services shall be collectively
referred to herein as the "All-In Services"); provided,
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however, that in any calendar quarter in the period up to and
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including the third quarter of calendar year 2002 during which
SB does not receive at least Two Million Dollars ($2,000,000)
in Total Revenues (as defined below), AOL shall be required to
pay SB for any Engineering Hours work carried out by SB during
such quarter (provided that such work does not otherwise
constitute Included SB Services) at the rates set forth in
Exhibit J to this Agreement. For purposes of this Section 11.1
only, "Total Revenues" shall mean the sum of all (a) Directory
Advertisement Revenues, (b) Other Fees, (c) Engineering Fees,
(d) Consulting and Marketing Fees, and (e) any other revenues
(in each case, recognized and/or received by SB under this
Agreement in any calendar quarter).
4. The Parties hereby agree to delete Section 18.1 of the Agreement
(inclusive of Sections 18.1, 18.1.1, 18.1.2 and 18.1.3) in its
entirety and replace it with the following:
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18.1 Guaranteed Payment. Subject to Section 20.7 of the Agreement,
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SB shall pay AOL a fixed payment of Fifteen Million Dollars
($15,000,000) (the "Fixed Payments") as follows:
18.1.1 Thirteen Million Dollars ($13,000,000) as of the Effective
Date of the Original Agreement.
18.1.2 Two Million Dollars ($2,000,000) as of April 25, 2002.
18.1.3 The Parties entered into an Advertising Insertion Order
Agreement ("Insertion Order") dated October 1, 2000, pursuant
to which:
(i) SB is obligated to make monthly guaranteed payments in the
amount of One Hundred Seventy Five Thousand Dollars
($175,000) to AOL for textual sponsorship on Netscape
Inventory as defined herein; and
(ii) SB provides data for the Netscape yellow pages product.
Whereas SB made one payment of $175,000 under the Insertion
Order, and whereas the Parties acknowledge and agree that such
Insertion Order terminated upon the Effective Date of the
Original Agreement, SB shall accordingly be credited with a
like amount of $175,000 against the Guaranteed Payments
required under this Section 18.1, and SB shall not be
responsible for any further payments under the Insertion
Order.
5. The Parties hereby agree to delete Section 18.2.1 and 18.2.2 of the
Agreement in their entirety and replace them with the following:
18.2.1 For Directory Advertisement Revenue generated and accrued
between the Effective Date of the Original Agreement and June
30, 2002 (when aggregated together with any Consulting and
Marketing Fees and Other Fees), AOL shall receive 25% of such
revenues and SB shall receive 75% of such revenues,
respectively.
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18.2.2 For Directory Advertisement Revenue generated and accrued
after June 30, 2002 (when aggregated together with any
Consulting and Marketing Fees and Other Fees), the Parties
shall share such revenues as follows:
SB Percentage Of AOL Percentage of
Directory Directory
Directory Advertisement Advertisement Advertisement
Revenue Amount Revenues Revenues
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Between $0 and $5.25 Million
In Directory Advertisement Revenues 75% 25%
In Excess of $5.25 Million and
Up to $20 Million in Directory
Advertisement Revenues 50% 50%
In Excess of $20 Million and
Up to $50 Million in
Directory Advertisement Revenues 25% 75%
In Excess of $50 Million and
Up to $150 Million in Directory
Advertisement Revenues 15% 85%
In Excess of $150 Million
in Directory Advertisement Revenues 12% 88%
6. The Parties hereby delete Section 18.2.3 in its entirety and replace
it with the following:
18.2.3 "Directory Advertisement Revenues" shall mean gross revenues
recognizable by AOL from the sale or license by AOL (or by any
AOL Alternative Sales Force), of the items listed in (a)-(d)
below, less in each case, any applicable taxes, or applicable
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advertising sales commissions payable to AOL or any third
party, and/or uncollectable amounts:
(a) Directory Advertisements;
(b) Self-Published Ads;
(c) Any fees (e.g., slotting fees, exclusivity fees, branding
fees) paid to AOL by any of its Alternative Sales Forces
that are directly related to the sale of Directory
Advertisements (if applicable);
(d) Any Incremental Net Revenue as set forth in Sections
18.2.4, and Additional DA Upsells revenues as set forth in
Section 18.2.6, and any Specifically Attributed Revenues
as set forth in Section 18.2.7 of this Agreement.
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"Directory Advertisement Revenues" shall not include (x) any
in-kind, non-cash consideration (e.g., where AOL barters
Directory Advertisements for non-cash consideration), (y)
except as provided in Section 18.2.7, revenues generated from
bundled transactions (e.g., where an AOL partner pays for
promotional inventory on the AOL Network and receives
Directory Advertisements as part of (but not the primary focus
of) such arrangement) or (z) Telemarketing Commissions (as
defined below).
For purposes of this Section 18.2, "Telemarketing Commissions"
shall mean fifteen percent (15%) of the gross revenues
generated from sales of any Directory Advertisements through
AOL telemarketing agents or representatives (such that
eighty-five percent (85%) of such gross revenues shall be
subject to the Directory Advertisement Revenue share
arrangement set forth in this Section); provided, however,
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that (i) such fifteen percent (15%) Telemarketing Commission
shall be deemed to apply regardless of whether the actual
telemarketing commission paid or incurred by AOL is greater
than or less than such amount; provided further, that (ii) to
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the extent technically feasible and commercially reasonable
(e.g., from a payment administration standpoint), (x) one
twelfth (1/12th) of the Telemarketing Commission with respect
to each Directory Advertisement shall be deducted from
Directory Advertisement Revenue in each month during the first
year of such Directory Advertisement and (y) no such
Telemarketing Commission shall be deemed to apply in any
renewal year (such that one hundred percent (100%) of the
gross revenue from such Directory Advertisement in any
advertisement renewal year shall be subject to the revenue
sharing arrangement set forth in this Section 18.2).
7. The Parties hereby delete Section 18.2.8 in its entirety and replace
it with the following:
18.2.8 Commencing with the Third Amendment Effective Date, and as
related to the receipt of cash payments for the sale of
Directory Advertisements, AOL shall pay to SB applicable
Directory Advertisement Revenues collected by AOL and owed to
SB on a monthly basis (as promptly as commercially reasonable
following each such month); provided, however, that if at any
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time during the Term or the Wind-Down Period, AOL has a good
faith belief that the foregoing monthly payment structure will
have a material adverse impact on AOL, then AOL shall have the
immediate right to discontinue the monthly payment structure
and to make quarterly payments thereafter (in such case, AOL
will use commercially reasonable efforts to make such payments
within thirty (30) days following the end of the quarter in
which such amounts were generated, but shall make such
payments in no event later than sixty (60) days following the
end of the quarter in which such amounts were generated);
provided further, that SB shall have the right to escalate the
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matter to the Management Committee for further review and
resolution.
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8. The Parties hereby delete the last sentence of Section 18.3 in its
entirety and replace it with the following:
All payments required to be made to SB shall be paid in
immediately available, nonrefundable (except as otherwise
expressly set forth herein) U.S. funds wired to the
"Switchboard Incorporated" account, Account Number [**], at
Silicon Valley East Bank (ABA: 121 140 399).
9. The Parties hereby agree to delete Section 18.6 of the Agreement
(inclusive of Sections 18.6, 18.6.1 and 18.6.2) in its entirety.
10. The Parties hereby agree to delete Section 20.1 of the Agreement in
its entirety and replace it with the following:
20.1 Term. Unless earlier terminated as set forth herein, the
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initial term of this Agreement shall commence on the Effective
Date and end on December 31, 2004 (the "Initial Term"). To the
extent that the Parties mutually agree in writing to renew
this Agreement upon expiration of the Initial Term (each such
renewal term, a "Renewal Term"), the Renewal Term(s), together
with the Initial Term, shall be collectively referred to
herein as the "Term."
11. The Parties hereby agree to amend Exhibit A of the Agreement by
deleting the following definition of "Fifth Year" in its entirety:
Fifth Year. The period commencing on the day immediately
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following the fourth anniversary of the Effective Date and
ending on the fifth anniversary of the Effective Date (if
applicable).
12. The Parties also hereby agree to amend Exhibit A of the Agreement by
deleting the definition of "Year" in its entirety and replacing it
with the following new definition:
Year. Each of the First Year, the Second Year, the Third Year
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and the Fourth Year.
13. The Parties also hereby agree to amend Exhibit A of the Agreement by
deleting the definition of "Level I Data Enhancements" in its entirety
and replacing it with the following new definition:
Level I Data Enhancements. Any Data beyond a Standard Business
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Listing contained in the [**] Database that enhance the
Standard Business Listings inserted into the [**] Database,
including enhanced data (such as store hours, brands carried,
specific services offered, credits cards carried, etc.) which
SB has compiled prior to the date of this Amendment (or which
SB compiles or otherwise aggregates at any time after the date
hereof) and which SB makes available on any SB Interactive
Site (including, without limitation, the Standard SB Site).
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14. The Parties also hereby agree to amend Exhibit H of this Agreement by
replacing such Exhibit in its entirety and replacing it with the
following:
"EXHIBIT H
Steering Committee Representatives
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Sales Manager Operations Manager Executive (optional)
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SB [**] [**] [**]
AOL [**] [**] [**]
15. This Third Amendment is supplementary to and modifies the Agreement.
The terms of this Third Amendment supersede provisions in the
Agreement only to the extent that the terms of this Third Amendment
and the Agreement expressly conflict. However, nothing in this Third
Amendment should be interpreted as invalidating the Agreement, and
provisions of the Agreement will continue to govern relations between
the Parties insofar as they do not expressly conflict with this Third
Amendment.
16. This Third Amendment may be executed in counterparts and by facsimile,
each of which shall be deemed an original and all of which together
shall constitute one and the same document.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this Third Amendment to
Directory and Local Advertising Platform Services Agreement to be executed by
their duly authorized representatives as of the Third Amendment Effective Date
set forth above.
AMERICA ONLINE, INC. SWITCHBOARD INCORPORATED
By: /s/J. ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: COO Title: President
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Date: August 21, 2002 Date: August 21, 2002
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