Exhibit 10.26
MARKETING AND DISTRIBUTION AGREEMENT
THIS MARKETING AND DISTRIBUTION AGREEMENT (this "Agreement") is
entered into as of the 10th day of February, 1998 by and between Sprint
Corporation, a Kansas corporation ("Sprint"), Sprint Communications
Company L.P., a Delaware limited partnership ("Sprint L.P."), Dolphin,
Inc., a Delaware corporation ("Newco"), and EarthLink Network, Inc., a
Delaware corporation ("EarthLink"). Sprint and Sprint L.P. are herein
referred to as the "Sprint Party." EarthLink and Newco are herein
referred to as the "EarthLink Party." The Sprint Party and the EarthLink
Party are each hereinafter referred to as a "Party" and collectively as
the "Parties." The Sprint Party and its Controlled Affiliates shall
hereinafter be referred to as the Sprint Group. The EarthLink Party and
its Controlled Affiliates shall hereinafter be referred to as the
EarthLink Group.
The Parties agree that the Sprint Party will, and will cause each
member of the Sprint Group to, perform as set forth in this Agreement and
the EarthLink Party will, and will cause each member of the EarthLink
Group to, perform as set forth in this Agreement.
1. Term. This Agreement shall be effective (the "Effective Date")
only upon the Closing as defined in the Investment Agreement between the
Parties and others, dated of even date herewith (the "Investment
Agreement") and shall remain in full force and effect for ten (10) years
("Initial Term"), unless earlier terminated by either Party pursuant to
Section 24. At the conclusion of the Initial Term either Party may extend
this Agreement for an additional five years by the giving of written
notice to the other Party at least nine (9) months in advance of the
expiration of the Initial Term, unless earlier terminated as provided
herein. In the event that the Investment Agreement is terminated prior to
the Closing of the Investment Agreement, this Agreement shall be null and
void.
2. Scope.
(a) For the purposes of this Agreement, the following
definitions will apply:
(i) Internet Services: Collectively, the Core Internet
Application Set, the Ancillary Internet Products and Services,
and the Internet Network Services, but excluding Internet
Telephony.
(ii) Core Internet Application Set: The set of software
products and applications and related products and services
which are included together and offered as a packaged whole by
the EarthLink Group to customers from time-to-time during the
term of this Agreement and which in concert with Internet
Network Services allow customers to access and experience the
public Internet. The Core Internet Application Set currently
consists of the services and related products described on
Schedule A.
(iii) Ancillary Internet Products and Services: The
Internet-related products and services that customers can obtain
from EarthLink as a discrete product or service that are not
Telecommunications Services.
(iv) Internet Network Services: Network access services,
which together with the Core Internet Application Set, allow
customers to access and explore the public Internet. Such
Internet Network Services include 28.8K dial-up, 56K dial-up,
ISDN, cable modems, XDSL, wireless and any other physical access
medium used to allow the delivery of Internet service to
customers.
(v) Internet Telephony: Voice telecommunications over the
Internet.
(vi) LD Services: Long distance telephony services
provided to consumers.
(vii) Telecommunications Services: Business long
distance telephony services, local telephone service, Internet
Telephony services (subject to Section 7(e)), sale of customer
premises equipment, pre-paid calling cards, wireless
communications services, virtual private network services
(excluding IP virtual private network services), toll free
telephony services, ATM and frame relay (each subject to Section
7(i)) and paging and any other voice or data related
telecommunications products and services provided by the Sprint
Group at any given time during the term of this Agreement,
excluding in all instances the Core Internet Application Set,
from which the Sprint Group derived more than $25 million in
gross revenues during the prior fiscal year; provided that the
Core Internet Application Set shall not be deemed to be a
Telecommunications Service.
(viii) Sprint Services: LD Services and
Telecommunications Services as provided by the Sprint Group from
time to time during the term of this Agreement.
(ix) Affiliate: With respect to any specified entity, any
other entity that controls, is controlled by or is under common
control with such entity.
(ix) Controlled Affiliate: With respect to any Party, any
entity that is directly or indirectly controlled by such Party.
Without limiting the foregoing, as used in Section 7,
"Controlled Affiliate" shall include any entity that such Party
can directly or indirectly unilaterally cause to take or refrain
from taking any of the actions required, prohibited or otherwise
restricted by such Section, whether through ownership of voting
securities, contractually or otherwise.
(b) This Agreement shall govern the Sprint Group's and the
EarthLink Group's collaborative marketing and distribution activity
in the forty-eight contiguous United States (the "Territory"). This
Agreement shall apply to: (i) the co-branding and marketing of the
EarthLink Group's Internet Services; (ii) the marketing of the Sprint
2
Group's LD Services; and (iii) the marketing of other
Telecommunications Services of the Sprint Group as mutually agreed
upon by the Parties.
3. Relationship.
(a) Subject to the provisions of this Agreement, the Sprint
Party and each of the other members of the Sprint Group hereby
appoints each of the members of the EarthLink Group as its agent to
sell the Sprint Group's LD Services and other Telecommunications
Services as agreed to by the Parties (collectively, the "Sprint
Services"), and the EarthLink Party and each of the other members of
the EarthLink Group hereby appoints each of the members of the Sprint
Group as its agent to sell Internet Services. Each Party accepts its
respective appointment for itself and on behalf of the members of its
respective Group. The Sprint Party will use reasonable efforts to
cause Sprint PCS to appoint the members of the EarthLink Group as its
agents to sell PCS services prior to the Effective Date. If Sprint
PCS fails to make such appointment by the Effective Date, Section
7(f) shall apply. In the event that Sprint PCS makes such
appointment, Sprint PCS shall be deemed a member of the Sprint Group
and included therein for purposes of this Agreement.
(b) No member of a Group has the authority to act on behalf of
the other Party's Group nor may any member of either Party's Group
bind the members of the other Party's Group except as provided in
this Agreement.
(c) Orders submitted by customers who sign up through the
Sprint Group for Internet Services are not binding on the EarthLink
Group until accepted by the EarthLink Group, which shall be evidenced
by the EarthLink Group's provision of Internet Services to a
customer. The EarthLink Group reserves the right to decline any
order for Internet Services solicited or taken by the Sprint Group,
provided the EarthLink Group will not discriminate against or apply
any more stringent standards to a potential Sprint Group generated
customer than any other potential EarthLink Group customer.
(d) Orders submitted by customers who sign up through the
EarthLink Group for Sprint Services are not binding on the Sprint
Group until accepted by the Sprint Group, which shall be evidenced by
the Sprint Group's provision of LD Services and/or Telecommunications
Services, as applicable, to a customer. The Sprint Group reserves
the right to decline to accept any order for Sprint Services
solicited or taken by the EarthLink Group, provided the Sprint Group
will not discriminate against or apply any more stringent standards
to a potential EarthLink Group generated customer than any other
potential Sprint Group customer.
(e) The EarthLink Group will provide customer service for
Internet Services for Sprint Group generated customers in accordance
with its general practices and procedures. Customers for Internet
Services will be customers of the EarthLink Group for Internet
Services and will remain customers of the EarthLink Group for the
Internet Services after termination of this Agreement unless such
customers elect to terminate their relationship with the EarthLink
Group.
3
(f) The Sprint Group will provide customer service for Sprint
Services and those customer service functions relating to Internet
Services as the Sprint Group deems appropriate for Internet Services
for its EarthLink Group generated customers in accordance with its
general practices and procedures. Customers for Sprint Services will
be customers of the Sprint Group for Sprint Services but not for
Internet Services and will remain customers of the Sprint Group for
Sprint Services after termination of this Agreement unless such
customers elect to terminate their relationship with the Sprint
Group.
(g) Nothing in this Agreement shall limit the Sprint Group's
ability to package or bundle various Sprint Services with the
EarthLink Group's Internet Services or its flexibility regarding
pricing of the Sprint Services within such package or bundle, in each
case as the Sprint Group deems appropriate.
(h) The terms set forth on Schedule B shall apply to any
customer of the EarthLink Group who is generated through the Sprint
Group's business service channels.
(i) Without the Sprint Party's prior written consent, no member
of the EarthLink Group will enter into any agreement that would
contractually prevent or contractually restrict the Sprint Group from
marketing and selling the Core Internet Application Set through any
Sprint marketing channel; provided, however, the EarthLink Group may
enter into such agreements after consultation with the Sprint Party
without violating this Section 3(i) if the Sprint Party receives a
credit against the number of subscribers required by Schedule H
hereof equal to twenty percent (20%) of the number of subscribers
obtained by the EarthLink Group through such agreements for the
applicable annual period.
4. Joint Marketing Committee.
(a) Each Party will appoint up to three representatives to
serve as members of a six person "Joint Marketing Committee". Each
member shall serve at the pleasure of their respective Party. The
Joint Marketing Committee will work together in a proactive and
cooperative spirit in seeking, defining and implementing marketing
opportunities consistent with the Plan (see Section 4(d)) and to
identify methods and opportunities to increase Internet Service and
Sprint Service revenues.
(b) The Joint Marketing Committee will be responsible for
making recommendations regarding modifications to the terms of this
Agreement in the event that competitive or other circumstances
dictate; however, neither Party will be obligated to amend or modify
this Agreement based on such recommendation.
(c) The Joint Marketing Committee will meet as often as
necessary, either in person or by telephone, but no less than on a
monthly basis for the first six (6) months after the Effective Date
and no less than once per three (3) month period after such initial
six (6) months. Either Party may call a Joint Marketing Committee
meeting upon seven (7) days' notice.
4
(d) The Joint Marketing Committee will prepare and produce a
sales and marketing plan for the Internet Services for each year of
the Agreement (the "Plan"). The Plan shall be published no later
than November 30 of each calendar year for the following calendar
year. During the first calendar year in which this Agreement becomes
effective, the Plan shall be published as soon as commercially
reasonable following the Effective Date. The Plan will address and
establish in reasonable detail the plan of execution for the joint
marketing activities of the Internet Services, and the Sprint Group
and the EarthLink Group shall devote resources and efforts reasonably
necessary to insure the Plan's goals and targets are met, the cost
and expenses of which to be born as determined in the Plan.
The Joint Marketing Committee will similarly prepare and produce
a plan to address the sale and marketing of Sprint Services by the
EarthLink Group.
(f) Any action by the Joint Marketing Committee will require
the majority approval of all of its members.
5. Branding.
(a) The Sprint Group and the EarthLink Group, in accordance
with Sections 25 and 26 and the "Branding Strategy" set forth in
Schedule L, shall include the agreed upon co-brand in:
(i) all of the Sprint Group's marketing, advertising and
other similar material relating to or referencing any of the
EarthLink Group's Internet Services; and
(ii) all of the EarthLink Group's marketing, advertising
and other similar material (e.g., software jackets, packaging,
web page(s), etc.) used to promote and offer for sale or
otherwise relating to the Internet Services and/or the Sprint
Services in the Territory.
The Parties intend to have the Internet Service as a co-branded
service which appears to the general public as part of the Sprint
Group portfolio of product and service offerings.
(b) No member of the EarthLink Group shall be under any
obligation to reference the Sprint Brand or the co-brand when
referring generally to the members of the EarthLink Group in their
corporate capacities. No member of the EarthLink Group will be
required to reference any member of the EarthLink Group, or the
EarthLink Group as a whole, as a Sprint Group-controlled entity.
(c) The Sprint Group and the EarthLink Group will each comply
with the terms of the Branding Strategy set forth in Schedule L.
6. Quality of Service. The EarthLink Group will provide a quality
of service and attendant customer and technical support for the Core
Internet Application Set (and any other
5
Internet Services provided by the EarthLink Group that are marketed under
the EarthLink-Sprint co-brand but excluding the Sprint Group provided
Internet Network Services which are a part of the Internet Services) that
is of high quality. In the event that the EarthLink Group fails to meet
this quality standard, it shall use substantial, diligent and continuous
efforts to seek to achieve or restore such service quality. If the
EarthLink Group fails to meet such standard for a continuous 120 day
period or for three periods of 45 or more days each during a calendar year
following written notice from the Sprint Party to the EarthLink Party, the
Sprint Party may terminate this Agreement, provided that the Sprint Group
is not then in material breach of this Agreement; provided, however, that
the determination of whether the EarthLink Group has met this quality
standard will be determined through the dispute resolution process
described in Section 21, such dispute resolution process to commence 60
days following written notice from the Sprint Party to the EarthLink Party
of the EarthLink Group's failure to meet the quality standard if the
Sprint Party determines that the EarthLink Group has not cured such
failure within such 60-day period. If the failure to meet such quality
standard is attributable to a failure or defect in any services or
products provided by a third party (e.g., the dial-up Internet access
services), the Sprint Party will have the right to terminate this
Agreement as provided above, but the EarthLink Group will not be deemed in
breach of this Agreement for failure to meet such quality standard.
7. Exclusivity.
(a) The provisions of this Section 7 apply only to activities
within the Territory and apply to each of the EarthLink Group and the
Sprint Group.
(b) The Sprint Group will not promote, advertise, market,
co-brand, package, bundle, develop, offer or sell, or enter into any
express or tacit agreement to permit its names to be used in
connection with, a set of Internet-related products and services
(whether as a series of individual products and services or as an
integrated grouping or package of products and services) that is the
same as or substantially similar to the Core Internet Application Set
(as in effect from time-to-time), other than those of the EarthLink
Group. The Sprint Group will not bid on, acquire or directly or
indirectly, own, manage, operate, join, control or finance, or
participate in the management, operation, control or financing of any
provider of any set of Internet-related products and services
(whether as a series of individual products and services or as an
integrated grouping or package of products and services) that is the
same as or substantially similar to the Core Internet Application Set
(as in effect from time-to-time), other than the EarthLink Group.
Nothing in this Section shall prohibit or restrict the Sprint Group
from (i) owning less than 5% of a company which engages in a
Restricted Services Business (as defined in Section 24), or
(ii) engaging in any activity relating to products or services that
perform the same function as any individual elements and/or
components of the Core Internet Application Set so long as the set of
such products and services (whether packaged or marketed as a series
of individual products and services or as an integrated grouping or
package of products and services) are not the same as or
substantially similar to the Core Internet Application Set; provided,
however, that if the Sprint Group intends to obtain any such elements
or components from a third party the EarthLink Group shall have the
first right of refusal to provide the Sprint Group with such elements
and
6
components of the Core Internet Application Set if such elements and
components supplied by the EarthLink Group are of substantially
similar quality as those available from third parties and are
provided by the EarthLink Group at the same price and on
substantially similar terms to the Sprint Group as the lower of the
price and terms upon which those elements and components are offered
by the EarthLink Group to third parties or the price and terms
otherwise generally commercially available to the Sprint Group for
such elements and components.
(c) The EarthLink Group will not promote, advertise, market,
co-brand, package, bundle, develop, offer, or sell any LD Service or
Telecommunications Services or services that are the same as or
substantially similar to the LD Services or Telecommunications
Services other than those of the Sprint Group. The EarthLink Group
will not bid on, acquire or directly or indirectly, own, manage,
operate, join, control or finance, or participate in the management,
operation, control or financing of, or act as an agent or
representative for, or enter into any express or tacit agreement to
permit its name to be used in connection with, or permit its Internet
Services to be marketed, sold or distributed by, any Material
Provider of LD Services or Telecommunications Services other than the
Sprint Group and, after Sprint PCS has appointed each member of the
EarthLink Group as its agents pursuant to Section 3(a), Sprint PCS.
Nothing in this Section shall prohibit or restrict the EarthLink
Group from owning less than 5% of a company which ▇▇▇▇▇ ▇▇ Services
or Telecommunications Services. A business or entity will be deemed
to be a "Material Provider" of LD Services or Telecommunications
Services if such business or entity (together with its Affiliates)
derives from the sale of LD Services and Telecommunications Services
(i) more than 5% of its gross revenues in any fiscal year, or
(ii) more than $25,000,000 of gross revenues in any fiscal year.
(d) Notwithstanding anything in Section 7(c) above or any other
provision of this Agreement, the EarthLink Group may continue to
offer a co-branded Core Internet Application Set which is marketed
and/or sold by the telecommunications companies listed in Schedule E,
consistent with the terms of its current agreements with these
companies. The EarthLink Group will not extend or renew such
agreements beyond January 1, 1999 unless either:
(i) The EarthLink Group delivers the Core Internet
Application Set on a private label basis (with no EarthLink
Group Brand); or
(ii) The Sprint Party gives prior written approval, which
approval shall not be unreasonably withheld.
(e) Notwithstanding Section 7(c) above, until such time as the
Sprint Group has developed an Internet Telephony service to offer to
consumers, the EarthLink Group may offer such service of any third
party of its choice. However, any Internet Telephony obtained by the
EarthLink Group from a third party may not be co-branded with the
third party brand and may not be offered under the EarthLink-Sprint
co-brand; provided, however, that notwithstanding the generality of
the foregoing, the EarthLink Group may
7
offer as a component of its Core Internet Application Set an
Internet Telephony application that can be run with the Core
Internet Application Set in substantially similar fashion (and would
be presented to the customer with a substantially similar branding
approach) as the VocalTec application that is currently made
available by the EarthLink Group to its customers. At such time as
the Sprint Group has developed such service, the EarthLink Group
will be required to obtain such service from the Sprint Group unless
the EarthLink Group is able to obtain a service with materially
superior performance or a comparable service on superior terms from
a third party; provided, however, that (i) the EarthLink Group will
have the right to continue to obtain the Internet Telephony solution
it then currently distributes until it can terminate the relevant
agreement without liability and without material adverse effect on
its business and its reputation; (ii) the Sprint Group will have the
right to match any third party offer to provide Internet Telephony
to the EarthLink Group on the same terms including terms addressing
both quality and economics; and, (iii) the EarthLink-Sprint co-brand
may be used only to market the Core Internet Application Set of
which such Internet Telephony services may be a component and will
not in any way be used to market or promote the Internet Telephony
services on a stand-alone basis.
(f) If Sprint PCS has not appointed the members of the
EarthLink Group as its agents to sell wireless services prior to the
Effective Date, neither Section 7(c) nor any other provision of this
Agreement will restrict the EarthLink Group from entering into
arrangements with one or more cellular and/or PCS service providers
pursuant to which the EarthLink Group may sell such cellular and/or
PCS services. At the option of the EarthLink Group, such cellular
and/or PCS service may be marketed and sold under the third-party
provider's brand. If such appointment by Sprint PCS occurs after
the Effective Date, the EarthLink Group will thereafter be bound by
Section 7(c) with respect to all cellular and PCS services, subject
to its rights under those agreements entered into by the EarthLink
Group prior to such date, which the EarthLink Group will terminate
as soon as contractually permissible; provided, however, that
EarthLink may continue its third-party cellular and PCS agreements
for such time as the EarthLink Group, in its reasonable discretion,
determines is necessary to avoid material adverse effects on its
business and on its reputation as a result of the termination of its
business relationship with such third parties.
(g) Notwithstanding Section 7(b) above or any other provision
of this Agreement, the Sprint Group will be permitted to appoint one
or more Internet service providers ("ISPs") other than the members
of the EarthLink Group as its agents for the sale of its branded LD
Services and Telecommunications Services so long as the Sprint Group
does not ▇▇▇▇ the Internet related services provided by such ISP on
an integrated basis with the Sprint Services.
(h) Neither Section 7(b) nor any other provision of this
Agreement will restrict the Sprint Group in any way with respect to
the "Corporate Dial" service that it currently offers or any similar
product or service that is designed primarily for large corporate
accounts and offers enhanced features that are not then included in
the Core
8
Internet Application Set; provided that the Sprint Group shall not
offer or sell any services or products in connection with such
"Corporate Dial" service which are the same as or substantially
similar to the Core Internet Application Set (unless the Core
Internet Application Set is provided by the EarthLink Group) so long
as the Core Internet Application Set provided by the EarthLink Group
is of substantially similar quality and is provided at the same
price and on substantially similar terms as such services are
generally commercially available to the Sprint Group.
(i) Notwithstanding Section 7(c) above or any other provision
of this Agreement, but subject to the restrictions in Section 11,
the EarthLink Group may market, package, offer or sell ATM and frame
relay telecommunications services of any third party but only for
the sole purpose of providing access to the public Internet;
provided, however, the EarthLink Group may display the ▇▇▇▇ of or
otherwise identify the name of the vendor of such services solely
for the purpose of identifying the source of such services.
8. The Sprint Group's Responsibilities.
(a) Subject to contractual restrictions, the Sprint Group
shall devote reasonable resources and efforts to ensure that the
EarthLink Group has access to the Sprint Group's consumer
(i) third-party controlled and managed distribution channels;
(ii) OEM channels; and (iii) marketing properties, including Radio
Shack and other telecommunications services and product resellers
(collectively referred to as "Third-Party Channels"). The EarthLink
Group shall involve the Sprint Party in all communications with
Third Party Channels. Nothing in this Section shall require the
Sprint Group to take any action which would adversely impact the
Sprint Group's relationship with Third-Party Channels. The Sprint
Group's current Third-Party Channels are listed on Schedule F.
(b) The Sprint Group will, within the Sprint Party's
reasonable discretion, permit the EarthLink Group to participate in
the Sprint Group's promotional activities and communicate with the
Sprint Group's consumer customers regarding the Core Internet
Application Set, including, without limitation, providing the
EarthLink Group, where permitted by law, with adequate information
necessary to identify such customers. The EarthLink Party will, at
the Sprint Party's election, pay either (i) the One Time Payment
described on Schedule H for each customer generated through such
channel, or (ii) incremental marketing costs associated with such
channel activities; however, under no circumstances will EarthLink
pay both such amounts.
(c) Subject to contractual restrictions, the EarthLink Group
will cooperate with the Sprint Group in maintaining the Sprint
Group's preferred position on the Netscape and Microsoft referral
servers; provided, however, that the Sprint Group's presence on
those servers will, from the Effective Date, be the co-branded Core
Internet Application Set.
9
(d) The Sprint Group shall devote reasonable resources and
efforts in opening its consumer channels to actively promote, market
and sell the Core Internet Application Set and shall exert
reasonable efforts to ensure that those channels actively promote,
market and sell the Core Internet Application Set. The EarthLink
Party will, at the Sprint Party's election, pay either (i) the One
Time Payment described on Schedule H for each customer generated
through such channel, or (ii) incremental marketing costs associated
with such channel activities; however, under no circumstances will
the EarthLink Party pay both such amounts.
(e) The Sprint Group shall purchase those items and pay to the
EarthLink Party those amounts as described on Schedule G.
9. The EarthLink Group's Responsibilities.
(a) The Sprint Party shall be compensated for any Sprint Group
generated customer of the Core Internet Application Set, as set
forth in Schedule H. If the Core Internet Application Set is
materially changed from the current set, or as new Internet Services
are introduced by the EarthLink Group, the Parties will negotiate
commercially reasonable terms for the Sprint Group to sell these
services, which in no event shall be less favorable than the terms
offered by the EarthLink Group to others for selling the same or
similar services which terms will be comparable to those generally
available in the market place. Costs associated with the generation
of customers for Internet Service, under this Section 9(a), shall be
borne by the Sprint Group.
(b) The EarthLink Party shall be responsible for payment to
Netscape and Microsoft of referral fees incurred as a result of, and
costs associated with, the Core Internet Application Set's presence
on those parties' referral servers.
(c) The EarthLink Party shall be responsible for payment of
all bounties, royalties, and residuals to Third-Party Channels due
to sales of its Internet Services, provided that the EarthLink
Party agrees to such terms prior to the channel participant selling
the Internet Services, unless the Sprint Group elects to pay such
third party payments in exchange for the commission payment set
forth in Schedule H.
(d) The EarthLink Group will, at its cost and using reasonable
efforts, actively market, promote and sell Sprint Services.
Compensation to the EarthLink Group for its sale of the LD Services
will equal a percentage of total Net Collectible Call Usage Revenue
as described on Schedule G. For the purpose of this Agreement, Net
Collectible Call Usage Revenue is defined as monthly revenue
(excluding taxes, bad debt, fraud and subsequently credited
charges). Compensation to the EarthLink Group for its sale of the
Telecommunications Services shall be mutually agreed upon subject to
Schedule G.
(e) The EarthLink Party will, at the Sprint Group's cost and
within the EarthLink Party's reasonable discretion, permit the
Sprint Group to participate in the EarthLink Group's various
promotional activities and communicate with the EarthLink Group's
consumer customers regarding LD Services and Telecommunications
Services,
10
including, without limitation, providing the Sprint Group, where
permitted by law and contract, with adequate information necessary
to identify such customers.
(f) The EarthLink Group will, in all cases, be responsible for
any costs related to the production of the EarthLink Group software,
CD ROM or similar media and related packaging.
(g) The EarthLink Group will make available to all Sprint
Group customers any promotional offering generally available to the
EarthLink Group's non-Sprint customers of the Core Internet
Application Set at the same prices and on the same terms.
(h) If the Core Internet Application Set is of substantially
similar quality to other similar service packages that could be
utilized by the Sprint Group, then the Sprint Group will obtain, and
the EarthLink Group will provide, the Core Internet Application Set
to the Sprint Group for any new Internet Network Service the Sprint
Group develops on prices and terms at least as favorable to the
Sprint Group as the EarthLink Group offers the Core Internet
Application Set to any other third party and under prices and terms
no less favorable to the Sprint Group than are generally
commercially available to the Sprint Group for a substantially
similar set of services. If the Sprint Group develops an Internet
Network Service and makes it available to third parties, the Sprint
Group will make such service available to the EarthLink Group on the
best terms as it makes the service available to third parties.
10. Training. Each Party's Group shall provide, at its own costs,
qualified personnel to train a mutually agreed upon number of
representatives of the other Party's Group with respect to the training
Parties' Group's services and products necessary to enable each Party's
Group to optimally perform its obligations under this Agreement.
11. The EarthLink Group's Telecommunications Services Requirements;
The Sprint Group's Core Internet Application Set Requirements.
(a) Subject to the limitations contained in this Agreement,
the Sprint Group will provide, and the EarthLink Party agrees to
acquire, the EarthLink Group's Telecommunications Services
requirements (exclusive of: (i) dial-up Internet access services
including the attendant high-speed circuits necessary to deliver the
Internet Services, and (ii) other high-speed access services
including ATM and frame relay when used to provide a dedicated
connection to the Internet) from the Sprint Group, provided the
Sprint Group offers such services to the EarthLink Group at the best
prices available to the EarthLink Group from a third party for
substantially similar services. The Sprint Group acknowledges that
the EarthLink Group has existing voice and data services agreements
with third parties. The Sprint Group may elect to pay any penalties
and other fees related to contractually permissible early
termination of such agreements or may permit the EarthLink Group to
continue to purchase such services under such agreements for the
entire term of such agreements. Notwithstanding the generality of
the foregoing, the Sprint Group shall not require the EarthLink
Group to effect an early termination of
11
any such agreement if such termination would cause a material
disruption to the EarthLink Group's business or constitute a breach
of any such agreement.
(b) The obligation of the EarthLink Group to provide the
Sprint Group with certain opportunities to provide dial-up Internet
access services to the EarthLink Group are set forth in Section 1.6
of the Network Services Agreement among the Parties of even date
herewith, which Section is incorporated herein by this reference and
shall survive for the term of this Agreement. Furthermore, for the
term of this Agreement the EarthLink Group will purchase from the
Sprint Group high-speed access services, including ATM and frame
relay, for the purpose of providing dedicated connections to the
Internet, provided such services are offered by the Sprint Group at
the best prices and on substantially similar terms as are available
to the EarthLink Group from a third party for substantially similar
services.
(c) The EarthLink Group will provide, and the Sprint Group
agrees to acquire, the Sprint Group's Core Internet Application Set
requirements for the Sprint Group's internal needs for services
substantially similar to the Core Internet Application Set from the
EarthLink Group, provided the EarthLink Group offers such services
to the Sprint Group at the best prices and on substantially similar
terms as are available to the Sprint Group from a third party for
substantially similar services.
12. E-Mail. The e-mail domain for the Internet Service shall be
"▇▇▇▇▇▇▇▇▇.▇▇▇", except as customers may request unique or vanity domain
names.
13. Product Enhancements.
(a) The EarthLink Party and the Sprint Party agree to
negotiate a billing and collection agreement for integrated billing
services for the Sprint Group's LD and Telecommunications Services
and the EarthLink Group's Internet Services, which results in the
EarthLink Group achieving substantially the same economic results of
its now existing merchant agreements (e.g., credit card agreements)
for its customer ▇▇▇▇▇▇▇▇. If, after one (1) year from the date the
integrated billing services are implemented, the Sprint Group's
incremental costs of providing integrated billing services differs
materially from the EarthLink Group's payment for the services, the
Sprint Party and the EarthLink Party agree they will renegotiate the
terms of the billing and collection agreement. Any renegotiated
increases or decreases in the EarthLink Group's payments to the
Sprint Group for integrated billing services shall not exceed
twenty-five percent (25%).
(b) (i) If the Sprint Group seeks the enhancement of existing
Internet Services or the development of new Internet Services
not currently offered by the EarthLink Group, the Sprint Party
will present a request for such enhancement or development to
the EarthLink Party. The Parties agree to negotiate in good
faith the developmental targets, milestones, acceptance testing
schedules and delivery dates for any such enhancements or
developments (the "Development Schedule"). The EarthLink Group
shall, if the EarthLink Party elects, develop at its cost the
new service or enhancement and negotiate commercially
reasonable terms with
12
the Sprint Party for the Sprint Group to sell the service as a
sales agent of the EarthLink Group. If the EarthLink Group
declines to develop the new service or enhancement, the Sprint
Party can require the EarthLink Group to develop such service
or enhancement at the Sprint Party's cost, unless such
development effort would have a material adverse impact on the
EarthLink Group's operations or product development efforts, as
reasonably determined by the EarthLink Party.
(ii) If the EarthLink Party declines for the EarthLink
Group to enhance existing Internet Services or develop new
Internet Services on the aforestated grounds, or if within
forty-five (45) following the EarthLink Party's receipt of the
Sprint Party's request the Parties have not agreed to the
Development Schedule, the Sprint Group may at its own cost
develop (either directly or by outsourcing) the enhancement or
service. After commercially reasonable acceptance testing, the
EarthLink Group will (if requested by the Sprint Party)
implement the development. If such development is funded by
the Sprint Party (whether developed by the EarthLink Group, the
Sprint Group or a third party), the Sprint Group will own such
development and will license the development to the EarthLink
Group on commercially reasonable terms.
Notwithstanding anything in this Section 13(b) to the contrary, if
the development or commercialization of any enhancement(s) of
existing Internet Services or the development of new Internet
Services would have a material adverse effect on the EarthLink Group
or its product development efforts, the EarthLink Group shall not be
required to develop or implement such new Internet Services or
enhancements to Internet Services. To the extent such items are
developed by the Sprint Group, directly or through a third party,
the Sprint Group will work with the EarthLink Group, at the Sprint
Party's expense (however, the EarthLink Group shall be responsible
for its own personnel costs), to ensure the proper integration of
such enhancements and new Internet services into the Internet
Services and the Parties' business relationship.
14. Lawful Performance and Related Covenants. Each Party's Group
must lawfully perform its obligations under this Agreement. Neither
Party's Group will commit any act that would reasonably be expected to
reflect unfavorably on the other. Neither Party's Group will
misrepresent products and services or the prices of products and
services. Neither Party's Group will sponsor or participate in any
illegal pyramid or multilevel marketing system.
15. Invoicing; Payment; Interest and Payment Default.
(a) Each Party will deliver to the other on a monthly basis an
invoice reflecting the aggregate amounts payable by the other
Party's Group to the invoicing Party for the month most recently
completed as computed in accordance with this Agreement. Each such
invoice will reflect, in detail, the computation and a detailed
description of the invoiced amounts.
(b) Each Party shall pay to the other all invoiced amounts
within thirty (30) days of receipt of an invoice; provided, however,
that to the extent any amount of an
13
invoice is subject to a bona fide, good faith dispute, the payment
of such disputed amount shall be determined in accordance with
dispute resolution processes provided for under Section 22. Any
undisputed amounts will be paid to and promptly credited by the
payee Party. In the case of a disputed amount, if after sixty (60)
days such dispute has not been resolved, the payor Party shall place
one hundred percent (100%) of the disputed amount in an escrow
account established for the payee Party's benefit until such dispute
is resolved. Upon resolution of the dispute, the Parties shall be
paid the disputed amounts held in escrow and any interest having
accrued on the disputed amounts held in the escrow account in
proportion to the amount to be received by each Party with respect
to the resolution of the dispute. To the extent the amount held in
escrow is insufficient to fully pay the payee Party as established
by the resolution of the dispute, the payor Party shall, within
fifteen (15) days of the resolution of the dispute, pay such balance
to payee party. The Parties shall bear the costs of the escrow
account in inverse proportion to the amounts distributed to the
Parties from the escrow account.
(c) After the expiration of the thirty (30) day payment
period, all undisputed unpaid invoiced amounts shall bear interest
at the rate of one percent (1%) per month, accruing daily, until
paid. In the event that the payor Party fails to pay any undisputed
amount when due and upon receipt of written notice from payee party
of nonpayment, the payor Party shall be deemed in default of this
Agreement if the undisputed amount is not then paid within the later
to occur of thirty (30) days from the date of the payor Party's
receipt of such notice of nonpayment or ninety (90) days from the
date of the applicable invoice (a "Payment Default").
16. Confidentiality.
(a) Definition. "Proprietary Information" means any
information or material regarding the terms of this Agreement or
which: (i) is confidential and proprietary to the disclosing
Party's Group, which derives economic value from not being generally
known and is the subject of reasonable efforts by the disclosing
party to maintain its secrecy; or (ii) the disclosing Party's Group
obtains from any third party, which the disclosing party treats as
confidential and proprietary, whether or not owned by the disclosing
Party's Group.
(b) Restriction. All Proprietary Information disclosed by one
Party's Group to the other Party is deemed to be confidential,
restricted and proprietary to the disclosing Party's Group.
(c) Use. The Parties agree to use the Proprietary Information
received from the other Party's Group only to accomplish the intent
of this Agreement or as otherwise set forth in this Agreement. No
other rights to trade Brand, inventions, copyrights, patents, or any
other intellectual property rights are implied or granted under this
Agreement or by the conveying of Proprietary Information between the
Parties and their Groups.
14
(d) Copying. Proprietary Information supplied is not to be
reproduced in any form except in performing a Party's obligations
under this Agreement.
(e) Care. The receiving Party must provide the same degree of
care to avoid disclosure and unauthorized use of the Proprietary
Information as it provides to protect its own similar proprietary
information. All Proprietary Information must be retained by the
receiving Party in a secure place with access limited to only such
of the receiving Party's employees, attorneys, accountants or agents
who need to know such information to perform a Party's obligations
under this Agreement and to such third Parties as the disclosing
Party has consented to by prior written approval. A receiving Party
may disclose the disclosing Party's Group's Proprietary Information
to members of the receiving Party's Group provided that the
receiving Party, together with the member of the receiving Party's
Group which may violate this Section 16, will be jointly and
severally liable for any breach of this Section 16 that is caused by
any member of such Party's Group.
(f) Ownership. All Proprietary Information, unless otherwise
specified in writing, (i) remains the property of the disclosing
Party or its Group, as the case may be, and (ii) such Proprietary
Information, including all copies of such information, must be
returned to the disclosing Party or its Group, as the case may be,
or destroyed after the receiving Party's need for it has expired or
upon request of the disclosing Party, and, in any event, upon
termination of this Agreement.
(g) Limitation. The Parties agree that the term "Proprietary
Information" does not include information which:
(i) has been or may in the future be published or is now
or may in the future be otherwise in the public domain through
no fault of the receiving Party or its Group;
(ii) prior to disclosure pursuant to this Agreement is
property within the legitimate possession of the receiving
Party or its Group;
(iii) subsequent to disclosure pursuant to this
Agreement is lawfully received from a third party having rights
in the information without restriction of the third party's
right to disseminate the information and without notice of any
restriction against its further disclosure;
(iv) is independently developed by the receiving Party's
Group; or
(v) is obligated to be produced under order of a court of
competent jurisdiction or other similar requirements of a
governmental agency, so long as the Party or the Party's Group
required to disclose the information provides the other Party
with prior notice of such order or requirement and limits to
the extent possible.
15
(h) Relief. The Parties agree that a breach of this
Section 16 may give rise to irreparable injury to the non-breaching
Party and its Group that cannot be compensated for adequately by
damages. Consequently, the Parties agree that each Party and the
members of its Group shall be entitled, in addition to all other
remedies available, to injunctive and other equitable relief to
prevent a breach of this Section 16 of this Agreement and to secure
the enforcement of the provisions of this Section 16 in any court of
competent jurisdiction in the United States or any state thereof
(and the Parties agree to waive any requirement for the posting of
bond in connection with such remedy).
(i) Term. Neither Party nor such Party's Group may disclose
the Proprietary Information of the other Party for a period which is
the longer of (i) four (4) years from the date of disclosure or
(ii) two (2) years following the date of termination of this
Agreement. A Party and/or its Group may never disclose trade
secrets of the other Party and/or its Group so long as such
Proprietary Information continues to qualify as a trade secret under
applicable law.
(j) Further Protection. If a Party determines that it or its
Group is required by law to disclose this Agreement or its terms or
any other Confidential Information (including any press release or
filing with the Securities and Exchange Commission or any other
government agency), such Party shall provide a copy of such proposed
disclosure to the other Party for its review and comment prior to
such disclosure and shall, together with the other members of this
Group, cooperate in full with the other Party and its Group with
respect to any protective orders, requests for confidentiality or
similar protections that are reasonably requested to be sought by
the other Party to protect the confidentiality of such information.
17. Liability of Parties. EXCEPT AS SPECIFICALLY PROVIDED FOR IN
THIS AGREEMENT, IN NO EVENT WILL EITHER PARTY OR THEIR GROUPS BE LIABLE
FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, OR
LOSS OF PROFITS, ARISING FROM THE RELATIONSHIP OR THE CONDUCT OF BUSINESS
UNDER THIS AGREEMENT.
18. [Reserved].
19. Indemnification.
(a) Each Party (the "Indemnifying Party") agrees to indemnify
and hold harmless the other Party and the other members of its Group
and its and their permitted assigns, and its partners, officers,
directors, employees and agents, and each of their representatives,
and its successors and assigns (collectively, the "Indemnitees") at
all times from and after the Effective Date against and in respect
of any Damages (hereinafter defined) suffered by the Indemnitees as
a result of (i) any breach by the Indemnifying Party and its Group
of any representation, warranty or covenant contained in this
Agreement or (ii) any claims, actions or demands (collectively,
"Claim") by a third party to the extent caused by or arising out of
(A) any negligent act or omission on the part of the Indemnifying
Party, (B) any act or omission by the Indemnifying Party and its
16
Group that does not conform to the requirements of the Agreement or
(C) the Indemnitee's use of the Indemnifying Party's brand in
accordance with the terms of this Agreement.
(b) For the purposes of this Agreement and unless otherwise
specifically provided, the term "Damages" shall include (i) all
amounts finally awarded or charged against an Indemnitee, (ii) any
amounts paid in settlement as permitted by this Section 19 and
(iii) all out-of-pocket expenses or costs incurred by such
Indemnitee(s), including reasonable professional and attorneys' fees
and expenses.
(c) Promptly upon receipt by the Indemnitee of notice of any
demand, assertion, claim, action or proceeding, judicial or
otherwise, with respect to any matter as to which an Indemnifying
Party has agreed to indemnify an Indemnitee under the provisions of
this Agreement, the Indemnitee will give prompt notice thereof in
writing to the Indemnifying Party, together with a statement of such
information respecting a Claim, as the Indemnitee shall then have.
The Indemnifying Party shall have the right to contest and defend
the Claim, with respect to which it has been called upon to
indemnify the Indemnitee under the provisions of this Agreement;
provided, however, that:
(i) notice of intention so to contest shall be delivered
to the Indemnitee within twenty (20) calendar days from the
receipt by the Indemnifying Party of notice of the Claim;
(ii) the Indemnifying Party will pay all costs and
expenses of such contest or defense, including all reasonable
attorneys' and accountants' fees, and the cost of any bond
required by law to be posted in connection with such contest or
defense;
(iii) such contest or defense shall be conducted by
attorneys employed by the Indemnifying Party, at the
Indemnifying Party's sole cost and expense, but the Indemnitee
shall have the right to participate in such proceedings and to
be represented by attorneys of its own choosing, at the
Indemnitee's cost and expense without contribution or
indemnification by the Indemnifying Party for such costs or
expenses;
(iv) if after such opportunity, the Indemnitee does not
elect to participate in the defense in any such proceedings,
the Indemnitee (subject to paragraph (vi) below) shall be bound
by the results obtained by the Indemnifying Party, including
without limitation any out-of-court settlement or compromise;
(v) if the Indemnifying Party assumes the defense, the
Indemnitee(s) will not settle, or attempt to settle, such claim
without the Indemnifying Party's consent which consent may be
withheld in the Indemnifying Party's good faith discretion; and
17
(vi) the Indemnifying Party will not settle any claim
without the prior written consent of the Indemnitees which
consent may be withheld in the Indemnifying Party's good faith
discretion, unless the settlement contains a complete and
unconditional release of the Indemnitee(s), and the settlement
does not involve the imposition of any nonmonetary relief on
the Indemnitees.
20. Publicity. Except for legally mandated disclosures, any press
releases or public announcements relating to this Agreement or the terms
of the Agreement must be mutually agreed upon by the Parties. Any
legally mandated disclosures shall be subject to the provisions of
Section 16(j). Notwithstanding the foregoing, neither Party nor any
member of its Group will be required to obtain approval of the other
Party or any member of its Group with respect to incidental references to
the co-branded Internet Services or the other Party's Brand included in
general corporate announcements and press releases.
21. Dispute Resolution. Prior to instituting any action pursuant
to Section 29(f), the Parties will attempt to resolve any dispute between
the Parties' Groups either with respect to the interpretation of any
provision of this Agreement or with respect to the performance by either
Party's Group under this Agreement as specified in this Section.
(a) Upon written request of either Party, a dispute shall be
submitted for resolution to a dispute resolution team which shall be
comprised of two representatives from each Party (the "Integrated
Action Team").
(b) The Integrated Action Team shall meet as often as
necessary to gather and furnish to each Party all information with
respect to the matter in issue, which is appropriate and germane for
its resolution.
(c) The Integrated Action Team shall discuss the dispute and
negotiate in good faith in an effort to resolve the dispute without
the necessity of any formal proceeding relating thereto.
(d) During the course of such negotiation, all reasonable
requests made by one Party to the other for nonprivileged
information reasonably related to this Agreement and the dispute
will be honored in order that each Party may be fully advised of the
other Party's position.
(e) The specific format for such discussions will be left to
the discretion of the Integrated Action Team, but may include the
preparation of agreed upon statements of fact or written statements
of position furnished by each Party to the other Party.
(f) If the Integrated Action Team fails to resolve the dispute
within thirty (30) days after the initial delivery of a request by
either Party to submit the dispute to the Integrated Action Team
(the "Notice"), then the dispute shall be escalated to an officer of
Sprint and an officer of EarthLink, for their review and resolution
within forty-five (45) days after delivery of the Notice.
18
(g) If the officers referred to above fail to resolve the
dispute within forty-five (45) days after the Notice, then the
dispute shall be escalated to the President of Sprint and the
President of EarthLink for their review and resolution within sixty
(60) days after the Notice.
(h) If the dispute is not resolved by the Parties' Presidents
within sixty (60) days after the Notice, then the Parties may
initiate formal proceedings.
(i) Notwithstanding anything in this Section to contrary, the
Integrated Action Team may stay the time periods set forth in this
Section upon a unanimous vote of its members to do so.
(j) Notwithstanding anything in this Agreement to the
contrary, either Party may resort to court action for injunctive
relief at any time if the dispute resolution process set forth in
this Section would permit or cause irreparable damage to such Party
or any third Party claiming against such Party, due to delay arising
out of the dispute resolution process.
22. Continued Performance. The Parties agree that their Groups
shall continue performing their respective obligations under this
Agreement while disputes are being resolved unless and until such
obligations are terminated or expire in accordance with the provisions of
the Agreement.
23. Audit. Each Party's Group will maintain complete and accurate
accounting records during the term of this Agreement and for two (2)
years after the termination of this Agreement in a consistent form to
substantiate the direct monetary payments and reporting obligations of
one Party to the other Party under this Agreement. Each Party may, upon
reasonable advance written notice to the other Party, conduct during the
other Party's regular business hours, and in accordance with applicable
law and reasonable security requirements, audits of the other Party's
Group of such direct monetary payment and reporting obligation accounts
and records, in accordance with the following guidelines and
restrictions:
(a) the audit may be conducted by members of the internal
audit department who are employees of the auditing Party;
(b) the audited Party and its Group may require the auditing
Party's employee to conduct the audit on the premises of the audited
Party's Group;
(c) the audited Party's Group will have the right to have an
employee or representative present at all times during the audit;
(d) the auditing Party will not have direct unrestricted
access to the audited Party's Group's computer database without the
consent of the audited Party, and will be entitled to review only
those specific records of the audited Party's Group directly related
to the monetary obligations of the audited Party's Group under this
Agreement, specifically limited to customer activations,
deactivations, customer billing records,
19
records related to media/advertising expenditures, market launch
expenditures, market development funds/escrow arrangements, and any
other records directly related to the monetary obligations of such
Party's Group hereunder; and
(e) the auditing Party's audit of activation, deactivation,
and customer billing records will be limited to a reasonable random
sampling audit of those records.
Subject to the restrictions set forth above, the audited Party and the
members of its Group will cooperate fully with the auditing Party. All
reasonable fees and costs incurred (including a reasonable charge for the
services of any employee of the audited Party directly involved in the
audit) by either Party in connection with such audits will be paid by the
auditing Party. The Party whose group is audited will have the right to
have the results of any such audit reviewed by their internal auditing
staff or by the audited Party's independent accountants who then audit
the financial statements of the audited Party ("Independent Auditors").
The cost of such internal or Independent Auditors review shall be borne
by the audited Party. The audited Party and its Group shall use its
commercially reasonable efforts to immediately correct any deficiencies
related to performance proved to exist by such audit.
Each Party may seek an audit of the other Party and its Group,
pursuant to this Section, no more than once every twelve (12) months.
These audit rights shall survive until the period ending twelve (12)
months following the termination of all residual payments under the
applicable Schedule.
Termination.
(a) Notwithstanding Section 1 of this Agreement, the Sprint
Party may, if not then in material breach of this Agreement,
terminate this Agreement with sixty (60) days prior notice in the
event the EarthLink Group is in material breach of any
representation, warranty, obligation or agreement set forth in this
Agreement and such breach is not substantially cured within sixty
(60) days of notice of such breach. If the breach requires more
than sixty (60) days to cure, such sixty (60) day period will be
extended for an additional sixty (60) days if the EarthLink Group is
exercising substantial, diligent and continuous efforts to cure such
breach; provided, however, that if the EarthLink Group is not
exercising substantial, diligent and continuous efforts to cure such
breach, the Sprint Party may terminate this Agreement immediately
pursuant to notice given at any time after the sixty (60) day cure
period (as may be extended pursuant to this Section 24(a)) but prior
to the cure of such breach.
(b) The Sprint Party shall have the option to terminate this
Agreement immediately by written notice to the EarthLink Party upon
the occurrence of:
(i) a Business Combination as defined in the Governance
Agreement between the Parties of even date herewith; or
(ii) consummation of a tender or exchange offer, merger,
consolidation, share exchange or other business combination, in
which the Sprint
20
or Sprint L.P. is a party, or a sale of securities,
recapitalization, liquidation, dissolution or similar transaction
involving Sprint or Sprint L.P., or any acquisition of, in any
manner, directly or indirectly, a material equity interest in, or a
material amount of voting equity securities of Sprint or Sprint L.P.
(with the acquisition of beneficial ownership of fifty percent (50%)
or more of voting equity securities being deemed material for this
purpose) or assets of Sprint or Sprint L.P. (a "Sprint Change in
Control Transaction") if the entity that, as a result of such
transaction, owns 50% or more of the equity securities or assets of
Sprint or Sprint L.P. or owns the Sprint Brand or is otherwise the
surviving entity of such transaction (the "Survivor"), is engaged,
directly or indirectly, either itself or through Affiliates, in a
Restricted Services Business (defined below).
(c) Notwithstanding Section 1 of this Agreement, the EarthLink
Party may, if not then in material breach of this Agreement,
terminate this Agreement with sixty (60) days prior notice in the
event the Sprint Group is in material breach of any representation,
warranty, obligation or agreement set forth in this Agreement and
such breach is not substantially cured within sixty (60) days of
notice of such breach. If the breach requires more than sixty
(60) days to cure, such sixty (60) day period will be extended for
an additional sixty (60) days if the Sprint Group is exercising
substantial, diligent and continuous efforts to cure such breach;
provided, however, that if the Sprint Group is not exercising
substantial, diligent and continuous efforts to cure such breach,
the EarthLink Party may terminate this Agreement immediately
pursuant to notice given at any time after the sixty (60) day cure
period (as may be extended pursuant to this Section 24(c)) but prior
to the cure of such breach.
(d) The EarthLink Party may, if not then in material breach of
this Agreement, terminate this Agreement immediately by written
notice to the Sprint Party in the event of:
(i) an acquisition by any member of the Sprint Group,
directly or indirectly, either in whole or in part, either via
a tender or exchange offer, merger, consolidation, share
exchange or other business combination or an asset purchase or
any other business transaction, of a third party which provides
a set of services and products (whether as a series of
individual products and services or as an integrated grouping
or package of products and services) which are the same as or
substantially similar to the Core Internet Application Set
(such portion of the business of such third party as consists
of the provision of such services being referred to as a
"Restricted Services Business"), if the Sprint Group has not
within 180 days after the consummation of such acquisition
effected the (x) transfer of the Restricted Services Business
to the EarthLink Group on terms and conditions mutually
acceptable to the Parties (which opportunity the EarthLink
Party agrees to review in good faith); (y) termination of the
Restricted Services Business; or (z) divestiture of the
Restricted Services Business; or
21
(ii) a Sprint Change in Control Transaction if the
Survivor is engaged in a Restricted Services Business and has
not within 180 days after the consummation of the Sprint Change
in Control Transaction effected the (x) transfer of the
Restricted Services Business to the EarthLink Group on terms
and conditions mutually acceptable to the Parties (which
opportunity the EarthLink Party agrees to review in good
faith); (y) termination of the Restricted Services Business; or
(z) divestiture of the Restricted Services Business; or
(iii) the termination of the Governance Agreement under
clause (ii) (when Sprint's Percentage Interest is less than the
Lower Threshold, as such terms are defined in the Governance
Agreement), (iv) and (vi) of Section 7.01(a) thereof.
The EarthLink Party will not unreasonably withhold its consent to an
extension of such 180 day period referred to in Sections 24(d)(i)
and (ii) for an additional period not to exceed 180 days if the
Sprint Group is not permitting the Restricted Services Business to
use the Sprint Brand or the Sprint Group's marketing and
distribution channels and is diligently and in good faith seeking to
consummate such divestiture as soon as possible. In the event of an
event described in clauses (i) and (ii) of Section 24(d) above:
(a) during the 180 day period provided for in such clauses (and any
extension thereof agreed to by the EarthLink Party and any time
period thereafter prior to the EarthLink Party's election (or waiver
of its right) to terminate this Agreement), the exclusivity
restrictions contained in Section 7(b) shall not apply and no breach
of such provision shall be deemed to have occurred by reason of the
conduct of a Restricted Services Business involved in such a
transaction during such time period; and (b) if the EarthLink Party
does not exercise its option to terminate this Agreement within 90
days following such prior 180 day period (as same may be extended
pursuant to this paragraph), the Sprint Group shall be permanently
released from the exclusivity restrictions under Section 7(b) for
the Restricted Services Business (including any internal growth or
expansion of such Business but excluding any acquisition of another
Restricted Services Business).
(e) Either Party may terminate this Agreement immediately by
written notice to the other Party upon the termination of the
Governance Agreement under clause (i) of Section 7.01 thereof.
(f) (i) Upon termination of this Agreement by the EarthLink
Party pursuant to Sections 24(d)(i) or 24(d)(ii) or by the
Sprint Party pursuant to Section 24(b)(ii), the Sprint Group
shall pay to the EarthLink Party a termination fee (the
"Termination Fee") to reimburse the EarthLink Group for its
loss of benefits under this Agreement, which payment is not in
lieu of any damages which may at the time of termination have
previously inured to the EarthLink Group as a result of any
breach of this Agreement by the Sprint Group prior to the
termination date, subject to clause (iv) below. The actual
losses resulting to the EarthLink Group from the termination of
this Agreement pursuant to Sections 24(d)(i), 24(d)(ii) or
22
24(b)(ii) would be difficult to determine, and the Parties
agree that the Termination Fee is a fair and reasonable
estimate of such losses in the form of liquidated damages and
is not a penalty.
(ii) The Termination Fee shall consist of two components,
the sum of which shall be paid as a single fee. The first
component of the Termination Fee (the "First Component") shall
equal $60 million on the Effective Date and shall decrease pro
rata per day over the five (5) year period commencing on the
Effective Date; provided that if the termination of this
Agreement occurs pursuant to Sections 24(d)(i), 24(d)(ii) or
24(b)(ii) prior to the second anniversary of the Effective
Date, the First Component shall equal $60 million. The First
Component shall be paid, at the EarthLink Party's election, in
cash or in shares of the Preferred Stock of Newco then-owned by
the Sprint Group that were issued pursuant to the Investment
Agreement, each such share having a value for such purpose
equal to the value of the Newco common stock into which such
share of Preferred Stock is convertible as of the date of such
termination assuming use of the Conversion Ratio as defined in
the Governance Agreement; provided that the EarthLink Party
cannot require the Sprint Party to surrender shares of
Preferred Stock if such surrender would violate federal or
state securities laws.
(iii) The second component of the Termination Fee will
equal the sum of the fees which would have been payable under
"Subscriber Commitment" on Schedule H for the period from such
termination through the end of the five (5) year commitment
period in such provision assuming that no additional
subscribers would have been generated under such provision
after the effective date of the termination of this Agreement.
(iv) The Termination Fee represents the sole amount that
will be payable from each Party to the other upon termination
of this Agreement other than damages accrued prior to the date
of termination resulting from any prior breach (excluding for
these purposes any damages relating to the period after the
termination of this Agreement) and amounts owing under any
express provision of this Agreement that have accrued prior to
the date of termination.
(g) Except as provided in this Section 24, termination of this
Agreement is without prejudice to any other rights or remedies of
the Parties. Termination of this Agreement for any cause does not
release either Party nor the members of its Group from any liability
which, at the time of termination, has already accrued to the other
Party and its Group subject to Section 24(f)(iv).
(h) Upon the termination of this Agreement the Parties and
their Groups will use commercially reasonable efforts to mitigate
the non-liquidated damages caused by the occurrence of such event.
23
(i) The occurrence of any of the events that trigger a right
to termination pursuant to Sections 24(b), 24(d) or 24(e) shall not
constitute a breach of this Agreement, including, without
limitation, Section 7(b).
25. Sprint Brand License.
(a) License. The Sprint Party grants to the EarthLink Party a
non-exclusive, royalty free, nontransferable license, to use the
Sprint Brand in the Territory (directly or through a sublicense to
the members of the EarthLink Group and the EarthLink Group's
distributors, resellers and channel partners) and during the term of
this Agreement for the purpose of marketing, promoting and selling
the Sprint Services, the Core Internet Application Set, Internet
Telephony services (to the extent permitted under Section 7(e)) and
such other Internet Services as are agreed upon in writing by the
Parties, in each case as specified in this Agreement. The EarthLink
Party shall cause the members of the EarthLink Group, and the
EarthLink Group's distributors, resellers and channel partners to
properly display and use Sprint's Brand in accordance with this
Agreement.
(b) Control of Brand.
(i) The Sprint Party has the right, at all reasonable
times, to inspect the EarthLink Group's relevant facilities and
review the manner in which the EarthLink Group uses the Sprint
Brands so that the Sprint Party may satisfy itself that the
Sprint Brands are used in accordance with this Agreement;
provided, however, that Sprint cannot exercise such right in a
manner which unreasonably interferes with the EarthLink Group's
normal business operations.
(ii) The EarthLink Group shall adhere to the trademark
usage guidelines furnished by the Sprint Party for the
depiction of the Sprint Brand ("Trademark Usage Guidelines")
and any reasonable modifications or amendments thereto. The
attached Schedule I will function as the current version of the
Trademark Usage Guidelines. The EarthLink Group shall adhere
to the Sprint Party's Marketing Communications Guidelines and
any reasonable modifications or amendments thereto, the current
version of which is attached as Schedule J. In the event of a
conflict between this Agreement on the one part and either of
the Trademark Usage Guidelines or Marketing Communications
Guidelines on the other part, this Agreement shall govern.
(iii)The EarthLink Group shall include on all advertising
and promotional materials, packaging and labels bearing the
Sprint Brand the following notice:
"[Sprint ▇▇▇▇] is a registered trademark of Sprint
Communications Company L.P. Used under license."
24
With respect to electronic presentations of the Sprint Brand,
this notice may be contained on EarthLink's web-site under
"Legal Information" or, if software, in the "About" box or
where the EarthLink Group's own proprietary notices appear.
(iv) Prior to any first use of the Sprint Brand on
advertising or promotional materials by the EarthLink Group,
the EarthLink Party agrees to furnish the Sprint Party with
samples of such advertising and promotional materials,
packaging and labels bearing any of the Sprint Brand for
trademark usage approval (which approval shall not be
unreasonably withheld) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. Intellectual
Property Analyst
Sprint Communications Company L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The EarthLink Group shall amend the future use of the Sprint
Brand in any such advertising and promotional materials,
packaging and labels if the use of the Sprint Brand is not
approved by the Sprint Party. The Sprint Party will have 7
business days from the date of receipt to approve or object to
materials submitted for trademark usage approval. If no
objection is received by the EarthLink Group within such 7
business days, such materials will be deemed approved. Use of
the Brand by the EarthLink Group that is substantially
identical to uses of the Brand that have previously been
approved or that is being used for the same program (with
substantially similar presentation of the Sprint Brand) as has
previously been approved do not require submission for
approval.
(v) The EarthLink Group must immediately cease placing
into its distribution channel any previously approved material
from which the Sprint Party withdraws its approval. The Sprint
Party will not unreasonably rescind approval of any materials
previously approved.
(c) Rights in Brand.
(i) The EarthLink Group acquires and will acquire no
rights, title or interest in the Sprint Brand or the goodwill
associated with them, other than the right to use the Sprint
Brand in accordance with this Agreement. In accepting this
Agreement, the EarthLink Group acknowledges the Sprint Party's
ownership of the Sprint Brand, its validity and the goodwill
connected with it. The EarthLink Group will not attack the
Sprint Brand, nor assist anyone in attacking it. The EarthLink
Party further agrees that the EarthLink Group shall not make
any application to register the Sprint Brand, nor to use any
confusingly similar trademark, service ▇▇▇▇, trade name, or
derivation, during the term of this Agreement or thereafter.
This paragraph will survive the termination of this Agreement.
25
(ii) At the request and sole expense of the Sprint Party,
the EarthLink Party will execute and will cause any relevant
member of the EarthLink Group to execute, any papers or
documents reasonably necessary to protect the rights of Sprint
in the Sprint Brand and execute and deliver such other
documents as may be reasonably requested by the Sprint Party.
(iii) Sprint represents and warrants that as of the
date hereof the Sprint Brand does not infringe upon any
trademarks and is not involved in any opposition, invalidation,
cancellation or litigation that would threaten the EarthLink
Group's use of the Sprint Brand in connection with the Core
Internet Application Set and, to the Sprint Party's knowledge,
no such action is threatened with respect to the Sprint Brand.
In the event that such action occurs, the Sprint Party will
vigorously protect the Sprint Brand.
(d) Infringement. The EarthLink Party shall promptly notify
the Sprint Party of any unauthorized use of the Sprint Brand that
comes to the EarthLink Group's attention. The Sprint Party in its
reasonable discretion may take such action as may be required to
prosecute the infringement. In the event that the Sprint Party
decides that action should be taken against such third Parties, the
Sprint Party may take such action either in its own name, or
alternatively, the Sprint Party may authorize the EarthLink Party to
initiate such action in the EarthLink Party's name but the EarthLink
Party shall have no obligation to do so. In either event, the
EarthLink Party agrees and agrees to cause the relevant members of
the EarthLink Group to cooperate fully with the Sprint Party, at the
Sprint Party's expense, to whatever extent it is necessary to
prosecute such action, all expenses being borne by the Sprint Party
and all damages which may be recovered being solely for the account
of the Sprint Party.
(e) Termination. In the event the EarthLink Group violates
the Sprint Brand Trademark Usage Guidelines or the Sprint Marketing
Communications Guidelines and continues to do so for a continuous 45
day period or for three periods of 30 days each during a calendar
year following written notice from the Sprint Party, such violation
shall constitute a material breach of this Agreement and the Sprint
Party may terminate this Agreement.
(f) Relief. The Parties agree that a breach of this
Section 25 may give rise to irreparable injury to the non-breaching
Party and its Group that cannot be compensated for adequately by
damages. Consequently, the Parties agree that each Party shall be
entitled, in addition to all other remedies available, to injunctive
and other equitable relief to prevent a breach of this Section 25
and to secure the enforcement of the provisions of this Section 25
in any court of competent jurisdiction in the United States or any
state thereof (and the Parties agree to waive any requirement for
the posting of bond in connection with such remedy).
26
26. EarthLink Brand License.
(a) License. The EarthLink Party grants to the Sprint Party a
non-exclusive, royalty free, nontransferable license, to use the
EarthLink Brand and the EarthLink marks described on Schedule C (the
"Marks") in the Territory (directly or through a sublicense to the
members of the Sprint Group and the Sprint Group's distributors,
resellers and channel partners) and during the term of this
Agreement for the purpose of marketing, promoting and selling
Internet Services sourced from the EarthLink Group (separately or in
a package or bundle with LD Services and/or Telecommunications
Services), in each case as specified in this Agreement. Sprint will
cause the members of the Sprint Group and the Sprint Group's
distributors, resellers and channel partners to properly display and
use the EarthLink Brand and Marks in accordance with this Agreement.
(b) Control of Brand and Marks.
(i) The EarthLink Party has the right, at all reasonable
times, to inspect the Sprint Group's relevant facilities and
review the manner in which the Sprint Group uses the EarthLink
Brands and Marks so that the EarthLink Party may satisfy itself
that the EarthLink Brands and Marks are used in accordance with
this Agreement; provided, however, that the EarthLink Party
cannot exercise such right in a manner which unreasonably
interferes with the Sprint Group's normal business operations.
(ii) The Sprint Group shall adhere to the trademark usage
guidelines furnished by the EarthLink Party for the depiction
of the EarthLink Brand and Marks ("EarthLink Trademark Usage
Guidelines"). The attached Schedule K will function as the
current version of the EarthLink Trademark Usage Guidelines.
(iii) The Sprint Party shall include on all advertising
and promotional materials bearing the EarthLink Brand or Marks
the following notice:
[EarthLink ▇▇▇▇] is a Registered Trademark of EarthLink
Network, Inc. Used under license.
(iv) Prior to any first use of any of the EarthLink Brand
and/or Marks by the Sprint Group, the Sprint Party must furnish
EarthLink with samples of all advertising and promotional
materials, packaging and labels bearing any of the EarthLink
Brand for trademark usage approval to:
Contracts Manager
EarthLink Network, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Sprint Group shall amend the future use of the EarthLink
Brand and Marks if the use of the EarthLink Brand or Marks is
not approved by the EarthLink Party.
27
The EarthLink Party will have 7 business days from the date of
receipt to approve or object to materials submitted for
trademark usage approval. If no objection is received by
Sprint within 7 business days, such materials will be deemed
approved. Use of the Brand and Marks by the Sprint Group that
is substantially identical to uses of the Brand and Marks that
have previously been approved or that is being used for the
same program (with substantially similar presentation of the
EarthLink Brand and Marks) as has previously been approved do
not require submission for approval.
(v) The Sprint Group must immediately cease placing
materials into its distribution channels any previously
approved material from which the EarthLink Party withdraws its
approval. The EarthLink Party will not unreasonably rescind
approval of any materials previously approved.
(c) Rights in Brand.
(i) The Sprint Group acquires and will acquire no rights,
title or interest in the EarthLink Brand and Marks or the
goodwill associated with them, other than the right to use the
EarthLink Brand in accordance with this Agreement. In
accepting this Agreement, the Sprint Group acknowledges the
EarthLink Group's ownership of the EarthLink Brand and Marks,
their validity and the goodwill connected with them. The
Sprint Group will not attack the EarthLink Brand or Marks, nor
assist anyone in attacking them. Sprint further agrees that
neither the Sprint Party nor any member of the Sprint Group
will make any application to register the EarthLink Brand, nor
to use any confusingly similar trademark, service ▇▇▇▇, trade
name, or derivation, during the term of this Agreement or
thereafter. This paragraph will survive the termination of
this Agreement.
(ii) At the request of the EarthLink Party, the Sprint
Party will execute and will cause any relevant member of the
Sprint Group to execute any papers or documents reasonably
necessary to protect the rights of the EarthLink Group in the
EarthLink Brand and Marks and execute and deliver such other
documents as may be reasonably requested by the EarthLink
Party.
(iii) The EarthLink Party represents and warrants that
as of the date hereof the EarthLink Brand and Marks do not
infringe upon any trademarks and are not involved in any
opposition, invalidation, cancellation or litigation that would
threaten Sprint's use of the EarthLink Brand and Marks, and to
the EarthLink Party's knowledge, no such action is threatened
with respect to the EarthLink Brand or Marks. In the event
that such action occurs, the EarthLink Party will vigorously
protect the EarthLink Brand.
(d) Infringement. The Sprint Party shall promptly notify the
EarthLink Party of any unauthorized use of the EarthLink Brand or
Marks that comes to the Sprint Group's attention. The EarthLink
Party in its reasonable discretion may take such action
28
as may be required to prosecute the infringement. In the event that
the EarthLink Party decides that action should be taken against such
third parties, the EarthLink Party may take such action either in
its own name, or alternatively, the EarthLink Party may authorize
the Sprint Party to initiate such action in the EarthLink Party's
name but Sprint shall have no obligation to do so. In either event,
the Sprint Party agrees to and agrees to cause the Sprint Group to
cooperate fully with the EarthLink Group to whatever extent it is
necessary to prosecute such action, all expenses being borne by the
EarthLink Party and all damages which may be recovered being solely
for the account of the EarthLink Party.
(e) Termination. In the event the Sprint Group violates the
EarthLink Trademark Usage Guidelines and continues to do so for a
continuous 45 day period or for three periods of 30 days each during
a calendar year following written notice from the EarthLink Party,
such violation shall constitute a material breach of this Agreement
and the EarthLink Party may terminate this Agreement.
(f) Relief. The Parties agree that a breach of this
Section 26 may give rise to irreparable injury to the non-breaching
Party and its Group that cannot be compensated for adequately by
damages. Consequently, the Parties agree that each Party and any
relevant members of their Groups shall be entitled, in addition to
all other remedies available, to injunctive and other equitable
relief to prevent a breach of this Section 26 to secure the
enforcement of the provisions of this Section 26 in any court of
competent jurisdiction in the United States or any state thereof
(and the Parties agree to waive any requirement for the posting of
bond in connection with such remedy).
27. Covenant of Cooperation and Good Faith. The Parties covenant
to timely and diligently cooperate to effect the goals, objectives and
purposes of this Agreement and to facilitate the performance of their
respective duties and obligations under this Agreement in a commercially
reasonable manner. Further, the Parties agree to deal and negotiate with
each other in good faith in the execution and implementation of their
duties and obligations under this Agreement.
28. Services Not Specifically Covered. There may be functions,
responsibilities, activities and tasks not specifically described in this
Agreement or the Schedules hereto which are required for the performance
and provision of the Parties' obligations and are an inherent part of, or
a necessary element included within, the Parties' obligations. If such
functions, responsibilities, activities and tasks are mutually determined
by the parties to be required for the proper performance the other
obligations or are an inherent part, or a necessary part, thereof, such
functions, responsibilities, activities and tasks shall be deemed to be
implied by and included within the scope of this Agreement and the
obligations established hereunder to the same extent and in the same
manner as if specifically described in this Agreement and the Schedules
hereto; provided that this Section 28 shall not be interpreted to impose
any material obligations or liabilities on any Party that are not
expressly set forth in this Agreement.
29
29. Miscellaneous.
(a) Notices. Unless otherwise provided herein, any notice,
request, waiver, instruction, consent or document or other
communication required or permitted to be given by this Agreement
shall be effective only if it is in writing and (a) delivered by
hand or sent by certified mail, return receipt requested, (b) if
sent by a nationally-recognized overnight delivery service with
delivery confirmed, or (c) if telecopied, with receipt confirmed as
follows:
EarthLink Party: EarthLink, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Hunton & ▇▇▇▇▇▇▇▇
NationsBank Plaza, Suite 4100
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. Hobby, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Sprint Party: Sprint Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Chief Financial Officer
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Sprint Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Corporate Secretary
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
The Parties shall promptly notify each other of any change in their
respective addresses or facsimile numbers or of the person or office
to receive notices, requests or other communications under this
Section 29(a). Notice shall be deemed to have been given as of the
date when so personally delivered, when delivered if sent by United
States mail, the next day when delivered during business hours to
such overnight delivery service properly addressed or when receipt
of a telecopy is confirmed, as the case may be, unless the sending
Party has actual knowledge that such notice was not received by the
intended recipient.
(b) Entire Agreement. This Agreement (including the Schedules
and Schedules) embodies the entire agreement and understanding of
the Parties in respect to the matter contemplated hereby and
supersedes and renders null and void all other prior
30
agreements and understandings, written and oral, with respect to the
subject matter hereof, provided that this provision shall not
abrogate any other written agreement between the Parties executed
simultaneously with this Agreement.
(c) Waiver. Except as otherwise permitted in this Agreement,
the terms or conditions of this Agreement may not be waived unless
set forth in a writing signed by the Party entitled to the benefits
thereof. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of such provision at any time
in the future or a waiver of any other provision hereof. The rights
and remedies of the Parties are cumulative and not alternative.
Except as otherwise permitted in this Agreement, neither the failure
nor any delay by any Party in exercising any right, power or
privilege under this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any
such right, power or privilege will preclude any other or further
exercise of such right, power or privilege or the exercise of any
other right, power or privilege.
(d) Successors and Assigns. Except as provided in this
Agreement, neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned or
transferred, in whole or in part, by any of the Parties or members
of their Groups without the prior written consent of the other
Party; provided, however, that such assignment or transfer may be
made by (i) by the Sprint Party to any of its Affiliates, or
pursuant to any merger or sale of substantially all of the assets
of Sprint or such Affiliates (or any transaction having such effect)
or (ii) by EarthLink to Newco in connection with a merger, exchange
offer, consolidation, share exchange or other business combination
with or a sale of assets to Newco or with or to a direct or indirect
wholly-owned subsidiary of Newco. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the Parties and their respective
successors and assigns. Any attempted assignment in violation of
this Section 29(d) shall be void.
(e) Governing Law. This Agreement shall be governed by the
laws of the State of Delaware, without regard to conflict of laws
principles.
(f) Exclusive Jurisdiction and Consent to Service of Process.
Subject to Sections 25(f) and 26(f) the Parties agree that any
action arising out of or relating to this Agreement shall be
instituted in a Delaware state court or in a federal court sitting
in such state which shall be the exclusive venue of any such action.
Each Party waives any objection which is based on jurisdiction with
respect to such action, and irrevocably consents and submits to the
jurisdiction of any such court (and the appropriate appellate
courts) in any such action. Any and all service of process and any
other notice in any such action shall be effective against such
Party when transmitted in accordance with Section 29(a). Nothing
contained herein shall be deemed to affect the right of any Party to
serve process in any manner permitted by law. At the time of a
dispute, the parties may mutually agree that any action arising out
of or relating to this Agreement may be
31
decided through an arbitration proceeding, the details of such
arbitration proceeding to be mutually agreed upon by the parties at
the time of the dispute.
(g) Waiver of Jury Trial. THE EARTHLINK PARTY AND THE SPRINT
PARTY HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL ACTION INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
(h) Severability. If any provision of this Agreement as
applied to any Party or to any circumstance shall be held invalid,
illegal or unenforceable by any court of competent jurisdiction,
(i) the validity, legality and enforceability of the remaining
provisions of this Agreement will remain in full force and effect
and (ii) the application of such provision to any other part or to
any other circumstance shall not be affected or impaired thereby.
To the extent permitted by applicable law, each Party waives any
provision of applicable law that renders any provision hereof
prohibited or unenforceable in any respect. If any provision of
this Agreement is held to be unenforceable for any reason, it shall
be adjusted rather than voided, if possible, in order to achieve the
intent of the Parties to the extent possible.
(i) Counterparts. This Agreement may be executed in one or
more counterparts each of which when so executed and delivered shall
for all purposes be deemed to be an original but all of which, when
taken together, shall constitute one and the same Agreement.
(j) Headings. The headings used in this Agreement are
inserted for convenience only and shall not be deemed to constitute
part of this Agreement or to affect the construction or
interpretation hereof.
(k) No Third-Party Beneficiaries. Nothing in this Agreement,
express or implied, shall create or confer upon any person
(including but not limited to any employees), other than the Parties
or their respective successors and permitted assigns, any legal or
equitable rights, remedies, obligations, liabilities or claims under
or with respect to this Agreement, except as expressly provided
herein.
(l) Interpretation.
(i) Each Party is a sophisticated legal entity that was
advised by experienced counsel and, to the extent it deemed
necessary, other advisors in connection with this Agreement.
Accordingly, each Party hereby acknowledges that no Party has
relied or will rely in respect of this Agreement or the
transactions contemplated hereby upon any document or written
or oral information previously furnished to or discovered by it
or its representatives, other than this Agreement.
32
(ii) No provision of this Agreement shall be interpreted
in favor of, or against, either of the Parties by reason of the
extent to which either such Party or its counsel participated
in the drafting thereof or by reason of the extent to which any
such provision is inconsistent with any prior draft hereof or
thereof.
(m) Amendment. No amendment, modification or alteration of
the terms or provisions of this Agreement, including any Schedules
hereto or thereto, shall be binding unless the same shall be in
writing and duly executed by the Party against whom such amendment,
modification or alteration is sought to be enforced.
(n) Guarantee. By its execution of this Agreement, Newco
agrees that it will be jointly and severally liable with EarthLink
for all of the obligations and liabilities of EarthLink, the
EarthLink Party and the EarthLink Group hereunder, and Newco hereby
guarantees the full performance by such entities of their respective
obligations hereunder, including its payment obligations.
(o) Survival. Notwithstanding the expiration or early
termination of this Agreement for any reason whatsoever, the
following Sections of this Agreement shall survive any such
expiration or termination: Sections 16, 17, 19, 20, 21, 23 and 29.
In addition, the termination of this Agreement shall not relieve any
Party from any payment obligations (including the Termination Fee)
which have accrued prior to or simultaneously with the termination
of this Agreement.
33
(o) SPRINT CORPORATION EARTHLINK NETWORK, INC.
-------------------------- ------------------------
Signature of Authorized Signature of Authorized
Representative Representative
-------------------------- -------------------------
Print Name Printed Name
-------------------------- -------------------------
Title Title
SPRINT COMMUNICATIONS
COMPANY L.P.
By: U.S. Telecom, Inc., General Partner DOLPHIN, INC.
-------------------------- -------------------------
Signature of Authorized Signature of Authorized
Representative Representative
--------------------------- --------------------------
Printed Name Printed Name
--------------------------- --------------------------
Title Title
34
