Common use of Minimum Spend Commitment Clause in Contracts

Minimum Spend Commitment. (a) TELUS hereby commits to a minimum spend in each Contract Year equal to the Initial MSC, subject to adjustment as provided in this Agreement (such amount, as adjusted from time to time in accordance with this Agreement, the “Minimum Spend Commitment” or “MSC”). The MSC represents an aggregate spend amount for all Services provided directly or indirectly to TELUS, TELUS Group Members and other TELUS Affiliates (other than TI and its subsidiaries) by TI Parties (including pursuant to an Affiliate Agreement), and is not allocated or broken down by country, region or Service. For any partial Contract Years (i.e. a Contract Year consisting of fewer than twelve (12) months), if any, the MSC will be pro-rated based on the actual number of days in the Contract Year. (b) In respect of any Contract Year, irrespective of the timing of the delivery, receipt or payment of the invoice, all: (a) amounts paid that are properly allocable (from an accounting perspective) as revenue to TI or its Affiliates from TELUS or its Affiliates pursuant to: (i) this Agreement; (ii) any Affiliate Agreement; (iii) any other agreement between TI or its Affiliate and TELUS or its Affiliate, unless expressly provided otherwise in such agreement; (b) amounts, if any, paid directly by TELUS or its Affiliates to authorized subcontractors of TI; and (c) amounts, if any, paid indirectly by TELUS or its Affiliates to TI or its Affiliates through a Third Party (for example, where TI is a subcontractor of such Third Party), constitute eligible amounts for the satisfaction of the MSC (collectively, the “MSC Eligible Spend”), subject to the following: (i) MSC Eligible Spend in a Contract Year that exceeds the MSC for that Contract Year (whether resulting from amounts paid for new business, increased volumes of Services, or any other reason): (A) will not trigger an increase in the MSC for the following Contract Year(s); and (B) will be carried forward to satisfy the MSC in subsequent Contract Year(s); (ii) amounts paid by TELUS (or a TELUS Affiliate) pursuant to the Amended and Restated Master Reseller Agreement made as of the Effective Date between TI and TELUS (the “MRA”) will be included as MSC Eligible Spend to the extent specifically set out in the MRA; (iii) Taxes and Regulatory Fees paid by TELUS, TELUS Group Members and other TELUS Affiliates do not qualify as MSC Eligible Spend; (iv) bonus payments for Incentive Targets that were achieved in such Contract Year and pass-through expenses invoiced in respect of such Contract Year qualify as MSC Eligible Spend; and (v) Service Level Credits and Earn Back Credits issued in a Contract Year will not be taken into account for the purposes of calculating MSC Eligible Spend (i.e. when calculating MSC Eligible Spend, the Fees paid by TELUS, TELUS Group Members and other TELUS Affiliates for a Service will not be adjusted by the amount of any Service Level Credits or Earn Back Credits issued in respect of such Service); and (vi) If TELUS sells a division of its business to a Third Party and such Third Party continues to receive Services from a TI Party substantially similar to the Services under a SOW with substantially similar terms to the applicable SOW, then the fees paid by such Third Party to the applicable TI Party pursuant to such SOW (not including any amendments or renewals of such SOW) will qualify as MSC Eligible Spend. For the purposes of this Section 9.1(b)(vi), TELUS will use commercially reasonable efforts to: 1) include a provision in the sale agreement with the Third Party that the Third Party continue to use TI for the Services which TELUS is then receiving from TI in support of the divested business; and 2) recommend and promote TI Services to the Third Party in connection with negotiating and closing the sale transaction. (c) Within [***] following the end of each Contract Year, TI will calculate the MSC Eligible Spend for the previous Contract Year and if the MSC Eligible Spend is less than the MSC for such Contract Year (unless and solely to the extent that such deficiency is a result of a Termination for Business or Technological Change, a Termination for Default, a Termination for Chronic Service Failure, a Suspension for Force Majeure or a Termination for Force Majeure during the Contract Year), TELUS will pay to TI an amount equal to [***] of the difference between the MSC Eligible Spend for such Contract Year and the MSC for such Contract Year. (d) Subject to Section 9.1(f), the obligation to pay such invoiced amount will be TELUS’ sole liability for any such failure to meet the MSC for that Contract Year and upon payment of the invoiced amount TELUS will be deemed to have satisfied the MSC for that Contract Year. (e) TI shall adjust the MSC annually (which adjustment may, for greater certainty, result in either an increase or a decrease of the MSC) on a dollar-for-dollar basis for any of the following events which have occurred during the most recently completed Contract Year: (i) any Termination for Default, Termination for Chronic Service Failure, Termination for Force Majeure, Suspension for Force Majeure or reinstatement of Services previously subject to a Suspension for Force Majeure, in each case where such termination relates to a Baseline Service; (ii) any Termination for Business or Technological Change that relates to a Baseline Service; (iii) any Price Review under Section 8.6 which results in a pricing adjustment to Baseline Services; (iv) any Benchmarking under Section 8.7 which results in a pricing adjustment to Baseline Services; and (v) any agreed [***] or [***] not realized as a result of a failure of TI or a TI Party to achieve [***] under a SOW. Any MSC adjustment required pursuant to this paragraph (e) will be calculated as follows: (A) In the case of an adjustment pursuant to paragraph (e)(i) or paragraph (c)(ii) above, TI shall adjust the MSC, effective as of the first day of the Contract Year following the year in which such Baseline Service is terminated, by decreasing the MSC by an amount equal to the reasonably projected reduction in annual Fees related to such Baseline Service for the following Contract Year resulting from the termination of such Baseline Service. The reasonably projected reduction shall be calculated based on (i) the original volume for the terminated Baseline Service in the first Contract Year, and (ii) the Fees for such Baseline Service in effect during the Contract Year of termination, irrespective of actual volume in the Contract Year of termination or the projected volume for such Service in the subsequent Contract Year; (B) In the case of an adjustment pursuant to paragraph (e)(iii) or (e)(iv) above, TI will adjust the MSC by the amount of the change in projected annual Fees for the relevant Baseline Services (calculated by applying the difference in Fees before and after the Price Review or the Benchmarking to the original volumes of the Baseline Services impacted by the pricing adjustment, irrespective of actual current volumes) for the Contract Year following the Contract Year in which the Fee adjustment occurred; and (C) In the case of an adjustment pursuant to paragraph (e)(v) above, TI will adjust the MSC by the amount of the reasonably estimated annualized Fee savings or cost reductions related to Baseline Services that will not be realized by TELUS or the TELUS Group Member, as applicable, in the subsequent Contract Year. (f) The Parties hereby establish an MSC Floor, subject to adjustment as provided in this Agreement. In the event of a Termination for Business or Technological Change during a particular Contract Year, as a result of which the MSC Eligible Spend for such Contract Year is below the MSC Floor, TELUS shall replace such lost MSC Eligible Spend with other MSC Eligible Spend by the end of the then-current Contract Year having a value equal to the difference between the estimated MSC Eligible Spend for such Contract Year, but for the termination, and the MSC Floor. (g) If TELUS, TELUS Group Members and other TELUS Affiliates do not collectively add MSC Eligible Spend which makes up such difference by the end of the Contract Year, TI shall invoice TELUS for, and TELUS shall pay to TI, an amount equal to [***] of the difference between the actual MSC Eligible Spend in such Contract Year and the MSC Floor. Such payment will be TELUS’ sole liability for the failure to meet the MSC Floor in connection with a Termination for Business or Technological Change for that Contract Year, and upon payment of such amount TELUS will be deemed to have satisfied the MSC Floor for that Contract Year. (h) For greater certainty: (a) no such shortfall payments will count as MSC Eligible Spend for such Contract Year or for any subsequent Contract Year; and (b) no such shortfall will result in a decrease in the MSC Floor for such Contract Year or for any subsequent Contract Year(s). (i) The adjustments to the MSC described in Section 9.1(e) can never result in the MSC for the following Contract Year being lower than the MSC Floor for such Contract Year. If the result of the adjustments as calculated pursuant to Section 9.1(e) would result in the MSC for a Contract Year being lower than the MSC Floor for such Contract Year, then the MSC for such Contract Year will be deemed to be equal to the MSC Floor for such Contract Year. Notwithstanding the foregoing, where Services are terminated pursuant to a Termination for Default, a Termination for Chronic Service Failure, a Termination for Force Majeure or suspended for a Suspension for Force Majeure, and as a result of such termination or suspension, the MSC Eligible Spend for such Contract Year were below the MSC Floor, the MSC Floor will be adjusted for the following Contract Year, on a dollar-for-dollar basis, based on the amount by which such termination or suspension caused the MSC Eligible Spend to fall below the MSC Floor, with such adjustment being effective the first day of that Contract Year. If any such adjustment to the MSC Floor relates to a Suspension for Force Majeure and the suspended Services are subsequently reinstated, the MSC Floor will automatically be readjusted upwards, effective the first day of the following Contract Year, by the same amount by which it had initially been reduced for such Suspension for Force Majeure. (j) The adjustments to the MSC described in Sections 9.1(e), 9.1(f) and 9.1(g) shall be calculated in the following order: (i) adjustments under Sections 9.1(e)(i) and 9.1(e)(ii); (ii) adjustments under Sections 9.1(e)(iii), 9.1(e)(iv), and 9.1(e)(v); and (iii) adjustments under Sections 9.1(f) and 9.1(g). For clarity, where the MSC has been adjusted, TI will conduct the next annual MSC review using the new MSC, with such new MSC being subject to adjustment in accordance with this Section 9.1. (k) TI will track and report on the status of the MSC Eligible Spend on a quarterly basis during each Contract Year. Commencing in the second Contract Year, TI will calculate all applicable MSC and MSC Floor adjustments in accordance with this Article 9 within [***] following the commencement of the applicable Contract Year, with the adjustments to be effective as of the first day of that Contract Year. Upon calculating such adjustments, TI will provide written notice of the adjustments to TELUS for review and approval, together with the underlying calculations used to determine the adjustments. Where TI determines that as a result of an adjustment TELUS is obligated to make a payment to TI under this Article, TI will include the amount payable and the underlying calculations used to determine such amount in TI’s adjustment notice to TELUS, together with a related invoice. (l) Within [***] after the Effective Date, TI will provide to TELUS a draft Schedule 9.1 setting out detailed single and multi-year example calculations of adjustments to the MSC and MSC Floor. Thereafter, TI and TELUS will, acting in good faith, work together to finalize a mutually agreeable Schedule 9.1 containing such examples and execute an amendment adding such Schedule 9.1 to this Agreement. Schedule 9.1 will include, for informational purposes only, examples of adjustments to the MSC and MSC Floor reflecting the Parties’ understanding of how adjustments are to be effected.

Minimum Spend Commitment. (a) TELUS TI hereby commits to a an aggregate minimum spend in each during the first five (5) Contract Year Years (the “Initial MSC Period”) equal to the Initial MSC, subject to adjustment as provided in this Agreement (such amount, as adjusted from time to time in accordance with this Agreement, the “Minimum Spend Commitment” or “MSC”). The MSC represents an aggregate spend amount for all Services provided directly or indirectly to TI by TELUS, TELUS Group Members and other TELUS Affiliates (other than TI and its subsidiaries) by TI Parties (including pursuant to an Affiliate Agreement), and is not allocated or broken down by country, region or Service. For any partial Where the Agreement is terminated by TI for cause pursuant to Section 17.2 or Section 17.4, prior to the end of the fifth (5th) Contract Years (i.e. a Contract Year consisting of fewer than twelve (12) months), if anyYear, the MSC will be pro-rated based on the actual number of days the Agreement was in the Contract Yeareffect prior to such event. (b) In All Fees properly allocable (from an accounting perspective) as revenue to TELUS from TI (which for clarity includes revenue from both TI CDA and TIHUS) in respect of any Contract Yearthe Initial MSC Period, irrespective of the timing of the delivery, receipt or payment of the invoiceinvoice (including, all: (a) amounts paid that are properly allocable (from an accounting perspective) as revenue to TI or its Affiliates from TELUS or its Affiliates pursuant to: (i) for purposes of this Agreement; (ii) any Affiliate Agreement; (iii) any other agreement between TI or its Affiliate and TELUS or its AffiliateSection 7.1, unless expressly provided otherwise in such agreement; (b) amounts, if any, paid directly by TELUS or its Affiliates TI to authorized subcontractors of TI; and (cTELUS) amounts, if any, paid indirectly by TELUS or its Affiliates to TI or its Affiliates through a Third Party (for example, where TI is a subcontractor of such Third Party), constitute eligible amounts for the satisfaction of the MSC for such period (collectively, the “MSC Eligible Spend”), subject to the following: (i) Fees for increased volumes of contracted Services during the Initial MSC Period qualify as MSC Eligible Spend in a Contract Year that exceeds the MSC for that Contract Year (whether resulting from amounts paid for new business, increased volumes of Services, or any other reason): (A) such period but will not trigger an increase in the MSC for the following Contract Year(s); and (B) will be carried forward to satisfy the MSC in subsequent Contract Year(s)MSC; (ii) amounts paid by TELUS (or a TELUS Affiliate) pursuant to the Amended and Restated Master Reseller Agreement made as of the Effective Date between TI and TELUS (the “MRA”) will be included as MSC Eligible Spend to the extent specifically set out in the MRA; (iii) Taxes and Regulatory Fees paid by TELUS, TELUS Group Members and other TELUS Affiliates TI do not qualify as MSC Eligible Spend; (iviii) bonus payments for Incentive Targets that were achieved in such Contract Year and pass-through expenses invoiced in respect of such Contract Year qualify as MSC Eligible Spend; and (v) Service Level Credits and Earn Back Credits service level credits, if any, issued in a Contract Year the Initial MSC Period will not be taken into account for the purposes of calculating MSC Eligible Spend (i.e. when calculating MSC Eligible Spend, the Fees paid by TELUS, TELUS Group Members and other TELUS Affiliates TI for a Service will not be adjusted by the amount of any Service Level Credits or Earn Back Credits service level credits issued in respect of such Service); and (viiv) If TELUS sells a division of its business to a Third Party and such Third Party continues to receive Services from a TI Party substantially similar to the Services under a SOW with substantially similar terms to the applicable SOWfor clarity, then the fees termination charges paid by such Third Party TI to TELUS under this Agreement during the applicable TI Party pursuant to such SOW (not including any amendments or renewals of such SOW) Initial MSC Period will qualify as MSC Eligible Spend. For the purposes of this Section 9.1(b)(vi), TELUS will use commercially reasonable efforts to: 1) include a provision in the sale agreement with the Third Party that the Third Party continue to use TI for the Services which TELUS is then receiving from TI in support of the divested business; and 2) recommend and promote TI Services to the Third Party in connection with negotiating and closing the sale transaction. (c) The Initial MSC and Initial MSC Floor represents approximately 60% and 45% respectively of TI’s Services spend with TELUS as of the Effective Date. (d) Within [***] following the end of each Contract Yearthe Initial MSC Period, TI TELUS will calculate the MSC Eligible Spend for the previous Contract Year such period and if the MSC Eligible Spend is less than the MSC for such Contract Year (unless and solely to the extent that such deficiency is a result of a Termination for Business or Technological Change, a Termination for Default, a Termination for Chronic Service Failure, a Suspension for Force Majeure Default or a Termination for Force Majeure during the Contract YearMajeure), TELUS TI will pay to TI TELUS an amount equal to [***] of the difference between the MSC Eligible Spend for such Contract Year and the MSC for such Contract Year. (d) MSC. Subject to Section 9.1(f7.1(e), the obligation to pay such invoiced amount will be TELUS’ TI’s sole liability for any such failure to meet the MSC for that Contract Year and upon payment of the invoiced amount TELUS TI will be deemed to have satisfied the MSC for that Contract Year. (e) TI the Initial MSC Period. TELUS shall adjust the MSC annually (which adjustment may, for greater certainty, result in either an increase or a decrease of the MSC) on a dollar-for-dollar basis for any of the following events which have occurred during the most recently completed Contract Year: (i) any Termination for Default, Termination for Chronic Service Failure, Termination for Force Majeure, Suspension for Force Majeure or reinstatement of Services previously subject to a Suspension Termination for Force MajeureMajor Business or Technology Change, in each case where such termination relates to a Baseline Service; , which has occurred during the Initial MSC Period. In addition, TELUS shall adjust the MSC on a dollar-for-dollar basis where: (iii) any Termination TI ceases to subscribe for Business or Technological Change that relates to a Baseline Service; (iii) any Price Review under Section 8.6 which results in a pricing adjustment to Baseline Services; (iv) any Benchmarking under Section 8.7 which results in a pricing adjustment to Baseline Services; and (v) any agreed [***] or [***] not realized Service as a result of TELUS discontinuing the Service to its customers generally; and (ii) TI does not subscribe for a failure of TI or a TI Party Service to achieve [***] under a SOWreplace the discontinued Service with comparable Fees to the discontinued Service. Any MSC adjustment required pursuant to this paragraph (ed) will be calculated as follows: (A) In the case of an adjustment pursuant to paragraph (e)(i) or paragraph (c)(ii) above, TI : TELUS shall adjust the MSC, effective as of the first day of the Contract Year following the year in which such Baseline Service is terminated, MSC by decreasing the MSC by an amount equal to the reasonably projected reduction in annual Fees related to such Baseline Service for the following Contract Year remainder of the Initial MSC Period resulting from the termination of such Baseline Service. The reasonably projected reduction shall be calculated based on (i) the original average volume for the terminated Baseline Service in up to the first Contract Yeartime of calculating the adjustment, and (ii) the Fees for such Baseline Service in effect during the Contract Year of termination, irrespective of actual volume in the Contract Year of termination or the projected volume for such Service in during the subsequent Contract Year; (B) In the case of an adjustment pursuant to paragraph (e)(iii) or (e)(iv) above, TI will adjust the MSC by the amount remainder of the change in projected annual Fees for the relevant Baseline Services (calculated by applying the difference in Fees before and after the Price Review or the Benchmarking to the original volumes of the Baseline Services impacted by the pricing adjustment, irrespective of actual current volumes) for the Contract Year following the Contract Year in which the Fee adjustment occurred; and (C) In the case of an adjustment pursuant to paragraph (e)(v) above, TI will adjust the Initial MSC by the amount of the reasonably estimated annualized Fee savings or cost reductions related to Baseline Services that will not be realized by TELUS or the TELUS Group Member, as applicable, in the subsequent Contract YearPeriod. (fe) The Parties hereby establish an MSC Floor, subject to adjustment as provided in this Agreement. In the event of a Termination for Business or Technological Change during a particular Contract Year, as a result of which the MSC Eligible Spend for such Contract Year is below the MSC Floor, TELUS shall replace such lost MSC Eligible Spend with other MSC Eligible Spend by the end of the then-current Contract Year having a value equal to the difference between the estimated MSC Eligible Spend for such Contract Year, but for the termination, and the MSC Floor. (gf) If TELUS, TELUS Group Members and other TELUS Affiliates do not collectively add MSC Eligible Spend which makes up such difference by the end of the Contract Year, TI shall invoice TELUS for, and TELUS shall pay to TI, an amount equal to [***] of the difference between the actual MSC Eligible Spend in such Contract Year and the MSC Floor. Such payment will be TELUS’ sole liability for the failure to meet the MSC Floor in connection with a Termination for Business or Technological Change for that Contract Year, and upon payment of such amount TELUS will be deemed to have satisfied the MSC Floor for that Contract Year. (h) For greater certainty: (a) no such shortfall payments will count as MSC Eligible Spend for such Contract Year or for any subsequent Contract Year; and (b) no such shortfall will result in a decrease in the MSC Floor for such Contract Year or for any subsequent Contract Year(s). (i) The Any adjustments to the MSC described in Section 9.1(e) for Termination for Major Business or Technology Change can never result in the MSC for the following Contract Year being lower than the MSC Floor for such Contract Year. If Floor; if the result of the adjustments as calculated pursuant to Section 9.1(e) for Termination for Major Business or Technology Change would result in the MSC for a Contract Year being lower than the MSC Floor for such Contract YearFloor, then the MSC for such Contract Year will be deemed to be equal to the MSC Floor for such Contract YearFloor. Notwithstanding the foregoing, where Services are terminated pursuant to a Termination for Default, Default or a Termination for Chronic Service Failure, a Termination for Force Majeure or suspended for a Suspension for Force Majeure, and as a result of such termination or suspensiontermination, the Fees constituting MSC Eligible Spend for such Contract Year were below the MSC Floor, TELUS will adjust the MSC Floor will be adjusted for the following Contract YearFloor, on a dollar-for-dollar basis, based on the amount by which such termination or suspension caused the MSC Eligible Spend to fall below the MSC Floor, with such adjustment being effective the first day of that Contract Year. If any such adjustment to the MSC Floor relates to a Suspension for Force Majeure and the suspended Services are subsequently reinstated, the MSC Floor will automatically be readjusted upwards, effective the first day of the following Contract Year, by the same amount by which it had initially been reduced for such Suspension for Force Majeure. (jg) The adjustments to the MSC described in Sections 9.1(e), 9.1(f) and 9.1(gSection 7.1(d) shall be calculated in the following order: (i) adjustments under Sections 9.1(e)(i) and 9.1(e)(ii);for Termination for Default, Termination for Force Majeure or TELUS discontinuing Services; and (ii) adjustments under Sections 9.1(e)(iii), 9.1(e)(iv), and 9.1(e)(v); and (iii) adjustments under Sections 9.1(f) and 9.1(g)for Termination for Major Business or Technology Change. For clarity, where the MSC has been adjusted, TI TELUS will conduct the next annual MSC review using the new MSC, with such new MSC being subject to adjustment in accordance with this Section 9.17.1. (kh) TI TELUS will track and report on the status of the MSC Eligible Spend on a quarterly an annual basis during each and report the amount to TI within [***] of the end of the Contract Year. Commencing in the second Contract Year, TI TELUS will calculate all applicable MSC and MSC Floor adjustments in accordance with this Article 9 7 within [***] following the commencement of event giving rise to the applicable Contract Year, with the adjustments to be effective as of the first day of that Contract Yearadjustment. Upon calculating such adjustments, TI TELUS will provide written notice of the adjustments to TELUS TI for review and approval, together with the underlying calculations used to determine the adjustments. Where TI determines that as a result of an adjustment TELUS is obligated to make a payment to TI under this Article, TI will include the amount payable and the underlying calculations used to determine such amount in TI’s adjustment notice to TELUS, together with a related invoice. (li) Within [***] after prior to [***] of the Effective Date, provided that TI CDA is still an Affiliate of TCI, the Executive Committee will provide to TELUS a draft Schedule 9.1 setting out detailed single meet and multi-year example calculations of adjustments to the MSC and MSC Floor. Thereafter, TI and TELUS will, acting discuss in good faith, work together to finalize a mutually agreeable Schedule 9.1 containing such examples faith the applicability and execute an amendment adding such Schedule 9.1 to this Agreement. Schedule 9.1 will include, for informational purposes only, examples terms of adjustments to the MSC and MSC Floor reflecting for the Parties’ understanding remaining [***] term of how adjustments are this Agreement. If the Executive Committee is unable to reach agreement within [***] of the [***] of the Effective Date the matter will be effectedescalated to an applicable Senior Vice-President of each of TELUS and TI for determination.