<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 4, 1997
REGISTRATION NO. 333-27241
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CONCENTRIC NETWORK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 4813 65-0257497
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NUMBER)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)
----------------
CONCENTRIC NETWORK CORPORATION
10590 NORTH TANTAU AVENUE
CUPERTINO, CA 95014
(408) 342-2800
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
HENRY R. NOTHHAFT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CONCENTRIC NETWORK CORPORATION
10590 NORTH TANTAU AVENUE
CUPERTINO, CA 95014
(408) 342-2800
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE OF PROCESS)
----------------
COPIES TO:
DAVID J. SEGRE THOMAS A. BEVILACQUA
ADELE C. FREEDMAN BROBECK, PHLEGER & HARRISON LLP
VALERIE SCHULTHIES TWO EMBARCADERO PLACE
PAUL B. SHINN 2200 GENG ROAD
WILSON SONSINI GOODRICH & ROSATI PALO ALTO, CA 94303
PROFESSIONAL CORPORATION (415) 424-0160
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(415) 493-9300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
The purpose of this Amendment No. 1 is solely to file certain exhibits to
the Registration Statement, as set forth below in Item 16(a) of Part II.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the sale
of the Common Shares being registered. All of the amounts shown are estimates
except for the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC Registration Fee............................................... $ 12,545
NASD Filing Fee.................................................... 4,640
Nasdaq National Market Listing Fee................................. 40,000
Blue Sky Qualification Fees and Expenses........................... 5,000
Printing and Engraving Expenses.................................... 100,000
Legal Fees and Expenses............................................ 350,000
Accounting Fees and Expenses....................................... 175,000
Transfer Agent and Registrar Fees.................................. 10,000
Miscellaneous...................................................... 52,815
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Total............................................................ $750,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
In May 1997, the Registrant entered into indemnification agreements with its
directors and officers providing for limitations on a director's and officer's
liability for judgments, settlements, penalties, fines and expenses of defense
(including attorneys' fees, bonds and costs of investigation) arising out of
or in any way related to acts or omissions as a director or an officer, or in
any other capacity in which services are rendered to the Registrant. The
Registrant believes its indemnification agreements will assist it in
attracting and retaining qualified individuals to serve as directors and
officers. The agreements provide that a director or officer is not entitled to
indemnification under such agreements (i) if the director or officer is not
relieved of liability under applicable law, (ii) for violations of certain
securities laws, or (iii) for certain claims initiated by the officer or
director. Due to the lack of applicable case law, it is not clear whether
indemnification is available in case of a breach of securities laws of the
U.S.
As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's Amended and Restated Certificate of Incorporation to be effective
upon completion of the offering include a provision that eliminates the
personal liability of its directors for monetary damages for breach or alleged
breach of their duty of care. In addition, as permitted by Section 145 of the
Delaware General Corporation Law, the Bylaws, as amended, of the Registrant to
be effective upon completion of the offering provide that: (i) the Registrant
is required to indemnify its directors and officers and persons serving in
such capacities in other business enterprises (including, for example,
subsidiaries of the Registrant) at the Registrant's request, to the fullest
extent permitted by Delaware law, including in those circumstances in which
indemnification would otherwise be discretionary; (ii) the Registrant may, in
its discretion, indemnify employees and agents in those circumstances where
indemnification is not required by law; (iii) the Registrant is required to
advance expenses, as incurred, to its directors and officers in connection
with defending a proceeding (except that it is not required to advance
expenses to a person against whom the Registrant brings a claim for breach of
the duty of loyalty, failure to act in good faith, intentional misconduct,
knowing violation of law or deriving an improper personal benefit); (iv) the
rights conferred in the Bylaws, as amended, are not exclusive, and the
Registrant is authorized to enter into indemnification agreements with its
directors, officers and employees; and (v) the Registrant may not
retroactively amend the Bylaw provisions in a way that is adverse to such
directors, officers and employees.
The Registrant's policy is to enter into indemnification agreements with
each of its directors and officers that provide the maximum indemnity allowed
to directors and officers by Section 45 of the Delaware General Corporation
Law and the Bylaws, as amended, as well as certain additional procedural
protections.
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The indemnification provisions in the Bylaws, as amended, and the
indemnification agreements entered into between the Registrant and its
directors and officers may be sufficiently broad to permit indemnification of
the Registrant's directors and officers for liabilities arising under the
Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the three years preceding the date hereof, the Company has made the
following sales of securities that were not registered under the Securities
Act (share numbers are approximate and actual numbers of shares may differ as
a result of rounding calculations related to the one-for-15 reverse split):
1. From June 1993 to March 1995, the Company sold to various investors
convertible debentures and convertible subordinated debentures
(collectively, the "Convertible Debentures") in the aggregate principal
amount of $4,260,000. As of March 31, 1997, all of the Convertible
Debentures had been converted into shares of Class A Common Stock at prices
ranging from $3.75 per share to $11.25 per share.
2. From June 1993 to March 1995, the Company sold to various investors
29,673 shares of Class A Common Stock at $30.00 per share, for an aggregate
consideration of $890,200.
3. Since June 1993 the Company has issued 24,611 shares of Class A Common
Stock, at prices from $11.25 to $30.00, to individuals or other entities on
account of services rendered by them to the Company.
4. In October 1994, the Company issued 30,917 shares of Class A Common
Stock to Linkon Corporation ("Linkon") in exchange for 66,170 shares of the
Company's Common Stock held by Linkon and Linkon's forgiveness of the
Company's debt to Linkon.
5. In connection with the 1994 master lease agreement with Racal, the
Company granted to Racal warrants to purchase 44,935 shares of the
Company's Class A Common Stock exercisable through September 1, 1998 at
$15.00 per share subject to adjustment. As a result of the options granted
to certain members of management in October 1995, the exercise price of the
warrants was decreased to $3.75 per share.
6. In February 1995, the Company granted to Racal warrants to purchase
5,000 shares of the Company's Class A Common Stock in consideration for
securing the Company's loan from Sun Bank South Florida, National
Association (the "Sun Bank Loan"). The Company has since repaid the Sun
Bank Loan. Racal may exercise the warrants through February 15, 2000, at a
price equal to the lowest of (i) $30.00 per share, (ii) the lowest price
per share at which the Company may sell shares of Common Stock (or
securities convertible into or exchangeable for shares of its Common
Stock), and (iii) the lowest price at which the holder of the warrant,
option or other Company security entitling the holder to purchase shares of
the Company's Common Stock may purchase such shares on or after February
15, 1995.
7. In connection with the 1995 master lease agreement between the Company
and Comdisco, Inc., the Company has issued to Comdisco a warrant to
purchase up to 17,453 shares of Class A Common Stock for a purchase price
of $10.82 subject to adjustment.
8. On April 20, 1995, the Company sold to GS Capital Partners L.P.
("GSCP"), Kleiner Perkins Caufield & Byers VII ("KPCB"), and KPCB VII
Founders Fund (together with KPCB, "KP") an aggregate of 906,453 shares of
the Company's Series A Preferred Stock ("Series A Preferred Shares") and
warrants to purchase an aggregate of 181,876 Class A Common Stock for an
aggregate consideration of approximately $10,000,000 pursuant to a
preferred stock and warrant purchase agreement (the "Series A Agreement").
The warrants issued pursuant to the Series A Agreement had an initial
exercise price of $11.00 for each share of Class A Common Stock. On April
18, 1997, the Investors exercised the warrants at a discounted price of
$6.60 per share. See "Certain Transactions" and "Description of Capital
Stock."
9. The Series A Agreement provided that in the event that the book value
of the shares of the Company decreased an amount in excess of $100,000 as a
result of certain events, including the breach of any representation or
warranty in the Series A Agreement, GSCP and KP would be entitled to
receive indemnification, in the form of additional shares of Class A Common
Stock. In consideration of GSCP's and KP's waiver of their right to be
indemnified in the future the Company agreed, in October 1995, to issue to
GSCP and KP an aggregate of 61,678 shares of Class A Common Stock.
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10. In connection with the alliance between Intuit and the Company, on
December 11, 1995, Intuit received warrants to purchase $1.5 million worth
of Series B Preferred Stock at an initial exercise price of $11.00 per
share and warrants to purchase $3.5 million worth of Series B Preferred
Stock at the closing sale price of the Company's next preferred stock sale,
which was $27.30 per share. Also in connection with the arrangements with
Intuit, GSCP and the Kleiner Entities made bridge loans totaling $2 million
to the Company on October 16, 1995, which were rolled over into bridge
loans totaling $4 million on November 6, 1995. On November 29, 1995, GSCP
made a further bridge loan of $3 million. In consideration of these loans,
GSCP and the Kleiner Entities received warrants to purchase shares of
Series B Preferred Stock at an exercise price of $11.00 per share.
Effective as of December 20, 1995, GSCP and the Kleiner Entities converted
the principal and interest due under their $2 million promissory notes into
a total of 366,947 shares of Series B Preferred Stock at a price of $11.00
per share. Also effective as of December 20, 1995, GSCP converted the
entire amount of principal and interest on its $3 million bridge note into
123,297 Series C Shares at an exercise price of $24.57 per share.
11. On December 20, 1995, the Company issued a total of 804,945 shares of
Series C Preferred Stock ("Series C Shares") at a price of $27.30 per
share. An additional 123,297 Series C Shares were issued to GSCP at $24.57
per share when it converted its $3 million bridge loan in January 1996.
12. On June 6, 1996, the Company closed a Bridge Loan from Sattel
Communications, LLC ("Sattel") for $5,000,000 evidenced by a convertible
Promissory Note dated June 6, 1996. The Company issued Sattel a warrant
dated June 6, 1996, to purchase 36,765 shares of the Company's Series D
Preferred Stock at an exercise price of $20.40 per share. On August 21,
1996, Sattel converted the bridge loan into shares of Series D Preferred
Stock at $20.40 per share.
13. On July 31, 1996, the Company closed a Bridge Loan from Matthew Bross
for $50,000 evidenced by a convertible Promissory Note dated July 29, 1996.
The Company issued Matthew Bross a warrant dated July 31, 1996, to purchase
2,451 shares of Series D Preferred Stock at an exercise price of $20.40 per
share. On August 21, 1996, the Company repaid the loan.
14. On July 31, 1996, the Company closed a Bridge Loan from Maritime
Capital Partners, L.P. for $500,000, evidenced by a convertible Promissory
Note dated July 29, 1996. The Company issued Maritime a warrant dated July
31, 1996, to purchase 14,706 shares of Series D Preferred Stock at an
exercise price of $1.36 per share. On August 21, 1996, the Company repaid
the loan.
15. On July 31, 1996, the Company closed a Bridge Loan from GSCP for
$300,000, evidenced by a convertible Promissory Note dated July 29, 1996.
The Company issued GSCP a warrant dated July 31, 1996, to purchase 24,510
shares of Series D Preferred Stock at an exercise price of $20.40 per
share. The Company repaid the loan on August 21, 1996.
16. On July 31, 1996, the Company closed a Bridge Loan from KPCB for
$300,000 evidenced by a convertible Promissory Note dated July 29, 1996.
The Company issued to KPCB a warrant dated July 31, 1996, to purchase
14,706 shares of Series D Preferred Stock at an exercise price of $20.40
per share. The Company repaid the loan on August 21, 1996.
17. On July 31, 1996, the Company closed a Bridge Loan from Henry
Nothhaft for $100,000 evidenced by a Promissory Note dated July 29, 1996.
The Company issued Henry Nothhaft a warrant dated July 31, 1996, to
purchase 4,902 shares of Series D Preferred Stock at an exercise price of
$20.40 per share. The Company repaid the loan on August 21, 1996.
18. On July 31, 1996, the Company closed a Bridge Loan from John Peters
for $50,000 evidenced by a Promissory Note dated July 29, 1996. The Company
issued John Peters a warrant dated July 31, 1996, to purchase 2,451 shares
of Series D Preferred Stock at an exercise price of $20.40 per share. The
Company repaid the loan on August 21, 1996.
19. On August 16, 1996, the Board of Directors amended the vesting
provisions of options to purchase 14,000 shares issued to Henry Nothhaft,
President, Chief Executive Officer and a director of the Company, on
October 31, 1995, and an option to purchase 11,900 shares issued to John
Peters, Executive Vice President
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and General Manager, Network Services Division, on October 31, 1995, so the
options would fully vest as of the closing date of the sale of at least
$29,000,000 of Series D Preferred Stock of the Company, which occurred on
August 21, 1996.
20. On August 21, 1996, the Company exchanged four options previously
issued to Randy Maslow, a director of the Company, for new options
exercisable for an aggregate of 46,673 shares of Class A Common Stock at
$3.75 per share. The four-year vesting schedule accelerates so that all
shares vest immediately in the event of an initial public offering or a
change of control. The options may be exercised through their expiration
date regardless of when Mr. Maslow ceases being an employee or consultant.
Mr. Maslow's employment with the Company ended on October 31, 1996.
21. On August 21, 1996, the Company sold 1,670,176 shares of Series D
Preferred Stock at $20.40 per share for an aggregate price of $34,000,000.
22. Between October 25, 1996 and November 5, 1996, the Company sold an
additional 1,029,412 shares of Series D Preferred Stock at $20.40 per share
for an aggregate price of $21,000,000.
23. In December 1996, the Company issued options for the purchase of
60,000 shares of Class A Common Stock to employees of Critical Technologies
Incorporated ("CTI"), a company that provides network operations services
to the Company. The options were issued pursuant to the Company's Employee
Staffing and Services Agreement with CTI, dated November 1, 1995. In
October 1996, the Board ratified an amendment to the Company's agreement
with CTI to provides that performance conditions applicable to 13,334 of
the 60,000 optioned shares will be deemed satisfied.
24. On March 5, 1997, in consideration of distribution agreements with
the Company, TMI Telemedia International, Ltd. was issued a warrant for
176,678 shares of Series D Preferred Stock at an exercise price of $20.40
per share.
25. On April , 1997, the Company entered into warrant amendment
agreements with TMI, GSCP, and the Kleiner Entities to reduce the exercise
price of certain of their warrants in return for the immediate exercise of
such warrants. The exercise price of warrants for 181,876 shares of Class A
Common Stock and 66,888 shares of Series B Preferred Stock held by GSCP and
the Kleiner Entities was reduced from $11.00 to $6.60 per share. The
exercise price of warrants for 233,660 shares of Series D Preferred Stock
held by GSCP, KPCB and TMI was reduced from $20.40 per share to $12.24 per
share. Also, in connection with the reduction of the exercise price of the
GSCP and Kleiner Entities' Common Stock warrants, the exercise price of
Intuit's $1.5 million warrant was similarly reduced to $0.44 per share, and
the expiration date was extended to December 31, 2000.
26. In May 1997, in consideration for Marc Collins-Rector agreeing to
convert his Class B Common Stock into Series A Preferred Stock and to vote
his shares to approve the reincorporation of the Company into Delaware and
certain other matters, GSCP, the Kleiner entities and Intuit agreed to vote
in favor of granting Mr. Collins-Rector certain registration rights with
respect to the shares of Common Stock held by Mr. Collins-Rector or
issuable upon conversion of the Series A Preferred. Additionally, the
Company granted Mr. Collins-Rector the right to designate a member of the
Board of Directors of the Company. Currently, Mr. Collins-Rector's designee
is Mr. Robert Doede.
27. Between May 31, 1996, and March 18, 1997, nonplan options to purchase
a total of 3,418 shares of Common Stock were exercised by three optionees
at prices ranging from $3.75 to $9.00 per share.
28. 1993 Incentive Stock Option Plan. The Company's 1993 Incentive Stock
Option Plan (the "1993 Plan") provides for the grant to employees of the
Company of incentive stock options. As of May 15, 1997, options to purchase
5,067 shares of Common Stock had been exercised at an exercise price of
$3.75 per share under the 1993 Plan by three optionees, and options to
purchase 54,007 shares of Class A Common Stock at a weighted average
exercise price of $12.45 per share were outstanding. No future grants will
be made under the 1993 Plan. The exercise price of all stock options
granted under the 1993 Plan must be at least equal to the fair market value
of the Common Stock on the date of grant. With respect to any participant
who owns stock possessing more than 10% of the voting power of all classes
of stock of the Company, the exercise price of any stock option granted to
such person must be at least 110% of the fair market value on the grant
date, and the maximum term of such option is five years. The term of all
other options granted under the 1993 Plan may be up to 10 years. Options
granted under the 1993 Option Plan must be exercised before the optionee
terminates his or her
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status as an employee of the Company, or within three months after such
optionee's termination by disability, or within 12 months after termination
by death. In October 1995, the Board approved an exchange offer pursuant to
which all employees would exchange their options for options granted under
the 1995 Stock Incentive Plan for Employees and Consultants (the "1995
Plan").
29. 1995 Stock Incentive Plan for Employees and Consultants. The
Company's 1995 Plan provides for the granting to employees of incentive
stock options within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and for the granting to employees
and consultants of nonstatutory stock options, stock appreciation rights
("SARs") and restricted stock awards ("RSAs"). No SARs or RSAs have been
granted under the 1995 Plan. The 1995 Plan was approved by the Board of
Directors and Stockholders in September 1995, and an amendment decreasing
the number of shares thereunder from 840,000 to 762,600 was approved by the
Board of Directors in February 1996. The 1995 Plan was terminated effective
October 4, 1996, and no further grants are being made thereunder except to
the extent that an exchange of options under the Company's 1993 Plan for
options under the 1995 Plan, which exchange was begun in October 1995, is
continuing and has not yet been completed. A total of 762,600 shares of
Common Stock are reserved for issuance pursuant to the 1995 Plan. As of May
15, 1997, options to purchase 344,951 shares of Common Stock at a weighted
exercise price of $3.75 per share were outstanding. Nine optionees have
exercised 3,612 shares of Common Stock under the 1995 Plan at an exercise
price of $3.75 per share.
The 1995 Plan may be administered by the Board of Directors or a
committee of the Board of Directors, which committee is required, once the
Company's Common Stock becomes publicly traded, to be constituted to comply
with Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended, and applicable laws. The administrator has the power to determine
the terms of the options granted, including the exercise price, the number
of shares subject to the option and the exercisability thereof, and the
form of consideration payable upon exercise. Options granted under the 1995
Plan are not generally transferable by the optionee, and each option is
exercisable during the lifetime of the optionee only by such optionee.
Options granted under the 1995 Plan must be exercised within three months
of the end of such optionee's status as an employee or consultant of the
Company, or within 12 months after such optionee's termination by death or
disability, but in no event later than the expiration of the option's term,
which may not exceed ten years. The exercise price of all options granted
under the 1995 Plan must be at least equal to the fair market value of the
Common Stock on the date of grant. With respect to any participant who owns
stock possessing more than 10% of the voting power of all classes of the
Company's outstanding capital stock, the exercise price of any option must
equal at least 110% of the fair market value on the grant date and the term
of the option must not exceed five years. The term of all other options
granted under the 1995 Plan may not exceed 10 years.
The 1995 Plan provides that in the event of a recapitalization, stock
split, stock dividend, combination or reclassification or other increase or
decrease in the number of issued shares of Common Stock without
consideration, the Committee shall adjust the number of shares subject to
each outstanding stock option, as well as the exercise price. In the event
of dissolution or liquidation of the Company, unexercised stock options
will terminate immediately prior to such event, after advance notice to
participants. In the event of a merger or the sale of substantially all
assets of the Company, each option shall be assumed or substituted. Options
not assumed or substituted shall terminate on the date of closing of the
merger.
30. Amended and Restated 1996 Stock Plan. The Company's Amended and
Restated 1996 Stock Plan (the "Restated 1996 Plan") provides for the
granting to employees of incentive stock options within the meaning of
Section 422 of the Code, and for the granting to employees, directors and
consultants of nonstatutory stock options and stock purchase rights
("Rights"). The 1996 Plan was initially approved by the Board of Directors
effective as of December 1996. It was amended and restated in May 1997 and
will be presented to the Stockholders for their approval at the 1997 annual
meeting. Unless terminated sooner, the Restated 1996 Plan will terminate
automatically in December 2006. A total of 793,333 shares of Common Stock
are currently reserved for issuance pursuant to the Restated 1996 Plan. As
of May 15, 1997, options to purchase 595,580 shares of Class A Common Stock
at a weighted average exercise price of $10.35 per share were outstanding,
and shares of Class A Common Stock remained available for future grant
under the Restated 1996 Stock Plan.
The Restated 1996 Plan may be administered by a committee of the Board of
Directors constituted to comply with applicable laws (the "Committee") or
by the Board itself. The Board or Committee (the "Administrator") has the
power to determine the terms of the options or Rights granted, including
the exercise price, the number of shares subject to each option or Right,
the exercisability thereof, or any vesting acceleration
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or waiver of forfeiture conditions. The Administrator may determine the
form of payment upon exercise, including cash, check, promissory note,
other shares, cashless exercise or a combination of the foregoing. The
Board has the authority to amend, suspend or terminate the Restated 1996
Plan, provided that no such action may impair the rights of any optionee or
Right holder without that person's consent.
Options and Rights granted under the Restated 1996 Plan are not generally
transferable by the optionee or Right holder other than by will or the laws
of descent and distribution, and each option and Right is exercisable
during the lifetime of the optionee or Right holder only by such optionee
or Right holder. The form of option agreement currently in use provides
that options generally must be exercised within 90 days of the end of
optionee's status as an employee, director or consultant of the Company.
Under the Plan, options must be exercised within twelve months after such
optionee's termination by death or disability, but in no event later than
the expiration of the option's term. In the case of Rights, unless the
Administrator determines otherwise, the Restricted Stock Purchase Agreement
shall grant the Company a repurchase option exercisable upon the voluntary
or involuntary termination of the purchaser's service with the Company for
any reason (including death or disability). The purchase price for shares
repurchased pursuant to the Restricted Stock Purchase Agreement shall be
the original price paid by the purchaser and may be paid by cancellation of
any indebtedness of the purchaser to the Company. The repurchase option
shall lapse at a rate determined by the Administrator but in no case more
slowly than 20% per year over five years. Generally, options vest 25% after
one year and 1/36 per month thereafter. The exercise price of all incentive
stock options granted under the Restated 1996 Plan must be at least equal
to the fair market value of the Common Stock on the date of grant. The
exercise price of nonstatutory stock options and Rights must at least be
equal to 85% of the fair market value of the Common Stock on the date of
grant. With respect to any participant who owns stock possessing more than
10% of the voting power of all classes of the Company's outstanding capital
stock, the exercise price of any incentive or nonstatutory stock option
granted must equal at least 110% of the fair market value on the grant
date. The term of an incentive stock option granted to such a 10%
Stockholder must not exceed five years. The term of other options granted
under the Restated 1996 Plan may not exceed ten years.
The Restated 1996 Plan provides that in the event of a merger of the
Company with or into another corporation, a sale of substantially all of
the Company's assets or a like transaction involving the Company, each
option shall be assumed or an equivalent option substituted by the
successor corporation. If the outstanding options are not assumed or
substituted as described in the preceding sentence, the Administrator shall
provide for the optionee or Right holder to have the right to exercise the
option or Right as to all of the optioned stock, including shares as to
which it would not otherwise be exercisable. If the Administrator makes an
option or Right exercisable in full in the event of a merger or sale of
assets, the Administrator shall notify the optionee or Right holder that
the option or Right shall be fully exercisable for a period of fifteen days
from the date of such notice, and the option or Right will terminate upon
the expiration of such period. The forms of option agreement and restricted
stock purchase agreement currently in use provide for a 180-day lockup of
the optionee's or Right holder's shares in the event of the Company's
initial public offering. The option exercise notice and the restricted
stock purchase agreement also grant the Company a right of first refusal
(prior to the initial public offering) on the sale or transfer of any
shares purchased pursuant to an option or Right, other than transfers by
gift, operation of law or certain family transfers.
The sales and issuances of securities in the transactions described in
paragraphs 4-27 above were deemed to be exempt from registration under the Act
in reliance upon (i) Section 4(2) of the Securities Act and Regulation D
promulgated thereunder as transactions by an issuer not involving any public
offering, or (ii) Rule 701 promulgated thereunder as transactions pursuant to
a compensatory benefit plan or a written contract relating to compensation.
The issuances described in paragraphs 1, 2 and 3 were not made pursuant to a
registration statement under the Act, nor were the offer and sale registered
or qualified under any state securities laws. Although the Company believed at
the time that such offers, sales and conversion were exempt from such
registration or qualification, they may not have been exempt. As a result,
purchasers of such securities may have the right under the Act or such state
securities laws, to rescind their purchases, and thereby be entitled to return
such securities to the Company and receive back from the Company the full
consideration paid by such purchasers. No claims for any such rescission have
been asserted against the Company. The effective price per share of Class A
Common Stock and Class A Common Stock equivalents
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of such purchases ranged from $3.75 to $30.00. The Company expects to initiate
a rescission offer to all such holders simultaneous with this offering. If all
such holders accept such rescission offer, the Company would be required to
apply up to $5,150,000 of the proceeds of this placement towards such
rescission. The repurchase of shares pursuant to the rescission offer may give
rise to an obligation of the Company to issue additional shares of Class A
Common Stock to the holders of Series A Preferred Stock.
In addition, options issued pursuant to the Company's 1995 Stock Incentive
Plan for Employees and Consultants (the "1995 Plan") and nonplan options for
the purchase of Class A Common Stock were issued to approximately 150 to 200
people in California in 1995 and 1996 for which the Company was unable to rely
on the exemption provided by Section 25102(f) of the California Corporations
Code. In March 1996, the Company was denied a permit for these issuances by
the California Commissioner of Corporations as a result of the Company's two
classes of Common Stock with differing voting rights. In addition, a smaller
number of options were issued to optionees in other states, including Michigan
and Florida, for which the Company may not have had available an exemption
from qualification. Also, the November 17, 1995, grant of options for the
purchase of 60,000 shares of Class A Common Stock to employees of Critical
Technologies Incorporated was not qualified and may not have had an exemption
available under the blue sky laws of California. The aforementioned options
are potentially subject to rescission, and the Company intends to include them
in its planned rescission offer previously discussed. As of the date hereof,
management is not aware of any claims for rescission against the Company.
While the Company will offer to rescind the securities sales, there are no
assurances that the Company will not otherwise be subject to possible
penalties or fines relating to these issuances. The Company believes the
Rescission Offers will provide it with additional meritorious defenses to any
such future claims. See "Shares Eligible for Future Sale."
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.
2.1* Merger Agreement.
3.1** Form of Amended and Restated Certificate of Incorporation of Registrant
prior to completion of this offering.
3.2* Form of Amended and Restated Certificate of Incorporation of Registrant
to be effective upon completion of this offering.
3.3* Amended and Restated Bylaws of Registrant prior to completion of this
offering.
3.4* Amended and Restated Bylaws of Registrant to be effective upon
completion of this offering.
4.1* Form of Registrant's Common Stock Certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
regarding legality of the securities being issued.
10.1** Amended and Restated Registration Rights Agreement, as amended and
restated as of August 21, 1996, by and among the Registrant, GS Capital
Partners, L.P., Kleiner Perkins Caufield & Byers VII, Comdisco, Inc.,
Intuit, Inc., certain listed holders of Series C Convertible Preferred
Stock, certain listed holders of Common Stock, certain listed holders
of Series D Convertible Preferred Stock, and Racal-Datacom, Inc.
10.2 Preferred Stock and Warrant Purchase Agreement, dated as of April 20,
1995, by and among the Registrant, GS Capital Partners, L.P., and
Kleiner Perkins Caufield & Byers VII and KPCB Information Sciences
Zaibatsu Fund II, as amended.
10.3** Form of Director and Officer Indemnification Agreement.
10.4** 1995 Stock Incentive Plan for Employees and Consultants, as amended
February 21, 1996.
10.5** Amended and Restated 1996 Stock Plan.
</TABLE>
II-7
<PAGE>
<TABLE>
<C> <S>
10.6* 1997 Stock Plan.
10.7* 1997 Employee Stock Purchase Plan.
10.8** Termination of Services and Indemnification Agreement, dated as of
February 15, 1996, by and between the Registrant and Marc Collins-
Rector and Chad Shackley.
10.9** Agreement, dated as of February 15, 1996, by and between the
Registrant and Randy Maslow.
10.10** Governance Agreement, dated May 15, 1997, by and among the Registrant,
Marc Collins-Rector, Chad Shackley, GS Capital Partners, L.P.,
Kleiner Perkins Caufield & Byers VII, KPCB VII Founders Fund, KPCB
Information Sciences Zaibatsu Fund II, and Intuit, Inc.
10.11+ Employee Services and Staffing Agreement, dated November 1, 1995,
between the Registrant and Critical Technologies, Inc., as amended on
September 30, 1996, and October 23, 1996, including Colocation
Services Agreement, dated as of November 1, 1994, between the
Registrant and Critical Technologies, Inc. and amendments thereto.
10.12+ Internet-Sign Up Wizard Referral and Microsoft Internet Explorer
License and Distribution Agreement, dated March 28, 1997, between the
Registrant and Microsoft Corporation.
10.13+ OEM License Agreement dated July 27, 1995, between the Registrant and
Netscape Communications Corporation, as amended by First Amendment,
dated January 2, 1996, Second Amendment, effective January 2, 1996,
and Third Amendment, dated May 21, 1996.
10.14+ "Dial up Client" Agreement, dated August 21, 1995, between the
Registrant and Netscape Communications Corporation.
10.15+ "Internet Account Server" Participation Agreement, dated as of January
14, 1997, between the Registrant and Netscape Communications
Corporation.
10.16+ Special Customer Arrangement, dated May 17, 1996, between MCI
Telecommunications Corporation and Sattel Communications LLC, as
amended by First Amendment, dated July 2, 1996; assigned to
Registrant by Assignment and Novation Agreement #2, dated as of
August 7, 1996.
10.17+ Master Agreement for MCI Enhanced Services, effective November 1,
1996, between the Registrant and MCI Telecommunications Corporation.
10.18++ Internet Access Agreement for Resellers, dated June 26, 1996, between
the Registrant and network MCI, Inc.
10.19++ Internet Server Access Services Agreement, dated August 5, 1996,
between the Registrant and Pac-West Telcomm.
10.20+ Contract for Services, dated June 17, 1996, by and between the
Registrant and MFS Telephone, Inc.
10.21+ AT&T Contract Tariff Order, dated June 17, 1996, and Addendum of even
date therewith.
10.22+ Master Lease Agreement Number CONO1C Between Concentric Research
Corporation and Racal-Datacom, Inc. ("Racal"), dated August 4, 1994,
as Supplemented by Letter Agreement, dated March 30, 1995, Between
the Corporation and Racal.
10.23+ Lease Agreement Number CON04C between Concentric Network Corporation
and Racal-Datacom, Inc., dated June 26, 1996.
10.24+ Master On-site Maintenance Plan Agreement Number CONO2C Between
Concentric Research Corporation and Racal-Datacom, Inc., dated August
24, 1994.
10.25** Lease Agreement, dated November 1, 1996, effective March 11, 1996, by
and between the Registrant and Saginaw Video Associates, d.b.a.
Saginaw Conference Center.
10.26** Amended and Restated Lease Agreement, dated as of October 7, 1996,
between the Registrant and Larry Shackley.
10.27** (Master) Lease, dated January 26, 1988, between Tandem Computers
Incorporated and Spieker-French #130, Limited Partnership, as amended
by Lease Amendment No. 1, effective February 5, 1990, and Extension
Agreement, dated March 23, 1993.
</TABLE>
II-8
<PAGE>
<TABLE>
<C> <S>
10.28* Sublease, dated June 22, 1995, between the Registrant and Tandem
Computers Incorporated.
10.29** Sublease, dated April 25, 1995, between Tandem Computers Incorporated
and Passage Systems, Inc.
10.30** Assignment Agreement, dated December 6, 1996, by and between the
Registrant and Passage Systems, Inc.
10.31+ Internet Access Service Agreement, dated December 11, 1995, effective
as of August 1, 1995, between the Registrant and Intuit, Inc., as
amended.
10.32+* Virtual Private Network Services, dated August 16, 1996, between the
Registrant and WebTV Networks, Inc.
10.33+ Support Services Agreement, dated March 31, 1997, by and between the
Registrant and MCI Telecommunications Corporation.
11.1** Statement of computation of earnings per share.
21.1* List of Subsidiaries.
23.1* Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(included in Exhibit 5.1).
23.2** Consent of Ernst & Young, LLP, Independent Auditors.
24.1** Power of Attorney (see signature page).
27.1** Financial Data Schedule.
</TABLE>
- --------
*To be filed by amendment.
** Previously filed.
+ Certain information in these exhibits has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a confidential
treatment request under 17 C.F.R. (S)(S) 200.80(b)(4), 200.83 and 230.46.
++ The Registrant has determined that these exhibits are not material and will
not be filed with this Registration Statement.
(b) Financial Statement Schedules
None.
ITEM 17. UNDERTAKINGS
(a) The Registrant hereby undertakes to provide to the underwriter at the
closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(c) The undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(ii) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1944, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL THE REQUIREMENTS FOR FILING ON FORM S-1 AND HAS DULY CAUSED THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT ON FORM S-1 TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CUPERTINO, STATE OF
CALIFORNIA, ON THE 4TH DAY OF JUNE, 1997.
Concentric Network Corporation
/s/ Henry R. Nothhaft
By: __________________________________
HENRY R. NOTHHAFT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1944, AS AMENDED, THIS
AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW ON JUNE 4,
1997, BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Henry R. Nothhaft President and Chief
- ------------------------------------- Executive Officer June 4, 1997
HENRY R. NOTHHAFT (Principal
Executive Officer),
Director
/s/ Michael F. Anthofer Chief Financial
- ------------------------------------- Officer (Principal June 4, 1997
MICHAEL F. ANTHOFER Financial and
Accounting Officer)
* Director June 4, 1997
- -------------------------------------
TERENCE M. O'TOOLE
* Director June 4, 1997
- -------------------------------------
VINOD KHOSLA
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Director , 1997
- ------------------------------------
RANDY MASLOW
* Director June 4, 1997
- ------------------------------------
FRANCO REGIS
Director , 1997
- -------------------------------------
L. ROD MANNING
* Director June 4, 1997
- ------------------------------------
GARY E. RIESCHEL
</TABLE>
*By: /s/ Henry R. Nothhaft
-------------------------
HENRY R. NOTHHAFT
ATTORNEY-IN-FACT
II-11
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.
2.1* Merger Agreement.
3.1** Form of Amended and Restated Certificate of Incorporation of
Registrant prior to completion of this offering.
3.2* Form of Amended and Restated Certificate of Incorporation of
Registrant to be effective upon completion of this offering.
3.3* Amended and Restated Bylaws of Registrant prior to completion of this
offering.
3.4* Amended and Restated Bylaws of Registrant to be effective upon
completion of this offering.
4.1* Form of Registrant's Common Stock Certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
regarding legality of the securities being issued.
10.1** Amended and Restated Registration Rights Agreement, as amended and
restated as of August 21, 1996, by and among the Registrant, GS
Capital Partners, L.P., Kleiner Perkins Caufield & Byers VII,
Comdisco, Inc., Intuit, Inc., certain listed holders of Series C
Convertible Preferred Stock, certain listed holders of Common Stock,
certain listed holders of Series D Convertible Preferred Stock, and
Racal-Datacom, Inc.
10.2 Preferred Stock and Warrant Purchase Agreement, dated as of April 20,
1995, by and among the Registrant, GS Capital Partners, L.P., and
Kleiner Perkins Caufield & Byers VII and KPCB Information Sciences
Zaibatsu Fund II, as amended.
10.3** Form of Director and Officer Indemnification Agreement.
10.4** 1995 Stock Incentive Plan for Employees and Consultants, as amended
February 21, 1996.
10.5** Amended and Restated 1996 Stock Plan.
10.6* 1997 Stock Plan.
10.7* 1997 Employee Stock Purchase Plan.
10.8** Termination of Services and Indemnification Agreement, dated as of
February 15, 1996, by and between the Registrant and Marc Collins-
Rector and Chad Shackley.
10.9** Agreement, dated as of February 15, 1996, by and between the
Registrant and Randy Maslow.
10.10** Governance Agreement, dated May 15, 1997, by and among the Registrant,
Marc Collins-Rector, Chad Shackley, GS Capital Partners, L.P.,
Kleiner Perkins Caufield & Byers VII, KPCB VII Founders Fund, KPCB
Information Sciences Zaibatsu Fund II, and Intuit, Inc.
10.11+ Employee Services and Staffing Agreement, dated November 1, 1995,
between the Registrant and Critical Technologies, Inc., as amended on
September 30, 1996, and October 23, 1996, including Colocation
Services Agreement, dated as of November 1, 1994, between the
Registrant and Critical Technologies, Inc. and amendments thereto.
10.12+ Internet-Sign Up Wizard Referral and Microsoft Internet Explorer
License and Distribution Agreement, dated March 28, 1997, between the
Registrant and Microsoft Corporation.
10.13+ OEM License Agreement dated July 27, 1995, between the Registrant and
Netscape Communications Corporation, as amended by First Amendment,
dated January 2, 1996, Second Amendment, effective January 2, 1996,
and Third Amendment, dated May 21, 1996.
10.14+ "Dial up Client" Agreement, dated August 21, 1995, between the
Registrant and Netscape Communications Corporation.
10.15+ "Internet Account Server" Participation Agreement, dated as of January
14, 1997, between the Registrant and Netscape Communications
Corporation.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.16+ Special Customer Arrangement, dated May 17, 1996, between MCI
Telecommunications Corporation and Sattel Communications LLC, as
amended by First Amendment, dated July 2, 1996; assigned to
Registrant by Assignment and Novation Agreement #2, dated as of
August 7, 1996.
10.17+ Master Agreement for MCI Enhanced Services, effective November 1,
1996, between the Registrant and MCI Telecommunications Corporation.
10.18++ Internet Access Agreement for Resellers, dated June 26, 1996, between
the Registrant and network MCI, Inc.
10.19++ Internet Server Access Services Agreement, dated August 5, 1996,
between the Registrant and Pac-West Telcomm.
10.20+ Contract for Services, dated June 17, 1996, by and between the
Registrant and MFS Telephone, Inc.
10.21+ AT&T Contract Tariff Order, dated June 17, 1996, and Addendum of even
date therewith.
10.22+ Master Lease Agreement Number CONO1C Between Concentric Research
Corporation and Racal-Datacom, Inc. ("Racal"), dated August 4, 1994,
as Supplemented by Letter Agreement, dated March 30, 1995, Between
the Corporation and Racal.
10.23+ Lease Agreement Number CON04C between Concentric Network Corporation
and Racal-Datacom, Inc., dated June 26, 1996.
10.24+ Master On-site Maintenance Plan Agreement Number CONO2C Between
Concentric Research Corporation and Racal-Datacom, Inc., dated August
24, 1994.
10.25** Lease Agreement, dated November 1, 1996, effective March 11, 1996, by
and between the Registrant and Saginaw Video Associates, d.b.a.
Saginaw Conference Center.
10.26** Amended and Restated Lease Agreement, dated as of October 7, 1996,
between the Registrant and Larry Shackley.
10.27** (Master) Lease, dated January 26, 1988, between Tandem Computers
Incorporated and Spieker-French #130, Limited Partnership, as amended
by Lease Amendment No. 1, effective February 5, 1990, and Extension
Agreement, dated March 23, 1993.
10.28* Sublease, dated June 22, 1995, between the Registrant and Tandem
Computers Incorporated.
10.29** Sublease, dated April 25, 1995, between Tandem Computers Incorporated
and Passage Systems, Inc.
10.30** Assignment Agreement, dated December 6, 1996, by and between the
Registrant and Passage Systems, Inc.
10.31+ Internet Access Service Agreement, dated December 11, 1995, effective
as of August 1, 1995, between the Registrant and Intuit, Inc.
10.32+* Virtual Private Network Services, dated August 16, 1996, between the
Registrant and WebTV Networks, Inc.
10.33+ Support Services Agreement, dated March 31, 1997, by and between the
Registrant and MCI Telecommunications Corporation.
11.1** Statement of computation of earnings per share.
21.1* List of Subsidiaries.
23.1* Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(included in Exhibit 5.1).
23.2** Consent of Ernst & Young, LLP, Independent Auditors.
24.1** Power of Attorney (see signature page).
27.1** Financial Data Schedule.
</TABLE>
- --------
*To be filed by amendment.
**Previously filed.
+ Certain information in these exhibits has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a confidential
treatment request under 17 C.F.R. (S)(S) 200.80(b)(4), 200.83 and 230.46.
++ The Registrant has determined that these exhibits are not material and will
not be filed with this Registration Statement.
<PAGE>
EXHIBIT 10.2
PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT
by and
among
CONCENTRIC RESEARCH CORPORATION,
GS CAPITAL PARTNERS, L.P.,
and
KLEINER PERKINS CAUFIELD & BYERS VII
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. Issuance and Sale of Securities........................................ 1
1.1. The Initial Purchase................................................... 1
1.2. The Subsequent Purchase................................................ 1
1.3. The Closings........................................................... 2
1.4. Actions at the Initial Closing......................................... 2
1.5. Additional Issuances................................................... 3
SECTION 2. Representations and Warranties of the Corporation...................... 3
2.1. Organization and Good Standing; Power and Authority; Qualifications.... 3
2.2. Authorization of the Documents......................................... 4
2.3. Capitalization......................................................... 4
2.4. Authorization and Issuance of Capital Stock............................ 5
2.5. Reservation of Shares.................................................. 6
2.6. Financial Statements................................................... 6
2.7. Absence of Undisclosed Liabilities..................................... 6
2.8. Absence of Changes..................................................... 6
2.9. No Conflict............................................................ 7
2.10. Agreements............................................................. 7
2.11. Intellectual Property Rights........................................... 8
2.12. Equity Investments..................................................... 10
2.13. Corporate Minute Books................................................. 10
2.14. Activities............................................................. 10
2.15. Assets................................................................. 10
2.16. Employee Benefit Plans................................................. 11
2.17. Labor Relations; Employees............................................. 12
2.18. Litigation; Orders..................................................... 12
2.19. Compliance with Laws; Permits.......................................... 12
2.20. Commissions, Etc....................................................... 13
2.21. Offering Exemption..................................................... 13
2.22. Related Transactions................................................... 13
2.23. Disclosure............................................................. 13
2.24. Taxes.................................................................. 13
2.25. Environmental Protection............................................... 14
2.26. Consents............................................................... 14
2.27. Insurance.............................................................. 15
2.28. Brokers................................................................ 15
2.29. Suppliers and Customers................................................ 15
2.30. Investment Banking Services............................................ 15
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
2.31. Suitability............................................................ 15
2.32. Use of Proceeds........................................................ 16
2.33. Preemptive Rights...................................................... 16
2.34. Stockholder Meeting.................................................... 16
SECTION 3. Representations and Warranties of the Investor......................... 16
SECTION 4. Corporate Governance................................................... 17
4.1. Board of Directors..................................................... 17
4.2. Committees............................................................. 18
4.3. Removal................................................................ 19
4.4. Directors' Indemnification............................................. 19
4.5. Meetings of the Board of Directors..................................... 19
SECTION 5. Certain Covenants...................................................... 19
5.1. Access to Records...................................................... 19
5.2. Financial Reports...................................................... 19
5.3. Budget and Operating Forecast.......................................... 20
5.4. System of Accounting................................................... 20
5.5. Maintenance of Corporate Existence, etc................................ 21
5.6. Compliance with Laws................................................... 21
5.7. Maintenance of Properties and Leases................................... 21
5.8. Insurance.............................................................. 21
5.9. Licenses and Permits................................................... 21
5.10. Intellectual Property.................................................. 21
5.11. Employee Nondisclosure Agreements...................................... 22
5.12. Preemptive Rights...................................................... 22
5.13. Disclosure of Investment............................................... 24
5.14. Use of Proceeds........................................................ 24
5.15. Major Transactions..................................................... 24
5.16. Notice................................................................. 26
5.17. Confidentiality........................................................ 26
5.18. Investment Banking Services............................................ 26
5.19. Preemptive Rights Waivers.............................................. 27
5.20. Rescission Offer....................................................... 27
5.21. Relocation............................................................. 27
5.22. Corporate Officers..................................................... 27
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
5.23. Call Right.................................................................. 27
SECTION 6. Conditions to the Subsequent Purchase....................................... 28
SECTION 7. Termination................................................................. 29
SECTION 8. Transfer Taxes.............................................................. 29
SECTION 9. Legends; Exchanges; Lost, Stolen or Mutilated Certificates.................. 29
SECTION 10. Survival of Representations, Warranties, Agreements and Covenants, etc...... 31
SECTION 11. Expenses.................................................................... 31
SECTION 12. Indemnification............................................................. 31
SECTION 13. Remedies.................................................................... 34
SECTION 14. Further Assurances.......................................................... 34
SECTION 15. Successors and Assigns...................................................... 35
SECTION 16. Entire Agreement............................................................ 35
SECTION 17. Notices..................................................................... 35
SECTION 18. Amendments.................................................................. 37
SECTION 19. Counterparts................................................................ 37
SECTION 20. Headings.................................................................... 37
SECTION 21. Nouns and Pronouns.......................................................... 37
SECTION 22. Governing Law............................................................... 37
SECTION 23. Severability................................................................ 37
</TABLE>
-iii-
<PAGE>
Exhibits
- --------
Exhibit A Form of Warrant
Exhibit B Form of Stockholder Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Certificate of Chief Executive Officer Re: Initial Closing
Exhibit E Form of Incumbency Certificate
Exhibit F Form of Amended and Restated Certificate of Incorporation and By-Laws
Exhibit G Form of Opinion of Counsel to the Corporation
Exhibit H Form of Common Stock and Option Purchase Agreement
Exhibit I Form of Employee Nondisclosure Agreement
Exhibit J Notice of Meeting
Exhibit K Form of Certificate of Chief Executive Officer Re: Subsequent Closing
-iv-
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION
- ---- -------
<S> <C>
Adjusted Closing Date Shares.............................................12(f)
Aggregate Indemnification Amount.........................................12(f)
Aggregate Investor Equity Percentage.....................................12(f)
Articles of Incorporation...............................................1.4(c)
Balance Sheet..............................................................2.6
BCA of Florida............................................................2.34
Benefit Plan...........................................................2.16(a)
Board...................................................................1.4(c)
Business Days............................................................12(f)
By-Laws.................................................................1.4(c)
Call Closing...........................................................5.23(b)
Call Price.............................................................5.23(a)
Call Right.............................................................5.23(a)
CEO.....................................................................4.1(a)
Closing.................................................................1.3(a)
Closing Per Share Price..................................................12(f)
Code...................................................................2.16(a)
Common Stock............................................................2.3(b)
Common Stock Equivalents................................................1.5(a)
Contract...............................................................2.10(a)
Conversion Shares..........................................................2.5
</TABLE>
-v-
<PAGE>
<TABLE>
<S> <C>
Corporate Designee.......................................................4.1(a)
Corporation............................................................Preamble
Corporation Notice......................................................5.23(a)
Corporation Valuation...................................................5.12(e)
Director Designee........................................................4.1(a)
Documents...................................................................2.1
Employee................................................................2.16(a)
Employee Agreement......................................................2.16(a)
Employee Nondisclosure Agreements..........................................2.17
Encumbrances...............................................................2.15
Enterprise Value..........................................................12(f)
Environmental Laws.........................................................2.25
Equity Security.........................................................5.12(a)
ERISA...................................................................2.16(a)
Excess Price Per Share....................................................12(a)
Excluded Securities.....................................................5.12(d)
Fair Market Value.........................................................12(f)
Final Indemnification Amount..............................................12(b)
Final Rescission Amount...................................................12(b)
GAAP........................................................................2.6
Gerster Letter.............................................................2.28
Goldman Sachs............................................................. 5.18
</TABLE>
-vi-
<PAGE>
<TABLE>
<S> <C>
GSCP...................................................................Preamble
GSCP Affiliate...............................................................15
GSCP Parties............................................................5.12(a)
Hazardous Substances.......................................................2.25
Identified Fee...........................................................2.3(b)
Indemnifiable Diminution..................................................12(a)
Initial Closing..........................................................1.3(a)
Initial Indemnification Amount............................................12(b)
Initial Purchase............................................................1.1
Intellectual Property...................................................2.11(i)
Interim CEO.............................................................5.22(a)
Investor(s)............................................................Preamble
Investor Designee........................................................4.1(a)
Investor Notice.........................................................5.23(a)
Investor Parties........................................................5.12(a)
Investor Securities.....................................................5.23(a)
Issue...................................................................5.12(a)
Issuance................................................................5.12(a)
Issuance Date............................................................1.5(a)
KP.....................................................................Preamble
KP Affiliate.................................................................15
KP Parties..............................................................5.12(a)
</TABLE>
-vii-
<PAGE>
<TABLE>
<S> <C>
Litigation...................................................................22
Losses....................................................................12(a)
Notes....................................................................1.1(b)
Notice of Acceptance....................................................5.12(b)
Offer Notice............................................................5.12(a)
Offered Securities......................................................5.12(a)
Other Buyers............................................................5.12(c)
Outstanding Shares........................................................12(f)
Permanent CEO...........................................................5.22(a)
Per Share Price...........................................................12(f)
Preemptive Offer........................................................5.12(a)
Preemptive Rights Transaction..............................................2.33
Preemptive Rights Waiver...................................................2.33
Preferred Stock..........................................................2.3(a)
Premises...................................................................2.25
Pro Rata Share..........................................................5.12(a)
Propositions...............................................................2.34
PTO.....................................................................2.11(c)
Qualified IPO...........................................................5.12(e)
Registration Rights Agreement............................................1.4(b)
Related Party...........................................................5.15(x)
Rescission Loss(es).......................................................12(a)
</TABLE>
-viii-
<PAGE>
<TABLE>
<S> <C>
Rescission Offer..........................................................5.20
Rescission Purchase.......................................................12(a)
Rescission Termination Date................................................5.20
SEC.......................................................................5.2.4
Securities Act.............................................................2.20
Series A Preferred Stock...............................................Recitals
Specified Executive Officer..............................................5.22(b)
Stock Purchase Agreement..................................................1.4(i)
Stockholder Agreement.....................................................1.4(a)
Subsequent Closing........................................................1.3(a)
Subsequent Purchase..........................................................1.2
Taxes.......................................................................2.24
Warrant Shares..........................................................Recitals
Warrants................................................................Recitals
</TABLE>
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<PAGE>
CONCENTRIC RESEARCH CORPORATION
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
AGREEMENT, dated as of April 20, 1995, by and among CONCENTRIC RESEARCH
CORPORATION, a Florida corporation (the "Corporation"), GS CAPITAL PARTNERS,
L.P., a Delaware limited partnership ("GSCP") and KLEINER PERKINS CAUFIELD &
BYERS VII, a California limited partnership ("KP"; together with GSCP, the
"Investors", each individually referred to as an "Investor").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Corporation wishes to sell to the Investors and the Investors
wish to purchase from the Corporation shares of Series A Convertible Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock"), and warrants,
substantially in the form of Exhibit A hereto (the "Warrants"), to purchase
shares of Class A Common Stock of the Corporation, par value $.01 per share
(such shares referred to as the "Warrant Shares").
ACCORDINGLY, the parties hereto hereby agree as follows:
SECTION 1. Issuance and Sale of Securities.
-------------------------------
1.1. The Initial Purchase.
--------------------
(a) At the Initial Closing (as defined in Section 1.3), each
Investor shall , severally and not jointly, purchase from the Corporation and
the Corporation shall sell to each Investor, 3,399,197 shares of Series A
Preferred Stock and 682,035 Warrants (the "Initial Purchase"), at an aggregate
price of $2,500,000 for all such shares of Series A Preferred Stock and
Warrants. Pursuant to the Articles of Incorporation of the Corporation, each
share of Series A Preferred Stock is initially convertible into a "Common Stock
Unit", consisting of one share of Class A Common Stock and .0032 of a share of
Class B Common Stock, and such 3,399,197 shares of Series A Preferred Stock are
initially convertible into 3,399,197 shares of Class A Common Stock and 10,901
shares of Class B Common Stock.
(b) At the Initial Closing, the principal amount of the promissory
note, dated April 13, 1995, in the amount of $125,000 issued to each Investor by
the Corporation (collectively, the "Notes") shall be applied towards the payment
of the aggregate purchase price otherwise payable by such Investor at the
Initial Closing, and the Notes shall be deemed paid in full and shall be
canceled.
1.2. The Subsequent Purchase. At the Subsequent Closing (as defined in
-----------------------
Section 1.3), each Investor shall, severally and not jointly, purchase from the
Corporation and the Corporation shall sell to each Investor, 3,399,197 shares of
Series A Preferred Stock and 682,035 Warrants (the
<PAGE>
"Subsequent Purchase"), at an aggregate purchase price of $2,500,000 for all
such shares of Series A Preferred Stock and Warrants.
1.3. The Closings.
------------
(a) The closing of the transactions contemplated by the Initial
Purchase (the "Initial Closing") shall take place simultaneously with the
execution and delivery of this Agreement. Subject to the satisfaction or waiver
of the conditions set forth in Section 6, the closing of the transactions
contemplated by the Subsequent Purchase (the "Subsequent Closing"; together with
the Initial Closing, each a "Closing") shall take place on July 20, 1995.
(b) At each Closing, the Corporation shall deliver to each Investor a
certificate or certificates representing the shares of Series A Preferred Stock
and Warrants purchased by the Investor at such Closing, registered in the name
of the Investor or its nominee. Delivery of such certificates and Warrants to
an Investor shall be made against receipt by the Corporation from the Investor
of the aggregate purchase price to be paid by the Investor at such Closing,
which shall be paid by wire transfer in such amount to an account designated at
least one business day prior to the applicable Closing by the Corporation.
(c) Each Closing shall take place at the offices of Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, NY 10004.
1.4. Actions at the Initial Closing. Simultaneously with, or prior to,
------------------------------
the execution and delivery of this Agreement, the following actions shall occur:
(a) A stockholder agreement (the "Stockholder Agreement") among the
Corporation, the Investors, Marc Collins-Rector and Chad Shackley, substantially
in the form of Exhibit B hereto, shall be duly executed and delivered by the
parties thereto.
(b) A registration rights agreement (the "Registration Rights
Agreement") between the Corporation and the Investors, substantially in the form
of Exhibit C hereto, shall be duly executed and delivered by the Corporation and
the Investors.
(c) The Corporation shall deliver to the Investors: (i) certificates
of good standing for the Corporation from the States of Florida and Michigan,
dated as of a date no earlier than five days prior to the Initial Closing, (ii)
a certificate executed by the Chief Executive Officer of the Corporation,
substantially in the form attached hereto as Exhibit D, certifying the accuracy
of the Corporation's representations and warranties and the performance of the
Corporation's covenants, (iii) an incumbency certificate, substantially in the
form attached hereto as Exhibit E, (iv) the certificates representing the
applicable Series A Preferred Stock and Warrants and (v) certified copies, as of
a date as close as practicable to the Initial Closing, of the Amended and
Restated Articles of Incorporation of the Corporation (the "Articles of
Incorporation") and the Amended and Restated By-Laws of the Corporation (the
"By-Laws"), which certified Articles of Incorporation and By-Laws will be in the
form of Exhibit F attached hereto and which By-Laws shall reflect the
-2-
<PAGE>
following amendments: (i) to fix the size of the Board of Directors of the
Corporation (the "Board") at five, and (ii) such other matters as are set forth
therein.
(d) The Investors shall receive from Honigman Miller Schwartz and
Cohn, counsel for the Corporation, or, with respect to certain matters other
counsel reasonably acceptable to the Investors, an opinion addressed to the
Investors, dated as of the Initial Closing, satisfactory in form and substance
to the Investors, which shall include the opinions set forth in Exhibit G
attached hereto.
(e) The following five persons shall have been elected as the Board
and shall hold such position as of the Initial Closing date: Marc Collins-
Rector, Randy Maslow, Terry O'Toole, Hadley Ford, and Vinod Khosla.
(f) The Board shall have formed a compensation committee which shall
consist of three board members, a majority of which are Investor Designees (as
defined in Section 4.1), to determine compensation of employees and the issuance
of stock options and other stock related awards and Randy Maslow, Vinod Khosla
and Terry O'Toole shall have been appointed to such committee. The Board shall
have taken all necessary action such that for purposes of the administration of
the Corporation's incentive stock option plan the compensation committee shall
be the stock option committee.
(g) The Corporation shall have obtained, with financially sound and
reputable insurers, term life insurance on the life of Marc Collins-Rector in
the amount of $5,000,000 or a binder with respect to such insurance, in form
satisfactory to the Investors.
(h) A Common Stock and Option Purchase Agreement (the "Stock Purchase
Agreement"), dated April 20, 1995, between the Investors and Marc Collins-Rector
and Chad Shackley, substantially in the form of Exhibit H, shall be duly
executed and delivered by the parties thereto.
1.5. Additional Issuances. In addition to and without limitation of all
--------------------
other indemnities in this Agreement, in the event of any breach of the
representation and warranty set forth in the last sentence of Section 2.3, the
Corporation shall issue to each Investor, at no cost to the Investor, an
additional amount of Series A Preferred Stock such that, if such issuance were
made at the Initial Closing, such representation and warranty would have been
true and accurate in all respects when made.
SECTION 2. Representations and Warranties of the Corporation. The
-------------------------------------------------
Corporation hereby represents and warrants to the Investors as follows:
2.1. Organization and Good Standing; Power and Authority; Qualifications.
-------------------------------------------------------------------
The Corporation (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida, (ii) has all requisite
corporate power to own, lease and operate its properties, to carry on the
business of the Corporation as presently conducted and as proposed to be
conducted
-3-
<PAGE>
and to enter into and carry out the transactions contemplated by this Agreement,
the Stockholder Agreement and the Registration Rights Agreement (collectively,
the "Documents"), and (iii) has all requisite corporate authority to own, lease
and operate its properties, to carry on its business as presently conducted and
to carry out the transactions contemplated by the Documents. The Corporation is
qualified to transact business as a foreign corporation in, and is in good
standing under the laws of, those jurisdictions listed on Schedule 2.1 hereto,
which jurisdictions constitute all of the jurisdictions wherein the character of
the property owned or leased or the nature of the activities conducted by the
Corporation makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified and in good standing would not,
individually or in the aggregate, have or reasonably be expected to have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Corporation.
2.2. Authorization of the Documents. The execution, delivery and
------------------------------
performance by the Corporation of each of the Documents has been duly authorized
by all requisite corporate action on the part of the Corporation, and each of
the Documents constitutes a legal, valid and binding obligation of the
Corporation, enforceable against the Corporation, in accordance with its terms
except to the extent that enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally.
2.3. Capitalization. The authorized capitalization of the Corporation
--------------
immediately following the Initial Purchase consists of:
(a) Preferred Stock. Twenty million (20,000,000) shares of Preferred
---------------
Stock, par value $.01 per share ("Preferred Stock") of which (A) eighteen
million (18,000,000) shares have been designated Series A Preferred Stock, (B)
six million seven hundred ninety-eight thousand three hundred ninety-four
(6,798,394) shares of Series A Preferred Stock have been validly issued and are
fully paid and nonassessable with no personal liability attaching to the
ownership thereof and (C) two million (2,000,000) shares of Preferred Stock
which are undesignated.
(b) Common Stock. Fifty million (50,000,000) shares of Common Stock,
------------
par value, $.01 per share ("Common Stock"), of which (A) forty-nine million
eight hundred forty-nine thousand six hundred forty-two (49,849,642) shares have
been designated Class A Common Stock and one hundred fifty thousand three
hundred fifty-eight (150,358) shares have been designated Class B Common Stock,
(B) 25,666,583 shares of Class A Common Stock are outstanding and 106,754 shares
of Class B Common Stock are outstanding, and all such shares have been validly
issued and are fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, (C) forty-three thousand six hundred and
four (43,604) shares of Class B Common Stock and 13,596,788 shares of Class A
Common Stock have been duly reserved for issuance in connection with the
conversion of the Preferred Stock and (D) 8,736,181 shares of Class A Common
Stock have been duly reserved for issuance upon the exercise of all outstanding
Common Stock Equivalents.
Schedule 2.3(a) hereto contains a list of (i) all holders of record
of capital stock of the Corporation, including the number of shares of capital
stock held by each such holder and the
-4-
<PAGE>
purchase price of such shares, and (ii) all outstanding warrants, options,
agreements, convertible securities or other commitments pursuant to which the
Corporation is or may become obligated to issue any shares of the capital stock
or other securities of the Corporation, which names all persons entitled of
record to receive such shares or other securities, the shares of capital stock
or other securities required to be issued thereunder as of the date hereof and
the price per share, if any, payable with respect to the issuance of any share
of capital stock issuable thereunder. Except as set forth on Schedule 2.3(b),
the Corporation has no knowledge of the names of any beneficial owners of shares
of capital stock who are not otherwise holders of record. Except as set forth
on Schedule 2.3(b) or as contemplated by the Documents there are, and
immediately after each Closing, there will be, no rights, including preemptive
or similar rights, to purchase or otherwise acquire shares or sell or otherwise
transfer shares of the capital stock of the Corporation pursuant to any
provision of law, the Articles of Incorporation, the By-Laws, any agreement to
which the Corporation is a party or otherwise; and, except as set forth on
Schedule 2.3(b) or as contemplated by the Documents, the Corporation is not a
party to, and to the Corporation's best knowledge, there are, and immediately
after each Closing, there will be, no agreement, restriction or encumbrance
(such as a right of first refusal, right of first offer, proxy, voting
agreement, voting trust, registration rights agreement, stockholders' agreement,
etc., whether or not the Corporation is a party thereto) with respect to the
purchase, sale or voting of any shares of capital stock of the Corporation
(whether outstanding or issuable upon conversion or exercise of outstanding
securities). Except as set forth on Schedule 2.3(b) or as contemplated by the
Documents or except for the right to vote its shares of Common Stock for the
election of directors, no person has the right to nominate or elect one or more
directors of the Corporation. The shares of Common Stock issuable upon
conversion of the Series A Preferred Stock and exercise of the Warrants issued
to each Investor under this Agreement will represent, in the aggregate, 32.9% of
the outstanding Common Stock of the Corporation at the Initial Closing date and
the voting power of such issued shares will represent, in the aggregate, no less
than 30.55% of the total number of votes able to be cast on any matter by all
voting securities of the Corporation (including, without limitation, the Class B
Common Stock) at the Initial Closing date (treating for purposes of these
calculations (i) all Series A Preferred Stock and Warrants issuable to the
Investors hereunder as if they were issued on the date of the Initial Closing,
(ii) all securities convertible into, exchangeable or exercisable for shares of
Common Stock (collectively, "Common Stock Equivalents") outstanding on the date
hereof as having been converted, exchanged or exercised, (iii) as having been
issued on the date hereof, any shares of Common Stock or Common Stock
Equivalents issuable pursuant to (A) any Contract entered into by the
Corporation prior to the date hereof, or (B) any preemptive right granted by the
Corporation prior to the date hereof, (iv) all brokers' and finders' fees
payable by the Corporation in connection with the transactions contemplated
hereby (each, an "Identified Fee") including, without limitation, those set
forth on Schedule 2.3(b) or Schedule 2.20 as having been paid on the date hereof
and (v) any Identified Fee payable in cash or property (other than Common Stock
or Common Stock Equivalents) shall be treated as the issuance of an amount of
shares of Common Stock equal to the quotient obtained by dividing the amount of
such fee by the Closing Per Share Price (as defined in Section 12)).
2.4. Authorization and Issuance of Capital Stock. The authorization,
-------------------------------------------
issuance, sale and delivery of the Series A Preferred Stock and the Warrants
pursuant to this Agreement and the authorization, reservation, issuance, sale
and delivery of the Warrant Shares and the Conversion
-5-
<PAGE>
Shares (as defined in Section 2.5) have been duly authorized by all requisite
corporate action on the part of the Corporation, and when issued, sold and
delivered in accordance with this Agreement, the Series A Preferred Stock, the
Warrant Shares and the Conversion Shares will be validly issued and outstanding,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof, free of any Encumbrances (as defined in Section 2.15) and not
subject to preemptive or similar rights of the stockholders of the Corporation
or others. Except as set forth on Schedule 2.3(b), the terms, designations,
powers, preferences and relative, participating, optional and other special
rights, and the qualifications, limitations and restrictions, of any series of
Preferred Stock of the Corporation are as stated in the Articles of
Incorporation.
2.5. Reservation of Shares. The Corporation has reserved a sufficient
---------------------
number of shares of Common Stock for issuance to the Investors upon the
conversion of the Series A Preferred Stock (the "Conversion Shares") and upon
the exercise of the Warrants issued or issuable to the Investors in accordance
with this Agreement.
2.6. Financial Statements. The Corporation has furnished to the
--------------------
Investors the audited statements of income, stockholders' equity and cash flows
of the Corporation for the fiscal years ended December 31, 1992 and 1993 and the
audited balance sheet of the Corporation as of those dates, and the unaudited
balance sheet of the Corporation as of December 31, 1994 and March 31, 1995 (the
"Balance Sheet") and the related unaudited statements of income, stockholders'
equity and cash flows of the Company for the 12 months ended December 31, 1994
and the related unaudited statement of income for the 3-month period ended March
31, 1995. All such financial statements (i) are in accordance with the books
and records of the Corporation, (ii) have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied (except
that such unaudited financial statements do not contain all of the footnotes
required under GAAP) and (iii) fairly present the financial position of the
Company as of December 31, 1992, 1993 and 1994 and March 31, 1995, respectively,
and the results of their operations and cash flows for the years ended December
31, 1992, 1993 and 1994 and the results of operations for the 3 months ended
March 31, 1995, respectively.
2.7. Absence of Undisclosed Liabilities. Except as disclosed on Schedule
----------------------------------
2.7 hereto, the Corporation does not have any liabilities or obligations
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due) other than (i) liabilities or obligations reserved against or
otherwise disclosed in the Balance Sheet and (ii) liabilities or obligations
arising since March 31, 1995 which individually are in an amount less than
$25,000 and which were incurred in the ordinary course of business consistent
(in amount and kind) with past practice.
2.8. Absence of Changes. Except as set forth on Schedule 2.8 hereto
------------------
since December 31, 1994, there has not been (a) any material adverse change in
the financial condition, results of operations, assets or liabilities of the
Corporation or any event or condition which could reasonably be expected to have
such a material adverse change, (b) any waiver of any valuable right of the
Corporation, the cancellation of any valuable right of the Corporation, or the
cancellation of any material debt or claim held by the Corporation, (c) any
payment of dividends on, or other distribution with respect to, or any direct or
indirect redemption or acquisition of, any securities of
-6-
<PAGE>
the Corporation, (d) any issuance of any stock, bonds or other securities of the
Corporation, (e) any sale, assignment or transfer of any tangible or intangible
assets of the Corporation, except in the ordinary course of business, (f) any
loan by the Corporation to any officer, director, employee, consultant or
shareholder of the Corporation (other than advances to such persons in the
ordinary course of business in connection with travel and travel related
expenses), (g) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets, property, financial
condition or results of operations of the Corporation, (h) any increase, direct
or indirect, in the compensation paid or payable to any officer or director of
the Corporation, or, other than in the ordinary course of business, to any other
employee, consultant or agent of the Corporation, (i) any change in the
accounting methods, practices or policies of the Corporation (j) any
indebtedness incurred for borrowed money other than in the ordinary course of
business or pursuant to an agreement set forth on Schedule 2.10 to this
Agreement, (k) any amendment to or termination of any material agreement to
which the Corporation is a party (other than amendments to or terminations of
agreements pursuant to or contemplated by this Agreement), (l) to the best
knowledge of the Corporation, any material adverse change with respect to the
regulation of the Corporation or its products by any administrative agency or
governmental body, (m) any material change in the manner of business or
operations of the Corporation, (n) any transaction except in the ordinary course
of business or as otherwise contemplated hereby, or (o) any agreement or
commitment (contingent or otherwise) to do any of the foregoing.
2.9. No Conflict. The execution, delivery and performance by the
-----------
Corporation of the Documents and the documentation relating thereto, the
consummation by the Corporation of the transactions contemplated hereby and
thereby, and the issuance, sale and delivery by the Corporation of the Series A
Preferred Stock, the Warrants, the Warrant Shares and the Conversion Shares by
the Corporation will not (a) violate any provision of law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body applicable to the
Corporation, or any of its properties or assets, (b) conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute (with
due notice or lapse of time, or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any Encumbrance (as defined in Section 2.15) upon any of the properties or
assets of the Corporation under, any Contract (as defined in Section 2.10)
required to be set forth on Schedule 2.10 hereto or (c) violate the Articles of
Incorporation or the By-Laws of the Corporation.
2.10. Agreements.
----------
(a) Except as set forth on Schedule 2.10 hereto, the Corporation is
not a party to any indenture, mortgage, guaranty, lease, license or other
contract, agreement or understanding, written or oral, (a "Contract") other than
any Contract which (i) is cancelable by the Corporation on 30 days' or less
notice without any penalty or other financial obligation and which involves
payments to or from the Corporation of less than $25,000 in such 30 day period
or (ii) involves annual aggregate payments to or from the Corporation of $25,000
or less, and in either case is not material to the business or financial
condition of the Corporation.
-7-
<PAGE>
(b) Complete copies (or, if oral, full written descriptions) of all
Contracts required to be listed on Schedule 2.10 hereto, including all
amendments thereto, have been delivered to GSCP and have been made available to
KP. Except as disclosed on Schedule 2.10 hereto, all of the Contracts will
continue to be legal, valid, binding, enforceable, and in full force and effect
against all the parties thereto on identical terms following the Initial
Closing. Except as set forth on Schedule 2.10 hereto, (i) there is no breach,
violation or default by the Corporation and no event which, with notice or lapse
of time or both, would (A) constitute a material breach, violation or default by
the Corporation under any such Contracts or (B) give rise to any lien or right
of termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration against the Corporation under, any such Contracts the
effect of which would be to, or be reasonably likely to, materially and
adversely affect the Corporation's business, and (ii) to the best knowledge of
the Corporation, no other party to any of such Contracts is in arrears in
respect of the performance or satisfaction of the terms and conditions on its
part to be performed or satisfied under any of such Contracts, no waiver or
indulgence has been granted by any of the parties thereto and no party to any of
such Contracts has repudiated any provision thereof.
2.11. Intellectual Property Rights.
----------------------------
(a) The Corporation owns or has the right to use pursuant to license,
sublicense, agreement or permission all Intellectual Property (as defined
below), individually or in the aggregate, material to the operation of the
business of the Corporation as currently conducted. Each item of Intellectual
Property owned or used by the Corporation immediately prior to each Closing will
be owned or available for use by the Corporation on identical terms and
conditions immediately subsequent to such Closing. The Corporation has taken
all necessary action, and continues to do so, to maintain and protect each item
of Intellectual Property that it owns or uses.
(b) Except as set forth on Schedule 2.11(b) hereto, the Corporation
has not interfered with, infringed upon or misappropriated any Intellectual
Property rights of third parties, and the Corporation has never received any
charge, complaint, claim, demand or notice alleging any such interference,
infringement or misappropriation (including any claim that the Corporation must
license or refrain from using any Intellectual Property rights of any third
party). To the best knowledge of the Corporation, no third party has interfered
with, infringed upon or misappropriated any Intellectual Property rights of the
Corporation.
(c) Schedule 2.11(c) hereto identifies each patent of the Corporation
and each pending patent application which has been made by the Corporation.
With respect to each patent, to the best knowledge of the Corporation, there is
no legally sufficient basis for invalidating any claim therein and the
Corporation is not aware of any substantial suggestion or assertion that any
such claim is invalid or unenforceable. To the best knowledge of the
Corporation, the patent applications identified on Schedule 2.11(c) hereto have
been properly prepared and filed; such applications are presently being
diligently pursued by the Corporation. With respect to each pending
application, to the best knowledge of the Corporation, there is no legally
sufficient basis for invalidating any claim therein indicated to be allowable by
the U.S. Patent and Trademark Office ("PTO") and the
-8-
<PAGE>
Corporation is not aware of any substantial suggestion or assertion that any
such claim is invalid or unenforceable.
(d) Schedule 2.11(d) hereto identifies all registered or unregistered
trademarks of the Corporation. Schedule 2.11(d) hereto identifies each license,
agreement and other permission which the Corporation has granted to any third
party with respect to any of its Intellectual Property with a value of $10,000
or greater (together with any exceptions).
(e) The Corporation has delivered to GSCP and has made available to
KP correct and complete copies of all registrations, patent applications,
licenses, agreements and permissions (as amended), identified in Schedules
2.11(c) and 2.11(d) hereto and has delivered to GSCP and has made available to
KP correct and complete copies of all other written documentation evidencing
ownership and prosecution (including all papers filed with or received from the
PTO) of each such item. With respect to each item of Intellectual Property
required to be identified in Schedules 2.11(c) and 2.11(d) hereto and except as
set forth in Schedule 2.11(e) hereto:
(i) the Corporation possesses all right, title and interest in
and to the item, free and clear of any encumbrance, license or other
restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge; and
(iii) the Corporation has never agreed to indemnify any Person
for or against any interference, infringement, misappropriation or other
conflict with respect to the item.
(f) Schedule 2.11(f) hereto identifies each item of Intellectual
Property that any third party owns and that the Corporation uses pursuant to
license, sublicense, agreement or permission except for software or applications
used which are publicly distributed by such third parties and used in the
ordinary course of business. Except as set forth on Schedule 2.11(f), (i) the
Corporation has not granted any sublicense or similar right with respect to any
such agreements or Intellectual Property, and (ii) to the best knowledge of the
Corporation, (x) each such item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling or change and (y) no
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand is pending or is threatened which challenges the legality, validity, or
enforceability of any such item of Intellectual Property.
(g) The Corporation has no knowledge that the Corporation will
interfere with, infringe upon or misappropriate any Intellectual Property rights
of third parties as a result of the proposed operation of its business after the
Initial Closing.
(h) The Corporation has not disclosed any of its proprietary
information other than in the ordinary course of business or other than to the
Corporation's representatives.
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<PAGE>
(i) The Corporation has provided to GSCP and has made available to KP
copies of any written opinions of legal counsel issued to the Corporation
relating to Intellectual Property.
"Intellectual Property" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations, continuations-in-
part, revisions, extensions and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names and corporate names, together
with all translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, and all applications, registrations
and renewals in connection therewith, (c) all copyrightable works, all
copyrights and all applications, registrations and renewals in connection
therewith, (d) all mask works and all applications, registrations and renewals
in connection therewith, (e) all know-how, trade secrets and confidential
business information, whether patentable or unpatentable and whether or not
reduced to practice (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production process and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, (h) all copies and tangible embodiments thereof (in
whatever form or medium) and (i) all licenses and agreements in connection
therewith.
2.12. Equity Investments. Except as set forth on Schedule 2.12 hereto,
------------------
the Corporation has never had, nor does it presently have, any subsidiaries, nor
has it owned, nor does it presently own, any capital stock or other proprietary
interest, directly or indirectly, in any corporation, association, trust,
partnership, joint venture or other entity.
2.13. Corporate Minute Books. The Corporation has previously provided to
----------------------
GSCP and has made available to KP, true and correct copies of all minutes of
meetings or other actions by the directors, stockholders or incorporators of the
Corporation since its inception.
2.14. Activities. Except with respect to activities of the Corporation
----------
relating to (i) providing access to the Internet and electronic bulletin board
systems and (ii) developing an "on-line" information and entertainment service,
prior to the date hereof, the Corporation has conducted no significant business
operations.
2.15. Assets. The Corporation has good and marketable title to all of
------
its assets and properties, free and clear of any mortgages, judgments, claims,
liens, security interests, pledges, escrows, charges or other encumbrances of
any kind or character whatsoever ("Encumbrances") except (i) as disclosed in
Schedule 2.15 hereto; (ii) Encumbrances for taxes not yet due and payable; (iii)
Encumbrances for taxes and charges and other claims, the validity of which the
Corporation is contesting in good faith; or (iv) Encumbrances which arise in the
ordinary course of business and do not materially impair the Corporation's
ownership, use of any such asset or property or the Corporation's ability to
obtain financing by using such assets or property as collateral.
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2.16. Employee Benefit Plans.
----------------------
(a) Schedule 2.16 hereto contains a true and complete list of (i)
each plan, program, policy, payroll practice, contract, agreement or other
arrangement providing for compensation, severance, termination pay, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits of any kind, whether formal or informal, funded or unfunded, written or
oral and whether or not legally binding, which is now or previously has been
sponsored, maintained, contributed to or required to be contributed to by the
Corporation or pursuant to which the Corporation has any liability, contingent
or otherwise, including, but not limited to, any "employee benefit plan" within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") (each a "Benefit Plan"); and (ii) each management,
employment, bonus, option, equity (or equity related), severance, consulting,
non compete, confidentiality or similar agreement or contract between the
Corporation and any current, former or retired employee, officer, consultant,
independent contractor, agent or director of the Corporation (an "Employee")
(each an "Employee Agreement"). The Corporation does not currently sponsor,
maintain, contribute to, nor is it required to contribute to, nor has the
Corporation ever sponsored, maintained, contributed to or been required to
contribute to, or incurred any liability to, (i) any "defined benefit plan" (as
defined in ERISA Section 3(35)); (ii) any "multiemployer plan" (as defined in
ERISA Section 3(37)) or (iii) any Benefit Plan which provides, or has any
liability to provide, life insurance, medical, severance or other employee
welfare benefits to any Employee upon his or her retirement or termination of
employment, except as required by Section 4980B of the Internal Revenue Code of
1986, as amended (the "Code").
(b) The Corporation is not (i) a member of a "controlled group of
corporations," under "common control" or an "affiliated service group" within
the meaning of Sections 414(b), (c) or (m) of the Code, (ii) required to be
aggregated under Section 414(o) of the Code, or (iii) under "common control,"
within the meaning of Section 4001(a)(14) of ERISA, or any regulations
promulgated or proposed under any of the foregoing Sections, in each case with
any other entity.
(c) The Corporation has provided to GSCP and has made available to KP
current, accurate and complete copies of all documents embodying or relating to
each Benefit Plan and each Employee Agreement, including all amendments thereto,
interpretations thereof, trust or funding agreements relating thereto (if any),
the two most recent annual reports (Series 5500 and related schedules) required
under ERISA (if any), the most recent determination letter received from the IRS
(if any), the most recent summary plan description (with all material
modifications) (if any), and all material communications to any Employee or
Employees relating to any Benefit Plan or Employee Agreement.
(d) Each Benefit Plan has been established and maintained in
accordance with its terms and in compliance with all applicable, laws, statutes,
orders, rules and regulations, including but not limited to ERISA and the Code,
except for either immaterial instances of noncompliance or instances of
noncompliance of which the Corporation is unaware which may be reasonably cured
without the incurrence by the Corporation of any material cost or liability; and
each Benefit Plan intended to qualify under Section 401 of the Code is, and
since its inception has been, so qualified.
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<PAGE>
(e) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any Benefit Plan
or Employee Agreement that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits with respect
to any Employee.
2.17. Labor Relations; Employees. Schedule 2.17 hereto lists all
--------------------------
employees of the Corporation. Except as set forth on Schedule 2.17 hereto, (i)
the Corporation is not delinquent in payments to any of its employees, for any
wages, salaries, commissions, bonuses or other direct compensation for any
services performed by the date hereof or amounts required to be reimbursed by
them to the date hereof, (ii) the Corporation is in compliance with all
applicable federal, state and local laws, rules and regulations respecting
employment, employment practices, labor, terms and conditions of employment and
wages and hours, except for either immaterial instances of noncompliance or
instances of noncompliance of which the Corporation is unaware which may be
reasonably cured without the incurrence by the Corporation of any material cost
or liability, (iii) the Corporation is not bound by or subject to (and none of
its assets or properties is bound by or subject to) any written or oral, express
or implied, commitment or arrangement with any labor union, and no labor union
has requested or, to the best knowledge of the Corporation, has sought to
represent any of the employees, representatives or agents of the Corporation,
(iv) there is no labor strike, dispute, slowdown or stoppage actually pending,
or, to the best knowledge of the Corporation, threatened against or involving
the Corporation, (v) to the best knowledge of the Corporation, no salaried key
employee has any plans to terminate his or her employment with the Corporation.
Each of the officers of the Corporation, each key employee and each other
employee now employed by the Corporation who has access to confidential
information of the Corporation has executed a confidentiality agreement
substantially in the form of Exhibit I (collectively, the "Employee
Nondisclosure Agreements"), and such agreements are in full force and effect.
2.18. Litigation; Orders. Except as set forth on Schedule 2.18, there is
------------------
no civil, criminal or administrative action, suit, claim, notice, hearing,
inquiry, proceeding or investigation at law or in equity or by or before any
court, arbitrator or similar panel, governmental instrumentality or other agency
now pending or, to the best knowledge of the Corporation, threatened against the
Corporation, Marc Collins-Rector, Chad Shackley, the Intellectual Property or
other property owned by the Corporation or the business of the Corporation. The
Corporation is not subject to any order, writ, injunction or decree of any court
of any federal, state, municipal or other domestic or foreign governmental
department, commission, board, bureau, agency or instrumentality.
2.19. Compliance with Laws; Permits. Except as provided in Schedule 2.19
-----------------------------
hereof, the Corporation (a) has complied in all material respects with all
federal, state, local and foreign laws, rules, ordinances, codes, consents,
authorizations, registrations, regulations, decrees, directives, judgments and
orders applicable to the Corporation and its business and (b) has all federal,
state, local and foreign governmental licenses, permits and qualifications
material to and necessary in the conduct of its business as currently conducted,
such licenses, permits and qualifications are in full force and effect, and no
violations have been recorded in respect of any such licenses, permits and
qualifications, and no proceeding is pending or, to the best knowledge of the
Corporation, threatened
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<PAGE>
to revoke or limit any such license, permit or qualification. Schedule 2.19
hereto sets forth a list of all such licenses, permits and qualifications, and
the expiration dates thereof.
2.20. Commissions, Etc. Except as set forth on Schedule 2.20 hereto, the
----------------
Corporation is not a party to any Contract obligating the Corporation to pay
commissions or fees to any party in connection with the issuance or sale of any
shares of capital stock or other securities of the Corporation prior to the
Initial Closing.
2.21. Offering Exemption. The offer and sale of the Series A Preferred
------------------
Stock and the Warrants as contemplated hereby, the issuance and delivery of the
Warrant Shares to the Investors upon the exercise of the Warrants and the
issuance and delivery of the Conversion Shares to the Investors upon the
conversion of the Series A Preferred Stock are each exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act") and under
applicable state securities and "blue sky" laws, as currently in effect.
2.22. Related Transactions. Except as set forth on Schedule 2.22 hereto,
--------------------
no current or former stockholder, director, officer or employee of the
Corporation, or any "associate" (as defined in the rules and regulations
promulgated under the Securities Exchange Act of 1934, as amended) of the
Corporation, is presently, or since the organization of the Corporation, has
been, directly or indirectly through such person's affiliation with any other
person or entity, a party to any agreement or transaction with the Corporation,
other than in connection with any such person's duties as a director, officer or
employee of the Corporation.
2.23. Disclosure. Neither this Agreement nor any certificate, instrument
----------
or written statement furnished or made to any of the Investors by or on behalf
of the Corporation pursuant to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact which
the Corporation has not disclosed to the Investors or their counsel in writing
and of which the Corporation is aware which materially and adversely affects or
could materially and adversely affect the business, prospects, financial
condition, operations, property or affairs of the Corporation.
2.24. Taxes. Except for immaterial instances of noncompliance, the
-----
Corporation has filed all Tax returns required by law to have been filed by it
at the time of each Closing and has paid all Taxes required to be paid by it
including, without limitation, any Tax levied upon any of its properties,
assets, income or franchises, which are due and payable prior to or at the time
of such Closing. All amounts required to be collected or withheld and any such
amounts that are required to be remitted to any taxing authority have been duly
remitted. The accruals and reserves for Taxes in each of the balance sheets
referenced in Section 2.6 are adequate in all material respects to cover any
liability of the Corporation for Taxes for periods through the date of such
balance sheets. If the Corporation files its Tax returns for its taxable year
which includes any Closing date in conformance with its past practices and tax
reporting, there will be no basis for any adverse audit adjustments with respect
to the Corporation under any of the provisions of the Code, or any provisions of
state, local or foreign tax law, with respect to operations and activities of
the Corporation during the period which began on January 1, 1995 and ends on
such Closing date. For federal income tax purposes,
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<PAGE>
the Corporation was properly classified as an "S corporation" under Section
1361(a) of the Code and the treasury regulations promulgated thereunder for all
periods ended on or before June 30, 1993, and was so classified for state and
local income tax purposes pursuant to analogous state or local provisions
through that date, in the jurisdictions set forth on Schedule 2.24. "Taxes,"
for purposes of this Section, means any taxes, assessments, duties, fees,
levies, imposts, deductions, withholdings, or other governmental charges of any
nature whatsoever and any liabilities with respect thereto, including any
penalties, additions to tax, fines or interest thereon, imposed by any
government or taxing authority of any country or political subdivision of any
country.
2.25. Environmental Protection. The Corporation has not caused, arranged
------------------------
or allowed, or contracted with any party for, the generation, use,
transportation, treatment, storage or disposal of any Hazardous Substances (as
defined below) in connection with the operation of its business or otherwise.
The Corporation, the operation of its business, and, to the best knowledge of
the Corporation, any real property that the Corporation leases or otherwise
occupies or uses (the "Premises") are in compliance with all applicable
Environmental Laws (as defined below), including, without limitation, any
Environmental Laws or orders or directives with respect to any cleanup or
remediation of any release or threat of release of Hazardous Substances. The
Corporation has not received any citation, directive, letter or other
communication, written or oral, or any notice of any proceeding, claim or
lawsuit, from any person arising out of the ownership or occupation of the
Premises, or the conduct of its operations, and the Corporation is not aware of
any basis therefor. The Corporation has obtained and is maintaining in full
force and effect all necessary permits, licenses and approvals required by all
Environmental Laws applicable to the Premises and the business operations
conducted thereon (including operations conducted by tenants on the Premises),
and is in compliance with all such permits, licenses and approvals. There has
been no release, or threatened release, at any time of any Hazardous Substances
at, on, or about, under or within any real property currently or formerly owned
or leased by the Corporation or any predecessor of the Corporation or any real
properties operated or controlled by the Corporation (other than pursuant to and
in accordance with permits held by the Corporation or any such predecessor).
The Premises are free of any Hazardous Substances (except those authorized
pursuant to and in accordance with environmental permits held by the
Corporation) and free of all contamination arising from, relating to, or
resulting from any such Hazardous Substances. For the purposes of this
Agreement, the term "Environmental Laws" shall mean any federal, state or local
law or ordinance or regulation pertaining to the protection of human health or
the environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the
-- ----
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et
--
seq., and the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901,
- ----
et seq. For purposes of this Agreement, the term "Hazardous Substances" shall
- -- ---
include oil and petroleum products, asbestos, polychlorinated biphenyls, urea
formaldehyde and any other materials classified as hazardous or toxic under any
Environmental Laws.
2.26. Consents. Except as set forth on Schedule 2.26 hereto, no permit,
--------
authorization, consent or approval of or by, or any notification of or filing
with, any person (governmental or private) is required in connection with the
execution, delivery and performance by the Corporation of the Documents or any
documentation relating thereto, the consummation by the Corporation of the
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<PAGE>
transactions contemplated thereby, or the issuance, sale or delivery of the
Series A Preferred Stock, the Warrants, the Warrant Shares and the Conversion
Shares (other than such notifications or filings required under applicable state
securities laws, if any, which shall be made on a timely basis).
2.27. Insurance. All of the assets of the Corporation that are of
---------
insurable character are covered by insurance with reputable insurers against
risks of liability, casualty and fire and other losses and liabilities
customarily obtained to cover comparable businesses and assets in amounts, scope
and coverage which are consistent with prudent industry practice. Schedule 2.27
hereto sets forth a list of all insurance coverage carried by the Corporation,
the carrier and the terms and amount of coverage.
2.28. Brokers. Other than pursuant to an agreement with Sunrise
-------
Securities Corp. and other than amounts alleged to be due pursuant to an
agreement with Jon B. Gerster pursuant to a letter dated December 19, 1994 (the
"Gerster Letter"), none of the Corporation, any of the officers, directors,
employees or stockholders of the Corporation has employed any broker or finder
in connection with the transactions with the Investors contemplated by this
Agreement. The Corporation maintains that no amounts are payable in connection
with such transactions pursuant to the Gerster Letter.
2.29. Suppliers and Customers. Except as set forth on Schedule 2.29
-----------------------
hereof, no supplier of materials or services to the Corporation in an amount in
excess of $25,000 per year has during the last twelve months decreased
materially or, to the best knowledge of the Corporation, threatened to decrease
or limit materially its provision of services or supplies to the Corporation,
nor expressed material dissatisfaction with the business relationship between
the Corporation and the supplier. The Corporation has no knowledge of any
termination, cancellation or threatened termination or cancellation or
limitation of, or any material modification or change in, or expressed material
dissatisfaction with the business relationship between the Corporation and any
supplier or customer of the Corporation of materials or services in an amount in
excess of $25,000 per year.
2.30. Investment Banking Services. Except as set forth on Schedule 2.30
---------------------------
hereto, the Corporation is not a party to any Contract which grants rights to
any third party with respect to the performance of investment banking services
for the Corporation, including, without limitation, with respect to the sale of
the corporation or a public offering, including an initial public offering, of
securities of the Corporation.
2.31. Suitability. Except as set forth on Schedule 2.31 hereto, neither
-----------
the Corporation nor, to the best knowledge of the Corporation, any of its
directors or officers (a) has ever been indicted for or convicted of any felony
or any crime involving fraud or misrepresentation; (b) is subject to any order,
judgment or decree of any court of competent jurisdiction or any governmental
authority barring, suspending, or otherwise limiting the right of the
Corporation or such person to engage in any activity conducted by the
Corporation; or (c) has been denied any license or permit affecting the
Corporation's or such person's ability to conduct any activity conducted by the
Corporation nor is there any basis upon which such liability to conduct any
activity conducted by the Corporation may be denied.
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<PAGE>
2.32. Use of Proceeds. Except as set forth on Schedule 2.32 hereto, the
---------------
Corporation is not required pursuant to any Contract or otherwise to apply the
proceeds received from the Investors pursuant to the transactions contemplated
hereby in any specified manner including, without limitation, the repayment of
any obligations of the Corporation.
2.33. Preemptive Rights. Between April 30, 1991 and April 5, 1995, the
-----------------
Corporation sold shares of Common Stock, in each case, without offering the then
stockholders of the Corporation preemptive rights with respect to such sales
(each such sale being referred to as a "Preemptive Rights Transaction") as
required pursuant to such Articles of Incorporation of the Corporation in effect
prior to April 5, 1995 (treating for purposes of these calculations sales of all
Common Stock Equivalents to which Preemptive Rights apply as sales of the shares
of Common Stock issuable thereunder). The Corporation has used its reasonable
best efforts to obtain waivers (a "Preemptive Rights Waiver") from all
stockholders of the Corporation of their preemptive rights under the Articles of
Incorporation with respect to the Preemptive Rights Transactions. Schedule 2.33
sets forth a complete list of each stockholder of the Corporation that has not
executed a Preemptive Rights Waiver as of the date hereof setting forth in
reasonable detail the number of shares of Common Stock which such person could
purchase upon exercise of its preemptive rights and the purchase price at which
such shares could be purchased.
2.34. Stockholder Meeting. A special meeting of stockholders of the
-------------------
Corporation was conducted on April 5, 1995 in accordance with the Business
Corporation Act of the State of Florida (the "BCA of Florida") and the Articles
of Incorporation and By-Laws of the Corporation then in effect, to consider and
vote on the approval of the propositions set forth in the Notice of Meeting
attached as Exhibit J hereto (collectively, the "Propositions"), including,
without limitation, the amendment to the Articles of Incorporation and By-Laws
of the Corporation then in effect. The Propositions were approved by the
requisite vote of stockholders of the Corporation required under the BCA of
Florida and the articles of Incorporation and By-Laws of the Corporation then in
effect to so approve the Propositions.
SECTION 3. Representations and Warranties of the Investor. Each Investor
----------------------------------------------
represents and warrants to the Corporation as of the date hereof as follows:
(a) The Investor is acquiring the Series A Preferred Stock and the
Warrants to be purchased by it under this Agreement for its own account, for
investment and not with a view to the distribution thereof within the meaning of
the Securities Act.
(b) The Investor understands that (i) the Series A Preferred Stock
and the Warrants have not been, and that the Warrant Shares and the Conversion
Shares will not be, registered under the Securities Act, by reason of their
issuance by the Corporation in a transaction exempt from the registration
requirements of the Securities Act and (ii) the Series A Preferred Stock, the
Warrants, the Warrant Shares and the Conversion Shares may not be sold unless
such disposition is registered under the Securities Act or is exempt from
regulation thereunder.
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<PAGE>
(c) The Investor further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to the
Investor) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
(d) The Investor has not employed any broker or finder in connection
with the transactions contemplated by this Agreement.
(e) The Investor is an "Accredited Investor" (as defined in Rule
501(a) under the Securities Act).
(f) The Investor is a partnership duly organized and validly existing
under the laws of the state of its organization and has all partnership power
and authority to enter into and perform the Documents. Each of the Documents
has been duly authorized by all necessary partnership action on the part of the
Investor. Each of the Documents constitutes a valid and binding agreement of
the Investor enforceable against the Investor in accordance with its terms
except to the extent that enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally.
(g) The execution, delivery and performance by the Investor of each
of the Documents and the consummation by the Investor of the transactions
contemplated thereby will not (a) violate any provision of law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body applicable to the
Investor, or any of its properties or assets, (b) conflict with or result in any
breach of any of the terms, conditions or provisions of, or constitute (with due
notice or lapse of time, or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any mortgage, judgment, claim, lien, security interest, pledge, escrow, charge
or other encumbrance of any kind or character whatsoever upon any of the
properties or assets of the Investor under, any material indenture, mortgage,
guaranty, lease, license or other contract or agreement, written or oral, to
which the Investor is a party or (c) violate the organizational documents of the
Investor.
SECTION 4. Corporate Governance.
--------------------
4.1. Board of Directors.
------------------
(a) (i) Subject to Section 4.1(d), from and after the date hereof
and until a Qualified IPO (as defined in Section 5.12), the Board shall consist
of five directors and the Corporation shall cause the following persons to be
designated for election at any meeting of stockholders for the election of
directors: (A) the then Chief Executive Officer of the Corporation including
any interim Chief Executive Officer (the "CEO"), (B) so long as the Investor
Parties (as defined in Section 5.12) beneficially own any Equity Securities of
the Corporation and subject to Section 4.1(a)(iii), two persons designated by
the Investors (each such person an "Investor Designee") and (C) subject to
Section 4.1(a)(iii), the remaining persons to be designated by the Corporation
(each such person a
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"Corporate Designee"; each of the CEO, each Investor Designee and each Corporate
Designee is referred to as a "Director Designee"). So long as any shares of
Series A Preferred Stock are outstanding, the persons nominated by the Investors
under this Section 4.1(a)(i) shall be the Series A Directors (as defined in the
Articles of Incorporation).
(ii) In the event (A) Racal-Datacom Inc. or any other
person is entitled pursuant to any Contract entered into prior to the date
hereof to nominate one or more persons to serve as a director and (B) Racal-
Datacom Inc. or any other such person nominates one or more persons to serve as
a director, such nominee(s) shall be a Corporate Designee(s) for purposes of
Section 4.1(a)(i).
(iii) Any person selected by the Investors to be an
Investor Designee who is not an employee, officer, director or partner of an
Investor shall be subject to the consent of the Corporation, which consent shall
not be unreasonably withheld. Any person selected by the Corporation to be a
Corporate Designee (other than Randy Maslow and Donald Schutt) shall be subject
to the consent of the Investors, which consent shall not be unreasonably
withheld.
(b) At each meeting of stockholders at which the election of
directors is on the agenda, the Corporation shall recommend to stockholders (or
the holders of Series A Preferred Stock, as the case may be) the election of the
Director Designees as directors, subject to the provisions of Section 4(a)(iii).
(c) Each Director Designee shall hold his office until his death or
resignation or until his successor shall have been duly elected and qualified.
If any Director Designee shall cease to serve as a director of the Corporation
for any reason, the vacancy resulting thereby shall be filled (i) by the new
CEO, in the case of a vacancy of the CEO's board seat and (ii) in all other
cases, by another person designated in the manner set forth in Section
4.1(a)(i), by the entity or entities set forth in Section 4.1(a)(i).
(d) Notwithstanding anything herein to the contrary, until a person
is elected to replace Marc Collins-Rector as CEO, the Corporation shall cause
two Corporate Designees and three Investor Designees to be designated for
election at any meeting of stockholders for the election of directors.
4.2. Committees.
----------
(a) The Corporation shall cause the CEO and an Investor Designee (and
until a person is elected to replace Marc Collins-Rector as CEO, the Corporation
shall cause two Investor Designees) determined by the Investors to be appointed
to each committee of the Board. Notwithstanding the foregoing, the Corporation
shall cause both Investor Designees to be appointed to the compensation
committee of the Board.
(b) If the Investor Designee serving on any such committee shall
cease to serve as a director of the Corporation for any reason or otherwise is
unable to fulfill his or her duties on any
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such committee, the vacancy resulting thereby shall be filled by another person
designated by the Investors.
4.3. Removal. The Corporation agrees that (i) no Investor Designees
-------
shall be removed from office without the consent of the Investors and (ii) that
no Specified Executive Officer (as defined in Section 5.22) shall be removed
from office without the consent of either GSCP or KP.
4.4. Directors' Indemnification.
--------------------------
(a) The Corporation shall promptly obtain and cause to be maintained
in effect, with financially sound insurers, a policy of directors' and officers'
liability insurance upon such terms and in such amount as is reasonably
acceptable to the Investor.
(b) The Articles of Incorporation or By-Laws, or both shall provide
for indemnification of, and advancement of expenses to, the directors of the
Corporation to the fullest extent permitted by law, which provisions shall not
be amended, repealed or otherwise modified until at least 6 years following the
date that the Investors are no longer entitled to nominate directors pursuant to
Section 4.1 hereto.
4.5. Meetings of the Board of Directors. The Corporation shall pay all
----------------------------------
reasonable travel expenses and other out-of-pocket disbursements incurred by any
Investor Designee or Series A Director in connection with attending meetings of
the Board of Directors of the Corporation.
SECTION 5. Certain Covenants.
-----------------
5.1. Access to Records. From and after the Initial Closing, the
-----------------
Corporation shall afford to each Investor and its employees, counsel and other
authorized representatives full access, during normal business hours, upon
reasonable advance notice, with due regard to the Corporation's ongoing
operations, to all of the books, records and properties of the Corporation and
to all officers and employees of the Corporation, for any reasonable purpose
whatsoever.
5.2. Financial Reports. From and after the Initial Closing, the
-----------------
Corporation agrees to furnish to each Investor the following:
5.2.1. Within 45 days after the end of each quarterly fiscal period,
commencing with the first quarterly fiscal period ending after the Initial
Closing or ending in the 45-day period before the Initial Closing, an unaudited
balance sheet and income statement as of the end of such period, together with
statements of retained earnings and cash flow for such period, and a comparison
by reasonable categories, including a reasonable explanation of any differences,
of the actual results to the applicable budget and the comparable figures for
the prior year, all in detail satisfactory to the Investor and certified by the
Chief Executive Officer of the Corporation as presenting fairly the financial
position and results of operations of the Corporation for such period and as
having been prepared in accordance with generally accepted accounting principles
(subject to normal year-end adjustments) consistently applied.
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5.2.2. Within 15 days after the end of each fiscal month,
commencing with the first fiscal month ending after the Initial Closing or
ending in the 15-day period before the Initial Closing, internal monthly
financial and operating statements for such month, prepared by the Corporation
for the Chief Executive Officer of the Corporation, plus a statement certified
by the Chief Executive Officer of the Corporation, setting forth a comparison by
reasonable categories to the applicable budget and the comparable figures for
the prior year and a reasonable explanation of any differences.
5.2.3. Within 90 days after the end of each fiscal year, commencing
with the first fiscal year ending after the Initial Closing or ending in the 90-
day period before the Initial Closing, an audited balance sheet and income
statement as of the end of such fiscal year, together with statements of
retained earnings and cash flow for such fiscal year, all in reasonable detail
and certified by a recognized national firm of independent accountants selected
by the Board as presenting fairly the financial position and results of
operations of the Corporation and as having been prepared in accordance with
generally accepted accounting principles consistently applied, including their
opinion thereon.
5.2.4. Promptly upon becoming available, (a) copies of all financial
statements, reports, press releases, notices, proxy statements and other
documents sent by the Corporation to its stockholders or released to the public
and copies of all regular and periodic reports, if any, filed by the Corporation
with the Securities and Exchange Commission ("SEC") or any securities exchange
and (b) any other financial or other information available to management of the
Corporation as any of the Investors shall have reasonably requested on a timely
basis.
5.2.5. If for any period the Corporation shall have any subsidiary
or subsidiaries whose accounts are consolidated with those of the Corporation,
then, in respect of such period, the financial statements and information
delivered pursuant to the foregoing Sections 5.2.1, 5.2.2 and 5.2.3 shall be the
consolidated and consolidating financial statements of the Corporation and all
such consolidated subsidiaries.
5.2.6. In all cases, the Corporation shall provide to the Investors
all information which it provides or has an obligation to provide to any other
stockholder of the Corporation, pursuant to any agreement with such stockholder
or otherwise, and any other information that any of the Investors may reasonably
request.
5.3. Budget and Operating Forecast. The Corporation shall provide the
-----------------------------
Investors with a copy of its operating plan and budget for fiscal year 1995,
which is approved by the Board within forty-five (45) days of the date hereof.
Forty-five (45) days before the beginning of each fiscal year, the Corporation
shall deliver to the Investors an operating plan and budget for the immediately
succeeding fiscal year so approved by the Board.
5.4. System of Accounting. The books of account and other financial and
--------------------
corporate records of the Corporation and its subsidiaries shall be maintained in
accordance with good business and accounting practices and the financial
condition of the Corporation shall be accurately reflected in the financial
statements referred to in Section 5.2.
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5.5. Maintenance of Corporate Existence, etc. The Corporation shall
---------------------------------------
maintain in full force and effect its corporate existence, rights, governmental
approvals and franchises and all licenses and other rights to use patents,
processes, licenses, trademarks, trade names or copyrights owned or possessed by
it and deemed by the Corporation to be material to the conduct of its business.
5.6. Compliance with Laws. The Corporation shall comply, and use its
--------------------
best efforts to cause each subsidiary to comply, with all applicable laws,
rules, regulations and orders, noncompliance with which could materially
adversely affect its business or condition, financial or otherwise.
5.7. Maintenance of Properties and Leases. The Corporation shall keep
------------------------------------
its properties in good repair, working order and condition, reasonable wear and
tear excepted, and from time to time make all needful and proper, or legally
required, repairs, renewals, replacement, additions and improvements thereto;
and the Corporation and its subsidiaries, if any, shall at all times comply with
each provision of all leases to which any of them is a party or under which any
of them occupies, or has possession of, property if the breach of such provision
might have a material adverse effect on the condition, financial or otherwise,
or operations of the Corporation.
5.8. Insurance.
---------
(a) The Corporation shall keep its assets and those of its
subsidiaries, if any, which are of an insurable character, if any, insured by
financially sound and reputable insurers against loss or damage by fire,
extended coverage and other hazards and risks and liability to persons and
property to the extent and in the manner customary for companies in similar
businesses similarly situated.
(b) The Corporation shall promptly secure and maintain after the
Initial Closing, with financially sound and reputable insurers, term life
insurance on the life of Marc Collins-Rector in the amount of $5,000,000. Such
policy shall be owned by the Corporation and all benefits thereunder shall be
payable to the Corporation.
5.9. Licenses and Permits. The Corporation shall use its best efforts to
--------------------
obtain all federal, state, local and foreign governmental licenses, permits and
qualifications material to and necessary in the conduct of business as proposed
to be conducted.
5.10. Intellectual Property. The Corporation shall use its best efforts
---------------------
to cause all Intellectual Property, including, but not limited to, technological
developments, inventions, discoveries or improvements made by employees of the
Corporation and its subsidiaries, if any, to be fully documented in engineering
or other notebooks in accordance with the prevailing industrial professional
standards, and where possible and appropriate, file and prosecute United States
and foreign patent applications relating to and protecting such developments.
In addition, the Corporation shall use its best efforts to cause all
Intellectual Property, including, but not limited to, all technological
developments, inventions, discoveries or improvements made by any employee of
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the Corporation and its subsidiaries, if any, to be owned by the Corporation
and, where possible and appropriate, obtain legal protections for the benefit of
the Corporation with respect to such property.
5.11. Employee Nondisclosure Agreements. The Corporation shall use its
---------------------------------
best efforts to obtain, and shall cause its subsidiaries, if any, to use their
best efforts to obtain, an Employee Nondisclosure Agreement in substantially the
form of Exhibit I hereto, as applicable, from all future officers, key employees
and other employees who will have access to confidential information of the
Corporation or any of its subsidiaries, if any, upon their employment by the
Corporation or any of such subsidiaries.
5.12. Preemptive Rights.
-----------------
(a) Until the earlier of a Qualified IPO (as defined below) and 3
years after the date hereof, except for Excluded Securities (as hereinafter
defined), the Corporation shall not issue, sell or exchange, or agree to issue,
sell or exchange (collectively, "Issue," and any issuance, sale or exchange
resulting therefrom, an "Issuance") (i) any shares of the Corporation's capital
stock, (ii) any other equity security of the Corporation, including, without
limitation, any options, warrants or other rights to subscribe for, purchase or
otherwise acquire any capital stock or other equity security of the Corporation
or (iii) any other security of the Corporation that is convertible into or
exchangeable for any equity security of the Corporation (collectively, an
"Equity Security") unless, in each case, the Corporation shall have first given
written notice (the "Offer Notice") to each Investor which shall (a) state the
Corporation's intention to sell any of the securities described in (i), (ii) and
(iii) above, the amount to be issued, sold or exchanged, the terms of such
securities, the purchase price therefor and a summary of the other material
terms of the proposed issuance, sale or exchange and (b) offer (a "Preemptive
Offer") to Issue to each Investor and its affiliates such Investor's Pro Rata
Share (as defined below) of such securities (with respect to each Investor, the
"Offered Securities") upon the terms and subject to the conditions set forth in
the Offer Notice, which Preemptive Offer by its terms shall remain open and
irrevocable for a period of 30 days from the date it is delivered by the
Corporation to the Investor (and, to the extent the Preemptive Offer is accepted
during such 30-day period, until the closing of the sales contemplated by the
Preemptive Offer). "Pro Rata Share" for the purposes of this Section shall
mean, the quotient of the number of shares of Common Stock beneficially owned by
(i) GSCP together with all GSCP Affiliates (as defined in Section 15)
(collectively, the "GSCP Parties"), in the case of GSCP, or KP together with all
KP Affiliates (as defined in Section 15) (collectively, the "KP Parties";
together with the GSCP Parties, the "Investor Parties"), in the case of KP,
divided by (ii) the total number of shares of Common Stock issued and
outstanding on the date of the Preemptive Offer (treating for purposes of this
calculation all Common Stock Equivalents as having been converted, exchanged or
exercised).
(b) Notice of an Investor's intention to accept a Preemptive Offer,
in whole or in part, shall be evidenced by a writing signed by the Investor and
delivered to the Corporation prior to the end of the 30-day period of such
Preemptive Offer (each, a "Notice of Acceptance"), setting forth such portion of
the Offered Securities that the Investor elects to purchase.
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<PAGE>
(c) (i) In the event that a Notice of Acceptance is not given by
an Investor in respect of all the Offered Securities, the Corporation shall have
90 days following the earlier of (A) delivery of the Notice of Acceptance or (B)
the 30-day period referred to in clause (b) above, if no Notice of Acceptance is
delivered, to Issue all or any part of such remaining Offered Securities not
covered by the Notice of Acceptance to any other person or persons, but only
upon terms and conditions in all respects, including, without limitation, unit
price and interest rates, which are no more favorable, in the aggregate, to such
other person or persons or less favorable to the Corporation than those set
forth in the Preemptive Offer.
(ii) If the Corporation does not consummate the Issuance of all
or part of the remaining Offered Securities to such other person or persons
within such period, the right provided hereunder shall be deemed to be revived
and such securities shall not be offered unless first reoffered to the Investor
in accordance with this Section 5.12.
(iii) Upon the closing, which shall include full payment to the
Corporation, of the Issuance to such other person or persons (the "Other
Buyers") of all or part of the remaining Offered Securities, the Investor shall
purchase from the Corporation, and the Corporation shall Issue to the Investor,
the Offered Securities covered by the Notice of Acceptance delivered to the
Corporation by the Investor, on the terms specified in the Preemptive Offer.
The purchase by the Investor of any Offered Securities is subject in all cases
to the execution and delivery by the Corporation and the Investor of a purchase
agreement relating to such Offered Securities in form and substance similar in
all material respects to the extent applicable to that executed and delivered
between the Corporation and the Other Buyers.
(d) As used herein, "Excluded Securities" shall mean:
(i) the Series A Preferred Stock issued or issuable pursuant
to this Agreement;
(ii) shares of Common Stock issuable or issued to employees,
advisors, consultants or outside directors of the Corporation directly or
pursuant to an employee benefit plan approved by the compensation committee of
the Board, the total number of such shares not to exceed 10% of the outstanding
shares of Common Stock at the Subsequent Closing (treating for purposes of these
calculations all Common Stock Equivalents as having been converted, exchanged or
exercised);
(iii) Common Stock issued or issuable upon conversion, exercise
or exchange of any securities outstanding on the date hereof and set forth on
Schedule 2.3 hereto or upon the conversion or exercise of any convertible
security, right, option or warrant which is subject to a Preemptive Offer or
which is issued or issuable pursuant to this Agreement;
(iv) any capital stock issued as a stock dividend or upon any
stock split or other subdivision or combination of shares of the Corporation's
capital stock or issued or issuable in connection with a merger or consolidation
as a result of which the holders of the Company's
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<PAGE>
outstanding securities immediately prior to the consummation of such transaction
hold voting securities in excess of fifty percent (50%) of the voting power of
the surviving or resulting entity; or
(v) Common Stock issued in any public offering of the
Company's securities.
(e) As used herein a "Qualified IPO" shall mean the closing of the
sale of shares of Common Stock in a bona fide, firm commitment, underwritten
public offering pursuant to an effective registration statement under the
Securities Act resulting in at least $25,000,000 of gross proceeds to the
Corporation before deducting underwriting discounts and commissions and offering
expenses, and reflecting a Corporation Valuation (as defined below) of
$75,000,000 or more.
The term "Corporation Valuation" means, with respect to any public
offering of Common Stock, the amount obtained by multiplying the total number of
shares of Common Stock outstanding immediately prior to such public offering
(treating for purposes of this calculation all Common Stock Equivalents as
having been converted, exchanged or exercised) multiplied by the per share
offering price for such public offering.
5.13. Disclosure of Investment. The Corporation, on the one hand, and
------------------------
each of the Investors, on the other hand, agrees that it will not, (i) except as
may be necessary or desirable in connection with a request by a governmental
agency, regulatory or supervisory authority or court or as required by law and
other than to potential investors in the Corporation, disclose the transactions
contemplated by the Documents without the prior written consent of the other
party or (ii) use in advertising or publicity the name of the other party
hereto, or any partner or employee of such party hereto or any of its respective
affiliates, or any trade name, trademark, trade device, service mark, symbol or
any abbreviation, contraction or simulation thereof owned by the other party
hereto or any of its respective affiliates, in either case without the prior
written consent of such party. The Corporation will not represent, directly or
indirectly, that any product or any service provided by, the Corporation has
been approved or endorsed by any Investor without the prior written consent of
the Investor.
5.14. Use of Proceeds. The Corporation shall use the proceeds from the
---------------
sale of Series A Preferred Stock and Warrants hereunder, and any monies received
upon exercise of the Warrants, as set forth on Schedule 5.14 hereto or in such
other manner as may be approved by the Board.
5.15. Major Transactions.
------------------
(a) In addition to any other action required to be taken by the
Board, the Corporation shall not, and shall cause its subsidiaries (if any) not
to, directly or indirectly, take any of the following actions without the prior
approval of the Board:
(i) make any significant change in the operating plan and
budget of the Corporation;
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<PAGE>
(ii) make any material change in the nature of its business or
engage in any line of business not conducted by the Corporation as of the date
hereof;
(iii) mortgage, encumber, or create or incur liens on, its
assets;
(iv) make or commit to make capital expenditures in excess of
an amount to be determined by the Board;
(v) enter into any transactions with affiliates;
(vi) enter into any material Contract or amend any material
Contract;
(vii) appoint or remove any executive management; or
(viii) relocate the Corporation's headquarters.
(b) Until the completion of a Qualified IPO, the Corporation shall
not, and shall cause its subsidiaries (if any) not to, directly or indirectly,
take any of the following actions without the prior written consent of the
Investors (except as expressly permitted by this Agreement):
(i) consolidate or merge into or with any other person, or
enter into any other similar business combination transaction or effect any
transaction or series of transactions in which more than fifty percent (50%) of
its voting securities are transferred to another person;
(ii) liquidate, dissolve or wind up, either voluntarily or
involuntarily;
(iii) purchase, acquire or obtain any capital stock or other
proprietary interest, directly or indirectly, in any other entity;
(iv) purchase, acquire or obtain assets of any third party in
an aggregate amount (as to the Corporation and all of its subsidiaries) in any
fiscal year in excess of $500,000;
(v) sell, lease, transfer or otherwise dispose of any assets
in an aggregate amount (as to the Corporation and all of its subsidiaries) in
any fiscal year in excess of $500,000;
(vi) create, incur, assume or suffer to exist any indebtedness
for borrowed money (including any capital leases) in an aggregate amount (as to
the Corporation and all of its subsidiaries) in excess of $1,000,000;
(vii) pay, or set aside any sums for the payment of, any
dividends, or make any distribution on, any shares of its capital stock or
redeem, repurchase or otherwise acquire any outstanding shares of its capital
stock or any other of its outstanding securities (other than indebtedness at
maturity in accordance with its terms) or issue or sell any capital stock or
other securities except for dividends or other distributions payable on the
Common Stock solely in the
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<PAGE>
form of additional shares of Common Stock and except for the issuance of shares
of Common Stock or the issuance of Common Stock Equivalents approved by the
Board to employees, advisors, consultants or outside directors of the
Corporation directly or pursuant to an employee benefit plan of the Corporation;
provided, however, the total number of shares of Common Stock issued or issuable
- -------- -------
pursuant to such plans shall not exceed 10% of the outstanding shares of Common
Stock as of the Subsequent Closing (treating for purposes of this calculation
all Common Stock Equivalents as having been converted, exchanged or exercised);
(viii) change the Corporation's independent public accountants;
or
(ix) amend, modify or waive the Articles of Incorporation or
the By-Laws in any manner which adversely affects the rights of any of the
Investors thereunder, including, without limitation, any change in the number of
directors comprising the Board of Directors, or become a party to any agreement
which is inconsistent with the rights of any of the Investors under the
Documents or otherwise conflicts with the Documents.
(x) enter into any transaction (except as expressly permitted
by this Agreement) with any (i) "affiliate" or "associate" (as such terms are
defined under Rule 12b-2 under the Securities Exchange Act of 1934, as amended)
of any Investor or (ii) entity of which any Investor is, directly or indirectly,
the beneficial owner of 5 percent or more of any class of equity securities (any
such party a "Related Party").
5.16. Notice. From and after the Closing, the Corporation shall provide
------
the Investors with written notice as soon as possible after the occurrence of
any event which if it had occurred after December 31, 1994 and prior to the
Closing would have required disclosure to the Investors pursuant to Section 2.8
hereof.
5.17. Confidentiality. Any information or documentation (other than
---------------
publicly available information) provided to the Investors pursuant to Section
5.1 or 5.2 shall be deemed to be confidential information of the Corporation.
Each Investor agrees to use its reasonable efforts to prevent the disclosure to
any person (excluding its officers, employees, agents or counsel) of any such
confidential information disclosed to it except (i) as may be necessary or
desirable in connection with a request by a governmental agency, regulatory or
supervisory authority or court having or claiming jurisdiction over the
Investor, (ii) to the extent that such information is or shall have become
generally available to the public without breach of this covenant, (iii) to the
extent that such information is received by the Investor from a third party on a
nonconfidential basis, (iv) in connection with the enforcement of the Investor's
rights hereunder or under the Articles of Incorporation and (v) disclosure to
other investors in the securities of the Corporation.
5.18. Investment Banking Services. So long as the GSCP Parties
---------------------------
beneficially own 5% or more of the outstanding shares of Common Stock of the
Corporation (treating for purposes of this calculation the conversion of all
Series A Preferred Stock) Goldman, Sachs & Co. ("Goldman Sachs") or any
affiliate of Goldman Sachs shall have the right to perform all investment
banking services for the Corporation (including, without limitation, with
respect to the sale of the
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<PAGE>
Corporation or a public offering of securities of the Corporation) upon
customary terms, including compensation, consistent with an arm's-length
transaction. If the Corporation and Goldman Sachs or its affiliate, after good
faith discussions, cannot agree on the terms of any such engagement, the
Corporation may hire such other investment banker as it finds acceptable
provided that Goldman Sachs will then be entitled to be a member of the
management group in connection with any underwriting of capital stock of the
Corporation.
5.19. Preemptive Rights Waivers. The Corporation shall use its
-------------------------
reasonable best efforts to obtain, as promptly as practicable after the date
hereof, Preemptive Rights Waivers from each stockholder of the Corporation with
respect to all of the Preemptive Rights Transactions.
5.20. Rescission Offer. Unless otherwise agreed to by the Investors, the
----------------
Corporation shall, as promptly as practicable after the date hereof and in
accordance with all applicable law, conduct an offer or offers to rescind the
issuance to any person (other than Marc Collins-Rector and Chad Shackley) of
each share of Common Stock and each Common Stock Equivalent issued by the
Corporation to such person prior to the date hereof (any such offer or offers
collectively referred to as the "Rescission Offer"). The Company shall
consummate the Rescission Offer and all purchases of Common Stock relating
thereto within 90 days after the date hereof (such 90th day referred to as the
"Rescission Termination Date").
5.21. Relocation. Unless otherwise agreed to by the Investors, the
----------
Corporation shall use its reasonable best efforts to relocate the headquarters
of the Corporation to a suitable location in San Jose, California as promptly as
practicable after the date hereof.
5.22. Corporate Officers.
------------------
(a) Immediately after the Initial Closing, the Corporation will
cooperate with the Investors and use its reasonable best efforts to conduct an
active search, supervised by the Investors, to elect a permanent CEO (the
"Permanent CEO") to replace either Marc Collins-Rector or any interim CEO
appointed by the Investors (the "Interim CEO"), provided that the election of
such CEO shall be subject to the approval of the Corporate Designees, which
consent will not be unreasonably withheld.
(b) If there is no person designated the CEO, then no person shall be
elected to fill an equivalent office, whether designated President or Chief
Operating Officer or otherwise of the Corporation or to hold any other similar
corporate office (each such person shall be referred to as a "Specified
Executive Officer") unless such person is approved by the Investors.
5.23. Call Right.
----------
(a) In the event an Investor notifies the Corporation that it will
not consummate the Subsequent Closing solely because the condition to closing
set forth in Section 6(e) has not been satisfied (such notice referred to as the
"Investor Notice"), then, for a period of 10 days after delivery of such
Investor Notice, the Corporation shall have the right (the "Call Right") to
require such
<PAGE>
Investor and its Investor Affiliates (as defined in Section 15) to sell all, but
not less than all, of the (i) shares of Series A Preferred Stock (including
Conversion Shares) and Warrants (including Warrant Shares) purchased by such
Investor and its Investor Affiliates under this Agreement and (ii) any shares of
Common Stock and Options (including Option Shares) purchased by such Investor
and its Investor Affiliates under the Stock Purchase Agreement (collectively,
(i) and (ii) are referred to as the "Investor Securities"), at an aggregate
price equal to the product of (A) $1.00 multiplied by (B) each share of Common
Stock acquired by the Investors pursuant to this Agreement or the Stock Purchase
Agreement or issuable upon conversion of the outstanding Series A Preferred
Stock, in each case, on the date of the Corporation Notice (the "Call Price").
The Corporation may exercise the Call Right by delivering written notice (the
"Corporation Notice") to such Investor setting forth the Corporation's exercise
of its Call Right. Upon exercise of the Call Right and delivery of the
Corporation Notice to such Investor, the Corporation shall be unconditionally
committed to purchase the Investor Securities of such Investor and its Investor
Affiliates at the Call Closing (as defined in Section 5.23(b)).
(b) The closing (the "Call Closing") of the sale and purchase of the
Investor Securities of an Investor and its Investor Affiliates with respect to
which a Corporation Notice has been delivered, shall take place on a date
selected by the parties, which date shall (i) if financing is sought by the
Corporation in order to purchase the Investor Securities, be within 5 days after
the obtaining of such financing and (ii) in all cases not be later than three
months after delivery of the related Investor Notice and shall be held at a
location to be determined by the parties. At the Call Closing, such Investor
shall, and shall cause each of its Investor Affiliates, against payment of the
Call Price in immediately available funds, to deliver to the Corporation the
certificates, if any, representing the Investor Securities being purchased, duly
endorsed, or accompanied by stock power(s) duly executed in blank.
SECTION 6. Conditions to the Subsequent Purchase. The obligations of each
-------------------------------------
Investor to consummate the Subsequent Purchase shall be subject to the
satisfaction (or waiver, which shall not be effective against any Investor who
does not consent in writing thereto), on or prior to the Subsequent Closing
Date, of the following conditions:
(a) The Initial Closing shall have occurred.
(b) The Corporation shall deliver to the Investors: (A) certificates
of good standing for the Corporation from the States of Florida and Michigan,
dated as of a date no earlier than five days prior to the Subsequent Closing,
and (B) certificates representing the applicable Series A Preferred Stock.
(c) The Investors shall have received a certificate of the
Corporation, dated as of the Subsequent Closing Date and signed by the Chief
Executive Officer of the Corporation, substantially in the form of Exhibit K
hereto, certifying that the representations and warranties of the Corporation in
this Agreement are true and correct in all material respects as of the
Subsequent Closing Date, as if made on the Subsequent Closing Date, except as
set forth on a schedule to such certificate.
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<PAGE>
(d) The Company shall have complied in all material respects with all
its agreements and covenants contained herein required to be performed at or
prior to the Subsequent Closing to the extent such agreements and covenants
relate to the Subsequent Closing.
(e) No event or change shall have occurred which, individually or in
the aggregate, has a material adverse effect on the business, assets, liability,
properties, condition (financial or otherwise), operations or results of
operations of the Corporation.
(f) No statute, rule or regulation or order of any court or any
governmental authority shall be in effect which, in either case, restrains,
enjoins, makes illegal or otherwise prohibits the transactions contemplated
hereby or the continuance of the Corporation's business in substantially the
manner in which it is now conducted.
(g) The Investors shall have received the audited statements of
income, stockholders' equity and cash flows of the Corporation for the fiscal
year ended December 31, 1994, such audited financial statements to be reported
on by Ernst & Young without any qualification other than a qualification
relating to the Corporation's inability to conduct its operations without
additional financing.
SECTION 7. Termination.
-----------
(a) The obligation of the parties to effect the Subsequent Purchase
may be terminated (i) by the mutual written consent of the Corporation and the
Investors or (ii) by any party in writing, without liability to such party on
account of such termination (provided the terminating party is not otherwise in
breach and/or default of this Agreement), if the Subsequent Closing shall not
have occurred on or before August 31, 1995.
(b) Termination pursuant to Section 7(a) hereto shall terminate all
obligations of the parties hereto to effect the Subsequent Purchase and all
obligations or liabilities relating thereto except for Sections 11 and 12
hereto.
SECTION 8. Transfer Taxes. The Corporation agrees that it will pay, and will
--------------
hold each Investor harmless from any and all liability with respect to any stamp
or similar Taxes which may be determined to be payable in connection with the
execution and delivery and performance of this Agreement or any modification,
amendment or alteration of the terms or provisions of this Agreement, and that
it will similarly pay and hold each Investor harmless from all Taxes in respect
of the issuance of the Series A Preferred Stock, the Warrants, the Warrant
Shares and the Conversion Shares to the Investors.
SECTION 9. Legends; Exchanges; Lost, Stolen or Mutilated Certificates.
----------------------------------------------------------
(a) Each certificate representing Warrants or shares of Series A
Preferred Stock or Common Stock issued or issuable to the Investors hereunder
shall bear a legend containing the following words:
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<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH
SUCH ACT."
"IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE RESTRICTIONS ON TRANSFER AND CERTAIN VOTING
REQUIREMENTS SET FORTH IN THE STOCKHOLDER AGREEMENT DATED AS OF
April 20, 1995 BY AND AMONG CONCENTRIC RESEARCH CORPORATION AND
THE PARTIES THERETO, A COPY OF WHICH IS ON FILE IN THE OFFICE OF
THE CORPORATION"
The requirement that the above securities legend be placed upon
certificates evidencing any such securities shall cease and terminate upon the
earliest of the following events: (i) when such shares are transferred in an
underwritten public offering, (ii) when such shares are transferred pursuant to
Rule 144 under the Securities Act or (iii) when such shares are transferred in
any other transaction if the seller delivers to the Corporation an opinion of
its counsel, which counsel and opinion shall be reasonably satisfactory to the
Corporation, or a "no-action" letter from the Staff of the SEC, in either case
to the effect that such legend is no longer necessary in order to protect the
Corporation against a violation by it of the Securities Act upon any sale or
other disposition of such shares without registration thereunder. The
requirement that the above legend regarding the Stockholder Agreement be placed
upon certificates evidencing any such securities shall cease and terminate upon
the earlier of (i) the transfer of such securities in accordance with the
Stockholder Agreement and (ii) the termination of the Stockholder Agreement.
Upon the occurrence of any event requiring the removal of a legend hereunder,
the Corporation, upon the surrender of certificates containing such legend,
shall, at its own expense, deliver to the holder of any such shares as to which
the requirement for such legend shall have terminated, one or more new
certificates evidencing such shares not bearing such legend.
(b) Upon surrender by any Investor to the Corporation of any
certificate representing Series A Preferred Stock or Common Stock purchased or
acquired hereunder, the Corporation at its expense will, within 5 business days,
issue in exchange therefor, and deliver to the Investor, a new certificate or
certificates representing such shares, in such denominations as may be requested
by such Investor. Upon receipt of evidence satisfactory to the Corporation of
the loss, theft, destruction or mutilation of any certificate representing any
share of Series A Preferred Stock or Common Stock purchased or acquired by any
Investor hereunder, and in case of any such loss, theft or destruction, upon
delivery of any indemnity agreement satisfactory to the corporation, or in any
case of any such mutilation, upon surrender and cancellation of such
certificate, the Corporation at its expense will, within 5 business days, issue
and deliver to the Investor a new certificate for such Series A Preferred Stock
or Common Stock of like tenor, in lieu of such lost, stolen or mutilated
certificate.
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<PAGE>
SECTION 10. Survival of Representations, Warranties, Agreements and Covenants,
------------------------------------------------------------------
etc. All representations and warranties hereunder shall survive the Closing
- ---
for a period of 5 years and shall in no way be affected by any investigation of
the subject matter thereof made by or on behalf of the Investors, provided,
however, that (i) the representations and warranties set forth in Section 2.3
shall survive indefinitely and (ii) the representations made in Section 2.7, as
they relate to Taxes, and in Section 2.24, shall survive until the expiration of
the applicable statute of limitations. All statements contained in any Schedule
to this Agreement or in any certificate or other instrument delivered by the
Corporation pursuant to Section 1.4 shall constitute representations and
warranties by the Corporation under this Agreement. All agreements contained
herein shall survive indefinitely until, by their respective terms, they are no
longer operative; provided, however, that the rights of an Investor and the
-------- -------
obligations of the Corporation to such Investor under Section 5 of this
Agreement shall, unless otherwise specified therein, terminate at such time as
such Investor and its Investor Affiliates do not beneficially own any shares of
the capital stock of the Corporation.
SECTION 11. Expenses. The Corporation and each Investor shall pay all its
--------
costs and expenses incurred by it or on its behalf in connection with this
Agreement and the consummation of the transactions contemplated hereby;
provided, however, the Corporation shall pay and shall reimburse the Investors
- -------- -------
at each Closing (other than with respect to fees and expenses set forth in the
proviso to this sentence of this Section 11 which shall be payable upon request)
for the fees and expenses of counsel retained by the Investors (such amount to
be allocated equally among the GSCP Parties and the KP Parties) in connection
with the negotiation and preparation of the Documents and the documentation
relating thereto and the consummation of the transactions contemplated
hereunder; provided, further, the Corporation shall pay and fully reimburse the
-------- -------
Investors upon request for any fees and expenses of counsel retained by the
Investors in connection with the Rescission Offer.
SECTION 12. Indemnification.
---------------
(a) (i) The Corporation shall indemnify, defend and hold each
Investor and its affiliates harmless against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including legal
and accounting fees and expenses) (collectively, "Losses"), arising from the
breach of any of the representations, warranties, covenants or agreements made
by it in any of the Documents or in any certificate or other instrument
delivered pursuant hereto, including, without limitation, any Indemnifiable
Diminution, and from any Rescission Losses (as such terms are hereinafter
defined). For purposes of this Section 12, each of the representations and
warranties made by the Corporation in any of the Documents or in any certificate
or other instrument delivered pursuant hereto shall be deemed to have been made
without the inclusion of limitations or qualifications as to materiality, such
as the words "material adverse affect," "immaterial," "material" and "in all
material respects" or words of similar import.
(ii) An "Indemnifiable Diminution" means any diminution in the
book value of the shareholders' equity of the Corporation (including, without
limitation, as a result of any undisclosed liability in existence as of the date
hereof required to be disclosed to the Investors or the incurrence of any
out-of-pocket costs and expenses with respect to any undisclosed litigation or
claim of a third party in existence as of the date hereof required to be
disclosed to the Investors) in
<PAGE>
excess of $100,000 arising from (i) the breach of any of the representations and
warranties made by the Corporation in any of the Documents or in any certificate
or other instrument delivered pursuant hereto (ii) any Losses incurred by the
Corporation arising from (A) any violation by the Corporation or any of its
officers, directors or employees of federal or state laws (other than with
respect to costs associated with the Rescission Offer) or (B) actions taken by
Marc Collins-Rector prior to the date hereof whether in connection with the
Corporation or otherwise. The Corporation shall provide each Investor, within
five days after the end of any fiscal month in which Indemnifiable Diminution is
incurred, written notice setting forth in reasonable detail the amount of the
Indemnifiable Diminution and the reason it was incurred.
(iii) A "Rescission Loss" shall occur any time the Corporation
purchases (any such purchase referred to as a "Rescission Purchase") any shares
of Common Stock or Common Stock Equivalents from any person pursuant to the
Rescission Offer at a price per share in excess of the Closing Per Share Price
(the purchase price per share of Common Stock or Common Stock Equivalents
(including any amounts relating to such purchase paid in respect of interest or
damages) minus the Closing Per Share Price being referred to as the "Excess
Price Per Share") and the amount of the Rescission Loss shall be equal to the
product of (A) the total number of shares of Common Stock purchased in such
Rescission Purchase multiplied by (B) the Excess Price Per Share. The
Corporation shall provide each Investor, within five days after the Rescission
Termination Date, written notice setting forth in reasonable detail the
aggregate Rescission Losses resulting from the Rescission Purchases
(collectively, the "Rescission Losses").
(b) In the event of any Indemnifiable Diminution and/or any
Rescission Losses, the Corporation shall (subject to clauses (c) and (d) below)
pay the Investors an amount (such amount with respect to Indemnifiable
Diminution shall be referred to as the "Final Indemnification Amount," and such
amount with respect to Rescission Losses shall be referred to as the "Final
Rescission Amount") equal to the quotient obtained by dividing (i) the Initial
Indemnification Amount by (ii) the result of (A) 1 minus (B) the Aggregate
Investor Equity Percentage (as such terms are defined below). The "Initial
Indemnification Amount" shall mean the product obtained by multiplying (I) the
amount of any Indemnifiable Diminution and/or any Rescission Losses, as
applicable, by (II) the Aggregate Investor Equity Percentage. In the event the
Corporation grants indemnification rights similar to those granted pursuant to
Section 12(a) with respect to Indemnifiable Diminution or Rescission Losses to
any other person in the future, appropriate adjustments to this Section 12 shall
be made so that the Investor will suffer no loss, directly or as a result of any
diminution in the book value of the stockholders' equity related to its
investment under this Agreement as a result of any indemnification payment to
such other person thereunder.
(c) Any amount payable by the Corporation to the Investors hereunder
shall be paid by issuing shares of Common Stock in an amount equal to the
quotient obtained (rounded up to the nearest whole even number) of (i) the
Aggregate Indemnification Amount and/or the Final Rescission Amount, as
applicable, divided by (ii) the applicable Per Share Price of a share of Common
Stock. The number of shares issuable under this Section 12(c) shall be
allocated among the GSCP Parties and the KP Parties as follows: 50% to the GSCP
Parties and 50% to the KP Parties.
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<PAGE>
(d) The Corporation shall not be required to issue any shares of
Common Stock pursuant to Section 12(c) with respect to Losses arising from
Indemnifiable Diminution until the Aggregate Indemnification Amount is equal to
$15,000. The Corporation shall issue any shares of Common Stock to be issued to
the Investors pursuant to Section 12(c) with respect to Rescission Losses
promptly after the Rescission Termination Date.
(e) For purposes of all calculations under this Section 12, (i) all
outstanding Common Stock Equivalents shall be treated as being exercised,
exchanged or converted into Common Stock at the then applicable exercise,
exchange and conversion rates and such shares of Common Stock shall be treated
as being outstanding, (ii) all purchases or sales of Common Stock Equivalents
shall be treated as the purchase or sale of the underlying shares of Common
Stock and (iii) the number of shares of Common Stock held by an Investor and its
Investor Affiliates as of the Subsequent Closing shall include any shares of
Common Stock issued to the Investor and/or its Investor Affiliates pursuant to
Section 1.5(b).
(f) For purposes of this Section 12 the following terms shall have
the meanings set forth below:
"Aggregate Indemnification Amount" means, at any time, the aggregate
amount of indemnification payments due to the Investors under Section 12(b) with
respect to Indemnifiable Diminution.
"Aggregate Investor Equity Percentage" means, (i) for purposes of
calculating any Final Indemnification Amount, the quotient obtained (expressed
as a decimal) by dividing (A) the number of shares of Common Stock issued under
this Agreement and held by the Investor Parties as of the Subsequent Closing by
(B) the number of shares of Common Stock outstanding as of the Subsequent
Closing and (ii) for purposes of calculating the Final Rescission Amount, the
quotient obtained (expressed as a decimal) by dividing (A) the number of shares
of Common Stock issued under this Agreement and held by the Investor Parties as
of the Subsequent Closing by (B) the result of (I) the number of shares of
Common Stock outstanding as of the Subsequent Closing minus (II) the number of
shares of Common Stock purchased pursuant to all Rescission Purchases
(collectively, the "Adjusted Closing Date Shares").
"Closing Per Share Price " means $.7331.
"Enterprise Value" means, with respect to any calculation in respect
of an Aggregate Indemnification Amount, the product of (i) the Fair Market Value
of a share of Common Stock multiplied by (ii) the total number of shares of
Common Stock outstanding prior to the issuance of any shares of Common Stock
under Section 12(c) in respect of such Aggregate Indemnification Amount
(collectively, the "Outstanding Shares").
"Fair Market Value" on any day shall mean the average of the daily
market prices of a share of Common Stock over a period of 30 consecutive
Business Days prior to the day as of which "Fair Market Value" is being
determined. The market price for each such Business Day shall be the
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<PAGE>
average of the closing prices on such day of the Common Stock on all domestic
exchanges on which the Common Stock is then listed, or, if there shall have been
no sales on any such exchange on such day, the average of the closing bid and
asked prices on all such exchanges at the end of such day, or, if the Common
Stock shall not be so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 3:30 P.M., New York time, on such day,
or if the Common Stock shall not be quoted, in the NASDAQ System, the average of
the closing bid and asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization. If the Common Stock is listed on any domestic
exchange, the term "Business Days" as used in this clause shall mean Business
Days on which such exchange is open for trading. If at any time the Common
Stock is not listed on any domestic exchange or quoted in the NASDAQ System or
the domestic over-the-counter market, the "Fair Market Value" shall be deemed to
be determined in good faith by the Corporation and the Investor. In the event
the Corporation and the Investor cannot agree on such Fair Market Value within
30 days after a determination of Fair Market Value is to be made, the Fair
Market Value shall be deemed to be the value per share of Common Stock
determined by an independent investment banking firm of national reputation
selected by the Investors and the Corporation. In the event the Corporation and
the Investors cannot agree on such investment banking firm within 10 days after
such investment banking firm is to be selected, the selection of the investment
banking firm shall be submitted to the American Arbitration Association for
resolution. The fees of such investment banking firm shall be borne as follows:
50% by the Corporation and 50% by the Investors (allocated equally among the
GSCP Parties and the KP Parties).
"Per Share Price " means an amount equal to (i) with respect to any
calculation in respect of an Aggregate Indemnification Amount, the quotient
obtained by dividing (A) the result of (I) the Enterprise Value minus (II) the
sum of (x) the Indemnifiable Diminution with respect to the Aggregate
Indemnification Amount and (y) the Aggregate Indemnification Amount by (B) the
Outstanding Shares and (ii) with respect to any calculation in respect of the
Final Rescission Amount, the quotient obtained by dividing (A) the result of (I)
$24,482,759 minus (II) the sum of (x) the aggregate amount paid by the
Corporation to purchase shares of Common Stock in all Rescission Purchases and
(y) the Final Rescission Amount by (B) the Adjusted Closing Date Shares.
SECTION 13. Remedies. In case any one or more of the covenants and/or
--------
agreements set forth in this Agreement shall have been breached by the
Corporation, any Investor may proceed to protect and enforce its rights either
by suit in equity and/or by action at law, including, but not limited to, an
action for damages as a result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in this Agreement.
Notwithstanding anything contained in this Section 13, any action for damages by
the Investors against the Corporation or the Corporation against the Investors
for breach of any representation, warranty, covenant or agreement contained in
this Agreement shall only be pursuant to Section 12 of this Agreement.
SECTION 14. Further Assurances. At any time or from time to time after each
------------------
Closing, the Corporation, on the one hand, and the Investors, on the other hand,
agree to cooperate with each other, and at the request of the other party, to
execute and deliver any further instruments or documents and to take all such
further action as the other party may reasonably request in order to
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<PAGE>
evidence or effectuate the consummation of the transactions contemplated hereby
relating to the Initial Purchase or Subsequent Purchase, as applicable, and to
otherwise carry out the intent of the parties hereunder.
SECTION 15. Successors and Assigns. This Agreement shall bind and inure to
----------------------
the benefit of the Corporation and each of the Investors and the respective
successors, assigns, heirs and personal representatives of the Corporation and
each of the Investors. The Corporation acknowledges that GSCP and/or KP may
transfer, all or part of, the securities acquired by it hereunder and assign,
all or part of, its rights and obligations under this Agreement to one or more
other partnerships, corporations, trusts or other organizations which are
controlled by, control or are under common control with such Investor or one or
more of the then current, former or future partners of such Investor (an
"Investor Affiliate"; in the case of GSCP, a "GSCP Affiliate" and in the case of
KP, a "KP Affiliate"), and GSCP and/or KP shall have the right to transfer, all
or part of, the securities of the Corporation acquired by it hereunder and
assign, all or part of, its rights and obligations under this Agreement to one
or more GSCP Affiliates or KP Affiliates, as applicable, without the consent of
the Corporation. Upon any such assignment, such assignee shall have and be able
to exercise all rights of the assigning Investor hereunder. Except as set forth
in this Section, no Investor may assign its rights and/or obligations hereunder
to any party without the consent of the Corporation, which consent shall not be
unreasonably withheld.
SECTION 16. Entire Agreement. This Agreement and the other writings referred
----------------
to herein or delivered pursuant hereto which form a part hereof contain the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or understandings with
respect thereto.
SECTION 17. Notices. All notices, requests, consents and other
-------
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
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<PAGE>
(i) if to the Corporation, to:
Concentric Research Corporation
400 Forty-First Street
Bay City, MI 48708
Telecopy: (517) 895-0529
Attention: Mr. Marc Collins-Rector
with a copy to:
Honigman Miller Schwartz and Cohn
222 Lakeview Avenue
Suite 800
West Palm Beach, FL 33401-6112
Telecopy: (407) 832-3036
Attention: Morris Brown, Esq.
and
Randy Maslow
The Cove Club, Suite 7V
2 South End Avenue
New York, NY 10280
(ii) if to GSCP, to:
GS Capital Partners, L.P.
85 Broad Street
New York, New York 10004
Telecopy: (212) 902-3000
Attention: Carla Skodinski
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopy: (212) 859-8586
Attention: Paul M. Reinstein, Esq.
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<PAGE>
(iii) if to KP, to:
Kleiner Perkins Caufield & Byers VII
2750 Sand Hill Road
Menlo Park, California 94025
Telecopy: (415) 233-0300
Attention: Vinod Khosla
All such notices, requests, consents and other communications shall be
deemed to have been given when received.
SECTION 18. Amendments. The terms and provisions of this Agreement may be
----------
modified or amended, or any of the provisions hereof waived, temporarily or
permanently, pursuant to the written consent of the Corporation and the
Investors.
SECTION 19. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 20. Headings. The headings of the sections of this Agreement have been
--------
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
SECTION 21. Nouns and Pronouns. Whenever the context may require, any pronouns
------------------
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of names and pronouns shall include the plural and vice
versa.
SECTION 22. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York without giving effect to
the principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of New York and of the United States of America, in
each case located in the County of New York, for any action, proceeding or
investigation in any court or before any governmental authority ("Litigation")
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any Litigation relating thereto except in
such courts), and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in this
Agreement shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of New York or the United States of America, in each case
located in the County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum.
SECTION 23. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any
provision of this Agreement is held
-37-
<PAGE>
to be invalid or unenforceable in any respect, such invalidity or
unenforceability shall not render invalid or unenforceable any other provision
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as
of the date first above written.
CORPORATION:
CONCENTRIC RESEARCH CORPORATION:
By: /s/ Randy Maslow
-----------------------------------------------
Name: Randy Maslow
--------------------------------------------
Title: Vice President
--------------------------------------------
INVESTORS:
GS CAPITAL PARTNERS, L.P.
By: GS Advisors, L.P., its general partner
GS Advisors, Inc., its general partner
By: /s/ Terry O'Toole
-----------------------------------------------
Name: Terry O'Toole
--------------------------------------------
Title: Vice President
-------------------------------------------
KLEINER PERKINS CAUFIELD & BYERS VII
By: KPCB VII ASSOCIATES, its general partner
By: /s/ William R. Hearst
----------------------------------------------
Name: William R. Hearst
--------------------------------------------
Title: General Partner
-------------------------------------------
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<PAGE>
FIRST AMENDMENT, dated as of December 11, 1995, by and among CONCENTRIC
NETWORK CORPORATION, a Florida corporation (formerly CONCENTRIC RESEARCH
CORPORATION the "Corporation"), GS CAPITAL PARTNERS, L.P., a Delaware limited
partnership ("GSCP"), KLEINER PERKINS CAUFIELD & BYERS VII, a California limited
partnership ("KPCB") and KPCB VII FOUNDERS FUND, a California limited
partnership (together with KPCB, "KP").
WHEREAS, the Corporation, GSCP and KP are parties to the Preferred Stock
Purchase Agreement (the "Purchase Agreement"), dated as of April 20, 1995;
WHEREAS, in connection with a private placement of equity securities in the
Corporation the parties desire to amend and to waive certain terms of the
Purchase Agreement, the Warrants (as defined in and as issued under the Purchase
Agreement), and the $3,000,000 note (the "Note" together with the Purchase
Agreement and the Warrants, the "Documents") dated November 29, 1995 issued by
the Corporation to GSCP, in each case, as set forth herein;
WHEREAS, on October 31, 1995, the Board of Directors of the Corporation
authorized the issuance of 462,589 shares of Class A Common Stock to each of
GSCP and KP (which shares were issued on November 1, 1995) in satisfaction of
losses incurred by them arising out of certain breaches of the Corporation's
representations and warranties contained in the Purchase Agreement and in
consideration of GSCP's and KP's waiver of their right to indemnification under
the Purchase Agreement with respect to any breach of the representations and
warranties of the Corporation contained in the Purchase Agreement and/or with
respect to Indemnifiable Diminution (as defined in Section 12 of the Purchase
Agreement), and (ii) the amendment of Section 12 of the Purchase agreement
providing for the payment of all future indemnification amounts payable
thereunder to be made in cash rather than shares of Class A Common Stock of the
Corporation.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Section 5.12(e) of the Purchase Agreement. Section
------------------------------------------------------
5.12(e) of the Purchase Agreement is hereby amended and restated in its entirety
as follows:
"(e) As used herein a "Qualified IPO" shall mean the closing of the sale
of shares of Common Stock in a bona fide, firm commitment, underwritten public
offering pursuant to an effective registration statement under the Securities
Act resulting in at least $25,000,000 of gross proceeds to the Corporation
before deducting underwriting discounts and commissions and offering expenses,
and reflecting a Corporation Valuation (as defined below) of $150,000,000 or
more.
The term "Corporation Valuation" means, with respect to any public offering
of Common Stock, the amount obtained by multiplying the total number of shares
of Common Stock outstanding immediately prior to such public offering (treating
for purposes of this calculation all Common Stock Equivalents as having been
converted, exchanged or exercised) multiplied by the per share offering price
for such public offering."
<PAGE>
2. Amendment and Waiver of Certain Indemnification Rights. 2.1. GSCP and
------------------------------------------------------
KP hereby waive any right to indemnification under the Purchase Agreement that
they may have with respect to (i) any breach of the Corporation's
representations and warranties contained in the Purchase Agreement, and (ii)
claims for Indemnifiable Diminution, as defined in Section 12 of the Purchase
Agreement. It is understood by the parties that GSCP and KP are not waiving any
right to indemnification that they may have with respect to any matter other
than a breach of the Corporation's representations and warranties under the
Purchase Agreement and/or on account of Indemnifiable Diminution.
2.2. Section 1.5 of the Purchase Agreement is hereby deleted in its
entirety.
2.3. Sections 12(c), 12(d) and 12(e) of the Purchase Agreement are hereby
amended and restated in their entirety as follows:
"(c) [intentionally left blank].
(d) [intentionally left blank].
(e) For purposes of all calculations under this Section 12, (i) all
outstanding Common Stock Equivalents shall be treated as being exercised,
exchanged or converted into Common Stock at the then applicable exercise,
exchange and conversion rates and such shares of Common Stock shall be treated
as being outstanding, and (ii) all purchases or sales of Common Stock
Equivalents shall be treated as the purchase or sale of the underlying shares of
Common Stock."
2.4. The definition of "Enterprise Value" contained in Section 12(f)
of the Purchase Agreement is hereby amended and restated in its entirety as
follows:
""Enterprise Value" means, with respect to any calculation in respect
of an Aggregate Indemnification Amount, the product of (i) the Fair Market Value
of a share of Common Stock multiplied by (ii) the total number of shares of
Common Stock then outstanding (collectively, the "Outstanding Shares")."
3. Waiver of Preemptive Rights. GSCP and KP hereby waive any preemptive
---------------------------
rights they may have pursuant to Section 5.12 of the Purchase Agreement with
respect to the equity issuances set forth on Schedule A hereto.
4. Waiver of Rights Pursuant to Section 5.15(b)(vii). GSCP and KP hereby
-------------------------------------------------
waive the provisions of Section 5.15(b)(vii) of the Purchase Agreement in
connection with the issuance to (a) Intuit, Inc. pursuant to the Warrant
Issuance Agreement dated December 11, 1995 of (i) warrants
to purchase Series B Preferred Stock of the Corporation, (ii) Series B Preferred
Stock in exercise of such warrants, and (iii) Common Stock issuable upon
conversion of such Series B Preferred Stock, and to (b) the purchasers under the
Series C Private Placement of (i) Series C Preferred Stock (the "Series C
Preferred Stock") and (ii) Common Stock issuable upon conversion of the Series C
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<PAGE>
Preferred Stock as provided for in the private placement being conducted by
Montgomery Securities pursuant to the private placement memorandum, dated
November 3, 1995 as supplemented (the "Series C Private Placement Memorandum").
5. Waiver of Rights Pursuant to Section 5.18 of the Purchase Agreement.
-------------------------------------------------------------------
GSCP and KP hereby waive their rights under Section 5.18 of the Purchase
Agreement with respect to the private placement of Series C Preferred Stock
pursuant to the Series C Private Placement Memorandum.
6. Amendment to Section 5.20 of the Purchase Agreement. The last sentence
---------------------------------------------------
of Section 5.20 of the Purchase Agreement is hereby amended and restated in its
entirety as follows:
"The Company shall consummate the Recession Offer and all purchases of
Common Stock relating thereto by the earlier of (i) the 90th day after the GSCP
Parties provide written notice, which written notice shall be after the date
hereof, to the Company to conduct such Recession Offer and (ii) June 30, 1996
(such earlier date, the "Recession Termination Date")."
7. Amendment to Section 1.01(e) of the Warrants. Section 1.01(e) of each
--------------------------------------------
Warrant issued pursuant to the Purchase Agreement (whether issued at the Initial
Closing or the Subsequent Closing, as such terms are defined in the Purchase
Agreement) is hereby amended and restated in its entirety as follows:
"(e) Expiration Date: the later of 5:00 P.M., New York time, on (i) the
---------------
third anniversary of the Initial Investment Date and (ii) the fifth business day
following the expiration of termination of all waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to the
exercise of this Warrant."
8. Waiver of Anti-Dilution Rights With Respect to the Issuance of Certain
----------------------------------------------------------------------
Securities. GSCP and KP hereby waive their rights pursuant to Section 3.6(c) of
- ----------
Article V of the Corporation's Articles of Incorporation and Section 3.01 of the
Warrants issued pursuant to the purchase agreement, in each case as in effect at
any time prior to the date of this Amendment, with respect to the equity
issuances set forth in Schedule A hereto.
9. Amendment to Section 3.01(b) of the Warrants. The last sentence of
--------------------------------------------
Section 3.01(b) of each Warrant issued pursuant to the Purchase Agreement
(whether issued at the Initial Closing or Subsequent Closing, as such terms are
defined in the Purchase Agreement) is amended in its entirety to read as
follows:
"Excluded Securities shall mean all shares of Common Stock or Common
Stock Equivalents (x) issued and outstanding as of December 11, 1995,
or Common Stock issued upon the conversion or exercise of any such
Common Stock Equivalent, (y) issued pursuant to the Corporation's
Incentive Stock Option Plan as in effect on such date, and (z) the
issuance of up to 1,000,000 shares of Class A Common
-3-
<PAGE>
Stock in connection with transactions approved by the Corporation's
Board of Directors on November 17, 1995."
10. Amendment to the Note. Section 4 of the Note is hereby amended by the
---------------------
addition of the following Section 4(d):
"(c) Notwithstanding the foregoing, with respect to any Conversion
Notice, at any time prior to the Conversion Date for such Conversation
Notice, the Investor may cancel the conversion contemplated by the
Conversion Notice by delivering written notice of such cancellation to the
Corporation. In the event of such cancellation, the Loan shall be paid in
accordance with Section 1 of this Note; provided, however, if the
-------- -------
cancellation notice is delivered after the Termination Date, the Loan shall
be paid on the second Business Day after receipt of the cancellation
notice."
11. Continuing Effect of the Documents. This First Amendment shall not
----------------------------------
constitute an amendment or waiver of any other provision of any of the Documents
not expressly referred to herein and shall not be construed as a consent to any
further or future amendment or waiver of any of the terms of any of the
Documents. Except as expressly amended hereby, the provisions of each of the
Documents is and shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall for all purposes be deemed to be an original and all of which shall
constitute the same instrument.
13. Governing Law. This Agreement shall be construed in accordance with
-------------
and governed by the laws of the State of New York applicable to agreements made
and to be performed wholly within such jurisdiction.
-4-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to be duly executed on its behalf as of the date first above written.
CONCENTRIC NETWORK CORPORATION
By: /s/ Henry R. Hothhaft
----------------------
Name: Henry R. Hothhaft
Title: CEO
GS CAPITAL PARTNERS, L.P.
By: GS Advisors, L.P., its general partner
By: GS Advisors, Inc., its general partner
By: /s/ Michael Miele
-----------------
Name: Michael Miele
Title: Attorney-in-Fact
KLEINER PERKINS CAUFIELD & BYERS VII
By: KPCB VII ASSOCIATES, its general partner
By: /s/ L. John Doerr
-----------------
Name: L. John Doerr
Title: Partner
KPCB VII FOUNDERS FUND
By: KPCB VII ASSOCIATES, its general partner
By: /s/ L. John Doerr
-----------------
Name: L. John Doerr
Title: Partner
-5-
<PAGE>
SCHEDULE A
----------
1. Warrants to purchase $5,000,000 worth of Series B Preferred Stock issued to
Intuit, Inc. and the Series B Preferred Shares issuable upon their
exercise;
2. Up to 13,933,153 shares of Series C Preferred Stock issuable in connection
with a private placement being conducted by Montgomery Securities, subject
to approval of its issuance by the Board of Directors of the Corporation;
3. Warrants to purchase 257,671 shares of Class A Common Stock issued to
Comdisco, Inc. pursuant to the Warrant Issuance Agreement, dated July 20,
1995 between Comdisco, Inc. and the Corporation;
4. Warrants and options exchanged (or the exchange of which has been
authorized by the Board of Directors) prior to the date of this First
Amendment for new warrants or options to the extent such exchange was
authorized by the Board of Directors.
5. Shares and options to purchase Class A Common Stock issued to consultants
and officers to the extent authorized by the Board of Directors prior to
the date of this First Amendment; and
6. Up to 1,000,0000 shares of Class A Common Stock to be issued pursuant to
resolutions of the Board of Directors adopted at a Meeting of the Board of
Directors held on November 17th Directors Meeting.
<PAGE>
AGREEMENT, dated as of August 21, 1996, by and among CONCENTRIC NETWORK
CORPORATION, a Florida corporation (formerly CONCENTRIC RESEARCH CORPORATION the
"Corporation"), GS CAPITAL PARTNERS, L.P., a Delaware limited partnership
("GSCP"), KLEINER PERKINS CAUFIELD & BYERS VII, a California limited partnership
("KPCB Founders") and KPCB INFORMATION SCIENCES ZAIBATSU FUND II, a California
limited partnership (together with KP and KPCB Founders, "KP").
WHEREAS, the Corporation, GSCP and KP are parties to the Preferred Stock
Purchase Agreement, dated as of April 20, 1995, as amended by the First
Amendment dated as of December 11, 1995 (as amended, the "Purchase Agreement");
WHEREAS, in connection with a private placement of equity securities in the
Corporation the parties desire to amend and/or waive certain terms of the
Purchase Agreement and to consent to an amendment of the Corporation's Bylaws
(the "Bylaws);
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Section 5.15(b) of the Purchase Agreement. Section
------------------------------------------------------
5.15(b) of the Purchase Agreement is hereby amended and restated in its entirety
as follows:
"(b) Until the completion of a Qualified IPO, the Corporation shall not,
and shall cause its subsidiaries (if any) not to, directly or indirectly, take
any of the following actions without the prior written consent of the Investors
(except as expressly permitted by this Agreement):
(a) Declare or pay any dividends on Common Stock other than dividends
payable solely in Common Stock;
(b) Make, or permit any subsidiary to make, any loan or advance to any
person, including, without limitation, any employee or director of the
Corporation or any subsidiary, except advances and similar expenditures in the
ordinary course of business or under the terms of an employee stock or option
plan approved by the Board; or
(c) Engage in any transaction with an officer or director or the
Corporation except transactions on terms which those directors who are not
interested in such transaction determine to be no less favorable to the company
than could be obtained from an unrelated third party in an arms-length
negotiation."
2. Waiver of Preemptive Rights. GSCP and KP hereby waive any preemptive
---------------------------
rights they may have pursuant to Section 5.12 of the Purchase Agreement with
respect to equity issuance set forth on Schedule A hereto.
3. Waiver of Certain Rights Under Bylaws. GSCP hereby consents to the
-------------------------------------
amendment of the first sentence of Article VIII of the Bylaws to delete
therefrom the requirement that the Company
<PAGE>
obtain GSCP's prior approval of any amendments to or repeal of Article I,
Section 2 and Article II, Sections 5, 7 ,8, 10 and 12 of the Bylaws.
4. Continuing Effect of the Documents. This Agreement shall not
----------------------------------
constitute an amendment or waiver of any other provision of any of the Purchase
Agreement or Bylaws not expressly referred to herein and shall not be construed
as a consent to any further or future amendment or waiver of any of the terms of
any of the Purchase Agreement or Bylaws. Except as expressly amended hereby,
the provisions of each the Purchase Agreement or Bylaws is an shall remain in
full force and effect.
5. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall for all purposes be deemed to be an original and all of which shall
constitute the same instrument.
6. Governing Law. This Agreement shall be construed in accordance with
-------------
and governed by the laws of the State of New York applicable to agreements made
and to be performed wholly within such jurisdiction.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Second
Amendment to be duly executed on its behalf as of the date first above written.
CONCENTRIC NETWORK CORPORATION
By: Henry R. Nothhaft
------------------------
Name: Henry R. Nothhaft
Title: President
GS CAPITAL PARTNERS, L.P.
By: GS Advisors, Inc., its general partner
By: GS Advisors, Inc., its general partner
By: Terence O'Toole
------------------------
Name: Terence O'Toole
Title: Vice President
KLEINER PERKINS CAUFIELD & BYERS VII
By: KPCB VII ASSOCIATES, its general partner
By: Vinod Khosla
------------------------
Name: Vinod Khosla
Title: General Partner
KPCB VII FOUNDERS FUND
By: KPCB VII ASSOCIATES, its general partner
By: Vinod Khosla
------------------------
Name: Vinod Khosla
Title: General Partner
KPCB INFORMATION SCIENCES
ZAIBATSU FUND II
By: KPCB VII ASSOCIATES, its general partner
By: Vinod Khosla
------------------------
Name: Vinod Khosla
Title: General Partner
<PAGE>
EXHIBIT 10.11
CRITICAL
TECHNOLOGIES
INCORPORATED
EMPLOYEE SERVICE
AND STAFFING
AGREEMENT
<PAGE>
EMPLOYEE SERVICES AND STAFFING AGREEMENT
----------------------------------------
THIS EMPLOYEE SERVICES AGREEMENT (THIS "Agreement"), dated as of this 1st
day of November, 1995, by and among Concentric Network Corporation ("CNC"), a
Florida corporation, with principal offices at 10590 N. Tantau Avenue,
Cupertino, CA 95014, and Critical Technologies Incorporated, ("CTI"), with
principal offices at 3324 Hollenberg Drive, Bridgeton, MO 63044, a Missouri
Corporation.
W I T N E S S E T H
-------------------
WHEREAS, CTI has performed network analysis and support services to CNC and
has assisted CNC with the planning and implementation of Points of Presence
("POPs") deployment; and
WHEREAS, CTI presently provides certain services to CNC including network
modeling and Point of Presence (POP) selection pursuant to a certain
Collocations Services Agreement between the parties, and the parties agree said
agreement will be amended, modified, and extended in certain respects by this
agreement; and
WHEREAS, CNC has determined that it is in the best interests of CNC to
continue to involve CTI in the design, implementation and operation of virtual
private and public networks that meet the needs of CNC's customers and to from a
team to be comprised of employees of CTI and whom CTI will cause to be provided
to CNC to facilitate said needs; and
WHEREAS, CNC is willing to reimburse CTI for the costs and related
expenses, including administration of planning and implementing POPS, assisting
network operations, implementing network improvements, including expanding
capacity, and opening "Virtual Local Access" calling areas on the terms and
conditions as herein provided; and
WHEREAS, CNC is also willing to compensate CTI's employees and principals
by granting to certain employees and principals of CTI options to purchase
shares of stock of CNC on the terms and conditions herein provided.
NOW, THEREFORE, in consideration of the respective covenants and agreements
of the parties contained herein, the parties hereto agree as follows.
DEFINITIONS
-----------
For purposes of this agreement, certain words and phrases are defined as
follows. These definitions do not define the obligations of the parties and are
only provided to assist the parties in understanding the contract.
(a) POP: "Point of Presence" is a local access network node on a network.
-2-
<PAGE>
(b) Staff Month: One calendar month of staff time including sick time,
weekends, holidays and vacation time. There are 12 such periods in each
calendar year.
(c) Loaned Employee: An employee or principal of CTI, the services of which
are utilized by CNC to facilitate the goals and purposes of this contract.
(d) "Local Access Network Engineering and Design Services" and "Local
Access Network Design and Analysis": The modeling of traffic patterns and
expenses to determine the most effective method for expanding and modifying a
network's dial-in access nodes.
(e) Network Expansion Plan, Network Operations Plan and Software
Development Plan: A series of mutually agreed upon objectives and goals that
are exhibits to this contract.
(f) Existing POP Site Contract: The existing location management contract
between CNC and CTI, titled Collocations Services Agreement, dated November 1,
1994, and attached as an exhibit to this contract.
(g) "Stretch" or "Performance" Objectives: A series of mutually agreed
upon objectives and goals that are required to be aspired to by CTI, but the
full performance of which is not warranted or guaranteed by CTI.
(h) Reasonably Attainable: Tasks that could be completed by a group of
similar size and experienced individuals with the same capital flexibility
allowed by CNC. Additionally, the sum total of activities must also be able to
be completed by the group.
(i) Public Offering: The initial offering of CNC stock to the public at
large, pursuant to SEC regulations. This is meant to be differentiated from a
private placement to qualified investors.
(j) Provisioning: The process of contracting for the physical facility
where a POP will be located and coordinating the telephone and other equipment
orders necessary to bring this site live or into production use by the network.
(k) Co-locate: The ability of CTI to place equipment on a POP site which
is owned by CNC. The concept being that both organizations can utilize the
space which is owned or leased by CNC.
-3-
<PAGE>
1. CTI'S RESPONSIBILITIES AND OBJECTIVES
-------------------------------------
LOANED EMPLOYEES - ADDITIONAL RESPONSIBILITIES
(a) CTI hereby agrees to use its best efforts to provide certain key
employees and principals of CTI, whose names are set forth on Exhibit A hereto
(the "Loaned Employees"), to perform functions for CNC. The parties agree that
CTI will provide 180 Staff Months of employee service over the two year term of
this agreement.
Although each Loaned Employee shall at all times remain an employee of CTI,
he or she will perform duties and be under the general direction of CNC for the
term of this Agreement, or until such Loaned Employee's assignment is otherwise
terminated as provided in Section 3 hereof. The Loaned Employees hereunder
shall be located in St. Louis, Missouri, unless noted in Exhibit A.
The parties hereto agree that the position, title and salary with respect
to each Loaned Employee are as set forth on Exhibit A hereto. Additionally, the
parties agree that Exhibit A(l), also attached, sets forth the Stock Options
which shall be granted to those Loaned Employees and certain other impacted
employees and principals of CTI as provided in Paragraph 4(f)(ii) of this
agreement. Exhibit A and A(l) hereto may be amended in writing from time to time
by the parties hereto to add Loaned Employees to fill positions provided for
under the Network Expansion Plan, Network Operations Plan and Interim Software
Development Plan previously submitted by CTI to CNC, and any other plans
submitted by CTI and agreed to by CNC. Copies of said Network Expansion Plan,
Network Operations Plan, and Interim Software Development Plan, marked Exhibits
C, E, and I respectively, are attached hereto and incorporated by reference as
if fully set out herein. Exhibits A and A(l) may also be amended to reflect the
termination of a Loaned Employee's assignment pursuant to Sections 3(a) and (c)
hereof, to replace a Loaned Employee whose assignment is terminated pursuant to
Section 3(e) of this Agreement, or to alter, amend or revise the title, salary
and duties of any Loaned Employee.
The parties agree that certain employees of CTI shall be located in St.
Louis, Missouri, and shall be responsible for the physical operation of the
network. At present there are fifteen (15) Network Operators. Twelve (12) of
said operators are CTI employees, the cost and expense of which are reimbursed
by CNC to CTI. Three (3) of said operators are CTI employees, the cost and
expense of which are borne by CTI.
CTI and CNC acknowledge that it is important for CNC to have long term
control and ownership of the Network Operations function being performed, in
part, by loaned CTI employees under this agreement. CTI and CNC further
acknowledge that CTI has current and prospective customers for which a 24x7x365
day network operations infrastructure is required. The parties further
acknowledge that in order to meet CNC's timetable for implementation of its new
Network Operations function, CTI was utilized to hire staff and implement the
technology necessary to provide CNC with a 24x7x365 day network operations
function. To accomplish this objective, CTI recruited a number of people who
had been identified as being members of the planned CTI network operations
center.
-4-
<PAGE>
In recognition of the facts that a) CTI had intended to build its own
network operations center around some of the core staff hired by CTI to support
CNC's requirements, b) CNC funded virtually all of the build out expense for the
Network Operations Center in St. Louis as well as the monthly operating expense
for this center, c) CNC requires the flexibility of controlling this function as
a core asset of CNC, and d) CTI desires the ability to service non-CNC customers
with its own dedicated staff plus some portion of the CNC staff, equipment,
software, and other resources funded by CNC on an "as available" basis, the
parties agree to the following terms with respect to the Network Operations
staff and resources that are covered by this Agreement.
1) CNC shall have the right to hire any or all of the personnel
designated as Network Operations staff during the term of this
Agreement under the same terms and conditions as it has for hiring any
other loaned employee under the terms of this Agreement, with the
following exception:
If CNC hires any or all of the Network Operations staff, then CNC
agrees to follow CTI to utilize this staff for a period of 9
months (Transition Period), unless reduced or extended by mutual
agreement, from the date of hire to support the operation of
other non-CNC networks so long as the effort devoted to the non-
CNC networks does not impair the quality of service or support
provided to CNC.
2) CTI will reimburse CNC for a proportionate share of the costs of a)
loaned CTI employees, b) CNC employees who have been converted from
CTI-to-CNC employment, and c) supporting resources that have been or
are being paid for by CNC when these people or supporting resources
are used to support non-CNC customer networks. The amount of
reimbursement will be computed as TCxAC1-(AC1 +C2):
NOTE: A negative result, product, or sum will not result in
payment to CTI.
TC = Monthly expense paid to CTI for Network Operations loaned
employees, plus Monthly expenses of any/all CNC hired Network
Operations employees, plus Monthly amortization/depreciation (48
months) of the Network Operations capital equipment, software,
and site preparation expenses paid for by CNC, plus any other
expenses associated with Network Operations paid for by CNC.
Cl = Total number of help/trouble calls taken by Network
Operations from Non-CNC customers.
-5-
<PAGE>
C2 = Total number of help/trouble calls taken by Network
Operations from CNC customers.
CP = Calls per employee (Total calls divided by total of Network
Operations personnel paid for by CTI and CNC).
NR = Number of CTI Network employees not reimbursed by CNC.
AC1 = Cl-(NRxCP).
3) During the Transition Period, CTI and CNC acknowledge that CNC
employees will be working side-by-side with CTI employees in St. Louis
and will be performing the same or similar tasks. Because of this, it
is in the best interests of both CTI and CNC that the employees be
treated in as equivalent a fashion as possible with respect to
compensation, benefits, and working hours/rules. CTI and CNC agree to
develop an appropriate employee transition plan upon hiring by CNC of
any St. Louis based Network Operations loaned employees to achieve
these objectives.
(b) Loaned Employees who will be made available to CNC will be
available only after they have executed Letters of Agreement in the form
attached hereto as Exhibit B, which form the parties hereto expressly approve.
(c) The parties hereby acknowledge and agree that Intellectual
Property Rights, as defined in Exhibit C, created, written, developed or made by
each Loaned Employee while performing services for CNC pursuant to this
Agreement shall be subject to the addendum to the Loaned Employee Letter of
Agreement (Exhibit B).
(d) In addition to the other terms and conditions of this contract,
CTI and CNC agree and stipulate, as further consideration for the promises made
by each party hereunder, as follows:
(1) CTI will use its best efforts to ensure the successful and
timely implementation of the Intuit contract. Additionally, CTI will use its
best efforts to ensure that the network performance achieved will be sufficient
to attract and retain new customers.
(2) CTI Principal Matthew W. Bross will be available on a part-
time basis to ensure overall management of the project. Matthew W. Bross will
contribute a minimum of 80% of his working time between the signing of this
document and the end of 1995, and then a mutually agreed upon level of effort
thereafter.
-6-
<PAGE>
(3) CTI will use its best efforts to ensure that a properly
trained network control center is developed in St. Louis, MO. This will include
developing the staffing requirements, interviewing and hiring the staff, and
training the staff as required.
(4) CTI will allow CNC to hire any of the CTI personnel
associated with this project that CNC wishes at any time during the project, as
set forth in Section 6 of this agreement.
(5) CTI will use its best efforts to assist CNC in locating other
revenue generating co-location network opportunities.
2. AGREEMENT SCOPE AND TERM
------------------------
The term of this agreement shall be for a period of twenty-four (24)
months, commencing November 1, 1995, and terminating October 31, 1997. The
parties agree that this agreement may be terminated prior to the expiration of
24 months by the mutual, written consent of both parties. Such 24 month period
referred to herein shall be referred to as the "Agreement Term". Said two (2)
year period shall automatically renew for an additional two-year period unless
either party shall give one-hundred twenty (120) days notice prior to the
expiration of this contract to the other party that said party does not wish to
extend the terms of this contract.
3. TERMINATION OF ASSIGNMENTS
--------------------------
A Loaned Employee's assignment to CNC may be terminated by CTI for the
following reasons:
(a) Termination of Employment with CTI. In the event a Loaned
----------------------------------
Employee's employment with CTI terminates for any reason, the Loaned Employee's
assignment to CNC hereunder shall also terminate. Nothing in this Agreement
shall require CTI to retain the Loaned Employee in its employment for any period
of time, and CTI shall be free to terminate any Loaned Employee at any time
during the term of this agreement.
(b) Payments Due Upon Termination of Loaned Employee's Assignment.
-------------------------------------------------------------
Upon the termination of the assignment of a Loaned Employee, CNC shall reimburse
CTI for any amount which had accrued and remains unpaid as of the date such
assignment terminated and for which CTI is entitled to reimbursement under
Section 4(f) below. CNC shall make any payments due under this subsection (b)
in accordance with said Section 4(f).
(c) Replacement of Loaned Employees. In the event a Loaned
-------------------------------
Employee's assignment is terminated pursuant to Section 3(a) above, unless the
position held by the Loaned Employee has been eliminated, CTI shall select a
replacement employee who will become a Loaned Employee for purposes of this
Agreement.
-7-
<PAGE>
4. CNC'S OBLIGATIONS - COMPENSATION, BENEFITS AND OTHER HUMAN RESOURCE
-------------------------------------------------------------------
PLANS AND PROGRAMS, REIMBURSEMENT OF EXPENSES, AND GRANT OF STOCK
-----------------------------------------------------------------
OPTIONS
-------
(a) Loaned Employees Generally. Except as otherwise set forth below
--------------------------
in Section 4(d), there shall be no change, from the date of this contract, in
the amount, terms and conditions of CTI's compensation, benefit and other Human
Resource ("HR") plans and programs as they relate to the Loaned Employees during
the term of this agreement without consultation with and the written consent of
CNC, except such changes as may be made in the ordinary course of business
consistent with CTI's past practices.
(b) Base Salary. CTI shall continue to compensate each of the Loaned
-----------
Employees for his or her services to CNC under the terms of this Agreement at
the rate per annum as specified in Exhibit A and as adjusted annually in
accordance with the next sentence, plus overtime and bonuses, if any, ("Base
Salary Rate"), less appropriate deductions (including withholding taxes and
deductions for participation in benefit programs), and in accordance with CTI's
general payroll practices. Any increase in such Base Salary Rate may be made at
the sole election of CTI, taking into account any recommendation of CNC made
from time to time, as appropriate.
(c) Benefits and Perquisites. Each Loaned Employee shall be eligible
------------------------
to continue in, or receive benefits under the benefits plans, arrangements,
practices, and programs made available from time to time to similarly situated
employees of CTI, subject to, and on a basis consistent with, the terms of such
plans, arrangements, practices, and programs.
(d) Incentive Compensation. Each Loaned Employee may be considered
----------------------
for participation in any incentive compensation, deferred compensation or bonus
arrangement, plan, policy and practice of CTI during the Agreement Term in the
sole discretion of CTI, subject to and on a basis consistent with the terms of
any such arrangement, plan, policy, and practice.
(e) Reimbursement of Loaned Employee Expenses. During the Agreement
-----------------------------------------
Tenn, CNC shall reimburse CTI for all reasonable ordinary and necessary out-of-
pocket employment related expenses of all Loaned Employees, including, but not
limited to travel, meals, lodging, mileage, moving expenses, telephone calls,
out-of-pocket advances made by the Loaned Employee on behalf of CNC, and any
other reasonable employment related expense, including any personal income tax
liability that is a direct result of relocating. This provision shall also
include all network operations employees hired in St. Louis, Missouri.
(f) Reimbursement of CTI, Share Options
-----------------------------------
(i) During the Agreement Term, CTI shall invoice CNC monthly for
one-twelfth (1/12) of the annual compensation, benefits and administrative costs
incurred by CTI with respect to the Loaned Employees, as determined by CTI, and
CNC shall pay such amount to CTI in accordance with its normal payment
practices, but in no event later than thirty (30) days following
-8-
<PAGE>
receipt of such invoice for such amount. Any discrepancies between amounts
billed and paid and actual costs incurred by CTI shall be reconciled and paid
promptly following the end of the relevant calendar year. CNC shall have the
right to audit, at CNC's expense, CTI's said costs and billings once annually in
connection with and at the time of such reconciliation. CNC shall be
responsible for reimbursement of the following: Loaned Employees' salaries,
FICA, state and federal unemployment tax, worker's compensation insurance
premiums and deductibles, medical/health insurance premiums and dental insurance
premiums, including coverage for spouses and family, long-term disability
insurance premiums, life insurance premiums, seminars and training costs related
to Network Operations, local and long distance travel expenses, pagers. CNC
shall be responsible for reimbursement of other costs or expenses which CNC
deems reasonable and necessary.
CNC shall also pay to CTI, as reimbursement, an amount equal to [*] of the
expenses set forth above, for reimbursement of the general administrative
expenses incurred by CTI in providing said Loaned Employees. Said [*] payment
shall also be made monthly on the same terms and conditions as set forth above,
and shall be based upon the amount billed each month by CTI to CNC.
CNC shall also reimburse CTI for the direct costs of Network Operation.
CNC shall reimburse CTI, on a monthly basis, for office rent, electricity,
telephone service, including base service and long distance, necessary office
furniture and equipment, ongoing network communications cost, software,
insurance, and any other direct, necessary expense.
(ii) CNC shall grant to certain employees and principals of CTI,
at CTI's direction,"options" to purchase Class A stock of CNC pursuant to Option
Agreements substantially in the form of Exhibit G hereto. CNC shall enter into
an Option Agreement with all recipients hereunder (optionees), in said form as
attached Exhibit G. The price, time of grant, number of shares, type of stock,
recipients of grants, and vesting of the Options shall be as follows:
(a) PRICE - The Options shall be granted to the recipients by CNC
-----
with an exercise price of Twenty-five cents ($.25) per share of
common stock.
(b) TIME OF GRANT - The Options shall be granted by CNC on the
-------------
date of execution of this contract, or within ten (10) days
thereafter.
(c) NUMBER OF SHARES - CNC shall grant to the designated
----------------
recipients Options to purchase a total of Nine Hundred Thousand
(900,000) shares of CNC Class A common stock. (The "Option
Shares"). CNC
- --------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-9-
<PAGE>
warrants and represents that it shall provide said 900,000 shares
to the Optionees under the agreement.
(d) TYPE OF STOCK - The Options will be to purchase Class A
-------------
common stock of CNC. CNC agrees to file, by the date the lock-up
period described in (e) below expires, a registration statement
on Form S-8 registering such shares, so that any such shares
shall be freely tradeable upon issuance which contain no
restrictions whatsoever restricting the sale of said stock on the
open market after such time as CNC makes an initial public
offering.
(e) RECIPIENTS OF GRANTS - The specific employees and principals
--------------------
of CTI to whom said Options shall be granted are set forth in
Exhibit A-l, attached hereto and incorporated by reference herein
and made a part of this contract. Said grants shall be made
directly to the designated recipients as set forth in said
Exhibit and shall be evidenced by an Option Agreement in CNC's
standard form. Each Optionee shall agree not to sell or
otherwise dispose of any shares issued upon exercise of the
Option for a period of up to 180 days following the effective
date of CNC's registration statement relating to CNC's initial
public offering, such period to be determined by CNC and the
underwriters. CNC warrants and represents that all other
employees who have been granted Options under the plan, Optionees
and stockholders of CNC stock are bound by a similar 180 day
provision. If CNC grants to any such employee Option holders,
the right to include shares issuable upon exercise of Option in a
registered offering (other than the Form S-8 registration
statements described in (d) above) prior to the effective date of
the Form S-8 registration statement to sell or dispose of any
portion of their shares during the period determined by CNC and
underwriters mentioned above, then the Optionees of CTI under
this agreement shall be granted the right to sell or dispose of
their shares in proportionate include in such registration the
same percentage of shares issuable upon exercise of the Options
equal to the percentage of shares held by other Optionees and
included in such registration amounts as
-10-
<PAGE>
compared to the total Option Shares issued on the effective date
of CNC's registration statement.
(f) VESTING - Subject to the provisions of Section 5, the Options
---------
will vest, and may be exercised, in whole or in part, as follows:
(1) Seven Hundred Thousand (700,000) of said Option Shares
shall vest ratably over twelve (12) months, at the end of
each month based on the Optionee's continued employment with
CTI, and
(2) Two Hundred Thousand (200,000) of the Options, to be
referred to as the "Performance Shares", will vest ratably
over twelve (12) months at the end of each month subject to
repurchase at the exercise price by CNC in the event certain
performance objectives set forth in Exhibit D have not been
achieved within the twelve (12) month period. If at the end
of said twelve (12) month period, said performance
objectives have not been substantially completed,
unexercised options to purchase Performance Shares shall
terminate and any Performance Shares acquired on exercise of
an Option shall be sold back to CNC by the person exercising
such Options at the price of Twenty-five cents ($.25) per
share.
(3) Regardless of any provision herein, all Options shall
fully vest on the date of an Initial Public Offering of
stock by CNC.
(4) In the event CNC shall merge with any entity, or shall
be acquired by any entity, or in the event of a change in
control or ownership of CNC, all
-11-
<PAGE>
Options granted hereunder shall become fully vested on date
said merger, acquisition, or changes in control or ownership
becomes effective. In the event CNC shall not be the
survivor of any merger, acquisition, change in ownership or
change in control, then CNC hereby agrees to place a
provision in its merger or acquisition contract with the
acquiring or surviving entity which requires the acquiring
or surviving entity either to assume such option or to
compensate the optionees under this agreement for the value
of the stock of CNC which the optionees would have received
under this agreement. If the Option is not assumed, the
provision shall require the surviving or acquiring entity to
pay to the respective optionees, in cash, or in the form of
stock of the acquiring or surviving entity, an amount equal
to the amount which the total, vested shares of CNC stock
held by all optionees hereunder represent in relation to the
total price paid for CNC by any acquiring or surviving
entity on the date CNC is acquired, merges with another
entity, or undergoes a change in control or ownership. To
illustrate, all parties agree that the following example
accurately expresses the intention of this provision in the
event the Options are not assumed:
In the event CNC is acquired by, or merges with another entity, and the
total price paid by the acquiring or surviving entity to obtain CNC,
considering all forms of compensation, is "X', and further considering that
all the vested stock options of CNC held by all optionees hereunder on the
date of the acquisition or merger is "Y", and further considering that if
"Y" represents "Z" percentage of the total value of all stock of CNC which
is valued at "X", then the acquiring or surviving entity shall pay to the
optionees hereunder an amount equal to "Z" of the purchase price of CNC
("X"), in amounts as directed by CTI. Said payment shall be in the form of
stock of the acquiring or surviving entity or in the form of cash, said
form of payment to be chosen by the acquiring or surviving entity. If stock
is chosen as a method of payment, said stock shall
-12-
<PAGE>
be Class A common stock with no restrictions on the sale or transfer of
said stock whatsoever other than restrictions which would apply to all
shareholders of CNC receiving stock in the merger.
Said provision, as illustrated above, shall be a part of any acquisition or
merger contract with any acquiring or surviving entity entered into by CNC.
Furthermore, CTI shall have the right to review the terms of said provision
prior to the execution of the acquisition or merger contract by CNC.
(5) Attached hereto as Schedule I and incorporated herein by
reference are certain additional covenants and agreements of
the parties with respect to the grant and exercise of
Options hereunder.
(iii) Representation Concerning Capital Structure of CNC,
---------------------------------------------------
Financial Statements. CNC has delivered to CTI the [consolidated] balance sheet
- --------------------
of CNC [and its subsidiaries] as of November 30, 1995, and the related
[consolidated] statement of income for the 11 months then ended, and for CNC's
most recent fiscal year ended December 31, 1994. CNC represents that the
authorized capital stock of CNC consists of 100, 150,358 shares of common stock,
par value one (1) cent per share [and 70 million shares of preferred stock, par
value one (1) cent per share], of which 32,801,220 shares [and 13,596,788
shares, respectively,] have been issued and are outstanding. CNC has not
granted any options, warrants or other rights to acquire shares of capital stock
or other equity securities of CNC, whether upon conversion of other securities
or otherwise, except as disclosed on Schedule 2 hereto (which Schedule includes
information concerning exercise price, conversion ratio and other information
sufficient to disclose the value to be received by CNC upon exercise of such
options, warrants or rights or conversion of such convertible securities).
5. OPTION TERMS AND PROVISIONS
---------------------------
(a) Subject to the terms of Section 5(c), the Options may be
exercised only by the optionee during the period ending 10 years following the
date of this contract. The Options may be exercised, in whole or in part, by
written notice (in the form attached as Exhibit F) stating the election to
exercise the Option and the total number of shares under the Option being
exercised. Such notice of exercise shall be signed by optionee and delivered,
accompanied by payment of the exercise price, to CNC. The Options shall be
deemed exercised upon receipt by CNC of such written notice accompanied by the
exercise price. For income tax purposes, shares of common Stock issued upon
exercise of the Options shall be considered transferred on the date of exercise
of the Option. If CNC reasonably determines that it is required to pay
withholding taxes as a result of any exercise, the Optionee shall be required to
pay to CNC the amount of such withholding taxes as a condition to the Optionee's
right to exercise the Option.
-13-
<PAGE>
(b) Payment of the exercise price shall be made by any of the
following, or a combination thereof, at the election of the holder of the
Option: (i) cash, (ii) personal check, (iii)cashier's check, or (iv) money
order.
(c) The Options shall not be transferable.
(d) In the event of the death of any recipient to whom an Option
shall have been transferred, the Option may be exercised at any time within 12
months following the date of the recipient's death (but in no event later than
10 years after the date of this contract), by such recipient's estate or by his
or her heirs or legatees. Said Option shall cease to vest in the event of death
of any recipient.
(e) In the event of termination of employment of a recipient, to
whom an Option Share shall have been transferred, as a result of his or her
disability, such recipient may, but only within 12 months of such termination
(and in no event later than 10 years after the date hereof), exercise the Option
to the extent the Option is vested as of the termination date.
6. CHANGE IN STATUS OF LOANED EMPLOYEE
-----------------------------------
(a) At any time during the Agreement Term or upon termination of
this Agreement, CNC may, at its sole option, offer permanent employment to any
Loaned Employee, upon terms and conditions agreed upon by CNC and such Loaned
Employee. If such Loaned Employee accepts CNC's offer of employment, such Loaned
Employee's employment with CTI shall terminate on a date mutually agreed upon by
CTI and the Loaned Employee and CTI shall pay the terminating Loaned Employee
all salaries and benefits due through such termination date (which amounts shall
be reimbursed by CNC pursuant to Section 4(f) hereof). In the event a Loaned
Employee shall become a CNC employee as provided hereunder, any time said
employee spends during the term of this contract working for CNC toward the
goals of CNC under this contract shall be counted as "staff months" in favor of
CTI in calculating the "Staff Months" pursuant to Section l(a) of this contract.
Additionally, all time spent by Shelley Mortimer, Timothy Hood, and Tony Zeis
toward the goals of this contract shall also be counted toward the "Staff
Months" regardless of the fact that said persons are employees of CNC.
(b) If an Optionee becomes an employee of CNC, his or her Options
shall continue to vest according to the terms herein.
If the employee later returns to the employment of CTI during the term of
this contract, the previous change in employment status shall not affect the
vesting rights of that employee with respect to the Options, and he or she shall
be treated as if he or she had never left CTI's employ for stock vesting
purposes.
-14-
<PAGE>
7. AGENCY AND AUTHORITY
--------------------
The Loaned Employees shall remain, and shall be advised by the parties that
they will at all times during the Agreement Term, continue as employees of CTI;
provided, that notwithstanding anything to the contrary contained in this
Agreement, CTI or any Loaned Employee may, at any time, with or without cause,
terminate employment of such Loaned Employee with CTI. CNC shall be responsible
for directing the Loaned Employees' performance of duties associated with the
position titles set forth on Exhibit A hereto. The parties hereto agree that
until further agreement, the Loaned Employees are not, nor will they become,
employees of CNC for tax purposes or any other purpose whatsoever. The Loaned
Employees have no authority to make commitments or enter into contracts on
behalf of, or to bind or otherwise obligate CNC in any matter whatsoever, except
as expressly provided herein.
8. MODIFICATION AND EXTENSION OF COLLOCATIONS SERVICES AGREEMENT
-------------------------------------------------------------
(a) The parties hereto expressly acknowledge that CTI and CNC,
formerly known as Concentric Research Corporation, with its principal offices at
10590 N. Tantau Avenue, Cupertino, CA 95014, have previously entered into a
certain contract titled "Collocations Services Agreement", marked Exhibit H and
attached hereto, under which CTI provides to CNC certain services, including but
not limited to, the provisioning of Points of Presence, modeling, providing
local access network design and analysis and various other functions and
services. As further and additional consideration for CNC and CTI for their
promises made under this agreement, CNC and CTI agree and stipulate as follows
with respect to said "Collocations Services Agreement," and the terms thereof:
(1) Said "Collocations Services Agreement" shall be extended for
an additional term of two years from the date of execution of
this contract. At the termination of this agreement, CTI will
assign its rights to the POPS under said contract to CNC. CNC
may close or acquire any POP during the two year term by paying
the net present value (at prime) of the remaining CTI profit on
any or all POPS.
(2) CNC will pay the amounts set forth in the original agreement
based upon a minimum of one hundred (100) POP sites at all times
during the additional two year period.
-15-
<PAGE>
(3) CTI will continue to be responsible for provisioning new POP
sites for CNC and CTI will be paid [*] for each installation.
All direct costs of any new POP shall be paid by CNC.
(4) CTI will continue to provide local access network design and
analysis for CNC at the cost to CNC of [*] per POP, per month.
In calculating this number, all POPS under the direct control of
CNC will be utilized.
(5) CTI shall be allowed to co-locate equipment in the CNC POPS'
controlled by CNC based upon a percentage of floor space
utilized. Such cost to CTI to be that percentage of the cost plus
[*] of the fees paid by such party to CTI for square footage
in the POP locations, in excess of the cost of said square
footage.
9. INDEMNIFICATION
---------------
(a) In the event of any liability, claim or cause of action of
any kind against CNC arising out of any action or inaction (or alleged action or
inaction) of a Loaned Employee, which is outside the scope of such employee's
services for CNC or as contemplated hereunder, or arising out of any action or
inaction (or alleged action or inaction) of a Loaned Employee which is outside
of the scope of such employee's services for CTI, CTI shall indemnify CNC from
and against any and all losses, damages, claims, penalties, liabilities or
expenses (including reasonable attorneys' fees and expenses) ("Losses') incurred
by CNC. CTI shall be informed immediately of any alleged action or inaction by
any CTI employee which might give rise to a claim for losses by CNC.
(b) In the event of any claim or cause of action of any kind
against CTI by any Loaned Employee for violation of any employment law, the
Americans with Disabilities Act, the Family and Medical Leave Act, or any act or
law designed to protect the rights of employees, arising out of any action or
inaction (or alleged action or inaction) of CNC or any of its employees,
principals, agents, or representatives, CNC shall indemnify CTI from and against
any and all losses or costs, damages, claims, penalties, liabilities, or
expenses (including reasonable attorneys' fees and expenses).
(c) CTI shall indemnify and hold harmless CNC from and against
any and all Losses incurred by CNC arising out of, or resulting from or relating
to any action by CTI relating to termination, salary continuation, indemnity,
notice pay or severance pay or benefits payable by
- -------------------------
[*]Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
-16-
<PAGE>
reason of termination of employment of any Loaned Employee with CTI or
termination of the assignment of any Loaned Employee with CNC, unless said claim
or loss is the result of a reduction in force for employees specifically,.hired
at the request of CNC, or results from termination because such employee is
hired by CNC.
10. SUCCESSORS AND ASSIGNS
----------------------
This Agreement and all rights hereunder shall inure to the benefit of and
be enforceable by each party's successors and permitted assigns. No party may
assign or transfer this Agreement or any of its rights or obligations hereunder
without the prior written consent of the other parties except as specifically
provided herein.
11. GOVERNING LAW AND JURISDICTION
------------------------------
This Agreement shall be governed by, and construed in accordance with, the
laws of California, without regard to the principles of conflicts of laws
thereof.
12. NOTICES
-------
For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given or delivered upon receipt after personal delivery or mailing by
registered mail, return receipt requested, postage prepaid, address as follows:
(a) If to CTI:
Critical Technologies Incorporated
3324 Hollenberg Drive
Bridgeton, MO 63044
Attention: Paul Noblett
Phone:
Facsimile:
with a copy to:
Niedner, Bodeux, Huff and Lenox
Attention: Timothy R. Huff
131 Jefferson Street
St. Charles, MO 63301
Phone:
Facsimile:
-17-
<PAGE>
(b) If to CNC:
Concentric Network Corporation
10590 N. Tantau Avenue
Cupertino, CA 95014
Attention: Chief Financial Officer
Phone: (408) 342-2800
Facsimile: (408) 342-2810
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Robert T. Clarkson
Facsimile: (415) 493-6811
or to such other address as any party may have furnished to the other in writing
in accordance herewith.
13. AMENDMENT
---------
No amendment or modification of this Agreement or any of its provisions
shall be binding upon any party unless made in Writing and signed by all of the
parties hereto.
14. VALIDITY
--------
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
15. WAIVER
------
The performance of any condition or obligation imposed hereunder upon any
party hereto may be waived only upon the written consent of the parties hereto.
Such waiver shall be limited to the terms thereof and shall not constitute a
waiver of any condition or obligation of the other party under this Agreement.
Any failure by any party to this Agreement to enforce any provision shall not
constitute a waiver of that or any other provision of this Agreement.
-18-
<PAGE>
16. THIRD PARTY RIGHTS
------------------
This Agreement shall not inure to the benefit of any third party other than
CTI and CNC and valid successors or assigns of a party hereto or thereto, with
the exception that CTI Loaned Employees and recipients of Option Share grants
provided herein shall be "third party beneficiaries" of this contract and shall
have all legal rights incident thereto, including the right of specific
performance of this contract.
17. REMEDIES UPON DEFAULT
---------------------
(a) The parties agree that they will attempt to resolve disputes
arising in connection with this Agreement, including with respect to achievement
of Performance Objectives set forth in Exhibit D, through good faith
consultation. In the event of a default by either party, the other party shall
notify the defaulting party, in writing, of the default, setting forth the
nature thereof. Said notice shall be mailed to the company at the designated
address for notices as provided in Paragraph 11 above. The defaulting party
shall have thirty (30) days from the date of the notice to cure said defect or
default. In the event said defect or default is not cured within thirty (30)
days as provided herein, the non-defaulting party may declare this contract in
breach and may pursue any legal or equitable remedy, including specific
performance. The parties agree that in the event of such an action, the losing
party shall be responsible for the payment of all costs, including the
reasonable attorney's fees of the prevailing party.
18. HEADINGS
--------
The heading references are for convenience purposes only and do not have
any meaning with respect to the terms and conditions of this Agreement.
19. ENTIRE AGREEMENT
----------------
This contract, consisting of pages, and all exhibits, being Exhibits
through, constitute the entire agreement of the parties, and no representation
or agreement, oral or otherwise, not contained herein, shall be binding upon the
parties. This agreement shall bind the heirs, assigns and successors of CNC and
CTI.
20. FORCE MAJEURE
-------------
Neither CNC or CTI shall be considered in default in performance of their
obligations hereunder if performance of such obligations is prevented or delayed
by acts of God or government, labor disputes, failure or delay of
transportation, or by vendors or subcontractors, or any other similar cause or
causes beyond the reasonable control of either party. Time of performance of
either party's obligations hereunder shall be extended by the time period
reasonably necessary to overcome the effects of such force majeure occurrences.
-19-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the date set forth below.
<TABLE>
<CAPTION>
CONCENTRIC NETWORK CRITICAL TECHNOLOGIES
CORPORATION INCORPORATED
<S> <C>
By: /s/ John Peters By: /s/ Matthew W. Bross
--------------------------- -----------------------------
Name: John Peters Name: Matthew W. Bross
------------------------- ---------------------------
Title: President, NSD Title: Vice-President
------------------------ --------------------------
</TABLE>
<PAGE>
LIST OF EXHIBITS AND SCHEDULES TO EMPLOYEE
------------------------------------------
SERVICES AND STAFFING AGREEMENT
-------------------------------
EXHIBITS
--------
<TABLE>
<S> <C>
A. List of Loaned Employees
A(1). Stock Grant Recipients and Amounts
B. Employee Letter of Agreement
B.(addendum) Confidentiality Agreement
C. Network Expansion Plan
D. Performance (Stretch) Objectives
E. Network Operations Plan
F. Form for Notice of Election of Exercise of Grant Option
G. Form of Option Agreement
H. Collocations Services Agreement
I. Software Development Plan
</TABLE>
SCHEDULES
---------
1. Additional Covenants and Agreements regarding the grant and exercise
of Option Shares.
2. Disclosure by CNC of grants of other options, warrants or other rights
to acquire shares of CNC stock or other equity securities of CNC.
<PAGE>
[***] EXHIBIT A
- -------------------------
[***]Certain information in this exhibit has been omitted and filed
separately with the Securities and Exchange Commission. A total of 3 pages
containing such information has been omitted from this exhibit. Confidential
treatment has been requested with respect to the omitted portions.
<PAGE>
"EXHIBIT B (ADDENDUM)"
CONFIDENTIALITY, NON-COMPETITION, AND COPYRIGHT AGREEMENT
THIS AGREEMENT is made as of the _____ day of __________, 1995, between
CONCENTRIC RESEARCH CORPORATION, a Florida corporation (hereinafter referred to
as "CRC"), and __________________________ (hereinafter referred to as
"Employee").
WITNESSETH:
WHEREAS, CRC owns and operates the Concentric Research Information System
("CRIS"), a computerized, on-line interactive network that provides information,
entertainment and telecommunication services; and
WHEREAS, in connection therewith CRC develops proprietary computer software
and uses proprietary know-how in such business, and now has and expects to
develop confidential information relating thereto and in connection with other
software products or services CRC develops or offers in the future; and
WHEREAS, the parties hereto desire to set forth certain agreements and
understandings regarding ownership of intellectual property by CRC and
confidentiality and non-competition on the party of Employee, which agreements
and understandings are for the benefit of both CRC and Employee.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
herein contained, and of other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
1. Confidential Information.
------------------------
a. The term "Confidential Information" shall refer to any
information, not generally known in the relevant trade or industry, which was
obtained from CRC, or which was learned, discovered, developed, conceived,
originated or prepared during or as a result of the performance hereunder on
behalf of CRC and which falls within the following general categories:
i. information relating to trade secrets of CRC;
ii. information relating to existing or contemplated products,
services, technology, designs, processes, formulae; computer
systems, computer software, algorithms and research or
developments of CRC;
<PAGE>
iii. information relating to business plans, sale or marketing methods,
methods of doing business, customer lists, customer usages and/or
requirements, names of sales representatives, and vendor and
supplier information or CRC;
iv. information relating to proprietary computer software not
generally known to the public and related unpublished
documentation of proprietary computer programs;
v. information relating to new developments;
vi. any other information that CRC may wish to protect by patent,
copyright or by keeping it secret and confidential.
b. Employee agrees not to divulge to anyone, at any time during or
after the termination of his employment by CRC, any Confidential Information or
any other trade secrets of CRC. Upon the termination of his employment by CRC,
Employee agrees to deliver up to CRC all notebooks, computer files and any other
data in any tangible form whatsoever in relation thereto, containing, embodying
or evidencing any of the Confidential Information described herein.
2. Non-Competition Covenant.
------------------------
a. The term "Competitor" shall refer to any person, firm,
corporation, partnership or other business entity of any type whatsoever engaged
in or about to become engaged in the production, licensing, sale or marketing of
any product or service:
i. which is similar to or competitive with CRIS or CRC's proprietary
computer software or any product or service of CRC with which
Employee has been directly concerned through his work with CRC
during the preceding two (2) years;
ii. with respect to which the Employee has acquired Confidential
Information.
b. As material inducement to CRC's willingness to employ Employee,
Employee covenants and agrees that, for a period of two years following the
termination of his employment, whether such termination be with or without
cause, he shall not enter the employ of any Competitor, nor himself engage
during such period, directly or indirectly as principal, agent, officer,
employee or otherwise, in any such business in competition with CRC, within any
area in which CRC is itself carrying on business at the time of such
termination. Employee also covenants and agrees that for a period of two years
following termination of his employment, he shall not recruit or attempt to
recruit any of CRC's other employees, or to contact either directly or
indirectly, any client of CRC for the purpose of soliciting such client from
CRC.
3. Copyright Assignment. Employee hereby acknowledges that all works,
--------------------
including all program code and supporting documentation and all other
copyrightable materials, written in whole
-2-
<PAGE>
or in part by Employee, shall be deemed to be works made for hire. To the extent
that any such writing may not, by operation of law, be works make for hire,
Employee hereby assigns to CRC the ownership of copyright in such works, whether
published or unpublished. Employee agrees to give CRC or its designees all
assistance reasonably required to perfect such rights, including but not limited
to, the identification of the works and supporting documentation and the
execution of any instruments required to register copyrights.
4. Remedies. The parties hereto recognize that the services to be
--------
performed hereunder by Employee are special and unique. It is understood and
agreed that Employee's disclosure of Confidential Information, breach of the
Non-Competition Covenant, and/or breach of the Copyright Assignment, may give
rise to irreparable injury to CRC, which may not be adequately compensated by
damages. Accordingly, in the event of Employee's breach or threatened breach of
this Agreement, CRC shall be entitled to preliminary and permanent injunctive
relief, without bond, restraining Employee from disclosing, in whole or in part,
the Confidential Information protected by this Agreement, or from rendering any
services to any person, firm, corporation, association, or other entity to whom
such Confidential Information, in whole or in part, has been disclosed or is
threatened to be disclosed, or from marketing, selling, or otherwise exercising
proprietary rights to copyrightable material referenced in this Agreement.
Nothing herein shall be construed as prohibiting CRC from pursing any other
recovery of damages. These undertakings shall survive the termination or
cancellation of this Agreement or of Employee's employment with CRC.
5. Miscellaneous Provisions.
------------------------
a. Employee acknowledges that he has no employment agreement of any
type whatsoever, whether oral, written, expressed, or implied, that would alter
the "at will" status of Employee's employment with CRC. Both CRC and Employee
therefore have the right to terminate this employment relationship at any time
for any reason, with no obligation to provide advance notice of such termination
to the other party. Employee hereby acknowledges receipt of the CRC employment
manual and agrees that CRC shall have the unilateral right to modify its
employment policies therein described at any time. Employee further agrees and
acknowledges that these employment policies or other similar provisions are
reasonable and agrees not to contest them by way of unjust dismissal proceedings
otherwise. By signing this Agreement, however, Employee is not agreeing to forgo
or waive any rights that he has or may have under federal, state and local
employment laws or regulation.
b. Employee represents to CRC, which relies on this representation,
that Employee is free to enter into this Agreement in that he is not under any
restrictions from a former employer or business that would preclude him from
making these arrangements. Employee acknowledges that CRC does not want him to
disclose to it any confidential information that he may have obtained from a
former employer.
c. This Agreement will be binding upon, shall inure to the benefit
of, CRC and Employee, and their respective heirs, personal and legal
representatives, successors and assigns.
-3-
<PAGE>
d. This Agreement contains the entire agreement and understanding
between the parties hereto, and no modification hereof shall be binding unless
in writing and signed by the parties hereto.
e. The provisions of this Agreement shall be deemed severable, and
the invalidity or unenforceability of any provision shall not effect the
validity or enforceability of the other provisions hereof.
f. This Agreement is executed in, and it is the intention of the
parties hereto that it shall be governed by the law of the State of Michigan.
IN WITNESS WHEREOF, CRC has caused this Agreement to be executed by a duly
authorized officer and Employee has duly executed this Agreement on the date and
year above written.
CONCENTRIC RESEARCH CORPORATION, EMPLOYEE/CONTRACTOR:
a Florida Corporation
By:____________________________ ___________________________
Witness:_______________________
Witness:_______________________
-4-
<PAGE>
EXHIBIT B
Loaned Employee Letter of Agreement
Concentric Network Corporation
Critical Technologies Incorporated
c/o CNC
Re: Conditions of Employment While Performing Services
Concentric Network Corporation
Dear __________:
I have agreed, as of ____________, 1995, to accept an assignment to
Concentric Network Corporation ("CNC") to perform services for the Concentric
Network Corporation in the capacity of ____________. I understand that during
the period in which I am performing services for CNC, I will still be an active
full-time employee of Critical Technologies Incorporated ("CTI"). As such, I
will be entitled to receive and be subject to the CTI compensation, benefits,
and other Human Resources plans and programs. I will not be considered an
employee of CNC and I further agree that I will not make any claim of
entitlement to any compensation, benefits or other Human Resources plans and
programs of CNC, if any.
I further agree that any intellectual property rights as defined in the
addendum to this employee loan letter of agreement, created, written, developed
or made by me while performing services for CNC shall be and shall continue to
be the property of CTI, as set forth in the addendum to this letter.
I understand and agree that neither the provisions of my assignment to CNC
nor this Letter of Agreement constitute a contract of employment or set forth
employment terms between me and CTI. I understand that my employment
relationship with CTI is by mutual consent (employment at will) and that I have
the right at any time to terminate my employment for any reason. I also
understand that CTI reserves the right to terminate my employment on the same
basis.
Sincerely,
________________________________________
-5-
<PAGE>
EXHIBIT C
CONCENTRIC RESEARCH CORPORATION
CRC 1995 EXPANSION PLAN
<PAGE>
SCOPE - EXPANSION PLAN
- --------------------------------------------------------------------------------
MANAGE THE SUCCESSFUL IMPLEMENTATION OF THE 1995 NETWORK EXPANSION UPGRADES.
PROVIDE THE BASIS FOR MANAGEMENT OF FUTURE NETWORK EXPANSION.
. Implement Xylogics terminal server technology
. Install V.34 technology
. Immediately bring all T1 facilities to full utilization
. Implement CMS diagnostic upgrade
. Create basic statistics document
. Ongoing capacity requirement (i.e. Affinity Programs)
. Create change control procedures
<PAGE>
OBJECTIVES - EXPANSION PLAN
- --------------------------------------------------------------------------------
. Formulate all current and future (1995) capacity data
. Model capacity data against current network provisioning
. Develop budget requirements
. Procure all hardware, software and services
. Manage the implementation and capacity upgrades
. Quality assurance testing
. Document process and solutions
<PAGE>
METHODOLOGY - EXPANSION PLAN
- --------------------------------------------------------------------------------
The Rapid Expansion of existing network facilities is possible due to the
immediate availability of all required components.
. AT&T Frame-Relay services have been expanded to 600% of last
year's capacity. This allows for rapid acquisition of additional
resources.
. Frame Ports
. Frame Circuits
. Frame Committed Information Rates
. Racal-Datacom product availability is excellent for the specific
networking components required in the expansion plan.
. Networking Engineering and Operations personnel are well versed
in the coordination of the required LEC facilities. POP
locations are all currently provisioned with T1 facilities
capable of immediate expansion.
<PAGE>
METHODOLOGY - EXPANSION PLAN
- --------------------------------------------------------------------------------
. CRC and Vendor(s) Organizational Chart
Functional Responsibilities
. Existing Statistics/Hardware
. Future Documentation Implementation
Plan
. Network diagrams Define
. Budget approval Requirements
. Define management requirements Define
. Document process and findings Change Control
. Quality Assurance review
<PAGE>
[This page intentionally left blank]
<PAGE>
METHODOLOGY - EXPANSION PLAN
. Deliver Requirements to Vendors Hardware
Procurement Procedures
Document
. Project Management Begin Phased
Installation
Close Project
. Quality Assurance Review Network
Testing
. As Built Network Documentation Network
Documentation
<PAGE>
METHODOLOGY - EXPANSION PLAN
DEVELOP & DRIVE THE CAPACITY PLANNING METHODOLOGY AND PERFORM THE FOLLOWING
ACTIVITIES TO ENSURE NETWORK PERFORMANCE.
. Define the hardware/ statistics report formatting
. Coordinating all activities with associated vendors
. Create change control procedures
. Define and document the detailed requirements
. Develop working design document
. Create detailed port cost contribution
. Manage to predictable implementation plan
. Provide detailed progress updates to mangement and the board as required
. Overall project management
This approach will ensure that ongoing requirements be handled in a timely,
cost effective manner insuring superior customer support.
<PAGE>
SCOPE - NETWORK EVOLUTION PLAN
. FINALIZE THE NETWORK RFP PROCESS AND WORKING NETWORK DESIGN. THIS
EFFORT WILL ENSURE COMPETITIVE COST STRUCTURES EXIST FOR THE NETWORK.
WHILE ENSURING HIGH CAPACITY, LOW LATENCY NETWORK PERFORMANCE
. Methodology and approach
. Vendor(s) selection
. Working network design
. Manage the implementation and migration
. Document process and solutions
<PAGE>
OBJECTIVES - NETWORK EVOLUTION PLAN
. Rapid completion of RFP process
. Provide a working network design that meets tactical and strategic
requirements
. Facilitate vendor "Proof Of Concept" against network design
. Define and analyze vendor pilot program(s)
. Implement final solution
<PAGE>
[This page intentionally left blank]
<PAGE>
METHODOLOGY - PHASE 1 NETWORK EVOLUTION PLAN
. Complete Requires
Document
. Complete Solicit
Vendors
Select Finalists
. Complete Vendor
Responses
. Define scoring criteria
. Determine selection committee Vendor
. Evaluate vendors Scoring
. Document process and findings
. Quality assurance review
. Management update
<PAGE>
METHODOLOGY - PHASE 2 NETWORK EVOLUTION PLAN
. Develop design vision Finalists
. Update detailed requirements Requirements Develop
. Present requirements to vendors Pilot Plan
. Joint working design Conceptual
Designs Pilot
Solution(s)
. Vendor(s) proof of concept
. Vendor(s) presentations Vendor Proof
of Concept
Evaluate
Pilots
. Define scoring criteria
. Evaluate vendors Vendor
. Document process and findings Scoring
. Quality assurance review
. Management update
<PAGE>
METHODOLOGY - NETWORK EVOLUTION PLAN
FINAL WORKING DESIGNS AND PROOF OF CONCEPT WILL ENCOMPASS DETAILS RELATED TO:
. Cost
. Functionality
. Reliability
. Performance
. Management Capabilities
This approach ensures that a working design can be implemented for a "Leading
Edge" network solution prior to large financial commitments.
<PAGE>
METHODOLOGY - NETWORK EVOLUTION PLAN
MANAGE THE METHODOLOGY AND PERFORM THE FOLLOWING ACTIVITIES TO ENSURE ITS
SUCCESS.
. Define the scoring matrix
. Manage the selection committee
. Document phased results
. Define and document the detailed requirements
. Develop working design document
. Define the pilot and facilitate vendor implementation
. Overall project management
<PAGE>
EXHIBIT "D"
Concentric Network Corporation and Critical Technologies, Inc.
PERFORMANCE OBJECTIVES
1. Develop and establish the network control center in Critical's St. Louis
facility.
2. Design, build and implement the seven (7) Canadian POP sites.
3. Rapidly harden the Bay City POP site.
4. Rapidly bring live seventy-one (71) local markets utilizing the LA (Virtual
Local Access) techniques.
5. Develop and implement a plan to segregate the CNC host systems.
6. Rapidly develop the Intuit Registration Server.
7. Deploy a total of [*] local and virtual access ports at a
targeted average cost/port of [*].
8. Successfully demonstrate the new network architecture. Included in this
demonstration will be the attainment of the following objectives:
a) A latency factor of not more than _______. (to be determined by
2/10/96)
b) A through-put purport of _________. (to be determined by 2/10/96)
c) The ability to reconfigure inbound port on a call-by-call basis.
d) The ability to provide best-fit routing on the back bone network.
9. Develop a field trial of a BRI ISDN connectivity.
10. Develop a monthly network management report.
11. Develop and implement on-line credit card authorization.
12. Implement the Portal Back Office System or an equivalent next generation
"back office system".
13. Implement a proactive capacity management system that ensures we maintain a
mutually agreeable target grade-of-service.
- -----------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT E
CONCENTRIC RESEARCH CORPORATION
PLAN FOR
NETWORK OPERATIONS
<PAGE>
NETWORK OPERATIONS
MISSION STATEMENT
Provide convenient and cost effective
operations of customer networks while
controlling the rising and hidden costs
of network management and support
[LOGO APPEARS HERE]
<PAGE>
[LOGO APPEARS HERE]
OBJECTIVE
Pro-actively monitor and resolve network
conditions before they negatively affect
network users
<PAGE>
NETWORK OPERATIONS
SCOPE
DEVICE MANAGEMENT PHYSICAL MANAGEMENT
. Logical & Physical . Moves/Adds/Changes
. LAN & WAN
. Routers, Hubs, Servers
. Threshold Monitoring
TROUBLESHOOTING ADMINISTRATION
. Fault Detection . Problem Management
. Event to Alarm . Trouble Tickets
. Correlation . Thresholds
. Impact Analysis . Security
. Corrective Action . Agents
. Backup
ASSET MANAGEMENT
. Equipment Assignments
. Configuration Information
. Firmware & Software
<PAGE>
NETWORK OPERATIONS
SERVICES
. Continuous 7x24x365 day proactive network monitoring
. Problem determination, tracking and resolution
. Problem impact analysis
. Vendor dispatch and service performance monitoring
. System performance and availability reporting
. Equipment configuration and database management
. Coordination of network adds, deletes and changes
<PAGE>
NETWORK OPERATIONS
STAFF EXPERIENCE
. 2-5 years experience in data communications
. Operations training on all network management systems
. Operations training on communications equipment
. Network troubleshooting and restoration procedural training
. General operation training to include; trouble ticketing, escalation
procedures, vendor dispatch, report generation
[LOGO APPEARS HERE]
<PAGE>
NETWORK OPERATIONS
SENIOR SUPPORT STAFF
. Consists of trained and experienced technical specialists who assist
network operators with problem diagnosis on an exception basis.
. These specialists become involved in those problems requiring
engineering investigation or software reconfiguration
<PAGE>
NETWORK OPERATIONS
SENIOR SUPPORT EXPERIENCE
. 5-15 years experience in data communications
. Broad experience in data communication concepts and curriculum
. Emphasis on product and system specialization
[LOGO APPEARS HERE]
<PAGE>
NETWORK OPERATIONS
[LOGO APPEARS HERE]
MONTHLY REPORTING:
. Network performance and availability
. Trouble tickets processed
. Network adds, changes and deletes
. Network failure trend analysis
. Vendor maintenance call performance
<PAGE>
ORGANIZATION OVERVIEW
[FLOWCHART APPEARS HERE]
<PAGE>
EXHIBIT I
SCOPE
. SOFTWARE DEVELOPMENT MANAGEMENT
. Manage registration server development effort for Intuit
. Manage host system software upgrades required for escalating
subscriber base
-Business requirements
-Technical requirements
-General analysis and design
-Detailed analysis and design
-Coding
-Integration and QA testing
-Beta testing
-Implementation / Certification
<PAGE>
14. Implement a proactive network management process that achieves an average
time-to-response of less than ______ hours on urgent trouble tickets and
less than ______ hours on priority trouble tickets.
-2-
<PAGE>
EXHIBIT F
[not included]
<PAGE>
EXHIBIT G
---------
CONCENTRIC NETWORK CORPORATION
------------------------------
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT is entered into effective ____________, 19__, between
CONCENTRIC NETWORK CORPORATION, a Florida corporation (the "Company"), and
_________________________ (the "Optionee").
WHEREAS, the Company and CRITICAL TECHNOLOGIES INCORPORATED ("CTI") are
parties to an Employee Services and Staffing Agreement (the "Employee
Agreement") pursuant to which, among other things, CTI has leased certain
employees to the Company and the Company has agreed to issue options to purchase
an aggregate of 900,000 shares of Common Stock of the Company ("Option Shares")
to certain employees of CTI which, pursuant to the Employee Agreement, will be
leased to the Company, and to certain other principals and employees of CTI and
to CTI; and
WHEREAS, an aggregate of ________ of the Option Shares (the "Performance
Option Shares") are subject to forfeit in the event certain performance
objectives set forth in an exhibit to the Employee Agreement are not timely
achieved (the balance of an aggregate of ________ Option Shares are referred to
herein as "Regular Option Shares"); and
WHEREAS, the Optionee is one of the persons selected by CTI to receive an
option pursuant to the Employee Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereto do hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the
---------------
right and option (the "Option") to purchase all or any part of the number of
Option Shares set forth below, at a purchase price of $.25 per share and on the
other terms and conditions herein set forth.
Total number of Regular Option Shares: _________
Total number of Performance Option Shares: _________
2. Dates When Option Exercisable.
-----------------------------
a. Except as otherwise provided in paragraph 2(d), Options for
each of the Regular Option Shares and the Performance Option Shares (if any)
will vest and become exercisable ratably over twelve (12) months, at the end of
each month after the date hereof, with Options for one-twelfth (1/12) of the
shares subject to Option (rounded to the nearest whole share) becoming
exercisable at the end of each such month.
<PAGE>
b. Except as otherwise provided in paragraph 2(e) and paragraph
8, the Option shall expire, to the extent it has not already been exercised, at
the close of business on ____________, 2005 (the tenth (10th) anniversary of the
Employee Agreement) (the "Expiration Date").
c. Except as otherwise provided in paragraph 2(e), the Option
with respect to all Regular and Performance Option Shares not then vested will
automatically be assigned to CTI if the Optionee ceases to be an employee of CTI
prior to the time all Option Shares are vested hereunder. It is expressly
understood and agreed that nothing herein is intended or shall be construed as
an employment contract or as implying any obligation on the part of CTI or the
Company to continue the Optionee's employment for any period of time after the
date hereof.
d. Notwithstanding paragraph 2(a), the Option shall immediately
become exercisable in full upon the effective date of any merger or
consolidation of the Company with or into any other entity, at which time the
Option shall automatically become an Option on exercise to purchase, with
respect to each Option Share purchasable hereunder (whether vested or not)
immediately before the consolidation or merger becomes effective, the securities
or other consideration to which a holder of one share of Common Stock is
entitled in the consolidation or merger without any change in or payment in
addition to the Exercise Price in effect immediately prior to the merger or
consolidation. The Company shall take any necessary steps in connection with a
consolidation or merger to assure that the provisions of this Option shall
thereafter be applicable, as nearly as reasonably may be, to any securities or
other consideration so deliverable on exercise of this Option. The Company shall
not consolidate or merge unless, prior to consummation, the successor entity (if
other than the Company) assumes the obligations of this paragraph by written
instrument executed and mailed to the Optionee at the address of the Optionee on
the books of the Company.
e. Notwithstanding paragraphs 2(b) and 2(c), in the event of
(i) the death of the Optionee, or (ii) termination of the Optionee's employment
by reason of his or her disability or incapacity, then in any of such events the
Option may be exercised (but only to the extent it was exercisable by the
Optionee on the date of his or her death or of such termination of employment),
by the Optionee, or the Optionee's personal representative, conservator (if any)
or guardian (if any), respectively, in the manner set forth below, for a period
of twelve (12) months (but not later than the Expiration Date) after the date of
the Optionee's death or of such termination of employment.
3. Method of Exercising Option. The Optionee (or representative as
---------------------------
provided above) may exercise the Option hereby granted on one or more occasions
at his or her discretion, on each occasion for all or any part of the Option
Shares for which the Option is then exercisable, by each time delivering to the
main business office of the Company, addressed to the attention of its Chief
Executive Officer or Secretary, (i) a written notice stating his or her election
to exercise the Option and the number of Regular and Performance (if any) Option
Shares to be purchased, together with (ii) cash or check in full payment of the
purchase price of the Option Shares to be purchased plus the amount of any
Federal and state withholding taxes payable by the Company as a result of such
exercise. The Option shall be deemed to be exercised only upon receipt of such
notice and payment
-2-
<PAGE>
by the Chief Executive Officer or Secretary. The Company will advise the
Optionee, upon the Optionee's reasonable prior request, of the required amount
of such taxes.
4. Non-Transferability of Option. The Option may be exercised only
-----------------------------
by the Optionee or as otherwise provided above or by the Employee Agreement. The
rights granted by this Option may not be assigned, transferred, pledged or
hypothecated in any way, other than by will or by operation of law, and except
for automatic transfer to CTI pursuant to Section 2(c), above, and further
assignment by CTI, pursuant to the terms of the Employee Agreement. Such rights
shall not be subject to execution, attachment or similar process. In the event
of the bankruptcy of the Optionee, or in the event of any prohibited assignment,
transfer, pledge, hypothecation or other disposition of the Option, or the levy
of any execution, attachment or similar process upon the Option, the Option
shall automatically expire and shall be null and void. Notwithstanding the
foregoing, however, with prior notice to the Company the rights granted by this
Option may be transferred between the Optionee in his or her personal capacity
and the Optionee as trustee of a trust (A) of which the Optionee is both sole
trustee and sole beneficiary during his or her lifetime, and (B) all of which is
treated under subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of
the Internal Revenue Code of 1986, as amended, as owned by the Optionee.
5. Share Adjustments. In the event of any stock dividend on,
-----------------
reclassification, split-up or combination of, or other change in, the Company's
Common Stock, then the number or kind of Option Shares shall be correspondingly
added to, reclassified, increased, diminished or changed proportionately,
without increase or decrease in the aggregate purchase price of all Option
Shares.
6. No Rights of Optionee as Shareholder. The Optionee shall have no
------------------------------------
rights respecting this Option or the Option Shares except as expressly set forth
herein or in the Employee Agreement; and the Optionee shall have no rights as a
shareholder with respect to any Option Shares until this Option has been duly
exercised as to such Option Shares in accordance with the terms hereof. The
grant of this Option shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its common stock or its capital or business structure, or to merge or to
consolidate, or to dissolve or liquidate, or to sell or transfer any or all of
its business or assets.
7. Securities Laws. Neither this Option nor any of the Option Shares
---------------
have been registered under the Securities Act of 1933, as amended, or the
securities laws of any state, in reliance on exemptions from the registration
provisions thereof. By acceptance hereof, the Optionee acknowledges such fact
and agrees that, unless the Option Shares are so registered prior to exercise
hereof, this Option and any Option Shares will be held for investment and not
with a view to distribution or resale, and may not be made subject to a security
interest, pledged, hypothecated, or otherwise transferred without either an
effective registration statement under such Act and compliance with applicable
state securities laws, which may not be possible, or an opinion of legal counsel
satisfactory to the attorneys for the Company that such registration is not
required under such Act and that applicable state securities laws will not be
violated by such action; and the Optionee further agrees that the certificates
for such Option Shares shall bear a legend substantially to such effect.
-3-
<PAGE>
8. Performance Option Termination and Repurchase Provisions. If
--------------------------------------------------------
performance objectives set forth in Exhibit E to the Employee Agreement have not
been achieved within twelve (12) months after the date of the Employee
Agreement, the Option for Performance Option Shares shall automatically
terminate and no longer be exercisable and the Company shall repurchase from the
Optionee at the purchase price of $.25 per share all Performance Option Shares
theretofore purchased by the Optionee upon partial exercise of this Option.
9. General. The Company shall at all times during the term of the
-------
Option reserve and keep available a number of shares of common stock equal to
the number of Option Shares, and shall pay all original issue and transfer taxes
with respect to the issue of Option Shares pursuant hereto and all other fees
and expenses necessarily incurred by the Company incurred in connection
therewith.
IN WITNESS WHEREOF, the Company and the Optionee have executed this Option
Agreement as of the date first above written.
Company: CONCENTRIC NETWORK CORPORATION
By:___________________________________
President
Optionee: ______________________________________
-4-
<PAGE>
EXHIBIT H
Colocation Services Agreement
This Colocation Services Agreement between Critical Technologies, a Missouri
corporation with principal offices at 1300 Baur Blvd., St. Louis, Missouri 83132
(hereinafter referred to as "Critical"), and Concentric Research Corporation
(hereinafter referred to as "CRC") with offices located 400 Forty first Street,
Bay City, Michigan 48708, is entered into this 1st day of November, 1994.
WHEREAS, Critical is a provider of colocation services; and
WHEREAS, CRC desires to engage Critical to provide colocation services as
described herein; and
WHEREAS, Critical desires to accept such engagement upon the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, CRC and Critical agree as follows:
I. DEFINITIONS
-----------
a. Colocation sites ("Sites")
Physical space which shall have the characteristics specified on
Appendix A, and shall be fit for the purposes of containing the Racks
and Equipment, as hereinafter defined, in an environment that will
enable the Racks and Equipment to operate according to Racal-Data Com,
Inc. specifications.
b. Optimum Locations
Optimum Locations shall be geographic locations (within which a Site
may be selected) which locations shall be identified by Critical as
most closely matching the criteria provided by CRC from time to time
for purposes of Modeling and in the Optimum Location Requests, as
provided in Article V of this Agreement. In identifying Optimum
Locations, Critical shall consider:
1. which metropolitan areas have the greatest potential customer
base
2. the determination of which physical location provides the
greatest number of callers with a local dial-access number
3. conclusions or indications from Modeling based upon CRC's
expressed criteria.
<PAGE>
Critical shall provide a mathematical justification for each Optimum
Location to CRC, which mathematical justification shall be approved by
CRC.
c. Modeling services ("Modeling")
The creation of a mathematical model built and maintained by Critical
which shall enable Critical to recommend to CRC and CRC to select
Optimum Locations pursuant to the criteria submitted by CRC. The Model
shall incorporate data, including but not limited to; CRC's research
in the desired markets and/or market places, the existing 800 number
service network traffic data ordered geographically, and existing
point of presence Site network traffic data.
d. Colocation services ("Services")
The services being offered to CRC by Critical shall consist of
Modeling, locating, qualifying and providing Optimum Locations and
Sites, pursuant to Optimum Location Requests and Site Orders as
described in Article V of this Agreement, providing supervision for
any and all construction necessary at the Sites, accommodating
installation of Equipment and Racks as hereinafter defined, insuring
compliance with all codes, ordinances, rules and regulations,
providing consolidated billing for the Sites. Critical shall provide
communication with respect to the Services with the TM as hereinafter
defined.
e. Industrial Telecommunications Racks ("Racks")
The industrial telecommunication Racks which contain the Equipment, as
hereinafter defined, including but not limited to:
Excal Rackmounts
ALM 2332 Rackmounts
INX Rackmount Shelves
f. Colocation equipment ("Equipment")
All of the Equipment, other than Racks, owned by Racal and leased to
CRC which are located at the Sites, which Equipment includes but is
not limited to that type described on Appendix B.
g. Racal-Data Com, Inc. ("Racal")
A Florida corporation with principal offices located at 1601 North
Harrison Parkway, Sunrise, Florida 33323-2899, which is the owner of
all or part of the Equipment and Racks and leases those Equipment and
Racks to CRC.
-2-
<PAGE>
h. Primary Entity
Any entity through which Critical leases or otherwise holds an estate
in the Site.
i. CRC Telecommunications Manager (the "TM")
CRC shall designate a single employee as its telecommunication manager
for purposes of this Agreement and as a primary CRC contact for
Critical with respect to this Agreement. The TM shall be designated by
CRC, in writing, upon execution of this Agreement and Critical shall
be notified, in writing within 48 hours, in the event that CRC
appoints a new TM.
II. AFFIRMATION
-----------
Critical shall provide Services, Optimum Locations and Sites pursuant to
Orders (as defined in Article V) to CRC.
III. TERM OF AGREEMENT
-----------------
This Agreement shall be effective upon the date first written above
("Effective Date") and shall continue for a period of twenty-four (24)
months from the Effective Date. Thereafter, this Agreement shall
automatically renew itself in twelve (12) month increments unless either
party notifies the other of its decision to terminate this Agreement by
providing the other party with sixty (60) days written notice prior to the
expiration of the period then in effect ("Renewal Period"). This Agreement
shall govern all Orders for Services which are received by Critical within
twenty-four (24) months from the Effective Date or any Renewal Period.
Notwithstanding anything contained herein, in the event that CRC shall fail
to renew after the first twenty-four (24) months of the Agreement, and in
the further event CRC shall have ordered more than 100 Sites which are
subject to this Agreement ("Additional Sites"), CRC shall pay the sum of
[*] for each Additional Site for each month less than twenty-four (24)
months which has expired from the time the Additional Site was ordered to
the date of termination of the Agreement under this paragraph.
IV. PAYMENT FOR SERVICES AND COMMENCEMENT
-------------------------------------
CRC shall pay to Critical the sum of [*] per Site per month, for the first
Rack, and [*] for each additional Rack at each Site, per month, up to a
total of three (3) Racks. With respect to the first Order, billing shall
commence on October 15, 1994. In addition, with respect to the first order,
CRC shall pay the sum of [*] upon execution of this Agreement. Thereafter,
- ---------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commisssion. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE>
commencement of billing for each Site shall begin upon execution of the
Site Order as provided in Article V of this Agreement (hereinafter referred
to as the "Commencement Date"). Payments are due monthly, on the first day
of each calendar month. If the Commencement Date of each Site or additional
Rack is other than the first day of each month, the first payment due
hereunder shall be equal to one-thirtieth (1/30) of the monthly rate set
forth for each day from and including the Commencement Date through and
including the last day of the month prior to the beginning of the term and
the monthly rate for the full initial month. Certain of the Sites shall be
located at Racal property or leaseholds ("Racal Sites") and CRC may elect
to obtain Sites. Notwithstanding anything else contained within this
Article IV, CRC shall only be required to pay the sum of [*] per month
per site for Racal Sites or where the site is obtained by CRC. In the event
that number of Sites subject to this Agreement shall drop below 90 Sites,
then CRC shall be required to pay the sum of [*] per month per Site for
Racal Sites or where the Site is obtained by CRC.
V. ORDERING PROCEDURE
------------------
a. Optimum Location Request
CRC, acting through the TM, shall make a written request to Critical
to identify Optimum Locations from time to time in order to enable CRC
and Critical to select new Sites or move existing Sites.
1. The TM shall identify the number of Optimum Locations which it
desires Critical to identify.
2. The TM shall further specify the number of days, but not less
than 30 days, within which CRC expects Critical to provide a
written response ("Identification Period").
(i) In the event that Critical is unable to respond within the
Identification Period, it shall notify the TM, before the
expiration of 75 percent of the respective Identification
Period, that it will be unable to comply within the
Identification Period. CRC may then elect to cancel the
Optimum Location Request or issue an amendment to the
Request to provide a new Identification Period.
b. Site Order
The TM shall, from time to time, direct Critical, in writing, to
identify a Site within an Optimum Location. The TM shall further
specify the number of days, but not less than thirty days unless
agreed in writing between the parties, within which CRC expects
Critical to provide a Site Order ("Order Period").
-4-
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
1. In the event that Critical is unable to respond within the Order
Period it shall notify the TM, before the expiration of 75% of
the respective Order Period, that it will be unable to comply
with the Order Period. CRC may then elect to cancel the Site
Order or issue an amendment to the Site Order to provide a new
Order Period.
2. Upon identification of a Site by Critical, Critical shall prepare
a Site Order with the address of the Site and deliver the Site
Order to the TM. The TM shall execute the Site Order on behalf of
CRC, confirming the Site Order.
(i) Subsequent to the execution of a Site Order, Critical
shall deliver to the TM, in electronic form, a list of all
exchanges which are a local call to the exchange from the
Site.
(ii) Subsequent to the execution of the Site Order by the TM,
if CRC ships Racks or Equipment to the address on the Site
Order or incurs any charges, including AT&T or local
exchange carrier charges, and the address on the Site
Order is incorrect or the Site cannot be used, for any
reason which is not the fault of CRC or Racal, Critical
shall be liable for all expenses incurred or related to
the Site address being incorrect or the Site not being
available for use by CRC, including Equipment and Cabinet
shipment charges.
c. Replacement Site
In the event that a Site Order is made, and after not less than 120
days subsequent thereto, CRC determines that the Site does not meet
its marketing criteria ("Nonconforming Site"), CRC may terminate the
Nonconforming Site and order a Replacement Site unless the Site is
selected by CRC without Critical's advice.
1. The Replacement Site must be leased for the balance of the term
of the Nonconforming Site.
2. The Replacement Order procedure shall be as follows:
(i) The TM shall, in writing, request a Replacement Site,
identifying the Nonconforming Site, and specifying a new
Optimum Location. The TM shall further specify the Order
Period. The term of this Order Period in such event shall
not be less than 30 days.
(ii) In the event that Critical is unable to respond within the
Order Period it shall notify the TM before the expiration
of 75% of the respective Order Period, that it will be
unable to comply with the Order Period.
-5-
<PAGE>
CRC may then elect to cancel the Replacement Order or
issue an amendment to the Replacement Order to provide a
new Order Period.
(iii) Upon indemnification of a Replacement Site by Critical,
Critical shall prepare a Replacement Order with the
address of the Replacement Site and deliver the
Replacement Site Order to the TM. The TM shall execute the
Replacement Site Order on behalf of CRC confirming the
Replacement Site Order.
1) Subsequent to the execution of a Replacement Site
Order, Critical shall deliver to the TM, in electronic
form, a list of all exchanges which are a local call
to the exchange of the Site.
2) Subsequent to the execution of the Replacement Site
Order by the TM, if CRC ships Racks or Equipment to
the address on the Replacement Site Order or incurs
any charges, including AT&T or local exchange carrier
charges, and the address on the Replacement Site Order
is incorrect or the Site cannot be used, for any
reason which is not the fault of CRC or Racal,
Critical shall be liable for all expenses incurred or
related to the Site address being incorrect or the
Site not being available for use by CRC, including
Equipment and Cabinet shipment charges.
VI. WARRANTY
--------
Critical warrants that the Services shall be provided to the best of its
ability, skill and knowledge. Critical further warrants that the Sites will
meet the requirements set forth on Appendix A and that the Services will be
of the kind and quality and fulfill the purposes defined in Article I of
this Agreement and will be performed by qualified personnel. Critical
warrants to CRC peaceful possession of all of the Sites. THE FOREGOING
WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES EXPRESS, IMPLIED, OR STATUTORY,
INCLUDING WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
AND NO REPRESENTATIVE OF CRITICAL IS AUTHORIZED TO ALTER OR ENLARGE THIS
WARRANTY.
VII. INSURANCE
---------
Critical shall maintain in force during the term of this Agreement a policy
of insurance issued by a company authorized to engage in the insurance
business in all of the states in which the Sites are located. The policy
shall insure the Racks and Equipment against the perils of fire, extended
coverage, vandalism, malicious mischief, special extended coverage ("All
Risk"), and sprinkler coverage. Further, Critical shall provide a
comprehensive general liability insurance policy insuring CRC against any
liability arising out of the use, occupancy or maintenance of the Site and
all access areas appurtenant thereto. Each policy shall be on an occurrence
basis
-6-
<PAGE>
and shall insure not less than Three Million Dollars ($3,000,000.00) per
occurrence. The insurance policy shall insure the hazards of the Site and
operations conducted in and on the Site, independent contractors,
contractual liability, and shall name CRC and Racal as insured parties.
CRC shall be furnished with a copy of the certificate of insurance.
VIII. FORCE MAJEURE
-------------
Neither Critical or CRC shall be considered in default in performance of
their obligations hereunder if performance of such obligations is
prevented or delayed by acts of God or government, labor disputes, failure
or delay of transportation, or by vendors or subcontractors, or any other
similar cause or causes beyond the reasonable control of either party.
Time of performance of either party's obligations hereunder shall be
extended by the time period reasonably necessary to overcome the effects
of such force majeure occurrences.
IX. CASUALTY
--------
In the event that a Site shall be destroyed or rendered unusable by fire
or other casualty, Critical shall have 30 days to relocate the Site.
X. TITLE AND LOCATION
------------------
Nothing contained herein shall give or convey to Critical any right, title
or interest in or to any of the Racks or Equipment, and Critical
represents and agrees that it shall furnish to CRC such documentation as
CRC requires to confirm said title in CRC or Racal.
Critical shall notify all Primary Entities of the interest of Racal and
CRC in the Racks and Equipment. Further, Critical shall file, on behalf of
CRC and Racal, a UCC financing statement in each respective state where a
Site is being provided pursuant to this Agreement, Critical shall provide
to CRC the names and addresses of the Primary Entities and CRC shall
prepare the UCC financing statements, Critical shall obtain the signatures
of the Primary Entities and file the UCC financing statements in the
appropriate state offices. CRC shall pay all filing fees. Each UCC
financing statement shall identify the Primary Entity with respect to the
Site, address of the Primary Entity, the identity of Racal and/or CRC as
the owners of the Racks or Equipment. The UCC shall be in a form which CRC
deems advisable to secure the interests of CRC and Racal. Without limiting
the foregoing, Critical shall obtain the signature of each of the Primary
entities on one or more financing statements in a form and substance
satisfactory to CRC covering all of the Racks and Equipment to be located
at the Sites pursuant to this Agreement.
XI. OWNERSHIP RIGHTS
----------------
a. Racks and Equipment
-7-
<PAGE>
The Racks and Equipment shall at all times remain the property of CRC
and/or Racal. Critical agrees that it shall allow the Equipment and
Rack to be labeled as property of CRC and Racal. Critical shall
replace any such stenciling tag or plate which may be removed or
destroyed or become illegible. Critical shall keep all Racks and
Equipment free from any marking or labeling which might be interpreted
as a claim of ownership thereof by Critical or any Primary Entity, or
might be interpreted as a claim of anyone so claiming through Critical
or any Primary Entity.
1. Upon termination or expiration of this Agreement, Critical shall
provide immediate access to the Sites to remove all Equipment and
Racks.
b. Modeling
With respect to the Modeling, Critical shall retain ownership of the
analytical process. CRC shall retain ownership of all data provided
for the Modeling and all results of the application of the analytical
process to the data. Critical shall not, without prior written
permission of CRC, transfer, disclose or otherwise provide the data or
results of the Modeling to any person outside of Critical. Critical
agrees that it shall thoroughly safeguard the confidentiality of the
data in the Modeling results, and in no event shall it be to a lesser
extent than Critical safeguards its own proprietary information.
Critical agrees that access to such data and the Modeling results will
be given only to employees of Critical who require access in the
course of Critical's business, and such employees will be informed of
the confidential nature thereof and shall be required to observe
provisions of confidence as set forth herein.
1. Within seven days following termination or expiration of this
Agreement, Critical shall return all data provided by CRC for the
Modeling and all Modeling results. Thereafter, within said seven
day period, Critical shall destroy all copies of the Modeling
Data provided by CRC and the Modeling results which Critical has
in its possession.
XII. DEFAULT
-------
a. By CRC:
-------
1. An Event of Default by CRC shall occur hereunder if: (i) CRC
fails to make payments as defined herein or to perform any other
condition of this Agreement, which shall continue for a period
thirty (30) business days following written notice thereof, (ii)
CRC fails within forty-five (45) days after the commencement of
any proceeding against CRC seeking any reorganization
arrangement, composition, readjustment, liquidation, dissolution,
or similar relief under any present or future statute, law,
regulation, to obtain the dismissal of such proceeding or (iii)
if a trustee or receiver is appointed or liquidation proceedings
are initiated with respect to all or a substantial portion
-8-
<PAGE>
of the properties of CRC, without the consent of Critical, and
CRC is unable to vacate such appointment within forty-five (45)
days.
b. By Critical:
------------
1. An Event of Default by Critical shall occur hereunder if: (i)
Critical fails to provide Services as defined in Article I or
Sites as set forth in Appendix A for reasons other than force
majeure, or the acts or omission of CRC, or fails to perform any
other covenant or condition of this Agreement, and Critical is
unable to cure or remedy any such deficiency within thirty (30)
business days following receipt of written notice of such
deficiency by CRC, (ii) Critical fails within forty-five (45)
days after the commencement of any proceeding against Critical
seeking any reorganization arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under
any present or future statute, law, regulation, to obtain the
dismissal of such proceeding or, (iii) if a trustee or receiver
is appointed or liquidation proceedings are initiated with
respect to all or a substantial portion of the properties of
Critical, without the consent of CRC, and Critical is unable to
vacate such appointment within forty-five (45) days.
XIII. SITE CASUALTY
-------------
CRC shall use its best efforts to maintain a minimum of 80 sites subject
to this Agreement.
XIV. REMEDY IN THE EVENT OF DEFAULT
------------------------------
a. By CRC:
-------
Upon the occurrence of an Event of Default or in case of breach by
CRC, Critical may cancel this Agreement, declare the entire amount of
any unpaid balance due under this Agreement due and payable, and use
all available remedies to remove CRC and its Racks and Equipment from
possession of the Sites by ejectment or otherwise. This remedy of
Critical is in addition to all other remedies at law or in equity.
b. By Critical:
------------
Upon the occurrence of an Event of Default by Critical, CRC may:
1. Terminate this Agreement without further liability; and
(i) exercise any other right or remedy which may be available
at law or in equity;
-9-
<PAGE>
(ii) elect, in its sole discretion, to retain possession of all
or a part of the Sites, on the condition that it assumes
Critical's lease obligations with the Primary Entity for
each respective Site that CRC retains possession of.
Critical may seek compensation in a court of law for any
leases not assumed by CRC.
XV. ASSIGNMENT
----------
a. By Critical:
------------
Any assignment of this Agreement by Critical without the written
consent of CRC shall be void, such consent shall not be unnecessarily
withheld.
b. By CRC:
-------
CRC shall not assign this Agreement, except to Racal, without first
obtaining the written consent of Critical, which consent will not be
unreasonably withheld, conditioned, or delayed. Critical's consent
shall be conditioned on Critical's approval of the economic viability
of the proposed assignee.
Notwithstanding anything to the contrary contained herein, any
transfer of this Agreement from CRC by merger, consolidation or
liquidation or any change in the ownership or power to both the
majority of the outstanding stock of CRC shall not constitute an
assignment for the purposes of this section.
XVI. GOVERNING LAW: FORM
-------------------
This Agreement shall be governed and construed in accordance with the
laws of the State of Michigan. The parties hereby consent and submit the
exclusive jurisdiction of the appropriate state or federal court serving
Bay County, Michigan, as to any dispute or controversy arising either
directly or indirectly, under or in connection with this Agreement.
XVII. WAIVER
------
No waiver by either party of any default shall operate as a waiver of any
other default or of the same default on a future occasion. No delay,
course of dealing or omission on the part of either party in exercising
any right or remedy shall operate as a waiver thereof, and no single or
partial exercise by either party of any right or remedy shall preclude
any other or further exercise thereof or the exercise of any other right
or remedy.
XVIII. SEVERABILITY
------------
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in
-10-
<PAGE>
any way be affected or impaired thereby, provided such provision still
expresses the intent of the parties. If the intent of the parties cannot be
preserved, the Agreement shall either be renegotiated or rendered null and
void.
XIX. NOTICES
-------
Any notices or communications given or required under this Agreement shall
be sufficiently given if delivered personally, in writing or sent by telex
or facsimile, federal express, registered or certified mail, postage
prepaid, to the other party at the following address:
TO: Critical Technologies
---------------------
St. Louis, MO
-------
Attn:
Timothy R. Huff
131 Jefferson Street
Charleston, MO 63301
TO: Concentric Research Corporation
400 Forty First Street
Bay City, MI 48708
Attn: President
With a copy to:
Susan M. Cook
Lambert, Leser, Cook, Schmidt & Giunta, P.C.
309 Davidson Building, P.O. Box 835
Bay City, MI 48707-0835
Such notice or other communications shall be deemed received (a) on the
date delivered, if delivered personally; or (b) upon receipt, if sent by telex
or facsimile, federal express or (c) three (3) business days after being sent,
if sent registered or certified mail.
XX. ENTIRE AGREEMENT
----------------
The terms and conditions contained in this Agreement, and the referenced
------------------
Addendums which are hereby incorporated herein, shall be applicable to all
----------------------------------------------
Optimum Location Requests and Site Orders during the effectiveness of this
Agreement whether referenced in same or not. This Agreement expresses the
entire understanding and agreement of the parties with reference to the
subject matter hereof, and is a complete and exclusive statement of the
terms of this Agreement, and no representations or agreements modifying or
supplementing the terms of
-11-
<PAGE>
this Agreement shall be valid unless in writing, signed by persons
authorized to sign agreements on behalf of both parties.
-12-
<PAGE>
IN WITNESS THEREOF, this Agreement was entered into as of the day and year
first written above.
CRITICAL TECHNOLOGIES
BY: /s/ James F. Crowe
-------------------------------
ITS: President, as President
------------------------------
DATE: November 1, 1994
-----------------------------
CONCENTRIC RESEARCH CORPORATION
BY: /s/ Donald I. Schutt
-------------------------------
ITS: Chief Operating Officer
------------------------------
DATE: November 1, 1994
-----------------------------
-13-
<PAGE>
APPENDIX
A. Electrical
1. One 30 Amp 120 Volt Single phase dedicated circuit with MEMA space LB-
30R for each communication equipment rack. Additional circuits required for
an independent air conditioning unit should the site's air conditioning be
turned off for any amount of time.
2. The service must by 24 hours per day, seven days a week, every day of
the year without interruption.
B. Physical space
1. Each telecommunications rack needs 24" width, 26" depth, 6' height.
2. Each telecommunications rack shall have 2' front and rear access at
all times.
3. Each telecommunications rack requires at least 1' clearance between
the interior ceiling and the top of the rack.
4. Each closet shall have a 4' x 4'3/4" plywood backboard (or equivalent
as per the Local Exchange Carrier's specifications) painted black to be
within 5' of the telecommunications rack(s).
C. Environment
1. Air conditioning is a requirement for all telecommunications racks and
should be on at all times.
2. The operating environment shall comply with all environmental
specifications as published in Racal's technical documentation.
3. There shall be suitable electrical lighting as required for service.
4. There shall be a key entry lock on the cabinet door to restrict access
to the cabinet.
D. Access
1. Access to the telecommunications closet shall be provided on a 7 day a
week 24 hour a day basis all days of the year.
<PAGE>
2. Access to the telecommunications closet shall be provided to (a) CRC
authorized personnel (b) Racal authorized personnel and (c) Local Exchange
Carrier personnel within 4 hours of notification.
ANY CHANGES REQUIRING OR PERTAINING TO INSIDE WIRING, WHETHER REQUESTED OR
DIRECTED BY A LOCAL EXCHANGE CARRIER OR OTHERWISE, SHALL BE THE
RESPONSIBILITY OF CRITICAL TECHNOLOGIES.
-2-
<PAGE>
EXHIBIT I
Scope
- ------
. Software Development Management
. Manage registration development for Intrust
. Manage host system software upgrade required for escalating subscriber base
- Business requirements
- Technical requirements
- General Analysis and design
- Coding
- Integration and testing
- Beta testing
- Implementation testing
<PAGE>
SCHEDULE 1
to Employee Services and Staffing Agreement
Dated as of the _____ day of _____________, 1995
by and between Concentric Network Corporation ("CNC") and
Critical Technologies Incorporated ("CTI") (the "Agreement")
The following provisions dealing with Share Options (as defined in the
Agreement) shall be deemed part of the Agreement as if fully set forth therein.
1. Compliance with SEC Rule 504. CNC agrees that it will take all
----------------------------
reasonable steps to comply with Rule 504 of Regulation D ("Regulation D")
promulgated by the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933 (the "Act") so long as CNC is not subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"). These steps will include, but not be limited to:
a. CNC will timely file a notice on Form D with the SEC.
b. CNC will, on an ongoing basis, provide to holders of Options
financial and other information concerning CNC reasonably necessary to
enable holders of Options to make fully informed decisions concerning
exercise of their Options and investment in shares of CNC Common Stock
("Shares").
2. At such time as CNC becomes subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, CNC shall:
a. Register with the SEC on Form S-8 those Options and Shares
subject to Options held by leased employees hereunder or other principals
or employees of CTI who are advisors or consultants to CNC;
<PAGE>
b. take all steps reasonably necessary to comply with Rule 505 of
Regulation D with respect to Options and Shares subject to Options held by
persons who are not leased employees hereunder or otherwise advisors or
consultants to CNC. Such compliance will include providing to such Option
holders on a timely basis copies of all reports and proxy materials filed
by CNC with the SEC, all Annual Reports and other materials provided by CNC
generally to its shareholders, and any other information reasonably
necessary to comply with the information requirements of Rules 502 and 505
of Regulation D.
3. "Piggy-Back" Registration Rights. If, prior to the second anniversary
--------------------------------
of the date on which CNC becomes subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, CNC files with the SEC a Registration
Statement to register Shares under the Act (other than a Registration Statement
on Form S-4 or S-8), holders of Shares purchased upon exercise of Options which
Shares have, at the time of filing of such Registration Statement, been held for
less than two years and are "restricted securities" (as defined in Rule 144
promulgated by the SEC), shall be given the right to include such Shares in
CNC's Registration Statement and sell such Shares in the offering made pursuant
to such Registration Statement ("Registration Rights") on substantially the
following terms:
a. CNC will bear the expenses of registration of such Shares other
than underwriters' discounts and commissions with respect thereto, and fees
and expenses of counsel to the selling shareholders.
b. Such selling shareholders will execute the Underwriting Agreement
pursuant to which Shares are sold in the registered offering, which
Underwriting Agreement may contain indemnification and other provisions in
substantially the form normally contained in such agreements.
-2-
<PAGE>
c. The Registration Rights will be available only with respect to
the number of Shares the underwriters indicate, in their judgment, will not
adversely impact the registered offering.
-3-
<PAGE>
September 30, 1996
Mr. Mike Anthofer
Vice President & CFO
Concentric Network Corp.
10590 N. Tantau
Cupertino, California 95014
C R I T I C A L
TECHNOLOGIES
Fax No. 408-342-2876 I N C O R P O R A T E D
Dear Mike:
Below I have outlined the changes to our agreement. Please indicate your
concurrence with these modifications by signing below. The specific changes for
our "Employee Service and Staffing Agreement" are:
1) Delete paragraph 1d, subsections 4 and 5.
2) Waive the notice of an extension in paragraph 2.0 and extend the agreement
for an additional two (2) years (October 31, 1999).
3) Change section 4f (second paragraph) so that the upcharge Is changed to
[*] instead of [*] for staff positions currently on board as of the
signing of the agreement (see attached listing). Change the upcharge to be
only on base salaries, payroll taxes and benefits. Other expenses
associated with hiring will be passed through at cost. Said taxes and
benefits are currently billed at [*] of base salaries; therefore, the
total markup over base salaries is [*]. Additional hiring over those
positions noted on the attached list will be at a [*] upcharge or
currently [*] over base salaries. Additionally, CNC commits to a
minimum level of staffing equal to the staffing level as of the date of
signing of this document.
4) Delete paragraph 6(a).
5) Delete 8(a)(4) and change 8(a)(3) so that said fees are no longer due
unless sites are added after Installation of the super POPs currently
scheduled.
6) As a consideration of this agreement, the CNC board must agree that all
"performance shares" or options have been earned (see attached
"Performance Summary"). Said options and all other
- --------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
options under the original agreement to be granted and delivered within 10
days of the first board meeting following the signing of this agreement.
Additionally, CNC shall provide an option agreement acceptable to CTI with
which an option holder may execute such options. Said option agreement to
be provided within 10 days of the board meeting following the signing of
this agreement. Failure of the CNC board to approve these two items will
nullify this agreement.
7) It is agreed that paragraph 10 of the existing contract shall provide that
CTI shall have the right to assign or transfer their duties, obligations
and all benefits under the contract to a merger or acquiring entity so
long as that entity is not Netcom, PSI, UUNET, ANS, ATT Worldcom, MFB,
GTE, Ameritech, PAC Bell, SBC, US West, NYNEX, BellSouth, Bell Atlantic,
Sprint Internet/Intranet Services, MCI Internet/Intranet Services, and
CompuServe Network Services. Should CTI be acquired by one of the named
competitors, CNC may at Its option exercise the "buy out option" and pay
CTI a cash payment equal to [*] of the remaining value (an a present
value basis at prime) of its profit and any unpaid relocation expenses
(see "e" below). Said option to be exercised with ninety (90) days of
notice by CTI of intention to merge with a competitor of CNC.
8) CTI further agrees to limit access to CNC proprietary information to only
those CTI employees who have a need to know.
9) In order to provide an orderly transition at the end of the agreement, CTI
agrees to locate all personnel and resources used to support CNC to a new
subsidiary and transfer that entity to CNC according to the following
plan:
a. CTI will create a wholly owned subsidiary. CTI will transfer all
existing CNC staff to this entity. Additionally, all new CNC related
staff will be hired by this subsidiary for those CNC operations
housed in St. Louis, Missouri.
b. CTI will transfer its rights (including leasehold improvements)
under Its lease to 3324 Hollenberg Drive to this new subsidiary.
Said lease to have at least five (5 years remaining at the
termination of this agreement at a cost not to exceed [*] per
square foot (triple net). Any office equipment currently owned by
CTI and used exclusively by the subsidiary employees will also be
transferred. Additional office equipment for current or future
employees of the subsidiary will be paid for by CNC and remain their
assets.
c. CTI will transfer a nonexclusive license to its software for network
modeling, site management. and telco reconciliation to this new
entity.
- -------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
d. CNC shall acquire title to this new subsidiary at the and of this
agreement and CTI will vacate the promise on 3324 Hollenberg Drive.
Both parties agree to execute such documents as may be necessary to
minimize the tax effect to both entities.
e. CNC shall pay CTI [*] for relocation expense and the assets of
the new subsidiary. This amount will be paid for costs as needed by
CTI to relocate its other business to other facilities. CTI will
provide to CNC on at least a quarterly basis their projected needs
for the next six months. All of these funds could be paid in advance
of the completion of this agreement. Any funds not so advanced will
be paid at the point where ownership of the subsidiary transfers to
CNC.
f. CTI agrees to reimburse CNC an amount equal to 35% of the annual
salary of any CNC employee (acquired through the acquisition of the
subside") that returns to CTI or its other subsidiaries within one
year of said acquisition.
g. CTI agrees to use its best efforts to ensure that all employees of
the subsidiary stay with the entity when the transfer to CNC occurs.
10) Sections 4 and 7 shall be modified to require joint agreement by both CTI
and CNC on all matters relating to the hiring and compensation of the
employees employed by the subsidiary.
11) In the event CNC determines that it requires additional local access POP
locations, before CNC executes an agreement with any other person to
provide such locations to CNC, CTI will negotiate for a period of thirty
(30) days with CNC for CTI to provide such locations. In the event that
CTI and CNC are unable to reach agreement within such 30 days, CNC shall
thereafter be free to execute an agreement with any other person to
provide such locations to CNC so long as the terms of such agreement when
considered in the aggregate (including such matters as price, facilities,
response times and other relevant factors bearing on the overall value of
such an arrangement to CNC), are no more favorable to such other person
that the most favorable terms offered by CNC in writing to CTI during such
30 days of negotiation.
12) CTI agrees to provide other consulting services to CNC at a rate not to
exceed the lowest offered by CTI to other customers requiring similar
services (including duration or quantity of such services).
- -------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
13) CNC and CTI agree to mutually recommend each other as business
opportunities arise. Specifically, CNC will recommend CT1 services, as
appropriate, to STET/TMI.
14) Effective upon the closing of any Acquisition of CTI, CTI shall pay, or
cause the person acquiring CTI to pay, to CNC the sum of [**] Such
sum shall be paid in cash unless the consideration paid to CTI or the
shareholders of CTI in the Acquisition consist solely or partly of
securities of the acquirer which can be traded on the NASDAQ National
Market, the New York Stock Exchange or the American Stock Exchange, in
which case the acquirer shall have the right to pay such amount to CNC in
a combination of cash and such securities in the same proportion and
manner that such cash and securities is paid to CTI or the shareholders of
CTI. Such securities shall be valued for the purposes of this agreement at
the average of the closing sale price of such securities for the 30
trading days preceding the closing of such Acquisition. In the event that
the total consideration for the Acquisition is paid in two or more
increments, the [*] to be paid to CNC shall be paid concurrently with
each such increment. The proportion of the [*] paid at each Increment
shall be the same proportion as the consideration paid at such increment
represents as a portion of the total consideration paid in all increments.
For purposes of this Agreement, an "Acquisition" shall mean any of
transactions or series of transactions in which all or substantially all
the business of CTI is transferred to another person, whether the form of
such transaction is a stock sale by the shareholders of CTI, a merger, a
consolidation or a transfer of assets.
- -------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
If you agree with these changes, please note your acceptance below. If I can
clarify any of the items notes, please contact me.
Accepted and Agreed: Accepted and Agreed:
Critical Technologies, Inc. Concentric Network Corporation
<TABLE>
<S> <C>
By: /s/ Matthew W. Bross By: /s/ Michael Anthofer
---------------------------- ----------------------------
Matthew W. Bross Michael Anthofer
Vice President & CEO Vice President & CFO
Date: 9-30-96 Date: 9-30-96
-------------------------- --------------------------
</TABLE>
cc: James A. Wootten
Michael Fallon
Paul W. Noblett
John Peters
-26-
<PAGE>
EMPLOYEE SERVICES AND STAFFING AGREEMENT
SECOND AMENDMENT
WHEREAS: Concentric Network Corporation, a Florida corporation ("CNC"), and
Critical Technologies Incorporated, a Missouri corporation ("CTI"), are parties
to that certain Employee Services and Staffing Agreement (the "Staffing
Agreement dated as of November 1, 1995, and
WHEREAS: CNC and CTI entered into an Extension and Amendment of the Staffing
Agreement on September 30, 1996 (the "Extension and Amendment"), which provides,
among other things, that the CNC Board of Directors must agree that all
"performance shares" or options to be granted under the Staffing Agreement have
been earned, and CNC must grant and deliver all option agreements under the
Staffing Agreement within 10 days of the first Board meeting following the
signing of the Extension and Amendment, which Board meeting was held on October
4,1996, and
WHEREAS: The Extension and Agreement further provides that failure of the CNC
Board to approve said two items will nullify the Extension and Amendment, and
WHEREAS: CTI and CNC agree that said option agreements should not be issued or
delivered until CNC has obtained from the State of Missouri appropriate waiver,
exemption, clearance or qualification for such options, the obtaining of which
will require more time than 10 days from October 4, 1996, and wish to amend the
Staffing Agreement, as amended, to enable CNC to obtain the appropriate Blue Sky
clearance without adverse effect on the Extension and Amendment,
NOW THEREFORE, CTI and CNC hereby agree as follows:
1. The Extension and Amendment is hereby amended to provide that CNC will
promptly apply for the necessary Missouri waiver, exemption, clearance or
qualification for the options and the 900,000 shares of Class A Common Stock
issuable upon exercise of such options, and will promptly issue option
agreements with respect to such options within five business days of receipt of
such waiver, exemption, clearance or qualification from the State of Missouri;
provided that the vesting of such shares over the 12-month period provided in
the Staffing Agreement shall not be postponed on account of the Missouri
application but shall continue as provided for in the Staffing Agreement.
2. As amended by the foregoing, the Staffing Agreement and the Extension and
Amendment shall remain in full force and effect and shall not be nullified on
account of delays related to obtaining Missouri Blue Sky approval; provided,
however, that if such options are not issued on or before December 21, 1996,
this Second Amendment to the Staffing Agreement shall terminate and the rights
of the parties shall be determined in accordance with the terms of the Employee
Servicing and Staffing Agreement and the First Amendment thereto, as if this
Second Amendment had not been executed.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Second Amendment by
their duly authorized representatives as of the date set forth below.
<TABLE>
<CAPTION>
CONCENTRIC NETWORK CRITICAL TECHNOLOGIES
CORPORATION INCORPORATED
<S> <C>
By: /s/ Mike Anthofer By: /s/ Matthew W. Bross
-------------------------------- -------------------------------
Name: Mike Anthofer Name: Matthew W. Bross
------------------------------ -----------------------------
Title: Vice President & CFO Title: Vice President
----------------------------- ----------------------------
Date: 10-23-96 Date: 10-21-96
------------------------------ -----------------------------
</TABLE>
<PAGE>
EXHIBIT 10.12
INTERNET-SIGN UP WIZARD REFERRAL AND MICROSOFT INTERNET
EXPLORER LICENSE AND DISTRIBUTION AGREEMENT
Document Version 4.1, February 5, 1997
This Internet-Sign Up Referral and Microsoft Internet Explorer License and
Distribution Agreement ("Agreement") is made and entered into this day of
March, 1997 ("Effective Date"), by and between MICROSOFT CORPORATION, a
Washington corporation, One Microsoft Way, Redmond, WA 98052-6399 ("MS"), and
Concentric Network Corporation, a Florida corporation, including its majority
owned subsidiaries and affiliates (collectively, "COMPANY").
INTRODUCTION
This Agreement includes two distinct business arrangements.
Under the first arrangement, MS plans to develop and distribute an
"Internet Connection Wizard" as a means of promoting Internet access services
for various Internet access service providers, including COMPANY, and of
acquiring subscribers for such access services. COMPANY will pay MS a referral
fee for each subscriber acquired by means of the Internet Connection Wizard.
Under the second arrangement, COMPANY may distribute, on a royalty-free
basis, a customized version of Microsoft Internet Explorer to subscribers or
potential subscribers of its Internet access services.
In consideration of the mutual promises and covenants contained herein,
the parties agree as follows:
1. DEFINITIONS. The following terms, whenever initially capitalized,
-----------
shall have the following meanings for purposes of this Agreement:
1.1 "Access" shall mean telecommunications facilities and services that
enable a computer user to access and use Internet sites and content by means of
a TCP/IP connection.
1.2 "COMPANY Information" shall mean information regarding or relating to
the ISP Service such as COMPANY'S name, telephone number, order processing
information, fees, service plans, etc., and other information that is reasonably
necessary to describe and solicit orders of the ISP Service to the ISP
Subscriber and/or such other information that has been mutually agreed to by the
parties .
1.3 "Comic Chat" shall mean the graphical Internet chat client in all
available language versions requested by COMPANY, and for all available
platforms.
1.4 "Criteria" shall mean the applicable Internet Explorer criteria as
defined in the Microsoft Internet Explorer Logo Qualification Criteria, attached
to Exhibit G as Attachments 1 and 2, and such future versions as established by
MS in its sole discretion.
1.5 "Guidelines" shall mean the guidelines for use of the Logo as
outlined in the Microsoft Internet Explorer Logo Usage Guidelines which are
attached hereto as Exhibits G and H and are an integral part of this Agreement.
1.6 "IEAK" shall mean the Internet Explorer Administration Kit, including
any updates to the IEAK as may be provided by MS from time to time, which
contains a single copy of the Licensed Software in object code as well as a set
of tools that enable COMPANY to perform limited customizations
License # 200AT-7087
<PAGE>
to the Licensed Software in order to facilitate the ISP Subscriber sign up
process, and to automate the task of creating diskettes/CD ROMs for
distribution. COMPANY shall use the IEAK in accordance with the instructions in
the IEAK and the Logo Guidelines provided by MS.
1.7 "Internet Connection Wizard" shall mean an electronic referral
mechanism to be developed by MS to promote the ISP services for various ISP
service providers, including COMPANY, and which ordering mechanism shall enable
the end user to order ISP Service via a link to COMPANY's Sign-up Server or
other method mutually agreed to by the parties. The Internet Connection Wizard
shall prompt the ISP Subscriber to enter various Locator Information. The
Internet Connection Wizard shall be launched from an icon on the "desktop"
office English language version of Windows 95 designated as "The Internet" or
such other name designated by MS. MS may include the Internet Connection Wizard
in other MS products as determined by MS. An overview of the referral and
ordering process is set forth in Exhibit Z.
1.8 "Internet Explorer" shall mean (a) Microsoft's browser/client for the
World Wide Web in all language versions and platforms requested by COMPANY and
which MS has available; and (b) a customized version of Internet Explorer
created through the use of the IEAK; provided, however, that MS reserves the
right to amend COMPANY's license rights to future versions of Internet Explorer
to reflect MS' then standard terms and conditions applicable to ISPs for such
future versions.
1.9 "Internet Mail and News" shall mean MS's client for email and
Internet newsgroups in all available language versions requested by COMPANY, and
for all available platforms.
1.10 "Internet Product" shall mean any COMPANY product which provides
access to or information about the Internet. An Internet Product may not be a
personal computer. For purposes of this Agreement, "ISP Service" (defined below)
shall be a type of Internet Product.
1.11 "Internet Site" shall mean COMPANY's worldwide web site(s) which
meet the applicable Criteria.
1.12 "ISP Information" shall mean information regarding or relating to
Internet access services (including the ISP Service) such as order processing
information, fees, service plans, etc., and other information that is reasonably
necessary to describe and solicit orders of such Internet access services to the
Internet access service subscriber and/or such other information that has been
mutually agreed to by MS and an Internet service provided (including COMPANY).
1.13 "ISP Information Page" shall mean a HTML based page which includes
ISP Information, to be maintained by COMPANY and hosted on the MS Referral
Server. The ISP Information Page shall be downloaded to the prospective ISP
Subscriber as part of the ordering and referral process.
1.14 "ISP Phone Book(s)" shall mean a listing of names of ISPs and
associated telephone numbers and other ISP Information, including COMPANY
Information. ISP Phone Books may be unique to a given telephone area code and/or
geographic region. There may be one or more ISP Phone Books specific to a single
telephone area code, geographic region or Service Area. The ISP Phone Book(s)
shall be hosted on one or more Referral Server(s). MS shall solely determine
the placement, presentation and content of COMPANY Information in the ISP Phone
Book(s).
1.15 "ISP Referral Fee" shall mean an amount set forth in Exhibit D for
each new ISP Subscriber. COMPANY shall receive a credit for each ISP Subscriber
for which an ISP Referral Fee was previously paid, who cancels the ISP Service
account within sixty (60) days of initiation of the ISP Service.
1.16 "ISP Service" shall mean a COMPANY service, listed in Exhibit B,
which provides an Internet protocol (IP) access service to the Internet as
contemplated by this Agreement. The parties
-2-
<PAGE>
acknowledge that COMPANY may provide access to the Internet via other Internet
Product(s) not listed in Exhibit B.
1.17 "ISP Subscriber" shall mean any individual or legal entity who
subscribes to the ISP Service through or as a result of the Internet Connection
Wizard.
1.18 "License Key" shall mean the 10-digit alpha numeric code provided by
MS that enables COMPANY to use the customization features in the IEAK.
1.19 "Licensed Software" shall mean, collectively, Internet Explorer,
NetMeeting, Internet Mail and News, and Comic Chat.
1.20 "Locator Information" shall mean an ISP Subscriber's name, email and
conventional mailing addresses, telephone and facsimile numbers, credit card
number, and any other data about such subscriber that enables the possessor of
such information to personally identify the end user.
1.21 "Logo" shall mean the "Microsoft(R) Internet Explorer" logo depicted
In the Guidelines or such additional or replacement logos as MS may provide from
time to time under this Agreement.
1.22 "NetMeeting" shall mean Microsoft's realtime collaboration and
communication software in all available language versions requested by COMPANY,
and for all available platforms.
1.23 "Referral Server" shall mean a server maintained by MS which shall
provide an ISP Subscriber with one or more ISP Phone Books, and which shall
enable the ISP Subscriber to transmit ordering information, via the Internet
Connection Wizard to the Sign-up Server.
1.24 "Service Area" shall mean the area in which COMPANY currently
provides or will provide Access, as of the Effective Date, as set forth in
Exhibit B.
1.25 "Sign-up Server" shall mean a server maintained by COMPANY which
shall enable the ISP Subscriber to order ISP Service from COMPANY and shall
further enable COMPANY to configure the ISP Subscriber's copy of the Licensed
Software (hosted on the ISP Subscriber's computer), all via online transmission.
COMPANY shall use the Sign-up Server to configure the ISP Subscriber's copy of
Licensed Software in accordance with the ISP Subscriber Configuration Guidelines
set forth in Exhibit E.
1.26 "Start Page" shall mean the web "start" page from which an ISP
Subscriber launches the ISP Service.
2. LICENSE FOR DISTRIBUTION OF LICENSED SOFTWARE; LOGO LICENSE; AND
----------------------------------------------------------------
LICENSE RESTRICTIONS
--------------------
2.1 MS grants to COMPANY a nonexclusive, worldwide, royalty-free license
during the term of this Agreement to (a) customize Internet Explorer using the
IEAK for such release of Internet Explorer solely in accordance with the
instructions provided in the IEAK's "Custom ISK Wizard"; (b) reproduce and
distribute (directly and indirectly) alone or in combination with other software
through COMPANY's distribution channels the Licensed Software (including
Internet Explorer as may be customized by COMPANY) to end users and potential
end users of COMPANY's Internet Product(s) and (c) to publicly perform and
display the Licensed Software in connection with public performance or display
of the ISP Service. Except as provided in Exhibit E, COMPANY may not customize
an ISP Subscriber's copy of Licensed Software (hosted on the ISP Subscriber's
computer), in the course of COMPANY's configuration of the ISP Subscriber's copy
of Licensed Software.
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2.2 COMPANY acknowledges and agrees that its use of the IEAK to customize
Internet Explorer requires the rightful receipt from MS of the License Key
allocated to COMPANY. COMPANY agrees that it shall use the IEAK solely in
accordance with the instructions provided in the IEAK's Custom ISK Wizard that
is available to COMPANY upon input of the allocated License Key and in
accordance with the Logo Guidelines provided by MS.
2.3 If MS makes a new release (other than an "Update" release which is
designated by MS as a change in the hundredths digit [x.x(x)] of any component
of the Licensed Software available, then: (a) COMPANY may no longer distribute
the old version of the Licensed Software component, and may only distribute such
new release of the Licensed Software component with COMPANY's Internet Product,
provided, however that COMPANY may continue to distribute existing inventory of
COMPANY's Internet Product containing a prior version of a Licensed Software
component for a period of six (6) months following MS' release of a new release;
and (b) COMPANY must formally notify its customers on COMPANY's home page for
its main public web site that an upgrade of the Licensed Software component is
available at the download URL specified in the most current version of the
Internet Explorer Logo License Agreement located on www.microsoft.com for
Internet Explorer and at www.microsoft.com/ie for other components of the
Licensed Software. The text of the respective notices must state: For Internet
Explorer: "Microsoft has made available a new version of Internet Explorer.
Click the Internet Explorer Logo to upgrade your browser today." and for other
components: "Microsoft has made available a new version of (NetMeeting/Internet
Mail and News/Comic Chat). Go to www.microsoft.com/ie to update your software
today". This notification will remain present on the COMPANY's main public web
site until the earlier of COMPANY's depletion of its outdated inventory, or
until three (3) months following the public availability of a new release.
2.4 Subject to and expressly conditioned upon compliance with the terms
and conditions of this Agreement, MS hereby grants to COMPANY a worldwide,
nonexclusive, non-assignable, nontransferable, royalty-free, right to use the
Logo solely in conjunction with COMPANY's Internet Site(s) and/or Internet
Product(s) and solely in the manner described in the Guidelines. COMPANY agrees
and acknowledges: MS owns the Logo; use of the Logo will inure to the benefit of
MS; COMPANY will not adopt, use, or register any corporate name, trade name,
trademark, service mark, or certification mark, or other designation similar to,
or containing in whole or in part, the Logo; COMPANY's use of the Logo shall
adhere to the Criteria.
2.5 COMPANY may not reverse engineer, decompile or disassemble the
Licensed Software.
2.6 COMPANY shall only distribute NetMeeting in conjunction with Internet
Explorer.
2.7 COMPANY may not permit further redistribution of the Licensed
Software by ISP Subscribers and end user customers of COMPANY's other internet
access services, if applicable. COMPANY reserves the right to distribute
Licensed Software to COMPANY's OEM partners that are bundling Internet
connectivity with their OEM product (e.g. gaming company promotional CD-ROM's).
COMPANY will report how many copies of Internet Explorer are licensed and
distributed in this manner.
2.8 COMPANY shall maintain and not alter or remove any copyright,
trademark and other protective notices contained in the Licensed Software,
including the end user license agreement ("EULA") which is included in the setup
installation of the Licensed Software. COMPANY shall also comply with
Microsoft's trademark guidelines set forth in Exhibit I with respect to the
proper use of Microsoft trademarks associated with the Licensed Software.
2.9 COMPANY shall require its distributors, dealers and others in its
distribution channels to comply with the relevant distribution terms of this
Agreement, in particular with Section 2.
2.10 COMPANY shall not modify, alter or remove contents of the Licensed
Software except as expressly provided in this Agreement.
-4-
<PAGE>
2.11 All rights in the Licensed Software not expressly granted herein are
reserved by MS.
3. MICROSOFT OBLIGATIONS
---------------------
MS shall perform the following:
3.1 Develop Internet Connection Wizard and ISF Phone Book(s); Maintain
------------------------------------------------------------------
ISP Phone Book(s). Provided that COMPANY complies with its obligations under
-----------------
this Agreement, MS shall include COMPANY's name, telephone number and other
mutually agreed upon COMPANY Information in the applicable ISP Phone Book(s).
Notwithstanding anything to the contrary in this Agreement, MS may move COMPANY
Information to another ISP Phone Book or remove COMPANY Information from one or
all ISP Phone Books if (a) during any two calendar quarters COMPANY's shipments
of Licensed Software (where Internet Explorer is distributed as the only web
browser) falls below seventy-five percent (75%) of total COMPANY shipments of
all web browsers or (b) commencing two calendar quarters after MS first
distributes an Internet Connection Wizard, during any single calendar quarter
the number of new ISP Subscribers for such quarter compared to the number of
new subscribers of other ISPs which appear in the same ISP Phone Book as
COMPANY for such quarter, is such that COMPANY is in the bottom ten percent
(10%) of all ISPs listed in the ISP Phone Book. By way of example, if there are
six (6) ISPs in an ISP Phone Book, and COMPANY had the fewest number of new
subscribers compared to other ISPs in the ISP Phone Book, then MS could move
COMPANY Information to another ISP Phone Book or remove COMPANY Information
from one or all ISP Phone Books. MS will notify COMPANY of any occurrence under
(b) above and give COMPANY 30 days to implement corrective action prior to
moving or removing COMPANY Information.
3.2 Distribution of Internet Connection Wizard. Incorporate the Internet
------------------------------------------
Connection Wizard into an icon on the "desktop" of the English language version
of Windows 95 designated as "The Internet" or such other name designated by MS.
3.3 Referral Server. Develop and maintain Referral Server.
---------------
3.4 Promotion. Include information concerning the ISP Service in press
---------
releases and marketing activities related to promotion of the Internet
Connection Wizard to be mutually agreed upon by MS and COMPANY.
4. COMPANY OBLIGATIONS
-------------------
COMPANY shall perform the duties described in Exhibit C.
5. PAYMENT AND REPORTING
---------------------
5.1 Advance. In consideration for MS including information regarding the
-------
ISP Services in the ISP Phone Book, COMPANY shall pay MS [*] as an advance
against future ISP Referral Fees which sum shall be applied against and recouped
from future earned ISP Referral Fees (the "Advance"). COMPANY shall pay the
Advance to MS on or before thirty (30) days after the Effective Date of this
Agreement.
5.2 ISP Referral Fee. In consideration of each ISP Subscriber, COMPANY
----------------
shall pay MS the ISP Referral Fee for each subscription for ISP Service ordered
by each ISP Subscriber.
5.3 Reporting. Within thirty (30) days after the end of each calendar
---------
month, COMPANY shall furnish MS a statement together with payment for any amount
shown thereby to be due to MS. The royalty statement shall be based upon ISP
Referral Fees for the quarter then ended, and shall be in the form of the sample
report included on Exhibit D. Late payment(s), including receipts for foreign
taxes withheld,
- ---------------
[*] Certain information in this exhibit has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has
been requested with respect to the omitted portions.
-5-
<PAGE>
if applicable, shall bear interest at the lower of the rate of one and one-half
percent (1.5%) per month and the maximum rate allowable by applicable law, from
the date such payment is due until the date it is actually paid. COMPANY's
report shall include for each version of the Licensed Software, the number of
copies of the Licensed Software licensed or distributed by or for COMPANY during
that calendar month, including "competitive upgrade" copies as described in
Exhibit D. In the event that no copies were licensed or distributed by or for
COMPANY during a calendar quarter, COMPANY shall indicate this on the report.
COMPANY's report shall further include the percentage of Internet Explorer
browsers licensed or distributed as a total of all browsers licensed or
distributed by or for COMPANY during that calendar month. All such reports shall
be maintained in confidence by MS and shall not be disclosed to any third party
except to its immediate legal and financial consultants as may be required in
the ordinary course of MS'business.
5.4 All amounts due hereunder shall be sent to the address listed in
Section 11. All amounts due hereunder are exclusive of any taxes, duties, fees,
excises or tariffs imposed on any of COMPANY's activities in connection with
this Agreement. Such charges, if any, shall be paid by COMPANY.
6. ACCEPTANCE, DISCLAIMER OF WARRANTY AND LIMITATION OF LIABILITY
--------------------------------------------------------------
6.1 The Licensed Software and IEAK are deemed accepted by COMPANY.
6.2 Neither the COMPANY nor any of its employees shall have any right to
make any representation, warranty, or promise on behalf of MS.
6.3 THE LICENSED SOFTWARE AND IEAK ARE PROVIDED TO COMPANY AS IS
WITHOUT WARRANTY OF ANY KIND. THE ENTIRE RISK AS TO THE RESULTS AND PERFORMANCE
OF THE LICENSED SOFTWARE AND IEAK ARE ASSUMED BY COMPANY AND THE END-USER
CUSTOMER. MS DISCLAIMS ALL WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT
NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT.
6.4 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY DIRECT (EXCEPT
AS TO AMOUNTS OWED HEREUNDER), CONSEQUENTIAL, INDIRECT, INCIDENTAL, OR SPECIAL
DAMAGES WHATSOEVER, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS
PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, AND THE LIKE,
ARISING OUT OF THE USE OF OR INABILITY TO USE THE LICENSED SOFTWARE OR IEAK,
EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
BECAUSE SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF LIABILITY FOR
CONSEQUENTIAL OR INCIDENTAL DAMAGES, THE ABOVE LIMITATION MAY NOT APPLY.
7. TERM OF AGREEMENT
-----------------
The term of this Agreement shall commence as of the Effective Date and shall
continue for a period of two (2) years. Thereafter, this Agreement shall
automatically renew for successive one year terms unless either party gives the
other party thirty (30) days written notice of its intent not to renew.
8. DEFAULT AND TERMINATION
-----------------------
8.1 This Agreement may be terminated earlier by a party if any of the
following events of default occur with respect to the other party (the
"Defaulting Party"): (a) if the Defaulting Party materially fails to perform or
comply with this Agreement or any provision hereof; (b) if the Defaulting Party
fails to strictly comply with the provisions of Section 10 or makes or attempts
to make an assignment in violation
-6-
<PAGE>
of Section 13.5; (c) if the Defaulting Party becomes insolvent or admits in
writing its inability to pay its debts as they mature, or makes an assignment
for the benefit of creditors; (d) if a petition under any foreign, state, or
United States bankruptcy act, receivership statute, or the like, as they now
exist, or as they may be amended, is filed by the Defaulting Party; or (e) if
such a petition is filed by any third party, or an application for a receiver of
the Defaulting Party is made by anyone and such petition or application is not
resolved favorably to the Defaulting Party within sixty (60) days.
8.2 Termination under subsection 8.1(b) shall be effective as of the date
notice is given. In all other cases, termination shall be effective ninety (90)
days after notice of termination to the Defaulting Party if the Defaulting Party
defaults have not been cured. The rights and remedies of the parties provided in
this Section shall not be exclusive and are in addition to any other rights and
remedies provided by law or this Agreement.
8.3 Upon termination of this Agreement for any reason, COMPANY must cease
distribution of the Licensed Software. Upon termination of this Agreement,
COMPANY's Information shall be immediately removed from the ISP Phone Book(s).
If this Agreement is terminated other than due to COMPANY's default, COMPANY may
distribute Licensed Software remaining in inventory as of such termination date
for a period of three (3) months. After such time, COMPANY shall destroy all
full or partial copies of the Licensed Software and IEAK in COMPANY's possession
or under its control. If this Agreement is terminated by MS for cause pursuant
to Section 8, COMPANY shall return to MS or destroy all full or partial copies
of the Licensed Software and IEAK in COMPANY's possession or under its control
within ten (10) days following the termination date, including any in-house
copies COMPANY may have produced.
8.4 End user licenses validly granted prior to expiration or termination
of this Agreement shall survive termination or expiration of this Agreement.
8.5 Sections 1, 5, 6, 8, 10, 11, 12 and 13 shall survive termination of
this Agreement.
8.6 In the event of termination by either party (other than a termination
by MS pursuant to Section 8.1) any remaining balance of the Advance made by the
COMPANY, as outlined in Section 5.1, shall be returned within 30 days of a final
report on ISP Referral Fees submitted by COMPANY.
9. SUPPORT
-------
9.1 COMPANY shall have the sole responsibility and expense for providing
all support for the Sign-up Server and all support needed by ISP Subscribers for
the Licensed Software and the ISP Service.
9.2 MS will provide COMPANY (but not ISP Subscribers) support for the
Internet Connection Wizard. Except for such support, this Agreement does not
include technical support from MS to COMPANY. Technical support may be available
from MS or an MS subsidiary pursuant to a separate agreement.
10. NONDISCLOSURE AGREEMENT
-----------------------
Each party shall keep confidential the terms and conditions of this Agreement,
and other non-public information and know-how disclosed to such party by the
other party. However, each party may disclose the terms and conditions of this
Agreement in confidence to its immediate legal and financial consultants as
required in the ordinary course of such party's business. Each party may
disclose this Agreement in, and as an exhibit to, its public disclosure
documents, if on the advice of legal council it would be required to do so;
provided, however, that the disclosing party agrees to seek confidential
treatment with respect to the ISP Referral Fees and with respect to the other
appropriate items after consultation with the other party.
-7-
<PAGE>
11. NOTICES AND REQUESTS
--------------------
All notices, authorizations, and requests in connection with this Agreement
shall be deemed given on the day they are (i) deposited in the U.S. mails,
postage prepaid, certified or registered, return receipt requested; or (ii) sent
by overnight courier, charges prepaid, with a confirming fax; and addressed as
follows:
NOTICES TO COMPANY:
- ------------------
Concentric Network Corporation_______________
10590 N. Tantau Ave._________________________
Cupertino, CA 95014 _________________________
Attn: Kevin L. Jones_______________________________
Telephone: (408)343-2204 _______________________________
Fax: (408)342-2810 _______________________________
NOTICES TO MS:
- --------------
Notices: MICROSOFT CORPORATION
- -------
One Microsoft Way
Redmond, WA 98052-6399
Attn: Senior Vice President, Systems
Copy to: Law & Corporate Affairs, US Legal
Fax: (206) 936-7209
or to such other address as the party to receive the notice or request so
designates by written notice to the other.
PAYMENTS/VOLUME DISTRIBUTION SUMMARIES:
- --------------------------------------
PAYMENTS MADE BY CHECK AND DISTRIBUTION SUMMARIES TO:
- ----------------------------------------------------
MICROSOFT CORPORATION
Remittance Processing
P.O. Box 84808
Seattle, WA 98124-6108
FOR OVERNIGHT DELIVERY TO:
- -------------------------
MICROSOFT CORPORATION
Remittance Processing
Wholesale Lockbox
6801 South 180th
Tukwila, WA 98188
Invoice No:______________
PAYMENTS MADE BY WIRE TRANSFER TO:
- ----------------------------------
MICROSOFT CORPORATION
c/o First Interstate Bank of Washington
Seattle Main Branch
Seattle, WA
U.S.A.
ABA
-8-
<PAGE>
SWIFT Code:
Account #
Regarding:
Microsoft PNS Collections
or to such other bank, address or account as MS may specify from time to time by
written notice to COMPANY. COMPANY agrees to ensure that the regarding line
stated above, the MS license agreement number for the Agreement, and the MS
invoice number, if any, are specified on each payment made pursuant to the
Agreement. One day prior to making any wire transfer, COMPANY shall send to MS a
fax containing all remittance information with a cover sheet listing the
COMPANY's name, the date of the wire transfer, the amount of the wire transfer,
and the number of pages being faxed to the attention of:
ICU Credit Rep
Microsoft Corporation
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<PAGE>
12. AUDITS
------
12.1 During the term of this Agreement, COMPANY agrees to keep all usual
and proper records and books of account and all usual and proper entries
relating to COMPANY's ISP Subscriptions sufficient to substantiate the number of
ISP Subscribers. COMPANY shall maintain on COMPANY premises such records for
itself and for each Subsidiary which exercises rights under this Agreement.
12.2 In order to verify statements issued by COMPANY and COMPANY's
compliance with the terms of this Agreement, MS may cause an audit to be made of
COMPANY's applicable books and records. Any audit shall be conducted during
regular business hours at COMPANY's facilities upon reasonable advance notice.
Any audit shall be conducted by an independent certified public accountant of
national stature selected by MS (other than on a contingent fee basis) (the
"Auditor") and such audit will be limited to Internet Explorer Subscribers
only and limited to one time per year.
12.3 COMPANY agrees to provide the Auditor access to the relevant
COMPANY's records and facilities.
12.4 Prompt adjustment shall be made to compensate for any errors or
omissions disclosed by such audit. Any such audit shall be paid for by MS unless
material discrepancies are disclosed. "Material" shall mean the under reporting
of ten percent (10%) of the amount due. If material discrepancies are disclosed,
COMPANY agrees to pay MS for the costs associated with the audit in addition to
the amount of any discrepancy. The results of any audit conducted under Section
12 shall be provided to COMPANY at the conclusion of the audit.
13. GENERAL
-------
13.1 This Agreement shall be construed and controlled by the laws of the
State of Washington. The parties consent to jurisdiction and venue in the state
and federal courts sitting in the state in which the initial defendant maintains
its headquarters. Process may be served on either party in the manner provided
in Section 11 above, or by such other method as is authorized by law.
13.2 Neither this Agreement, nor any terms and conditions contained
herein, shall be construed as creating a partnership, joint venture, agency
relationship or as granting a franchise.
13.3 This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements or communications. It shall not be modified except by
a written agreement dated subsequent to the date of this Agreement and signed on
behalf of COMPANY and MS by their respective duly authorized representatives. No
waiver of any breach of any provision of this Agreement shall constitute a
waiver of any prior, concurrent or subsequent breach of the same or any other
provisions hereof, and no waiver shall be effective unless made in writing and
signed by an authorized representative of the waiving party.
13.4 If any provision of this Agreement shall be held by a court of
competent jurisdiction to be illegal, invalid or unenforceable, the remaining
provisions shall remain in full force and effect.
13.5 The rights and obligations hereunder shall inure to the benefit of
the successors of the parties hereto, provided any rights or obligations
hereunder shall not be assigned by either party without the prior written
approval of the other party. COMPANY hereby agrees that it will remain
responsible for and guarantee the compliance of each majority owned subsidiary
or affiliate which exercises rights under this Agreement. MS hereby approves the
assignment of this Agreement to a successor corporation to the COMPANY in
connection with a reincorporation of the COMPANY in a state other than Florida.
-10-
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13.6 Any Licensed Software which COMPANY distributes or licenses to or on
behalf of the United States of America, its agencies and/or instrumentalities
(the "Government"), is provided to COMPANY with RESTRICTED RIGHTS. Use,
duplication or disclosure by the Government is subject to restriction as set
forth in subparagraph (c)(1)(ii) of the rights in Technical Data and Computer
Software clause at DFAR 252.227-7013, or as set forth in the particular
department or agency regulations or rules which provide Microsoft protection
equivalent to or greater than the above-cited clause. COMPANY shall comply with
any requirements of the Government to obtain such RESTRICTED RIGHTS protection,
including without limitation, the placement of any restrictive legends on the
Tool documentation and any license agreement used in connection with the
distribution thereof. Manufacturer is Microsoft Corporation, One Microsoft Way,
Redmond, Washington 98052-6399. Under no circumstances shall Microsoft be
obligated to comply with any Governmental requirements regarding cost and
pricing data and cost accounting. For any distribution or license of the
Licensed Software that would require compliance by Microsoft with Governmental
requirements relating to cost and pricing data or cost accounting, COMPANY must
obtain an appropriate waiver or exemption from such requirements for the benefit
of Microsoft from the appropriate Governmental authority before the distribution
and/or license of the Licensed Software to the Government.
13.7 COMPANY acknowledges that the Licensed Software and the IEAK are
subject to the export control laws and regulations of the U.S., and any
amendments thereof. COMPANY agrees that it will not export or re-export the
Licensed Software and/or the IEAK to any country, person, entity or end user
subject to U.S. export restrictions. COMPANY specifically agrees not to export
or re-export the Licensed Software and/or the IEAK (i) to any country to which
the U.S. has embargoed or restricted the export of goods or services, which as
of December 31, 1996 include, but are not necessarily limited to, Cuba, Iran,
Iraq, Libya, North Korea, Sudan, and Syria, or to any national of any such
country who COMPANY knows intends to transmit or transport the products back to
such country; (ii) to any end-user who COMPANY knows will utilize the Licensed
Software and/or IEAK in the design, development or production of nuclear,
chemical or biological weapons; or (iii) to any end-user who has been prohibited
from participating in U.S. export transactions by any federal agency of the U.S.
government.
13.8 COMPANY shall, at its own expense, obtain and arrange for the
maintenance in full force and effect of all governmental approvals, consents,
licenses, authorizations, declarations, filings, and registrations as may be
necessary for the performance of all of the terms and conditions of the
Agreement including, but not limited to, foreign exchange approvals, import and
offer agent licenses, fair trade approvals and all approvals which may be
required to realize the purposes of the Agreement.
13.9 In the event income taxes are required to be withheld by any non-
U.S.A. government on payments required hereunder, COMPANY may deduct such taxes
from the amount owed MS and pay them to the appropriate tax authority. COMPANY
shall promptly deliver to MS an official receipt for any such taxes withheld or
other documents necessary to enable MS to claim a U.S.A. Foreign Tax Credit.
COMPANY will make certain that any taxes withheld are minimized to the extent
permitted by the applicable law.
13.10 If either MS or COMPANY employs attorneys to enforce any rights
arising out of or relating to this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and costs.
13.11 The following Exhibits are part of this Agreement:
Exhibit B Company ISP Service(s)
Exhibit C Company Obligations
Exhibit D ISP Referral Fees
Exhibit E ISP Subscriber Configuration Guidelines
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Exhibit G Microsoft(R) Internet Explorer Online Logo Usage
Guidelines
Attach l&2 Microsoft Internet Explorer Logo Qualification
Criteria
Exhibit H Microsoft(R) Internet Explorer Standard Logo Usage
Guidelines
Exhibit I General Guidelines For Using Microsoft Trademarks
Exhibit X Microsoft Frontpage Server Extensions
Exhibit Z Windows 95 ISP Referral and Ordering Process
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above. All signed copies of this Agreement shall be deemed originals.
MICROSOFT CORPORATION CONCENTRIC NETWORK CORPORATION
------------------------------
(COMPANY)
/s/ Cameron Myhrvold /s/ Henry R. Nothhaft
- ------------------------------------ ------------------------------
By (sign) By (sign)
Cameron Myhrvold Henry R. Nothhaft
- ------------------------------------ ------------------------------
Name (Print) Name (Print)
Vice President, Public Network Sales President & CEO
- ------------------------------------ ------------------------------
Title Title
3/28/97 March 26, 1997
- ------------------------------------ ------------------------------
Date Date
-12-
<PAGE>
EXHIBIT B
---------
COMPANY'S ISP SERVICE(S)
Concentric's service offering for consumers includes basic dial-up subscriber
access to the Internet and World Wide Web, as well as value-added services.
Value-added services include e-mail; access to newsgroups, global chat, IRC,
FTP, gopher, and a personal Web site. Value-added services offered as additional
options include private-domain Web sites and dedicated Web servers, shell
accounts (PPP, SLIP, and UNIX), rlogin, Telnet, and direct dial service.
COMPANY SERVICE AREA
US and Canada
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<PAGE>
EXHIBIT C
---------
COMPANY OBLIGATIONS (NOTE: MS OBLIGATIONS ARE SET FORTH IN SECTION 3)
COMPANY shall perform the following duties/obligations:
- ------------------------------------------------------
1. Offer the ISP Service(s).
2. Develop and maintain a Sign-up Server. The Sign-up Server shall be
operational on a 7X24 basis.
3. Establish a toll free telephone number, or any other communication
medium mutually agreed to by the parties for the processing of orders
for ISP Subscribers. COMPANY shall notify MS in writing by a mutually
agreed upon date of such specific communication medium or other relevant
means of order entry secured by COMPANY for the ISP Service and any
other COMPANY Information. COMPANY shall use unique numbers, extensions
or addresses so as to ensure that all ISP Subscribers (e.g. those
directed to the Sign-up Server by the Internet Connection Wizard) can be
easily segregated from other orders received by COMPANY that do not
originate from the Internet Connection Wizard for revenue reporting
purposes.
4. Use and display the "Microsoft Internet Explorer" logo on the home page
for COMPANY's ISP Service, along with a hot link to
www.microsoft.com/ie/ie.htm on the face of the home page.
---------------------------
5. In copies of Microsoft Internet Explorer distributed by COMPANY, COMPANY
may set the "default" URL to point to COMPANY's home page for the ISP
Service, provided that such home page includes a hot link to
www.microsoft.com/ie/ie.htm.
---------------------------
6. Offer the Microsoft Internet Explorer as the standard web browser for
COMPANY's ISP Service. At the time of ISP Service request from an ISP
Subscriber, COMPANY shall not express or imply that an alternate browser
is available. COMPANY may provide a non-MS web browser with its ISP
Service only upon a customer initiated request.
7. COMPANY shall not advertise or otherwise promote any non-MS web browser
more than [*] of the total impressions for advertisements for web
browsers. By way of example, COMPANY shall not display any logo for, or
maintain a link to, a non-MS web browser on the front page of COMPANY's
website for the ISP Service, on the Start Page, or on the front page of
any COMPANY website for any other Internet access service offered by
COMPANY.
8. Use the Microsoft Internet Explorer name and logo in COMPANY's
packaging, advertising and promotional materials in connection with the
Licensed Software. Such use shall be pursuant to MS' standard trademark
policies as attached hereto and as may be provided by MS to COMPANY from
time to time.
9. Within sixty (60) days following execution of this Agreement, issue a
press release announcing that COMPANY has licensed the Microsoft
Internet Explorer and that the Microsoft Internet Explorer will be the
standard web browser included in COMPANY's ISP Service. In the event
COMPANY elects to distribute NetMeeting, COMPANY shall issue a press
release announcing such distribution within sixty (60) days following
execution of this Agreement. COMPANY shall provide any such press
release to Microsoft for review at least five (5) days prior to release.
- ---------------
[*] Certain information in this exhibit has been omitted and filed separately
with the Securities and Exchange Commission. A total of 2 pages containing
such information has been omitted from this exhibit. Confidential treatment
has been requested with respect to the omitted portions.
-14-
<PAGE>
COMPANY agrees MS may use COMPANY's name in any press release MS issues
regarding licensing of the Microsoft Internet Explorer provided that if
the use of COMPANY's name extends beyond listing COMPANY as having
licensed Internet Explorer, MS shall provide such press release to
COMPANY for review at least five (5) days prior to release.
10. Before COMPANY is listed in the ISP Phone Book(s), COMPANY will test and
certify compliance of Access with MS specifications for security and
authentication protocols, other industry protocols, and other
specifications and standards specified by MS from time to time in
accordance with the procedures, and using the testing tools specified by
MS from time to time. COMPANY will provide MS with information and
access as requested by MS from time to time to allow MS to ensure
COMPANY's ongoing compliance with such specifications, the acceptance
testing procedures, and the terms of this Agreement.
-15-
<PAGE>
EXHIBIT D
---------
ISP REFERRAL FEES
[*]
- ---------------
[*] Certain information in this exhibit has been omitted and filed separately
with the Securities and Exchange Commission. A total of 2 pages containing
such information has been omitted from this exhibit. Confidential treatment
has been requested with respect to the omitted portions.
-16-
<PAGE>
EXHIBIT E
---------
ISP SUBSCRIBER CONFIGURATION GUIDELINES
1. COMPANY shall configure the ISP Subscriber's copy of Internet Explorer
(hosted on the ISP Subscriber's computer) via an INS file such that the
"default" URL on Internet Explorer points to the Start Page.
2. COMPANY can add and populate a "favorites folder" on the ISP Subscriber's
copy of Internet Explorer via an INS file.
3. COMPANY's ISP Information Page shall comply with the following:
a. Size of the HTML page limited to 20K.
b. The page should have one exit point that points back to the main
referral page.
c. No scrolling, no tabs, no links, and no fields.
d. Should fit on 640x480 with no fields.
e. Use buttons as much as possible.
f. Do not use hot links.
g. A "cancel" leaves the entire Internet Connection Wizard.
MS reserves the right to change the above criteria.
-18-
<PAGE>
EXHIBIT G to the LICENSE AND DISTRIBUTION AGREEMENT
Microsoft(R) Internet Explorer
Online Logo Usage Guidelines
This site is best experienced with
[Logo "Microsoft Internet Explorer"]
Click here to start
1. USAGE
Use the Internet Explorer online logo (the "Logo") only to promote
Microsoft Internet Explorer and indicate that your Internet Site includes
or is compatible with the Microsoft Internet Explorer.
The Logo may only be used on your Internet Site which must meet the
applicable Logo Qualification Criteria and may not be used in any other
fashion.
RECOMMENDED TEXT. Based upon extensive research, we suggest that the
Internet Explorer Logo be accompanied by the following text "This site is
best experienced with ... Click here to start." as indicated in the below
images. This information clarifies how the logo should be used, especially
for new Internet visitors who are unfamiliar with the different means of
navigating the Internet.
This site is best experienced with
[Logo "Microsoft Internet Explorer"]
Click here to start
This site is best experienced with
[Logo "Microsoft Internet Explorer"]
Click here to start.
PRODUCT NAME. It should appear as "Microsoft(R) Internet Explorer at the
first and most prominent use in all materials and can thereafter be
referred to as "Internet Explorer".
2. INTENT
You are not permitted to use the logo to disparage Microsoft, its products
or services, or for promotional goods or for products which, in MS'
reasonable judgment, may diminish or otherwise damage Microsoft's goodwill
in the Logo, including but not limited to uses which could be deemed to be
obscene, pornographic, excessively violent, or otherwise in poor taste or
unlawful, or which purpose is to encourage unlawful activities. Similarly,
you cannot imitate Microsoft's product packaging or the Logo in any of your
materials, including advertising, product packaging, and promotional
materials. The Logo must not be used in a manner that implies Microsoft's
sponsorship or endorsement of the product, service, or content presented on
your Internet Site.
3. LOGO LINK
Used in an Internet Site, the Logo must be an active link to this URL
address:
http://www.microsoft.com/ie/ie.htm
-----------------------------------
-19-
<PAGE>
4. PRESENTATION
PROMINENCE. Do not use the Logo or the names "Microsoft," "Microsoft
Internet Explorer," or "Internet Explorer" more prominently than your
company, product, or Internet Site name.
ARTWORK. Use only Microsoft authorized electronic artwork of the Logo. The
Logo must stand by itself and must include a minimum amount of empty space
surrounding the Logo (30 pixels) so as to separate it from any other object,
such as type, photography, borders, edges, and so on. The Logo may not be
used as a feature or design element of any other Logo.
SIZE. The Logo cannot be reduced in size beyond what is electronically
provided by Microsoft and must be placed in a prominent location on the
Internet Site where it is used. Do not remove any trademark symbols or alter
the Logo in any way. Redraws, distortions, or animation of the Logo are not
permitted beyond what is provided to authorized registered Microsoft
Online logo Internet Sites.
FOOTNOTE. Include the following footnote on Internet Sites that include the
Logo: "Microsoft is a registered trademark in the United States and other
countries and the Microsoft Internet Explorer Logo is a trademark of
Microsoft Corporation."
ALTERATIONS TO THESE GUIDELINES
Microsoft reserves the right to change the Logo and these Usage Guidelines at
any time and solely at its discretion. If possible, Microsoft will provide
advanced notice of these changes. Any use of the Logo that is not consistent
with these guidelines is strictly prohibited.
CANCELLATION OF AUTHORIZATION TO HOST LOGO
Microsoft reserves the right to review use of the Internet Explorer Logo.
Disregard for these Usage Guidelines may result in a revocation of the right to
use the logo, and with it all benefits enjoyed through participation in the logo
program.
Third parties improperly using the Logo must correct any deficiencies in their
use of the Logo and/or in the quality of the product used in conjunction with
the Logo upon reasonable notice from Microsoft. Refusal to correct such
deficiencies may result in revocation of the right to use the Logo.
QUESTIONS
If you have any questions about the Logo Program, please send e-mail to
"[email protected]"
TRADEMARKS. Microsoft and Windows are registered trademarks and ActiveX is a
trademark in the United States and other countries and the Microsoft Internet
Explorer Logo is a trademark of Microsoft Corporation.
-20-
<PAGE>
ATTACHMENT 1 TO EXHIBIT G OF THE MICROSOFT INTERNET EXPLORER LOGO
USAGE GUIDELINES
MICROSOFT(R) INTERNET EXPLORER ONLINE
LOGO QUALIFICATION CRITERIA
This site is best experienced with
[Logo "Microsoft Internet Explorer"]
Click here to Start
Gaining authorization to use the version of the Microsoft(R) Internet Explorer
online logo shown above for your Internet Site is easy. Simply fulfill the
following two criteria and you are eligible to use the logo.
1. Showcase on your Internet Site one or more of these HTML features:
. Ratings. Support self-regulation of content to ensure appropriate
-------
access to your Internet Site.
. Marquees. Scroll text or graphics across your screen.
--------
. Enhanced tables. Use colors/textures to make tabular data more
---------------
legible and visually appealing.
. Background sounds. Provide an auditory experience when your Internet
-----------------
Site is accessed.
. Watermarks. Create a mark of distinction on your home page.
------------
. Inline AVIs. Graphically animate your page beyond static images.
-----------
. Enhanced HTML Frame Tags. Simulate the appearance of a magazine with
------------------------
borderless, nonscrolling, floating frames, and even frames within
frames.
. Enhanced HTML style sheets. Control margins, line spacing, and
----------------------------
placement of design elements; specify fonts and point sizes; get
desktop publishing support for the Web.
2. Enroll in the logo program, and agree to follow the Logo Usage Guidelines.
NEED HELP GETTING STARTED?
Please go to the FREE Microsoft Internet Explorer online logo--compliant Web
site template at http://www.microsoft.com/ie/log/actxtemp.htm. This template
will help to get you started in building your Internet Site or to simply enhance
your existing Internet Site. See examples of the new HTML features and ActiveX-
compatible controls at the ActiveX Gallery at
http://www.microsoft.com/ie/appdev/controls/default.htm.
If you want more assistance, order the ActiveX Development Kit at
http://www.microsoft.com/intdev/sdk.
NOTE ABOUT CHANGES:
Note: Due to the rapid development of Internet Explorer technology, these
criteria will change periodically over time. All online logo authorized sites
will be notified by e-mail of any changes to these criteria. Permission to use
the logo is limited to those who meet the then applicable criteria, and those
who no longer meet the criteria must discontinue use of logo.
TRADEMARKS. Microsoft and Windows are registered trademarks and ActiveX is a
trademark in the United States and other countries and the Microsoft Internet
Explorer Logo is a trademark of Microsoft Corporation.
-21-
<PAGE>
ATTACHMENT 2 TO EXHIBIT G OF THE MICROSOFT INTERNET EXPLORER LOGO
USAGE GUIDELINES
MICROSOFT(R) INTERNET EXPLORER ONLINE
ANIMATED LOGO QUALIFICATION CRITERIA
This site is best experienced with
[Logo "Microsoft Internet Explorer"]
Click here to start.
Gaining authorization to use the animated version of the Microsoft Internet
Explorer online logo shown above for your Internet Site is easy. Simply fulfill
the following three criteria and you are eligible to use the logo:
1. Showcase on your Internet Site one or more of these HTML features:.
. Ratings. Support self-regulation of content to ensure appropriate
-------
access to your Internet Site.
. Marquees. Scroll text or graphics across your screen.
--------
. Enhanced tables. Use colors/textures to make tabular data more
---------------
legible and visually appealing.
. Background sounds. Provide an auditory experience when your Internet
-----------------
Site is accessed.
. Watermarks. Create a mark of distinction on your home page.
------------
. Inline AVIs. Graphically animate your page beyond static images.
-----------
. Enhanced HTML Frame Tags. Simulate the appearance of a magazine with
------------------------
borderless, nonscrolling, floating frames, and even frames within
frames.
. Enhanced HTML style sheets. Control margins, line spacing, and
----------------------------
placement of design elements; specify fonts and point sizes; get
desktop publishing support for the Web.
2. Activate your Internet Site with ActiveX-compatible Technology.
Support one or more ActiveX-compatible controls on your Internet Site.
. Demonstrate ActiveX-compatible controls. Make your Internet Site
---------------------------------------
interactive today!
. Script ActiveX-compatible controls. Use ActiveX-compatible scripts to
----------------------------------
make a Web page interactive. You can easily link together
ActiveX-compatible controls or intrinsic controls to create
dynamic pages.
3. Enroll in the logo program and agree to follow the Logo Usage Guidelines.
NEED HELP GETTING STARTED?
Please go to the FREE Microsoft Internet Explorer online logo-compliant Web site
template at http://www.microsoft.com/ie/log/actxtemp.htm. This template will
help to get you started in building your Internet Site or to simply enhance your
existing Internet Site. See examples of the new HTML features and ActiveX-
compatible controls at the ActiveX Gallery at
http://www.microsoft.com/ie/appdev/controls/default.htm.
. If you want more assistance, order the ActiveX Development Kit at
http://www.microsoft.com/intdev/sdk.
Note: Due to the rapid development of Internet Explorer technology, these
criteria will change periodically over time. All online logo authorized sites
will be notified by e-mail of any changes to these criteria. Permission to use
the logo is limited to those who meet the then applicable criteria, and those
who no longer meet the criteria must discontinue use of logo.
TRADEMARKS. Microsoft and Windows are registered trademarks and ActiveX is a
trademark in the United States and other countries and the Microsoft Internet
Explorer Logo is a trademark of Microsoft Corporation.
-22-
<PAGE>
EXHIBIT H TO THE LICENSE AND DISTRIBUTION AGREEMENT
---------------------------------------------------
MICROSOFT(R) INTERNET EXPLORER STANDARD LOGO USAGE GUIDELINES
-------------------------------------------------------------
Includes
[Microsoft Internet Explorer Logo]
Microsoft has established the following set of guidelines to assist you in
proper use of the Microsoft Internet Explorer standard logo (the "Logo"). The
power of the Logo lies in its consistent and appropriate use. Any usage outside
these guidelines dilutes the effectiveness of the Logo and makes it more
difficult to defend our rights to the trademark. Microsoft reserves the right to
change the Logo and/or these Guidelines at any time at its discretion. Third
parties shall comply with the Guidelines as amended from time to time.
ACCOMPANYING WORDS
The graphic may not be used without the words "Includes," "Microsoft(R)," and
"Internet Explorer" attached, except as otherwise provided below. No additional
or substitute words may be used. The words may not be abbreviated, translated,
or transliterated, as in non-English documentation. Microsoft will, however,
provide the Logo in versions where the word "Includes" may be translated for the
local market, as available. You may not substitute your own translation of the
Logo.
USING THE MICROSOFT INTERNET EXPLORER STANDARD LOGO
. Use the Logo only to promote Microsoft Internet Explorer and indicate that
your product includes Microsoft Internet Explorer.
. This Logo is NOT to be placed on World Wide Web sites for the purpose of
downloading Microsoft Internet Explorer. For this purpose, please see the
Microsoft Internet Explorer Online Logo Usage guidelines at
http://www.microsoft.com/ie/logo/.
. Microsoft will provide you with electronic artwork of the Logo. You may
not alter this artwork in any way.
. This Logo is for Microsoft and third party use only as a graphical
representation of Microsoft Internet Explorer software.
* Microsoft Use: The Logo may be used by Microsoft on packaging,
channel, collateral, advertising, direct mail, and events
promotion materials for Microsoft products that include Microsoft
Internet Explorer software. When referring to Microsoft Internet
Explorer by itself, Microsoft may use the Logo without the word
"Includes."
* Third Party Use: The Logo may be used by third parties authorized
to distribute the Microsoft Internet Explorer software under a
separate License and Distribution Agreement. Authorized third
parties may use the Logo only on the product packaging of
products that include Microsoft Internet Explorer software and
related advertising.
LEGAL INFORMATION
. The Logo is owned by Microsoft Corporation. All uses of the Logo must
include the following notice:"Microsoft is a registered trademark in the
United States and other countries and the Microsoft Internet Explorer Logo
is a trademark of Microsoft Corporation." A trademark symbol (TM) should
appear to the right of the Logo without alteration from the electronic or
camera-ready artwork provided. In
-23-
<PAGE>
addition, a registered trademark symbol ((R)) must appear in the upper-
right corner immediately following the word "Microsoft." Do not remove any
trademark symbols or alter the Logo in any way.
. The product name for Microsoft Internet Explorer should appear as
"Microsoft(R) Internet Explorer" at the first and most prominent use in
all materials and can thereafter be referred to as "Internet Explorer."
. Microsoft owns the Microsoft Internet Explorer Logo and all uses of the
Logo will inure to the benefit of Microsoft. Third parties shall employ
best efforts to use the Logo in a manner that does not derogate from
Microsoft's rights in the Logo and will take no action that will interfere
with or diminish Microsoft's rights in the Logo. Third parties should not
adopt, use, or register any corporate name, trade name, trademark, service
mark or certification mark, trade dress, or other designation similar to,
or containing in whole or in part the Logo.
. Third parties may not use the Logo in a manner that would imply that their
company or any goods or services provided by such third parties are
sponsored or endorsed by, or affiliated with Microsoft.
. Third parties may not display the Logo on packaging, documentation,
collateral, or advertising in a manner that suggests their product is a
Microsoft product, or in a manner that suggests Microsoft is a part of
their product name.
. You are not permitted to use the Logo to disparage Microsoft Corporation,
its subsidiaries, products, or services, or for promotional goods or for
products which, in Microsoft's reasonable judgment, may diminish or
otherwise damage Microsoft's goodwill in the Logo, including but not
limited to uses that could be deemed to be obscene, pornographic,
excessively violent, or otherwise in poor taste or unlawful, or which
purpose is to encourage unlawful activities.
. Third parties may not imitate Microsoft's product packaging or the Logo in
any of their materials, including advertising, product packaging, and
promotional materials.
. The Logo or the names "Microsoft," "Microsoft Internet Explorer," or
"Internet Explorer" cannot appear larger and/or more prominent than third
parties' trade name, service name, product name, or trademark on any
materials produced or distributed by such third parties.
. Microsoft reserves the right to object to unfair uses or misuses of its
trademarks or other violations of applicable law.
SIZING AND PLACEMENT REQUIREMENTS
. Recommended minimum size is 1" high. The "small" graphic interchange
format (GIF) file provided is an example of the smallest recommended size.
. The Logo with accompanying words must stand alone. A minimum amount of
empty space must surround the Logo so as to separate it from any other
object such as type, photography, borders, edges, and soon. The required
border of empty space around the Logo must be 1/2x wide, where x equals
the height of the Logo as measured from the top edge of the word
"Includes" to the bottom edge of the word "Explorer."
. You may not combine the Logo with any other object, including, but not
limited to, other logos, words, graphics, photos, slogans, numbers, design
features, or symbols.
. The Logo may not be used as a design feature on your product, product
packaging, documentation, collateral, or advertising.
FOUR-COLOR OR ONE-COLOR APPLICATIONS
COLORS
The color version is the preferred way of reproducing the Logo. The Logo
consists of a blue graphic element and black type. The PANTONE(R) Matching
System (PMS) color for the blue is PMS 279 C. Four-color process (CMYK)
equivalents can also be used. For online usage, the blue color should be Red 0,
Green 102, Blue 255 for 8-bit or higher resolution palettes.
The color version can be reproduced only as described here.
-24-
<PAGE>
BLACK-AND-WHITE APPLICATIONS
The black-and-white Logo consists of black graphic element and black type.
Please use the file provided.
ACCESSING THE FILES
The print files are provided in Encapsulated PostScript(R) (EPS) and Windows(R)
metafile (WMF) format. Use the EPS files for materials printed to a Postscript-
compatible printer. Use the Windows metafile to print to a non-PostScript
printer. These files should not be opened and edited, only placed (for example,
select "import...picture") into software programs such as common page-layout or
presentation programs, word-processing software, and so forth. Due to
translation problems between the Mac and PC, Mac(TM) EPS images may lose their
preview. When you place them into your page-layout document, you will see a box
or big 'X' instead of the preview. The image will still print correctly and the
bounding box accurately shows the size of the image. EPS images are sizable, but
please scale proportionately. PC EPS images only have black-and-white previews.
If you chose to use a color PC EPS, it will still preview in black and white.
When you print it, the color will print correctly. EPS format is device-
dependent so the resolution of the device you are printing to is the resolution
you will achieve. The art files include Adobe Illustrator (ART) and Macromedia
Freehand (FH5) format. These are provided for use where the print files supplied
will not work. They are not to be altered.
QUALITY CONTROL
Microsoft reserves the right to review your use of the Logo and to conduct spot
checks on all products, product packaging, marketing materials, and
documentation and may periodically send out requests for samples. Microsoft may
also conduct spot checks in retail outlets and other product sources to monitor
your compliance with these Logo Usage Guidelines. Refusal to submit samples,
noncompliance with these Guidelines, or failure to correct any deficiencies in
your use of the Logo and/or in the quality of the product used in conjunction
with the Logo upon reasonable notice from Microsoft could result in revocation
of your license to use the Logo.
(C) 1996 Microsoft Corporation. All rights reserved.
Microsoft and Windows are registered trademarks in the United States and/or
other countries and the Microsoft Internet Explorer logo is a trademark of
Microsoft Corporation.
PostScript is a registered trademark of Adobe Systems, Inc. Macintosh is a
registered trademark and Mac is a trademark of Apple Computer, Inc. PANTONE
is a registered trademark of Pantone, Inc.
- --------------------------------------------------------------------------------
-25-
<PAGE>
EXHIBIT I
GENERAL GUIDELINES FOR USING MICROSOFT TRADEMARKS
The name Microsoft is synonymous with high-quality computer software and
---------
hardware products; throughout the world, thousands of products produced every
day bear the trademarks of Microsoft Corporation. A trademark is a word, name,
design, or phrase that identifies a product and distinguishes it from similar
products made by competitors. Consequently, Microsoft trademarks are worth
millions of dollars because they represent the standards of excellence and
consistent quality associated with Microsoft(R) products. Without trademarks,
consumers wouldn't be able to distinguish different manufacturers' products or
products of high quality from those of lesser quality. For these reasons, it's
important to understand trademarks and what you can do to protect them.
Trademark rights are acquired by the proper, continuous use of the trademarks. A
trademark that hasn't been registered with the Trademark Office is noted with a
TM. Registered marks are noted with an (R).
WHY PROTECT TRADEMARKS?
Properly used, a trademark can be legally protected indefinitely. However, if
it's used improperly, a trademark can become diluted or fall into generic use
arid lose its protected status. Words such as aspirin, zipper, kerosene, and
harmonica were once trademarks that became generic because their owners did not
protect them properly.
Microsoft doesn't want its valuable trademarks added to the list of genericized
trademarks. The responsibility for protecting trademarks occurs every time each
trademark is used by Microsoft employees and our licensees-whether the
trademarks are used in products, presentations, books, marketing materials, or
advertisements.
Correct use of our trademarks is important to Microsoft, so we've drafted the
following guidelines.
SIX SIMPLE RULES FOR PROTECTING MICROSOFT TRADEMARKS?
1. Set trademarks apart from other words or the nouns they modify.
--------------------------------------------------------------
The common way to do this is to properly capitalize the product name and
designate the trademarks with the appropriate symbols-(R) or TM. You can also
use underlining, italics, or bold type. Examples:
INCORRECT WHEN YOU STARTUP WINDOWS, CLICK ON THE...
CORRECT WHEN YOU STARTUP MICROSOFT(R) WINDOWS(R)
OPERATING SYSTEM, CLICK ON THE...
2. Use Microsoft trademarks as proper adjectives.
---------------------------------------------
Trademarks are adjectives that describe a specific person, place, or thing.
Because a trademark is an adjective, use it with the noun that it modifies.
Example:
THE FORMAT COMMAND OF THE MS-DOS(R) OPERATING SYSTEM...
If you use the same trademark repeatedly in a piece, you must use it correctly:
At first reference, use the Microsoft product name plus its full descriptor;
thereafter, the trademark should appear with its noun descriptor at least 50
percent of the time. (In the example above, "operating system" is the
descriptor.)
-26-
<PAGE>
In the case of our Windows(R) trademark, follow the correct example below.
INCORRECT WINDOWS APPLICATIONS [OR MACHINE/PC]
CORRECT APPLICATION FOR THE WINDOWS(R) OPERATING SYSTEM
You may refer to products that are compatible with the Windows operating system
as: "Windows(R)-compatible products", "Windows(R)-based products" or "products
for Windows(R)."
3. NEVER combine a Microsoft trademark/product name with your (or another
----------------------------------------------------------------------
third party's) trademark/product name.
- -------------------------------------
Trademarks serve to identify the source of a product. If Microsoft trademarks
are combined with the trademarks or product names of others, consumers may be
confused as to which company is the source of a product.
4. Don't use Microsoft trademarks in the possessive or plural form.
---------------------------------------------------------------
Examples:
INCORRECT CODEVIEW(R)'S INTERFACE
CORRECT THE MICROSOFT(R) CODEVIEW(R) DEBUGGER'S INTERFACE
INCORRECT A CASE OF MICROSOFT(R) POWERPOINT(R)S
CORRECT A CASE OF MICROSOFT(R) POWERPOINT(R) PRESENTATION
GRAPHICS PROGRAMS
5. Use the appropriate trademark symbol in the proper place and give
-----------------------------------------------------------------
proper attribution.
------------------
SYMBOLS:
R = REGISTERED TRADEMARK OR SERVICE MARK
TM = TRADEMARK OWNERSHIP CLAIMED
NOTICE:
"_____________ IS A REGISTERED TRADEMARK AND __________ IS A
TRADEMARK OF MICROSOFT CORPORATION."
6. Do not shorten, abbreviate or create acronyms out of Microsoft trademarks.
-------------------------------------------------------------------------
EXAMPLES: DO NOT SAY VC++ FOR THE TRADEMARK VISUAL C++(TM) OR FP FOR THE
REGISTERED TRADEMARK FOXPRO(R).
PROPER USE OF MICROSOFT TRADEMARKS BY OTHERS
. You must have a distinct product name for your product which does not
include any Microsoft product name or trademark.
. You should not market any product under a name that is confusingly similar
to a Microsoft product name or trademark.
. You should not place your company name, trademarks, service marks or
product names next to a Microsoft product name on packaging, disk labels,
or advertisements.
. You are not allowed to use the Microsoft logo on your packaging.
. You may only use the Microsoft logo pursuant to the Microsoft logo
guidelines below.
-27-
<PAGE>
. You must not imitate Microsoft packaging and must display your own
name more prominently than the Microsoft name in the product.
-28-
<PAGE>
MICROSOFT LOGO GUIDELINES
THE LOGO TYPEFACE
The Microsoft logo is a specifically designed form of the company name and may
not be retypeset or modified in any way. Artwork for the logo is available as
printed logo sheets in positive and negative versions, and in electronic form.
COMBINING THE LOGO WITH OTHER GRAPHICS
The Microsoft logo never appears with any other symbol or icon (except the
registered trademark symbol), nor is it contained within a box, circle, or other
shape. The logo must always be accompanied by the registered trademark symbol.
One company logo worldwide ensures that Microsoft is recognized and understood
consistently around the world.
COLOR
The approved colors for the logo are black or reversed out to white. The logo
should never be screened back, built out of four-color process screens, or
broken into multiple colors. Any case for deviation for internal Microsoft use
must be presented to the Creative Director in Corporate Marketing, Redmond,
Washington.
PROXIMITY TO OTHER ELEMENTS
To properly stage the logo, a minimum clearance between the logo and other
elements must be maintained. The cap height of the M in the Microsoft logo
indicates the measurement of minimum clearance between the logo and other
elements on all sides of the logo. This rule alone dictates placement of the
logo in marketing communications.
MINIMUM SIZE
The logo should never appear below a minimum size of 3/4" or 2 cm in width.
Sizes below this measurement decrease readability dramatically.
USE OF THE MICROSOFT LOGO BY THIRD-PARTIES
The Microsoft logo may be used only when referring to Microsoft Corporation. The
following terms and conditions apply when using our corporate logo. Any use of
the logo that falls outside what is outlined below is strictly prohibited. For
further information or clarification on third-party use of the Microsoft logo,
please contact the Permissions/Trademark Group at fax number (206) 869-1327, or
email [email protected].
1. Our logo may only be used to identify Microsoft Corporation or Microsoft
products or services.
2. Our logo may not be used in a manner that would imply your company is
sponsored or endorsed by, or affiliated with, Microsoft.
3. Our logo may not be used in a manner that would imply goods or services
provided by your company are sponsored or endorsed by, or affiliated with,
Microsoft.
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<PAGE>
4. Our logo may not be used in a manner that would disparage Microsoft
Corporation, its subsidiaries, or its products or services.
5. Our logo should never appear larger and/or more prominent than your trade
name, service name, or trademark on any materials produced or distributed by
your company.
6. The following trademark designation "(R)" must appear in the upper right or
at the baseline immediately following the logo. The logo should be
accompanied by the following footnote.
Microsoft is a registered trademark of Microsoft Corporation.
7. You must use the logo provided by Microsoft Corporation with no changes in
the color or design. Camera-ready art is provided for reproduction purposes
only.
8. Microsoft reserves the right to object to unfair uses or misuses of its
trademarks or other violations of applicable law.
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<PAGE>
EXHIBIT X
---------
MICROSOFT FRONTPAGE SERVER EXTENSIONS
1. Authoring Support
2. Administration Support
3. Smart HTML engine (Bot Implementations)
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<PAGE>
EXHIBIT Z
---------
WINDOWS 95 ISP REFERRAL AND ORDERING PROCESS
[FLOW CHART FOLLOWS]
USER ISP MS
- ------------------
User click on
"The Internet"
icon
- ------------------
- ------------------ ------------------------
Dial in to MS MS Referral Server's
- ------------------ ISP listing downloaded
to client
------------------------
- -------------------
User views ISP
Information Pages &
chooses an ISP
- -------------------
- ------------------- ----------------------
Dial into ISP ISP's server answers
- ------------------- call & presents on-
line sign-up forms
----------------------
- -------------------- ----------------------
User completes sign- Sign-up information is
up form & chooses accepted by ISP server
access # ----------------------
- --------------------
- -------------------- -----------------------
User dials local INS file sent to update
access to connect to the browser to support
ISP service ISP's service.
- -------------------- -----------------------
-----------------------
ISP software delivered
to client
-----------------------
- --------------------
User logged on
and browsing the
Internet
- --------------------
-32-
<PAGE>
EXHIBIT 10.13
NETSCAPE COMMUNICATIONS CORPORATION
AND
CONCENTRIC RESEARCH CORPORATION
OEM LICENSE AGREEMENT
NO. ________________
This OEM License Agreement ("Agreement") is entered into on this 27th day of
July, 1995 ("Effective Date") by and between Netscape Communications
Corporation, a Delaware corporation ("Netscape"), with principal offices at 501
East Middlefield Road, Mountain View, CA 94043 and Concentric Research
Corporation, a Florida corporation ("Concentric"), with principal offices at
400 Forty-First Street, Bay City, MI 48708.
WHEREAS, Concentric markets and provides data communications and interactive on-
line products and services including Internet access services.
WHEREAS, Netscape has proprietary or remarketing rights to certain computer
software products.
WHEREAS, Netscape wishes to grant to Concentric and Concentric desires to obtain
certain license rights to such computer software products more particularly
described below in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree to the following terms and conditions, which set forth the rights,
duties, and obligations of the parties.
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the following
meanings:
1.1 "Attachment(s)" means the attachments to this Agreement which are attached
hereto and incorporated herein:
1.1.1 Attachment A (Description of Netscape Products) which sets forth a
description of each Netscape Product licensed hereunder.
1.1.2 Attachment B (Pricing, Payment Schedules and Deliverables) which
sets forth pricing for Concentric, payment schedules, and specific
items to be delivered to Concentric.
1.1.3 Attachment C (Netscape's Trademarks) which sets forth the trademarks
over which Netscape claims ownership.
1.1.4 Attachment D (Netscape's End User License Agreements) which sets
forth Netscape's terms and conditions of licensing applicable to an
end user customer.
1.1.5 Attachment E (OEM Maintenance and Support) which sets forth
Netscape's and Concentric's maintenance and support obligations.
1.1.6 Attachment F (Concentric Products(s)) which sets forth a description
of Concentric Products which will be bundled with the Netscape
Products.
<PAGE>
1.2 "Derivative Work(s)" means a revision, modification, translation,
abridgment, condensation or expansion of a Netscape Product or
Documentation or any form in which a Netscape Product or Documentation may
be recast, transferred, or adapted, which, if prepared without the consent
of Netscape, would be a copyright infringement.
1.3 "Distributor" means any third party which acquires possession of the
Netscape Products from Concentric without becoming a Netscape Product End
User and distributes such media, Netscape's end user license agreement, and
Concentric Product to an End User.
1.4 "Documentation" means those software user manuals, reference manuals and
installation guides, or portions thereof, which are distributed in
conjunction with the Netscape Products set forth in Attachment A.
1.5 "End User" means any third party licensed by Concentric or a Distributor to
use, but not to further distribute, the Netscape Products.
1.6 "Major and Minor Updates" mean updates, if any, to the Netscape Products.
Major Updates involve additions of substantial functionality while Minor
Updates do not. Major Updates are designated by a change in the number to
the left of the decimal point of the number appearing after the product
name while Minor Updates are designated by a change in such number to the
right of the decimal point. Netscape is the sole determiner of the
availability and designation of an update as a Major or Minor Update. Major
Updates exclude software releases which are reasonably designated by
Netscape as new products. Where used herein "Updates" shall mean Major
Updates or Minor Updates interchangeably.
1.7 "Netscape Product(s)" means the executable version (but not the source code
version) of the computer software products listed or described in
Attachment A as Netscape may update and provide hereunder from time to
time.
1.8 "Program Errors" means one or more reproducible deviations in the Netscape
Products from the applicable specifications shown in the Documentation.
1.9 "Concentric Product(s)" means Concentric's bulletin board and related
Internet access service products developed and marketed by Concentric, as
described in Attachment F, with which the Netscape Products are bundled for
distribution.
SECTION 2. GRANT OF LICENSES AND RIGHTS
2.1 Licenses
2.1.1 License. Subject to the terms and conditions of this Agreement,
Netscape hereby grants and Concentric hereby accepts, a
nonexclusive, nontransferable license to (i) use and reproduce,
without change, the Netscape Products (in executable form only)
on any tangible media and (ii) distribute by sublicense such
Netscape Product copies to Distributors and End Users only in
conjunction with a Concentric Product.
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<PAGE>
Concentric is expressly prohibited from any retail distribution
of the Netscape Products and shall not permit or authorize anyone
else to do so. Concentric is also expressly prohibited from any
marketing and/or distribution directly or indirectly (e.g.
through Distributors) of Netscape Products unless each copy is
bundled with a Concentric Product. Such reproduction shall occur
only at the location of Concentric's principal office first set
forth above unless an alternate location is otherwise specified
in writing to Netscape. Concentric may grant Distributors the
right to grant further sublicenses to distribute copies of the
Netscape Products to other Distributors regardless of tier and
Concentric and all Distributors shall have the right to
distribute the Netscape Products to End Users. Subject to the
terms and conditions of this Agreement, Netscape hereby grants
and Concentric hereby accepts a nonexclusive, nontransferable
license to use the Milan Customer Registration Process 1.1
document solely in conjunction with the Netscape Products to
register End Users for Concentric Products. Concentric shall not
disclose, provide, or otherwise make available said document to
any third party.
2.1.2 Source Code Restrictions. Concentric agrees not to decompile,
reverse engineer, disassemble, or otherwise determine or attempt
to determine source code for the executable code of the Netscape
Products or to create any Derivative Works based upon the
Netscape Products or Documentation, and agrees not to permit or
authorize anyone else to do so.
2.1.3 Documentation License. Subject to the terms and conditions of
this Agreement, Netscape hereby grants and Concentric hereby
accepts a nonexclusive, nontransferable license to use and
reproduce the Documentation, and to distribute the Documentation
solely in conjunction with the Netscape Products. Such
reproductions shall occur only at Concentric's principal office
first set forth above, unless an alternate location is otherwise
specified in writing to Netscape. Such distribution may be to
Distributors and End Users.
2.1.4 Licenses Dependent on No Retail Distribution and Bundling. The
licenses granted in Paragraph 2.1.1 are conditional upon no
retail distribution of, and the marketing and bundling of, each
Netscape Product as required therein. If Concentric distributes
through the retail channel, or fails to so bundle the Netscape
Products, the licenses shall be immediately revocable by Netscape
in addition to any other remedies Netscape may have.
2.2 Export
Concentric shall comply fully with all then-current applicable laws, rules
and regulations relating to the export of technical data, including, but
not limited to any regulations of the United States Office of Export
Administration and other applicable governmental agencies and Concentric
acknowledges that by virtue of certain security technology embedded in the
Netscape Products, that export of such software may not be legal. Netscape
agrees to cooperate in providing information requested by Concentric as
necessary to obtain any required licenses and approvals. When distributing
the Netscape Products and Documentation in countries where an enforceable
copyright law covering the same does not
-3-
<PAGE>
exist, Concentric or its Distributors shall obtain a written agreement
signed by the customer prohibiting the customer from making unauthorized
copies of the same.
SECTION 3. MARKETING AND DISTRIBUTION
3.1 Nonexclusivity
Concentric understands that Netscape may enter into arrangements similar
to this Agreement with third parties.
3.2 Public Announcements and Promotional Materials
Netscape and Concentric shall cooperate with each other so that each
party may issue a press release concerning this Agreement, provided that
each party must approve any press release prior to its release. Netscape
shall cooperate with Concentric in its development of the initial
marketing and sales materials used to promote the distribution of the
Netscape Products.
3.3 Terms Relating to Distribution
3.3.1 General Restrictions on Distribution
Concentric agrees to comply with and shall require its
Distributors to comply with all applicable laws, rules and
regulations to preclude the acquisition of unlimited rights to
technical data, software and documentation provided with the
Netscape Product to a governmental agency, and ensure the
inclusion of the appropriate "Restricted Rights" or "Limited
Rights" notices required by the U.S. Government agencies.
3.3.2 Distributor License Agreement
Concentric shall procure from each Distributor an executed copy
of a distribution license ("Distributor License Agreement")
sufficient to ensure that such Distributors are required to
comply with the relevant terms of this Agreement.
3.3.3 End User License Agreements
Concentric and its Distributors shall distribute the Netscape
Products to End Users only under the terms of, and shall ensure
that the Netscape Products are subject to applicable end user
license agreements with terms at least as restrictive as those
set forth in the end user license agreements attached hereto as
Attachment D ("End User License Agreements").
3.3.4 Enforcement of Sublicense Agreements
Concentric and its Distributors shall use commercially reasonable efforts
to enforce each Distributor License Agreement and End User License
Agreement, whichever may be relevant, with at least the same degree of
diligence used in enforcing similar agreements governing others, which in
any event shall be sufficient to adequately enforce such agreements.
Concentric shall use commercially reasonable efforts to protect
Netscape's copyright, shall notify Netscape of any breach of a material
obligation under a Distributor License Agreement or an End User License
Agreement affecting Netscape Products, and will cooperate with Netscape
in any legal action to prevent or stop unauthorized use, reproduction or
distribution of Netscape Products.
-4-
<PAGE>
SECTION 4. FEES AND PAYMENT
4.1 Prepaid License Fees
4.1.1 Concentric shall pay to Netscape the non-refundable royalty
license fees ("License Fees") specified in Attachment B hereto.
In addition, upon exhaustion of the License Fees, Concentric
shall pay to Netscape the royalties per license granted by
Concentric and Distributors to End Users as specified in
Attachment B in connection with the distribution of all or any
portion of a Netscape Product or Update. The License Fees shall
be credited against the royalties accruing under this Agreement
in accordance with Attachment B hereto. Licenses will accrue in
the applicable corresponding quantity upon: (a) the initial date
of Concentric's internal use; (b) distribution by Concentric of a
Netscape Product copy to a Distributor or End User; (c)
authorization by Concentric to increase the authorized number of
copies and (d) the initial date of Concentric's internal use or
shipment by Concentric to an End User or Distributor of an
Update. Concentric shall pay Netscape such royalties accrued
during each month within thirty (30) days following the end of
such month and each such payment shall be accompanied by a
monthly royalty report as described in Paragraph 4.3 below.
4.1.2 Service Fees. Concentric shall pay to Netscape the service fees
set forth on Attachment B for maintenance and support services
set forth in Attachment E hereto.
4.2 Payment and Taxes
4.2.1 Payments. All payments shall be made in United States dollars at
Netscape's address as indicated in this Agreement or at such
other address as Netscape may from time to time indicate by
proper notice hereunder.
4.2.2 Taxes. All fees and royalties are exclusive of all taxes, duties
or levies, however designated or computed. Concentric shall be
responsible for and pay all taxes based upon the transfer, use,
distribution of Netscape Products, or the program storage media,
or upon payments due under this Agreement including, but not
limited to, sales, use, or value-added taxes, duties, withholding
taxes and other assessments now or hereafter imposed on or in
connection with this Agreement or with any sublicense granted
hereunder, exclusive of taxes based upon Netscape's net income.
In lieu thereof, Concentric shall provide to Netscape a tax or
other levy exemption certificate acceptable to the taxing or
other levying authority.
4.3 Monthly Reports
Concentric and its Distributors shall maintain accurate records of End
Users, including the name and address of each End User, the specific
platforms distributed to each End User, and any further information as
Netscape may from time to time reasonably request to be maintained.
Concentric shall report to Netscape within Thirty (30) calendar days after
the end of each month, the type and number of licenses granted for the
Netscape Products during such prior month by Concentric to Distributors and
End Users.
-5-
<PAGE>
4.4 Audit of Records
Concentric shall keep and maintain full, true, and accurate records
containing all data reasonably required for verification of amounts to be
paid, and the quantity of Netscape Products distributed. Netscape shall
have the right, during normal business hours upon at least five (5)
business days prior notice, to have a nationally recognized independent
auditor audit and analyze the relevant records of Concentric to verify
compliance with the provisions of this Agreement. The audit shall be
conducted not more than twice every twelve (12) months at Netscape's
expense unless there is inadequate record keeping or the results of such
audit establish that inaccuracies in the monthly royalty reports have
resulted in underpayment of royalties to Netscape more than five percent
(5%) of the amount actually due in any month, in which case Concentric
shall bear the expenses of the audit.
SECTION 5. DELIVERABLES, UPDATES, AND TECHNICAL SUPPORT
5.1 Deliverables
Netscape shall provide Concentric with the deliverables indicated in
Attachment B ("Deliverables"). All deliveries under this Agreement shall be
F.O.B. Netscape.
5.2 Updates and Technical Support
Netscape shall provide Concentric with Updates as they become available
from Netscape at the pricing, terms and conditions specified in Attachment
B.
SECTION 6. TRADEMARKS AND TRADE NAMES
6.1 License to Use
Whenever Concentric makes reference to the Netscape Products or the
functionality of the Netscape Products provided within the Concentric
Product, then Concentric shall use (and is hereby granted a non-
transferable, non-exclusive restricted license to use) those Netscape
trademarks and trade names relating to the applicable Netscape Products in
any advertising, marketing, technical or other materials related to such
Netscape Products which are distributed by Concentric or its Distributors
in connection with this Agreement. Concentric need not use Netscape's
trademarks and trade names in any country in which their connotation is
offensive and will consult with Netscape as to the foreign translation of
Netscape trademarks and trade names so that Netscape can help ensure
uniformity with their use by Netscape or third parties. Concentric shall
clearly indicate Netscape's ownership of such trademarks or trade names
specified in Netscape's trademark and trade name listing indicated in
Attachment C. All such usage shall inure to Netscape's benefit. Concentric
agrees not to register, and agrees to obtain the agreement of its
Distributors not to register, any Netscape trademarks or trade names
without Netscape's express prior written consent. Upon Netscape's request
from time to time Concentric agrees to provide Netscape with copies of
goods bearing Netscape's trademarks and trade names so that Netscape can
verify their adequate quality. Concentric shall suspend use of Netscape
trademarks and trade names if such quality is reasonably deemed inferior by
Netscape until Concentric has taken such
-6-
<PAGE>
steps as Netscape may reasonably require to solve the quality deficiencies.
A list of Netscape's current trademark registrations and pending
applications is indicated in Attachment C. Netscape reserves the right to
update Attachment C from time to time in accordance with the notice
requirements under this Agreement.
SECTION 7. PROPRIETARY RIGHTS
7.1 Proprietary Rights
Title to and ownership of all copies of the Netscape Products and
Documentation whether in machine-readable or printed form, and including,
without limitation, Derivative Works, compilations, or collective works
thereof and all related technical know-how and all rights therein
(including without limitation rights in patents, copyrights, and trade
secrets applicable thereto), are and shall remain the exclusive property of
Netscape and its suppliers. Concentric shall not take any action to
jeopardize, limit or interfere in any manner with Netscape's ownership of
and rights with respect to the Netscape Products and Documentation.
Concentric shall have only those rights in or to the Netscape Products and
Documentation granted to it pursuant to this Agreement.
7.2 Proprietary Notices
7.2.1 No Alteration of Notices. Concentric and its employees and agents
shall not remove or alter any trademark, trade name, copyright,
or other proprietary notices, legends, symbols, or labels
appearing on or in copies of the Netscape Products and
Documentation delivered to Concentric by Netscape and shall use
the same notices, legends, symbols, or labels in and on copies of
Netscape Products and Documentation made pursuant to Section 2.1
as are contained in and on such Netscape Products and
Documentation.
7.2.2 Notice. Each portion of the Netscape Products and Documentation
reproduced by Concentric shall include the intellectual property
notice or notices appearing in or on the corresponding portion of
such materials as delivered by Netscape hereunder. Concentric
shall ensure that all copies of the Netscape Products made
pursuant to this Agreement conspicuously display the following
notice:
Copyright (C)1994 (or other appropriate year(s)), Netscape
Communications Corporation. All Rights Reserved.
If Concentric is unsure of the appropriate year(s), it shall consult
Netscape to obtain the correct designation. Such notice shall be on labels
on all media containing Netscape Products. If the copyright symbol "(C)"
cannot technically be reproduced, Concentric shall use the word "Copyright"
followed by the notation "(c)" in its place.
SECTION 8. CONFIDENTIAL INFORMATION AND DISCLOSURE
8.1 Confidential Information
Each party agrees to maintain all Confidential Information in confidence to
the same extent that it protects its own similar Confidential Information
and to use such Confidential Information only as permitted under this
Agreement. For purposes of this Agreement
-7-
<PAGE>
"Confidential Information" shall mean information including, without
limitation, computer programs, code, algorithms, names and expertise of
employees and consultants, know-how, formulas, processes, ideas, inventions
(whether patentable or not), schematics and other technical, business,
financial and product development plans, forecasts, strategies and
information marked "Confidential" or if disclosed verbally, reduced to
writing and marked "Confidential" within thirty (30) days after the date of
disclosure. Each party agrees to take all reasonable precautions to prevent
any unauthorized disclosure or use of Confidential Information including,
without limitations disclosing Confidential Information only to its
employees (a) with a need to know to further permitted uses of such
information and (b) who are parties to appropriate agreements sufficient to
comply with this Section 8, and (c) who are informed of the nondisclosure/
non-use obligations imposed by this Section 8 and both parties shall take
appropriate steps to implement and enforce such non-disclosure/non-use
obligations. The foregoing restrictions on disclosure and use shall survive
for Three (3) years following termination of this Agreement but shall not
apply with respect to any Confidential Information which (i) was or becomes
publicly known through no fault of the receiving party; (ii) was rightfully
known or becomes rightfully known to the receiving party without
confidential or proprietary restriction from a source other than the
disclosing party; (iii) is independently developed by the receiving party
without the participation of individuals who have had access to the
Confidential Information; (iv) is approved by the disclosing party for
disclosure without restriction in a written document which is signed by a
duly authorized officer of such disclosing party; and (v) the receiving
party is legally compelled to disclose; provided, however, that prior to
any such compelled disclosure, the receiving party will (a) assert the
privileged and confidential nature of the Confidential Information against
the third party seeking disclosure and (b) cooperate fully with the
disclosing party in protecting against any such disclosure and/or obtaining
a protective order narrowing the scope of such disclosure and/or use of the
Confidential Information. In the event that such protection against
disclosure is not obtained, the receiving party will be entitled to
disclose the Confidential Information, but only as and to the extent
necessary to legally comply with such compelled disclosure.
8.2 Confidentiality of Agreement
Unless required by law, and except to assert its rights hereunder or for
disclosures to its own employees on a "need to know" basis, Concentric
agrees not to disclose the terms of this Agreement or matters relating
thereto without the prior written consent of Netscape, which consent shall
not be unreasonably withheld.
SECTION 9. WARRANTIES
9.1 Limited Warranty
Subject to the limitations set forth in this Agreement, Netscape warrants
only to Concentric that the Netscape Products when properly adapted,
installed, and used will substantially conform to the specifications in the
Documentation in effect when the Netscape Products are shipped to
Concentric. Netscape's warranty and obligation shall extend for a period of
Ninety (90) days ("Warranty Period") from the date Netscape first delivers
the Netscape Products to
-8-
<PAGE>
Concentric. All warranty claims not made in writing or not received by
Netscape within the time period specified above shall be deemed waived.
Netscape's warranty and obligation is solely for the benefit of Concentric,
who has no authority to extend this warranty to any other person or entity.
NETSCAPE MAKES NO WARRANTY THAT ALL ERRORS OR FAILURES WILL BE CORRECTED.
9.2 EXCLUSIVE WARRANTY
THE EXPRESS WARRANTY SET FORTH IN PARAGRAPH 9.1 CONSTITUTES THE ONLY
WARRANTY WITH RESPECT TO THE NETSCAPE PRODUCTS. NETSCAPE MAKES NO OTHER
REPRESENTATION OR WARRANTY OF ANY KIND WHETHER EXPRESS OR IMPLIED (EITHER
IN FACT OR BY OPERATION OF LAW) WITH RESPECT TO THE NETSCAPE PRODUCTS.
NETSCAPE EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. NETSCAPE DOES NOT WARRANT, FOR EXAMPLE, THAT THE
NETSCAPE PRODUCTS ARE ERROR-FREE OR THAT OPERATION OF THE NETSCAPE PRODUCTS
WILL BE SECURE OR UNINTERRUPTED. THERE IS ALSO NO IMPLIED WARRANTY OF
NONINFRINGEMENT; THE SOLE REMEDY FOR INFRINGEMENT IS PROVIDED IN SECTION
10.
9.3 Defects Not Covered by Warranties
If Netscape's ability to perform warranty services is affected thereby,
Netscape shall have no obligations under the warranty provisions set forth
in Section 9.1: (a) in the event Concentric incorporates, attaches or
otherwise engages any attachment, feature, program, or device to the
Netscape Products, or any part thereof; or (b) if any nonconformance is
caused by: accident; transportation; neglect or misuse; alteration,
modification, or enhancement of the Netscape Products by Concentric;
failure to provide a suitable installation environment; use of supplies or
materials not meeting specifications; use of the Netscape Products for
other than the specific purpose for which the Netscape Products are
designed; use of the Netscape Products on any systems other than the
specified hardware platform for such Netscape Products; or Concentric's use
of defective media or defective duplication of the Netscape Products.
9.4 Exclusive Remedy
If Concentric finds what it believes to be errors or a failure of the
Netscape Products to meet specifications which significantly affects
performance, and provides Netscape with a written report during the
Warranty Period, Netscape will use reasonable efforts to correct promptly,
at no charge to Concentric, any such errors or failures. This is
Concentric's sole and exclusive remedy for any express or implied
warranties hereunder.
SECTION 10. INDEMNIFICATION
10.1 Netscape shall defend any action brought against Concentric to the extent
it is based on a claim that reproduction or distribution by Concentric of
the Netscape Products furnished hereunder within the scope of a license
granted hereunder directly infringes any valid United States patent, United
States copyright, United States trademark or trade secret in the United
-9-
<PAGE>
States. Netscape will pay resulting costs, damages and legal fees finally
awarded against Concentric in such action which are attributable to such
claim provided that Concentric (a) promptly notifies Netscape in writing of
any such claim and Netscape has sole control of the defense and all related
settlement negotiations, and (b) cooperates with Netscape, at Netscape's
expense, in defending or settling such claim.
10.2 Should a Netscape Product become, or be likely to become in Netscape's
opinion, the subject of infringement of such copyright, patent, trademark
or trade secret, Netscape may procure for Concentric (i) the right to
continue using the same or (ii) replace or modify it to make it non-
infringing. Netscape shall have no liability for and Concentric shall
indemnify and hold Netscape harmless from and against any claim based upon:
(a) use of other than the then current, unaltered version of the Netscape
Product, unless the infringing portion is also in the then current,
unaltered release;(b) use, operation or combination of Netscape Products
with non-Netscape programs, data, equipment or documentation if such
infringement would have been avoided but for such use, operation or
combination; (c) Concentric's or its agent's activities after Netscape has
notified Concentric that Netscape believes such activities may result in
such infringement (Out this shall not release Netscape from its
indemnification obligations prior to such notification); (d) compliance
with Concentric's designs, specifications or instructions; (e) any
modifications or marking of the Netscape Products not specifically
authorized in writing by Netscape; (f) Concentric's use of any trademarks
other than those listed in Attachment C; or (g) third party software. The
foregoing states the entire liability of Netscape and the exclusive remedy
of Concentric with respect to infringement of copyrights, patents,
trademarks or trade secrets.
10.3 Concentric agrees to indemnify and hold Netscape harmless from any claims,
damages and costs incurred by Netscape related to defective disks or
defective duplication in copies of the Netscape Products distributed by
Concentric.
SECTION 11. LIMITATION OF LIABILITY
EXCEPT FOR A BREACH OF SECTIONS 2.1 OR 8, IN NO EVENT SHALL NETSCAPE OR ITS
SUPPLIERS OR CONCENTRIC BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF
BUSINESS, LOSS OF USE OR DATA, INTERRUPTION OF BUSINESS, OR FOR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF A PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES (AND NOTWITHSTANDING
ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY), OR FOR ANY CLAIM
BY ANY THIRD PARTY, EXCEPT AS PROVIDED IN THE SECTION ENTITLED
"INDEMNIFICATION". IN NO EVENT WILL NETSCAPE OR ITS SUPPLIERS BE LIABLE FOR
(a) ANY REPRESENTATION OR WARRANTY MADE TO ANY THIRD PARTY BY CONCENTRIC,
ANY AGENT OF CONCENTRIC OR DISTRIBUTOR; (b) FAILURE OF THE NETSCAPE
PRODUCTS TO PERFORM AS SPECIFIED HEREIN EXCEPT AS, AND TO THE EXTENT,
OTHERWISE EXPRESSLY PROVIDED HEREIN; (c) FAILURE OF THE NETSCAPE PRODUCTS
TO PROVIDE SECURITY; OR (d) ANY USE OF THE
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<PAGE>
NETSCAPE PRODUCTS OR THE DOCUMENTATION OR THE RESULTS OR INFORMATION
OBTAINED OR DECISIONS MADE BY END USERS OF THE NETSCAPE PRODUCTS OR THE
DOCUMENTATION. THE REMEDIES PROVIDED HEREIN ARE CONCENTRIC'S SOLE AND
EXCLUSIVE REMEDIES. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, NETSCAPE'S ENTIRE LIABILITY TO CONCENTRIC FOR DAMAGES CONCERNING
PERFORMANCE OR NONPERFORMANCE BY NETSCAPE OR IN ANY WAY RELATED TO THE
SUBJECT MATTER OF THIS AGREEMENT, AND REGARDLESS OF WHETHER THE CLAIM FOR
SUCH DAMAGES IS BASED IN CONTRACT OR IN TORT, SHALL NOT EXCEED THE AMOUNT
OF FEES RECEIVED BY NETSCAPE FROM CONCENTRIC.
SECTION 12. TERM OF AGREEMENT
Unless sooner terminated under the provisions of Section 13, or otherwise
rightfully terminated, this Agreement shall remain in effect for a period
of two (2) years from the Effective Date. Thereafter it shall remain in
effect; provided however, either party may terminate this Agreement for
convenience effective at the end of such initial two (2) year term or at
any time thereafter upon at least sixty (60) days prior written notice.
SECTION 13. DEFAULT AND TERMINATION
13.1 Termination for Default.
If either party defaults in any of its obligations under this Agreement,
the non-defaulting party, at its option shall have the right to terminate
this Agreement by written notice unless, within thirty (30) calendar days
after written notice of such default, the defaulting party remedies the
default, or, in the case of a default which cannot with due diligence be
cured within a period of thirty (30) calendar days, the defaulting party
institutes within the thirty (30) calendar days steps necessary to remedy
the default and thereafter diligently prosecutes the same to completion.
13.2 Bankruptcy. Either party shall have the right to terminate this Agreement
if the other party ceases to do business in the normal course, becomes or
is declared insolvent or bankrupt, is the subject of any proceeding
relating to its liquidation or insolvency which is not dismissed within
Ninety (90) calendar days, or makes an assignment for the benefit of its
creditors.
13.3 Effect on Rights
13.3.1 Termination of this Agreement by either party shall not act as a
waiver of any breach of this Agreement and shall not act as a
release of either party from any liability for breach of such
party's obligations under this Agreement.
13.3.2 Except as specified in Paragraphs 13.4 and 13.5 below, upon
termination or expiration of this Agreement, all licenses for
Netscape Products and Documentation granted under this Agreement
shall terminate.
13.3.3 Except where otherwise specified, the rights and remedies granted
to a party under this Agreement are cumulative and in addition
to, and not in lieu of, any other rights
-11-
<PAGE>
or remedies which the party may possess at law or in equity,
including without limitation rights or remedies under applicable
patent, copyright, trade secrets, or proprietary rights laws,
rules or regulations.
13.4 Effect of Termination
Within thirty (30) calendar days after termination of this Agreement,
Concentric shall either deliver to Netscape or destroy all copies of the
Netscape Products and Documentation (except as provided in Section 13.5)
and any other materials provided by Netscape to Concentric hereunder in its
possession or under its control, and shall furnish to Netscape an affidavit
signed by an officer of Concentric certifying that, to the best of its
knowledge, such delivery or destruction has been fully effected.
Notwithstanding the foregoing, and provided Concentric fulfills its
obligations specified in this Agreement with respect to such items,
Concentric may continue to use and retain copies of the Netscape Products
and Documentation to the extent, but only to the extent, necessary to
support and maintain Netscape Products rightfully distributed to End Users
by Concentric prior to termination of this Agreement.
13.5 Continuing Obligations
13.5.1 Payment of Accrued Fees and Royalties. Within Thirty (30)
calendar days of termination of this Agreement, Concentric shall
pay to Netscape all sums then due and owing. Any other such sums
shall subsequently be promptly paid as they become due and owing.
13.5.2 Continuance of Sublicenses. Notwithstanding the termination of
this Agreement, all End User sublicenses which have been properly
granted by Concentric and Distributors pursuant to this Agreement
prior to its termination shall survive.
13.5.3 Other Continuing Obligations. The respective rights and
obligations of Netscape and Concentric under the provisions of
Paragraphs 2.1.2, 2.2, 3.3.1, 3.4, 9.1, 9.2, 9.3, 9.4, 13.3,
13.4, 13.5 and Sections 4, 6, 7, 8, 10, 11 and 14 shall survive
termination of this Agreement.
SECTION 14. GENERAL PROVISIONS
14.1 Notices
Any notice, request, demand, or other communication required or permitted
hereunder shall be in writing and shall be deemed to be properly given upon
the earlier of (a) actual receipt by the addressee or (b) five (5) business
days after deposit in the U.S. mail, postage prepaid, when mailed by
registered or certified U.S. mail, return receipt requested, or two (2)
business days after being sent via private industry courier to the
respective parties at the addresses first set forth above or to such other
person or address as the parties may from time to time designate in a
writing delivered pursuant to this Paragraph 14.1. Notices to Netscape and
Concentric shall be attention to: Legal Department.
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<PAGE>
14.2 Waiver and Amendment
The waiver by either party of a breach of or a default under any provision
of this Agreement, shall not be construed as a waiver of any subsequent
breach of the same or any other provision of the Agreement, nor shall any
delay or omission on the part of either party to exercise or avail itself
of any right or remedy that it has or may have hereunder operate as a
waiver of any right or remedy. No amendment or modification of any
provision of this Agreement shall be effective unless in writing and signed
by a duly authorized signatory of Netscape and Concentric.
14.3 Assignment
This Agreement and the licenses granted hereunder are to a specific legal
entity or legal person, not including corporate subsidiaries or affiliates
of Concentric, and are not assignable by Concentric, nor are the
obligations imposed on Concentric delegable without the prior written
consent of Netscape. Notwithstanding the foregoing, Concentric may assign
this Agreement to a successor in interest to the whole of Concentric's
business created to effect a change in the state of incorporation of
Concentric. Any attempt to sublicense (except as expressly permitted
herein) assign or transfer any of the rights, duties or obligations under
this Agreement in derogation hereof shall be null and void.
14.4 Governing Law
This Agreement is entered into in the State of California, U.S.A., and this
Agreement shall be governed by and construed in accordance with the laws of
the State of California, U.S.A., without reference to its conflicts of law
provisions. Any dispute regarding this Agreement shall be subject to the
exclusive jurisdiction of the California state courts in and for Santa
Clara County, California (or, if there is exclusive federal jurisdiction,
the United States District Court for the Northern District of California),
and the parties agree to submit to the personal and exclusive jurisdiction
and venue of these courts.
14.5 Relationship of the Parties
No agency, partnership, joint venture, or employment is created as a result
of this Agreement and neither Concentric nor its agents have any authority
of any kind to bind Netscape in any respect whatsoever.
14.6 Captions and Section Headings
The captions and section and paragraph headings used in this Agreement are
inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement.
14.7 Severability
If the application of any provision or provisions of this Agreement to any
particular facts of circumstances shall be held to be invalid or
unenforceable by any court of competent jurisdiction, then (a) the validity
and enforceability of such provision or provisions as applied to any other
particular facts or circumstances and the validity of other provisions of
this Agreement shall not in any way be affected or impaired thereby and (b)
such provision or provisions shall be reformed without further action by
the parties hereto to and only to the
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<PAGE>
extent necessary to make such provision or provisions valid and enforceable
when applied to such particular facts and circumstances.
14.8 Force Majeure
Either party shall be excused from any delay or failure in performance
hereunder, except the payment of monies by Concentric to Netscape, caused
by reason of any occurrence or contingency beyond its reasonable control,
including but not limited to, acts of God, earthquake, labor disputes and
strikes, riots, war, and governmental requirements. The obligations and
rights of the party so excused shall be extended on a day-to-day basis for
the period of time equal to that of the underlying cause of the delay.
14.9 Entire Agreement
This Agreement, including the Attachments hereto, constitutes the entire
agreement between the parties concerning the subject matter hereof and
supersedes all proposals or prior agreements whether oral or written, and
all communications between the parties relating to the subject matter of
this Agreement and all past courses of dealing or industry custom. The
terms and conditions of this Agreement shall prevail, notwithstanding any
variance with any purchase order or other written instrument submitted by
Concentric, whether formally rejected by Netscape or not.
AUTHORIZED SIGNATURES
In order to bind the parties to this Agreement, their duly authorized
representatives have signed their names below on the dates indicated.
NETSCAPE COMMUNICATIONS CONCENTRIC NETWORK
CORPORATION CORPORATION
By: /s/ Conway Rulon-Miller By: /s/ Henry R. Nothhaft
-------------------------------- --------------------------------
Name: Conway (Todd) Rulon-Miller Name: Henry R. Nothhaft
------------------------------ ------------------------------
Title: VP Sales Title: CEO
----------------------------- -----------------------------
Date: 7-28-95 Date: 7-28-95
------------------------------ ------------------------------
REVIEWED BY
NETSCAPE LEGAL
Initial
------------
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<PAGE>
ATTACHMENT A
NETSCAPE PRODUCT DESCRIPTIONS
<TABLE>
<CAPTION>
Product O/S
- ------- ---
<S> <C>
Netscape Navigator LAN 1.1 Windows and Macintosh
Netscape Navigator Personal Edition 1.1 Windows
</TABLE>
<PAGE>
ATTACHMENT B
PRICING, PAYMENT SCHEDULES AND DELIVERABLES
1. Prepayment for Client Products. Concentric agrees to pay to Netscape a
------------------------------
nonrefundable prepayment against future-owed royalties for the Netscape
Navigator products equal to [*] due and payable as follows:
<TABLE>
<CAPTION>
Amount Due Date
---------- ----
<S> <C>
[*] Effective Date
[*] October 31, 1995
[*] January 31, 1996
[*] April 30, 1996
[*] July 31, 1996
</TABLE>
All prepaid royalties are recoverable at a One Hundred percent (100%) rate,
meaning that for each One dollar ($1.00) of royalty due, One dollar ($1.00) is
credited to Concentric's client product prepaid royalty account. After the
client product prepaid royalties are fully depleted, (whether in any given
monthly reporting period or after the total prepayment of [*]), royalties
for the Netscape Navigator client product will be paid net thirty (30) days in
accordance with Section 2 of this Attachment B and Section 4 of this Agreement.
2. Pricing for Client Products. The per product price for the Netscape
---------------------------
Navigator products shall be as follows:
<TABLE>
<CAPTION>
Product Quantity Per Product Price
------- -------- -----------------
<S> <C> <C>
Navigator LAN 1.1 [*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
Navigator Personal Edition 1.1 [*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
- -------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
3. Maintenance and Support. Concentric agrees to pay to Netscape an annual
-----------------------
fee for the maintenance and support described in Attachment E hereto. [*].
4. Major Updates.
-------------
4.1 For new licensees of the Netscape Products, the license fee for Major
Updates shall not increase by more than [*] of the applicable per product price.
4.2 For existing licensees of the Netscape Products, the license fee is
[*] of Netscape's published end user price for the applicable Netscape
Product incorporating the Major Update, or Netscape's published list price for
the Major Update distributed on a stand-alone basis, whichever is less.
4.3 Notwithstanding section 4.1 and 4.2 of this Attachment B, Concentric
will receive version 2.0 of the Netscape Products at no increase in the fees set
forth in section 2 of this Attachment B.
5. Deliverables.
------------
One (1) gold master of Navigator LAN 1.1 for Windows and Macintosh
One (1) gold master of Navigator Personal Edition 1.1 for Windows
One (1) electronic copy and one (1) printed copy of Documentation for Navigator
LAN 1.1 and Personal Edition 1.1
One (1) printed copy of the document known as "Milan Customer Registration
Process 1.1"
6. Ship To Address for Deliverables:
Concentric Research Corporation
-------------------------------------
10590 N. Tantau Avenue
-------------------------------------
Cupertino. CA 95014
-------------------------------------
Attention: Dan McCammon
--------------
Telephone: 408 7774690
---------------
- -------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE>
ATTACHMENT C
NETSCAPE TRADEMARKS
Netscape Trademarks
The following are trademarks of Netscape Communications Corporation in the
United States and/or other countries:
the Netscape Communications Corporation logo
Netscape
Netsite
Mozilla
Netscape Navigator
Netscape Internet Applications
Netscape Communications Server
Netscape Commerce Server
Netscape News Server
Netscape Proxy Server
Netscape Merchant System
Netscape Community System
Netscape Publishing System
Netscape IStore
<PAGE>
ATTACHMENT D
NETSCAPE END USER LICENSE AGREEMENTS
BY OPENING THE PACKAGE OR CLICKING ON THE "ACCEPT" BUTTON, YOU ARE CONSENTING TO
BE BOUND BY AND ARE BECOMING A PARTY TO THIS AGREEMENT. IF YOU DO NOT AGREE TO
ALL OF THE TERMS OF THIS AGREEMENT, CLICK THE "DO NOT ACCEPT" BUTTON OR RETURN
THIS PRODUCT TO THE PLACE OF PURCHASE FOR A FULL REFUND.
NETSCAPE NAVIGATOR END USER LICENSE AGREEMENT
GRANT. Netscape Communications Corporation ("Netscape") hereby grants to you a
non-exclusive license to use its accompanying software product ("Software") and
accompanying documentation ("Documentation") on the following terms:
You may:
use the Software on any single computer;
use the Software on a second computer so long as the first and second
computers are not used simultaneously; or
copy the Software for archival purposes, provided any copy must contain all
of the original Software's proprietary notices.
You may not:
permit other individuals to use the Software except under the terms listed
above; modify, translate, reverse engineer, decompile, disassemble (except
to the extent applicable laws specifically prohibit such restriction), or
create derivative works based on the Software or Documentation;
copy the Software or Documentation (except for back-up purposes); rent,
lease, transfer or otherwise transfer rights to the Software or
Documentation; or remove any proprietary notices or labels on the Software
or Documentation.
SOFTWARE. If you receive your first copy of the Software electronically, and a
second copy on media, the second copy may be used for archival purposes only.
This license does not grant you any right to any enhancement or update.
TITLE. Title, ownership rights, and intellectual property rights in and to the
Software and Documentation shall remain in Netscape and/or its suppliers. The
Software is protected by the copyright laws of the United States and
international copyright treaties. Title, ownership rights, and intellectual
property rights in and to the content accessed through the Software is the
property of the applicable content owner and may be protected by applicable
copyright or other law. This License gives you no rights to such content.
<PAGE>
LIMITED WARRANTY. Netscape warrants that for a period of ninety (90) days from
the date of acquisition, the Software, if operated as directed, will
substantially achieve the functionality described in the Documentation.
Netscape does not warrant, however, that your use of the Software will be
uninterrupted or that the operation of the Software will be error-free or
secure. In addition, the security, mechanism implemented by the Software has
inherent limitations, and you must determine that the Software sufficiently
meets your requirements. Netscape also warrants that the media containing the
Software, if provided by Netscape, is free from defects in material and
workmanship and will so remain for ninety (90) days from the date you acquired
the Software. Netscape's sole liability for any breach of this warranty shall
be, in Netscape's sole discretion: (i) to replace your defective media; or (ii)
to advise you how to achieve substantially the same functionality with the
Software as described in the Documentation through a procedure different from
that set forth in the Documentation; or (iii) if the above remedies are
impracticable, to refund the license fee you paid for the Software. Repaired,
corrected, or replaced Software and Documentation shall be covered by this
limited warranty for the period remaining under the warranty that covered the
original Software, or if longer, for thirty (30) days after the date (a) of
shipment to you of the repaired or replaced Software, or (b) Netscape advised
you how to operate the Software so as to achieve the functionality described in
the Documentation. Only if you inform Netscape of your problem with the
Software during the applicable warranty period and provide evidence of the date
you acquired the Software will Netscape be obligated to honor this warranty.
Netscape will use reasonable commercial efforts to repair, replace, advise or
refund pursuant to the foregoing warranty within 30 days of being so notified.
THIS IS A LIMITED WARRANTY AND IT IS THE ONLY WARRANTY MADE BY NETSCAPE.
NETSCAPE MAKES NO OTHER EXPRESS WARRANTY AND NO WARRANTY OF NONINFRINGEMENT OF
THIRD PARTIES' RIGHTS. THE DURATION OF IMPLIED WARRANTIES, INCLUDING WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR
PURPOSE, IS LIMITED TO THE ABOVE LIMITED WARRANTY PERIOD; SOME STATES DO NOT
ALLOW LIMITATIONS ON HOW LONG AN IMPLIED WARRANTY LASTS, SO LIMITATIONS MAY NOT
APPLY TO YOU. NO NETSCAPE DEALER, AGENT, OR EMPLOYEE IS AUTHORIZED TO MAKE ANY
MODIFICATIONS, EXTENSIONS, OR ADDITIONS TO THIS WARRANTY. If any modifications
are made to the Software by you during the warranty period; if the media is
subjected to accident, abuse, or improper use; or if you violate the terms of
this Agreement, then this warranty shall immediately be terminated. This
warranty shall not apply if the Software is used on or in conjunction with
hardware or Software other than the unmodified version of hardware and Software
with which the Software was designed to be used as described in the
Documentation.
THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS, AND YOU MAY HAVE OTHER LEGAL
RIGHTS THAT VARY FROM STATE TO STATE OR BY JURISDICTION.
LIMITATION OF LIABILITY. UNDER NO CIRCUMSTANCES AND UNDER NO LEGAL THEORY,
TORT, CONTRACT, OR OTHERWISE, SHALL NETSCAPE OR ITS SUPPLIERS OR RESELLERS BE
LIABLE TO YOU OR ANY OTHER PERSON FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY CHARACTER
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<PAGE>
INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF GOODWILL, WORK STOPPAGE,
COMPUTER FAILURE OR MALFUNCTION, OR ANY AND ALL OTHER COMMERCIAL DAMAGES OR
LOSSES, OR FOR ANY DAMAGES IN EXCESS OF NETSCAPE'S LIST PRICE FOR A LICENSE TO
THE SOFTWARE AND DOCUMENTATION, EVEN IF NETSCAPE SHALL HAVE BEEN INFORMED OF THE
POSSIBILITY OF SUCH DAMAGES, OR FOR ANY CLAIM BY ANY OTHER PARTY. THIS
LIMITATION OF LIABILITY SHALL NOT APPLY TO LIABILITY FOR DEATH OR PERSONAL
INJURY TO THE EXTENT APPLICABLE LAW PROHIBITS SUCH LIMITATION. FURTHERMORE,
SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR
CONSEQUENTIAL DAMAGES, SO THIS LIMITATION AND EXCLUSION MAY NOT APPLY TO YOU.
TERMINATION. This license will terminate automatically if you fail to comply
with the limitations described above. On termination, you must destroy all
copies of the Software and Documentation.
EXPORT CONTROLS. None of the Software or underlying information or technology
may be downloaded or otherwise exported or reexported (i) into (or to a national
or resident of) Cuba, Iraq, Libya, North Korea, Yugoslavia, Iran, Syria or any
other country to which the U.S. has embargoed goods; or (ii) to anyone on the
U.S. Treasury Department's list of Specially Designated Nationals or the U.S.
Commerce Department's Table of Denial Orders. By downloading or using the
Software, you are agreeing to the foregoing and you are representing and
warranting that you are not located in, under the control of, or a national or
resident of any such country or on any such list.
In addition, if the licensed Software is identified as a not-for-export product
(for example, on the box, media or in the installation process), then the
following applies: EXCEPT FOR EXPORT TO CANADA FOR USE IN CANADA BY CANADIAN
CITIZENS, THE SOFTWARE AND ANY UNDERLYING TECHNOLOGY MAY NOT BE EXPORTED OUTSIDE
THE UNITED STATES OR TO ANY FOREIGN ENTITY OR "FOREIGN PERSON" AS DEFINED BY
U.S. GOVERNMENT REGULATIONS, INCLUDING WITHOUT LIMITATION, ANYONE WHO IS NOT A
CITIZEN, NATIONAL OR LAWFUL PERMANENT RESIDENT OF THE UNITED STATES. BY
DOWNLOADING OR USING THE SOFTWARE, YOU ARE AGREEING TO THE FOREGOING AND YOU ARE
WARRANTING THAT YOU ARE NOT A "FOREIGN PERSON" OR UNDER THE CONTROL OF A FOREIGN
PERSON.
MISCELLANEOUS. This Agreement represents the complete agreement concerning this
license between the parties and supersedes all prior agreements and
representations between them. It may be amended only by a writing executed by
both parties. THE ACCEPTANCE OF ANY PURCHASE ORDER PLACED BY YOU IS EXPRESSLY
MADE CONDITIONAL ON YOUR ASSENT TO THE TERMS SET FORTH HEREIN, AND NOT THOSE
CONTAINED IN YOUR PURCHASE ORDER. If any provision of this Agreement is held to
be unenforceable for any reason, such provision shall be reformed only to the
extent necessary to make it enforceable. This Agreement shall be governed by
and construed under California law as such law applies to agreements between
California residents entered into and to be performed within California, except
as governed by
-3-
<PAGE>
Federal law. The application the United Nations Convention of Contracts for the
International Sale of Goods is expressly excluded.
U.S. Government Restricted Rights. Use, duplication or disclosure by the
Government is subject to restrictions set forth in subparagraphs (a) through (d)
of the Commercial Computer-Restricted Rights clause at FAR 52.227-19 when
applicable, or in subparagraph (c)(1)(ii) of the Rights in Technical Data and
Computer Software clause at DFARS 252.227-7013, and in similar clauses in the
NASA FAR Supplement. Contractor/manufacturer is Netscape Communications
Corporation, 501 East Middlefield Road, Mountain View, CA 94043.
-4-
<PAGE>
ATTACHMENT E
OEM MAINTENANCE AND SUPPORT
1. Maintenance/Minor Updates. In consideration of the Maintenance and Support
-------------------------
fee set forth in Attachment B, Netscape will provide to Concentric any Minor
Updates made generally available during the term of this Agreement. Concentric
and not Netscape will be responsible for providing Minor Updates to its
Distributors and End Users. The expenses of any such distribution will be paid
by Concentric. Concentric and Netscape will favorably consider electronic or
alternative dissemination methods of such Minor Updates to the extent consistent
with policies of both companies. Concentric and Netscape agree to discuss
monthly support issues and processes.
2. Technical Support. In consideration of the Maintenance and Support fee set
-----------------
forth in Attachment B, Netscape will provide Concentric with Netscape's backend
technical support services, as further described herein.
a. Back-end Support. Netscape will provide back-end support to
----------------
Concentric for Program Errors not resolved by Concentric pursuant to
Concentric's support policies and in accordance with subsection (b) below.
This support includes efforts to identify defective source code and to
provide corrections, workarounds and/or patches to correct Program Errors.
Netscape will provide Concentric with a telephone number and an e-mail
address which Concentric may use to report Program Errors during Netscape's
local California business hours (8am - 5pm Pacific Time). For priority 1 or
2 failures, Concentric agrees to notify Netscape via both telephone and e-
mail. Concentric will identify one (1) member of its customer support staff
and an alternate to act as the primary technical liaisons responsible for
all communications with Netscape's technical support representatives. Such
liaisons will have sufficient technical expertise, training and/or
experience for Concentric to perform its obligations hereunder. Within one
(1) week after the Effective Date, Concentric will designate its
liaison(s). Notification will be in writing and/or e-mail to Netscape.
Concentric may substitute contacts at any time by providing to Netscape one
(1) week's prior written and/or electronic notice thereof.
Netscape will use reasonable commercial efforts to correct significant
Program Errors that Concentric identifies, classifies and reports to
Netscape and that Netscape substantiates. Netscape may reclassify Program
Errors if it reasonably believes that Concentric's classification is
incorrect. Concentric will provide sufficient information to enable
Netscape to duplicate the Program Error before Netscape's response
obligations will commence. Netscape will not be required to correct any
Program Error caused by (a) Concentric's incorporation or attachment of a
feature, program, or device to the Netscape Products, or any part thereof;
(b) any nonconformance caused by accident, transportation, neglect, misuse,
alteration, modification, or enhancement of the Netscape Products; (c) the
failure to provide a suitable installation environment; (d) use of the
Netscape Products for other than the specific purpose for which the
Netscape Products are designed; (e) use of the Netscape Products on any
systems other than the specified hardware platform for such Netscape
Products; (f) Concentric's use of defective media or defective duplication
of the Netscape Products; or
<PAGE>
(g) Concentric's failure to incorporate any Minor Update previously
released by Netscape which corrects such Program Error.
Provided Program Error reports are received by Netscape during Netscape's
local California business hours (8am - 5pm Pacific Time), Netscape will use
reasonable commercial efforts to communicate with Concentric about the
Program Error via telephone or e-mail within the following targeted
response times:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Priority Failure Description Response Time
--------------------------------------------------------------------------------
<S> <C> <C>
1 Fatal (no useful work can be done) 10 hours
--------------------------------------------------------------------------------
2 Severe Impact (functionality disabled): 1 working day
errors which
result in a lack of application
functionality or cause intermittent
system failure
--------------------------------------------------------------------------------
3 Degraded Operations: errors causing 3 working days
malfunction of non-critical functions
--------------------------------------------------------------------------------
4 Minimal Impact: attributes and/or Future release, on
options to utility business justifiable basis
--------------------------------------------------------------------------------
5 Enhancement Request When applicable
--------------------------------------------------------------------------------
</TABLE>
Netscape will use reasonable commercial efforts to resolve each significant
Program Error by providing either a reasonable workaround, an object code
patch, or a specific action plan for how Netscape will address the problem
and an estimate of how long it will take to rectify the defect. Netscape
reserves the right to charge Concentric additional fees at its then-
standard rates for services performed in connection with reported Program
Errors which are later determined to have been due to hardware or software
not supplied by Netscape. Notwithstanding the foregoing, Netscape has no
obligation to perform services in connection with (i) Program Errors
resulting from hardware or software not supplied by Netscape; or (ii) which
occur in the Netscape Product release which is not the then-current
release.
b. Front-line Support. Concentric, and not Netscape, will provide
------------------
front-line, or first and second level, technical support to its
Distributors and End Users. Such support includes call receipt, call
screening, installation assistance, problem identification and diagnosis,
efforts to create a repeatable demonstration of the Program Error and, if
applicable, the distribution of any defective media or Minor Updates.
Concentric agrees that any documentation distributed by Concentric will
clearly and conspicuously state that End Users should call Concentric for
technical support for the Netscape Products. Netscape will have no
obligation to furnish any assistance, information or documentation with
respect to the Netscape Products, to any Distributor or End User. If
Netscape customer support representatives are being contacted by a
significant number of Concentric's Distributors or End Users then, upon
Netscape's request, Concentric and Netscape will cooperate to minimize such
contact.
-2-
<PAGE>
ATTACHMENT F
CONCENTRIC PRODUCTS
Concentric network Access Software which permits end users to access
- ------------------------- Concentric's national dial-up data communications
network and includes:
Internet Access Software and network services which permit
- --------------- subscribers access to all Internet capabilities
through the Concentric Network.
Concentric Research Information and Entertainment Service
- ---------------------------------------------------------
Computerized interactive system offering
subscribers a wide range of on-line information
and entertainment services.
-3-
<PAGE>
FIRST AMENDMENT TO THE
NETSCAPE COMMUNICATIONS CORPORATION
AND
CONCENTRIC RESEARCH, INC.
OEM LICENSE AGREEMENT
This First Amendment ("Amendment") to the Netscape Communications Corporation
and Concentric Research Inc., OEM License Agreement ("Agreement") is entered
into on December __, 1995 ("Amendment Date") by and between Netscape
Communications Corporation ("Netscape") and the Concentric Network Corporation,
successor to the whole of Concentric Research Corporation ("Concentric").
WHEREAS, Netscape and Concentric Research Corporation have entered into an OEM
License Agreement having an effective date of July 27, 1995;
WHEREAS, Netscape and Concentric desire to amend said OEM License Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Added as a new Section 1.1.7 is:
"1.1.7 Attachment G (Navigator Custom Program Request Form) which sets forth
the parameters of the Netscape Navigator Product that OEMs can request Netscape
to customize."
2. Added as a new Section 1.10 is:
"1.10 "Registered User" means an End User that subscribes to Concentric's
Product after receiving a copy of the Netscape Product on tangible media, and
remains a subscriber for [*] after first initiating use of the Netscape Product
using a Concentric Product."
3. Added a new Section 2.1.5 is:
"2.1.5 Distribution Requirements. Concentric may distribute the Netscape
Products electronically by on-line distribution, and speculatively, provided,
however, that such distribution shall be permitted only if distributed as
specifically set forth in this Section 2.1.5.
2.1.5.1 In the case of on-line distribution, the Netscape Products may only
be distributed directly from Concentric and not through Distributors, and must
not be distributed unless: (a) and until after an End User subscribes to
Concentric's Product through Concentric's registration computer; (b) addressed
to a specific End User; (c) distribution is made in conjunction with
Concentric's providing an offer code or password to a potential subscriber; (d)
Concentric agrees to pay, upon distribution/transmission, the applicable license
fee specified in Attachment B; and (e) distribution/transmission is solely from
Concentric's registration computer.
- -------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
1
<PAGE>
2.1.5.2 In case of speculative distribution, such distribution shall be
limited to a nonrenewable, nonreuseable cumulative total of all Netscape
Products of ten million (10,000,000) copies, and distribution shall only be on
tangible media. Netscape Products distributed on a speculative basis must be
preconfigured so that the "Home Page" upon initial installation and use by the
End User is pointing to, and initially "its", a Concentric configured URL.
2.1.5.3 If Concentric distributes the Netscape Products electronically or
speculatively and is not in strict compliance with the conditions described in
this Section 2.1.5, and such distribution shall be considered outside the scope
of this Agreement, and as to any future distribution, the licenses granted
hereunder shall be immediately revocable by Netscape in addition to any other
remedies Netscape may have. Concentric agrees to use all reasonable efforts to
terminate all licenses granted to End Users by Concentric which have not been
granted in strict compliance with the conditions described in this Section
2.1.5."
4. Section 4.1.1 is amended to read as follows, with the revisions as noted by
the underlined text:
"4.1.1 Concentric shall pay to Netscape the non-refundable royalty license
fees ("License Fees") specified in Attachment B hereto. In addition, upon
exhaustion of the License Fees, Concentric shall pay to Netscape the royalties
per license granted by Concentric and Distributors to End Users as specified in
Attachment B in connection with the distribution of all or any portion of a
Netscape Product or Update. The License Fees shall be credited against the
royalties accruing under this Agreement in accordance with Attachment B hereto.
Licenses will accrue in the applicable corresponding quantity upon: (a) the
initial date of Concentric's internal use; (b) in the case of speculative
--------------------------
distribution by Concentric of a tangible Netscape Product copy to a Distributor
--------
or End User, as soon as the End User becomes a Registered User; (c) in the case
------------------------------------------------------------------
of on-line distribution of a Netscape Product immediately upon
- --------------------------------------------------------------
distribution/transmission; (d) in the case of any and all other means and forms
- -------------------------------------------------------------------------------
of distribution of a Netscape Product, now or hereafter known or available, upon
- --------------------------------------------------------------------------------
distribution by Concentric of a Netscape Product copy to a Distributor or End
User; (e) authorization by Concentric to increase the authorized number of
copies; and (f) the initial date of Concentric's internal use of shipment by
Concentric to an End User or Distributor of an Update. Concentric shall pay
Netscape such royalties accrued during each month within thirty (30) days
following the end of such month and each such payment shall be accompanied by a
monthly royalty report as described in Paragraph 4.3 below."
5. Added as Section 4.1.3 is:
"4.3 Customization Fees. Concentric shall pay to Netscape the customization
fees set forth in Attachment B for each customization performed by Netscape as
set forth in a completed and accepted Attachment B."
2
<PAGE>
6. Section 4.3 is amended to read as follows, with the revisions as noted by
the underlined text:
"4.3 Monthly Reports
Concentric and its Distributors shall maintain accurate records of End
Users, including the name and address of each end User, the specific
platforms distributed to each End User, a running total of the number of
--------------------------------
copies of the Netscape Products distributed speculatively, the number of
------------------------------------------------------------------------
Registered Users, and any further information as Netscape may from time to
----------------
time reasonably request to be maintained. Concentric shall report to
Netscape within Thirty (30) calendar days after the end of each month, a
-
running total of a the number of copies of the Netscape Products
----------------------------------------------------------------
distributed speculatively, the number of Registered Users and the type and
-------------------------------------------------------------
number of licenses granted for the Netscape Products during such prior
month by Concentric to Distributors and End Users."
7. Section 12 is amended to read as follows, with the revisions as noted by
the underlined text:
"Unless sooner terminated under the provisions of Section 13, or otherwise
rightfully terminated, this Agreement shall remain in effect for a period
of three (3) years from the amendment Date. Thereafter it shall remain in
--------------- --------------
effect; provided however, either party may terminate this Agreement for
convenience effective at the end of such initial three (3) year term or at
---------
any time thereafter upon at least sixty (60) days prior written notice."
8. Attachment a is amended to read as follows, with the revisions as noted by
the underlined text:
3
<PAGE>
"ATTACHMENT A
NETSCAPE PRODUCT DESCRIPTIONS
Product O/S
- ------- ---
Netscape Navigator LAN 1.x and 2.x Windows and Macintosh
-----------
Netscape Navigator Personal Edition 1.x and 2.x Windows
-----------
Netscape Navigator Personal Edition 2.x Macintosh (when available)"
- -----------------------------------------------------------------------------
9. Attachment B is amended to read as follows, with the revisions as noted by
the underlined text:
"ATTACHMENT B
PRICING, PAYMENT SCHEDULES AND DELIVERABLES
1. Prepayment for Client Products. Concentric agrees to pay to Netscape as
------------------------------
nonrefundable prepayment against future-owed royalties for the Netscape
Navigator products equal to [*] due and payable as follows:
<TABLE>
<CAPTION>
Amount Due Date
------ --------
<S> <C>
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
All prepaid royalties are recoverable at a One Hundred percent (100%) rate,
meaning that for each One dollar ($1.00) of royalty due, One dollar ($1.00) is
credited to Concentric's client product prepaid royalty account. After the
client product prepaid royalties are fully depleted, (whether in any given
monthly reporting period or after the total prepayment of [*]), royalties
for the Netscape
- ------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
4
<PAGE>
Navigator client product will be paid net thirty (30) days in accordance with
Section 2 of this Attachment B and Section 4 of this Agreement. [*]
2. Pricing for Client Products. The per product price for the Netscape
---------------------------
Navigator products distributed from the Effective Date to the Amendment Date
---------------------------------------------------------
shall be as follows:
<TABLE>
<CAPTION>
Product Quantity Per Product Price
------- -------- -----------------
<S> <C> <C>
Navigator LAN 1.x [*] [*]
-
[*] [*]
[*] [*]
[*] [*]
[*] [*]
Navigator Personal Edition 1.x [*] [*]
-
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
The per product price for the Netscape Navigator products distributed after the
- -------------------------------------------------------------------------------
Amendment Date shall be as follows:
- -----------------------------------
<TABLE>
<CAPTION>
Product Quantity Per Product Price
- --------------------------------------------------------------------------------
<S> <C> <C>
Navigator LAN 1.x & 2.x [*] [*]
- ------------------------------------------------------------------
(Windows & Macintosh) [*] [*]
- ------------------------------------------------------------------
[*] [*]
- ------------------------------------------------------------------
</TABLE>
- ------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
5
<PAGE>
<TABLE>
<S> <C> <C>
Navigator Personal Edition 1.x & 2.x Win 95 Non-Win 95 & Macintosh
- ------------------------------------------------------------------------------
[*] [*] [*]
- -----------------------------------------------------------
[*] [*] [*]
- -----------------------------------------------------------
[*] [*] [*]
- -----------------------------------------------------------
</TABLE>
3. Customization Fees. [*].
------------------
4. Maintenance and Support. [*].
-----------------------
5. Major Updates.
-------------
5.1 For new licensees of the Netscape Products, the license fee for Major
Updates shall not increase by more than [*] of the applicable per product price.
5.2 For existing licensees of the Netscape Products, the license fee is
[*] of Netscape's published end user price for the applicable Netscape Product
incorporating the Major Update, or Netscape's published list price for the Major
Update distributed on a stand-alone basis, whichever is less.
5.3 Notwithstanding section 5.1 and 5.2 of this Attachment B, Concentric
- - ---
will receive version 2.x of the Netscape Products at no increase in the fees set
-
forth in section 2 of this Attachment B.
6. Deliverables.
- - ------------
One (1) gold master of Navigator LAN 1.1 for Windows and Macintosh
One (1) gold master of Navigator Personal Edition 1.1 for Windows
One (1) gold master of Navigator Personal Edition 20 for Macintosh (when
- ------------------------------------------------------------------------
available)
- ----------
One (1) electronic copy and one (1) printed copy of Documentation for Navigator
LAN 1.1 and Personal Edition 1.1
One (1) printed copy of the document known as "Milan Customer Registration
Process 1.1"
One (1) gold master of Updates and One (1) electronic copy and one (1) printed
- ------------------------------------------------------------------------------
copy of Documentation for Updates
- ---------------------------------
- ---------------------------------
[*]Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
6
<PAGE>
7. Ship To Address for Deliverables:
- -
Concentric Research Corporation
10590 N. Tantau Avenue
Cupertino, CA 95014
Attention: James Isaacs
Telephone: 408-342-2829"
10. Attachment G, attached to this Amendment is added to the Agreement as
Attachment G.
11. In connection with Section 6.1 of the Agreement, Concentric confirms that
it will comply with Netscape's trademark and tradename usage guidelines,
including, but not limited to the Netscape Navigator Included Usage Guidelines.
12. Except as expressly amended herein, all other terms and conditions of the
Agreement remain in full force and effect.
AUTHORIZED SIGNATURES
In order to bind the parties to this Amendment, their duly authorized
representatives have signed their names below on the dates indicated.
NETSCAPE COMMUNICATIONS CORPORATION CONCENTRIC NETWORK
CORPORATION
By: /s/ Thomas Dicker By: /s/ Henry R. Nothhaft
---------------------------------- --------------------------------
Name: Thomas Dicker Name: Henry R. Nothhaft
-------------------------------- -------------------------------
Title: Executive Director By: President and CEO
------------------------------- ---------------------------------
Date: January 2, 1996 Date: December 30, 1995
-------------------------------- ---------------------------
7
<PAGE>
SECOND AMENDMENT TO THE
NETSCAPE COMMUNICATIONS CORPORATION
AND
CONCENTRIC RESEARCH, INC.
OEM LICENSE AGREEMENT
This Second Amendment ("2nd Amendment") to the Netscape Communications
Corporation and Concentric Research Inc., OEM License Agreement ("Agreement") is
entered into by and between Netscape Communications Corporation ("Netscape") and
the Concentric Network Corporation, ("Concentric") effective as of January 2,
1996.
WHEREAS, Netscape and Concentric Research Corporation have entered into an OEM
License Agreement having an effective date of July 27, 1995;
WHEREAS, Netscape and Concentric entered into a First Amendment of the Agreement
dated December 30, 1995 ("1st Amendment");
WHEREAS, Netscape and Concentric desire to further amend Section 1 of Attachment
B of said OEM License Agreement;
NOW THEREFORE, the parties agree as follows:
1. Section 1 of Attachment B is replaced with the following:
1. [*]
Amount Due Date
------ --------
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
- --------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
[*]
All prepaid royalties are recoverable at a One Hundred percent (100%) rate,
meaning that for each One dollar ($1.00) of royalty due, One dollar ($1.00) is
credited to Concentric's client product prepaid royalty account. After the
client product prepaid royalties are fully depleted, (whether in any given
monthly reporting period or after the total prepayment of [*]), royalties
for the Netscape Navigator client product will be paid net thirty (30) days in
accordance with Section 2 of this Attachment B and Section 4 of this Agreement.
[*]
2. Except as expressly amended herein, all other terms and conditions of the
Agreement and First Amendment remain in full force and effect.
- -------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE>
AUTHORIZED SIGNATURES
In order to bind the parties to this 2nd Amendment, their duly authorized
representatives have signed their names below on the dates indicated.
NETSCAPE COMMUNICATIONS CONCENTRIC NETWORK
CORPORATION CORPORATION
By: /s/ Conway Rulon-Miller By: /s/ Henry R. Nothhaft
------------------------------- --------------------------
Name: Conway (Todd) Rulon-Miller Name: Henry R. Nothhaft
----------------------------- ------------------------
Title: V.P. Sales Title: President/CEO
---------------------------- -----------------------
Date: 1/30/91 Date: 2/13/91
----------------------------- ------------------------
REVIEWED BY
NETSCAPE LEGAL
Initial____________
-3-
<PAGE>
THIRD AMENDMENT TO THE
NETSCAPE COMMUNICATIONS CORPORATION
AND
CONCENTRIC RESEARCH, INC.
OEM LICENSE AGREEMENT
This Third Amendment ("3rd Amendment") to the Netscape Communications
Corporation and Concentric Research Inc., OEM License Agreement ("Agreement") is
entered into on May 21, 1996 ("3rd Amendment Date") by and between Netscape
Communications Corporation ("Netscape") and the Concentric Network Corporation,
successor to the whole of Concentric Research Corporation ("Concentric").
WHEREAS, Netscape and Concentric Research Corporation have entered into an OEM
License Agreement having an effective date of July 27, 1995;
WHEREAS, Netscape and Concentric entered into a First Amendment of the Agreement
dated December 30, 1995 ("1st Amendment");
WHEREAS, Netscape and Concentric entered into a Second Amendment of the
Agreement dated January 2, 1996 ("2nd Amendment");
WHEREAS, Netscape and Concentric desire to amend said OEM License Agreement;
NOW THEREFORE, in consideration of the mutual covenants set forth herein, the
parties agree as follows:
1. Section 2.1.1 is amended to read as follows, with deletions as noted by the
strike through text:
"2.1.1 License. Subject to the terms and conditions of this Agreement,
Netscape hereby grants and Concentric hereby accepts, a nonexclusive,
nontransferable license to (i) use and reproduce, without change, the Netscape
Products (in executable form only) on any tangible media and (ii) distribute by
sublicense such Netscape Product copies to Distributors and End Users only in
conjunction with a Concentric Product. Concentric is expressly prohibited from
any marketing and/or distribution directly or indirectly (e.g. through
Distributors) of Netscape Products unless each copy is bundled with a Concentric
Product. Such reproduction shall occur only at the location of Concentric's
principal office first set forth above unless an alternate location is otherwise
specified in writing to Netscape. Concentric may grant Distributors the right
to grant further sublicenses to distribute copies of the Netscape Products to
other Distributors regardless of tier and Concentric and all Distributors shall
have the right to distribute the Netscape Products to End Users. Subject to the
terms and conditions of this Agreement, Netscape hereby grants and Concentric
hereby accepts a nonexclusive, nontransferable license to use the Milan Customer
Registration Process 1.1 document solely in conjunction with the
<PAGE>
Netscape Products to register End Users for Concentric Products. Concentric
shall not disclose, provide, or otherwise make available said document to any
third party.
2. Section 2.1.5.2 is amended to read as follows, with the deletions as noted
by the underlined and strike through text:
"2.1.5.2 In the case of speculative distribution, such distribution
shall be limited to distribution on tangible media. Netscape Products
distributed on a speculative basis must be preconfigured so that the "Home
Page" upon initial installation and use by the End User is pointing to, and
initially "hits", a Concentric configured URL."
4. Section 4.3 is amended to read as follows, with deletions as noted by the
strike through text:
"4.3 Monthly Reports
Concentric and its Distributors shall maintain accurate records of
End Users, including the name and address of each End User, the number of
Registered Users, the specific platforms distributed to each End User, and any
further information as Netscape may from time to time reasonably request to be
maintained. Concentric shall report to Netscape within Thirty (30) calendar days
after the end of each month, the number of Registered Users and the type and
number of licenses granted for the Netscape Products during such prior month by
Concentric to Distributors and End Users.
5. The portions of Attachment B referenced below are amended to read as
follows, with deletions as noted by strike through and additions as noted by
underline text.
"2. Pricing for Client Products. The per product price for the Netscape
Navigator products distributed from the Effective Date to the effective date of
the 1st Amendment shall be as follows:
<TABLE>
<CAPTION>
Product Quantity Per Product Price
<S> <C> <C>
Navigator LAN l.x [*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
- ---------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE>
<TABLE>
<S> <C> <C>
Navigator Personal Edition [*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
The per product price for the Netscape Navigator products distributed after the
effective date of the 1st Amendment shall be as follows:
<TABLE>
<CAPTION>
Product Quantity Per Product Price
<S> <C> <C>
Navigator LAN 1.x, 2.x and 3.x [*] [*]
--- [*] [*]
(Windows & Macintosh) [*] [*]
<CAPTION>
Navigator Personal Edition 1.x, Win95 Non-Win95 & Mac
2.x & 3.x
-----
<S> <C> <C> <C>
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
<CAPTION>
Navigator LAN Gold 2.x and 3.x Win95 Non-Win95 & Mac
- ------------------------------ ----- ---------------
<S> <C> <C> <C>
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
</TABLE>
- ---------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
"5.2 For existing licensees of the Netscape Products who register a new
----------------------------------------------------------------------
Netscape Product incorporating a Major Update, the license fee for such Major
- -----------------------------------------------------------------------------
Update shall be as follows:
- ---------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Update from Client Version: To Client Version: Upgrade Price:
- --------------------------- ------------------ --------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Navigator Personal Edition 1.x to Navigator Personal Edition 2.x [*]
- ---------------------------------
Navigator Personal Edition 3.x to Navigator Personal Edition 4.x
- ---------------------------------
Navigator Personal Edition 4.x to Navigator Personal Edition 5.x
- ---------------------------------
- --------------------------------------------------------------------
Navigator Personal Edition 2.x to Navigator Personal Edition 3.x [*]
- ---------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------
Navigator LAN 1.x to Navigator LAN 2.x [*]
Navigator LAN 3.x to Navigator LAN 4.x
Navigator LAN 4.x to Navigator LAN 5.x
- --------------------------------------------------------------------
Navigator LAN 2.x to Navigator LAN 3.x [*]
- -----------------
- --------------------------------------------------------------------
Navigator Gold LAN 2.x to Navigator Gold LAN 3.x [*]
- --------------------------------------------------------------------
</TABLE>
6. Except as expressly amended herein, all other terms and conditions of the
Agreement remain in full force and effect.
- ---------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE>
AUTHORIZED SIGNATURES
In order to bind the parties to this Amendment, their duly authorized
representatives have signed their names below on the dates indicated.
NETSCAPE COMMUNICATIONS CONCENTRIC NETWORK
CORPORATION CORPORATION
By: /s/ Thomas Dicker By: /s/ Henry R. Nothhaft
-------------------------- -----------------------------
Name: Thomas Dicker Name: Henry R. Nothhaft
------------------------- ----------------------------
Title: Executive Director Title: CEO
------------------------ ---------------------------
Date: Date: 5/20/96
------------------------- ----------------------------
REVIEWED BY
NETSCAPE LEGAL
Initial
------------
-5-
<PAGE>
EXHIBIT 10.14
NETSCAPE COMMUNICATIONS CORPORATION
AND
CONCENTRIC RESEARCH CORPORATION
"DIAL-UP CLIENT" AGREEMENT
This Agreement is made as of August 21, 1995 ("Effective Date") between
Netscape Communications Corporation a Delaware corporation with its principal
place of business 501 East Middlefield Road, Mountain View, CA 94043
("Netscape") and Concentric Research Corporation, a Florida corporation with a
place of business at 10590 N. Tantau Avenue, Cupertino, CA 95014 ("Concentric").
A. Netscape develops and markets technology and services for use in
connection with the Internet. Netscape has a client/server product ("Dial-Up
Client Product") that operates as a component of a system ("Dial-Up System")
that allows Internet users in the U.S. to select, and register with, an Internet
access provider from a menu of Internet access providers that have entered into
agreements with Netscape.
B. Concentric is an Internet access provider that wishes to be included in
the menu of Internet access providers used with the Dial-Up System ("Menu") so
that users of its Internet access services may register through the Dial-Up
System ("Subscribers").
Netscape and Concentric agree as follows:
1. Dial-Up Client Product. The current descriptions of the Dial-Up Client
----------------------
Product and the Dial-Up System are contained in Attachment A. Concentric
acknowledges that these may be revised by Netscape from time to time in response
to market conditions. Netscape will issue specific written procedures for the
use of the Dial-Up System. Concentric's use of the Dial-Up System will be in
accordance with the terms of this Agreement, including Attachment A, and
Netscape's written procedures. Netscape will use reasonable commercial efforts
to implement the Dial-Up System in the U.S., and Concentric will use reasonable
commercial efforts to assist Netscape in doing so.
2. Menu of Internet Access Providers. Subject to the terms and conditions
---------------------------------
of this Agreement (including Concentric's payment in full of the commissions,
the development expenses, and toll-free telephone charges specified in Sections
7(a), (c) and (d), respectively), Netscape will include Concentric in the Menu.
Concentric acknowledges that Netscape will determine the format, ordering, and
contents of the Menu (including the total number of Internet access providers
listed in the Menu at any time) in its sole discretion, and may revise such
format, ordering, and contents at any time. Netscape will use reasonable
commercial efforts to remain neutral with respect to the choices of providers
made by users of standard Netscape Navigator Personal Edition and any updates
thereof.
3. Concentric Infrastructure Deliverables.
--------------------------------------
3.1 Requirements for Internet Access Infrastructure. Netscape
-----------------------------------------------
requires that Concentric establish and maintain, and Concentric agrees to
establish and maintain, the infrastructure
<PAGE>
for Internet access as described in Attachment B in order that Netscape may
provide Subscribers with the choices of competitive Internet access services.
3.2 Concentric Deliverables.
-----------------------
3.2.1 Provider Pages.
--------------
(a) Function of Provider Pages. When a user of the Dial-Up
--------------------------
Client Product wishes to learn about a specific Internet service provider, the
user may select such provider from the Menu and will then be linked to one or
more informational HTML pages and data sheets containing such provider's fee
schedule and describing its service offerings ("Provider Pages"), which are
intended to aid the user in deciding which provider to subscribe to.
(b) Delivery of Provider Pages. Concentric will deliver to
--------------------------
Netscape, within ten (10) days of Netscape's provision of the appropriate form
to Concentric, the Provider Pages of Concentric in final form, a copy of which
is to be attached as part of Section 2.1 of Attachment B, for incorporation into
the Dial-Up System. Concentric may update its Provider Pages up to once each
month by delivering revised pages to Netscape in final form by the 25th day of
the previous month. Netscape will use reasonable commercial efforts to update
the Dial-Up System with such revised pages within ten (10) days of their
delivery by Concentric, subject to subsection (c) below.
(c) Review and Approval of Provider Pages. Netscape will have
-------------------------------------
the right to review the contents and format of each Provider Page prior to
including any such page in the Dial-Up System. If Netscape determines, in its
sole discretion, at any time before or after delivery of any such page by
Concentric that such page contains any material, or presents any material in a
manner, that is not appropriate for use in the Dial-Up System, Netscape will
inform Concentric of such determination and, if such page is already
incorporated in the Dial-Up System, Netscape may immediately remove such page
from the Dial-Up System. Instead of Netscape incorporating such Provider Page in
the Dial-Up System, Concentric will deliver to Netscape a revised Provider Page
that Netscape determines, in its sole discretion, is appropriate for use in the
Dial-Up System. In no event will Netscape be required to incorporate any
Provider Page or other information in the Dial-Up System except as described in
this paragraph.
(d) Credit System Interface. Concentric will deliver to
-----------------------
Netscape within five (5) days of the Effective Date the specifications and other
information needed by Netscape to interface with Concentric's designated credit
and approval system. Concentric will provide Netscape with any and all updates
to such information on a timely basis. Any implementation which Netscape creates
in the development of such an interface will be owned by Netscape.
3.2.2 Other Concentric Deliverables. Additionally, Concentric will
-----------------------------
provide Netscape with other deliverables as described in Attachment A.
-2-
<PAGE>
4. License Rights. Concentric grants to Netscape a non-exclusive license
--------------
during the term of this Agreement to use, reproduce, electronically distribute,
publicly display, and publicly perform the materials delivered to Netscape by
Concentric in connection with the Dial-Up System. Nothing in this Agreement
gives either party any exclusive marketing or distribution rights.
5. Marketing and Promotion.
-----------------------
(a) Marketing. Netscape will determine in its sole discretion the
---------
manner of, and resources it will devote to, advertising, promoting, and
otherwise marketing the Dial-Up Client Product under this Agreement. Concentric
acknowledges that the commercial success of the Dial-Up Client Product is highly
speculative and that Netscape has made no representation to Concentric that
Concentric will obtain any Subscribers through the use of the Dial-Up Client
Product. Concentric agrees to participate in press announcements regarding the
creation and deployment of the Dial-Up System as reasonably requested by
Netscape.
(b) Trademark Usage in Marketing Materials. Netscape will have the
--------------------------------------
right to use Concentric's trademarks, trade names, servicemarks, and/or logos in
any advertising, promotional, and other marketing materials for the Dial-Up
Client Product and the Dial-Up System in a manner consistent with Concentric's
standard trademark usage. Netscape will submit samples of such materials to
Concentric from time to time upon Concentric's request.
(c) Promotions. Concentric will offer a free trial period of at least
----------
five (5) hours of connect time to each Subscriber during the term of this
Agreement.
6. Technical Support. Netscape will provide front line (first line)
-----------------
technical support to users of the Dial-Up Client Product during the registration
process. Concentric agrees to provide back-up (second line) technical support
to Netscape during the registration process. Concentric will have primary
responsibility for end user support for Internet access services once the user
has established a functioning connection directly to the Concentric. All other
aspects of technical support under this Agreement will be as specified in
Attachment C.
7. Payments.
--------
(a) Commissions. Concentric agrees to pay Netscape a commission for
-----------
each new Subscriber. The amount of each commission will be calculated as
specified in Attachment and will accrue as to each Subscriber upon Concentric
billing such Subscriber for such Subscriber's second month of service from
Concentric. Concentric will pay Netscape commissions on a calendar month basis
within fifteen (15) days of the end of the month in which the commission
accrued. The payment may be made either (i) with the monthly report required to
be submitted by Concentric under Section 8 below or (ii) by electronic wire
transfer to an account designated by Netscape.
(b) Equipment Required for Concentric. Concentric agrees to ensure
---------------------------------
that all incremental requirements necessary to establish communication links
between Concentric's registration system and the Netscape registration server
are promptly performed by Concentric at
-3-
<PAGE>
Concentric's sole cost and expense. Typically such requirements will include,
without limitation, a router and telecommunications equipment required by
Concentric.
(c) Development Expenses. Concentric agrees to pay Netscape the
--------------------
expenses incurred by Netscape in modifying the Dial-Up System to make it
properly interface with Concentric's access set-up system. The type and amount
of such development expenses and the development schedule is to be mutually
agreed to by the parties and to be attached as part of Attachment B. Netscape
will own all modifications to the Dial-Up System.
(d) Toll-Free Telephone Charges. Each month, Netscape will bill
---------------------------
Concentric, and Concentric will pay Netscape [*] Concentric will pay the Toll
Charges within fifteen (15) days upon receipt of invoice from Netscape.
Concentric shall have the right, no more than once per twelve month period, to
have an independent third party verify that the amount of the Toll Charges
billed to Concentric is correct, or if incorrect, the amount which such third
party believes Concentric should have been charged. Concentric shall not have
the right to learn the total number of new Subscribers for the Internet access
providers on the Dial-Up System.
8. Records and Reports. Within fifteen (15) days of the end of each
-------------------
month, Concentric will deliver to Netscape a written report in the format as
specified in Attachment E showing the number of Subscribers acquired by
Concentric through the Dial-Up System, the number of Subscribers which
Concentric billed for an initial month's service, the number of Subscribers
Concentric billed for a second month's service, and such other information as
Netscape may reasonably request from time to time. Only in case commission
payments are made via electronic wire transfer, Concentric may submit to
Netscape the required monthly report by fax or e-mail. Otherwise, commission
payments must accompany the monthly report. Concentric will maintain, for at
least three (3) years after expiration or termination of this Agreement,
accurate books and records relating to Subscribers who first registered for
Concentric's services through the Dial-Up Client Product, and will permit
examination of such records by Netscape at reasonable times.
9. Subscriber Fees and Terms. Concentric will determine its Internet
-------------------------
subscription fees and the terms of its service offerings in its sole discretion.
10. Confidential Information. Confidential information of each party
------------------------
disclosed in connection with this Agreement ("Confidential Information") will be
treated as specified in the agreement contained in Attachment F. In the event
such agreement terminates or expires, its terms will continue to govern the
Confidential Information. The identity of each party's customers will be the
Confidential Information of such party. Concentric Confidential Information
shall include the records and reports described in Section 8 above ("Reports")
which are not available to Netscape through other sources, provided that
Netscape may aggregate the information in Reports with
- ------------------
[*] Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
-4-
<PAGE>
information from other sources in such a manner that the origin of Concentric's
information is not readily available, and the aggregated information shall not
be Concentric Confidential Information.
11. Indemnity. Each party will defend, indemnify, and hold the other
---------
party harmless against any third party claims arising from the manufacture, use,
reproduction, or distribution, as authorized in this Agreement, of any
technology, content, or other information supplied by it to the other party
under this Agreement, including but not limited to arising out of any alleged
infringement or misappropriation of any copyright, trademark, trade secret,
patent, or other intellectual property right, or violation of any right of
privacy or publicity.
12. Proprietary Rights.
------------------
(a) Ownership. Concentric acknowledges that Netscape and its
---------
licensors own all right, title, and interest in and to the Dial-Up Client
Product and the other components of the Dial-Up System. Netscape acknowledges
that Concentric and its licensors own all right, title, and interest in and to
Concentric's Internet access system.
(b) No Right to Use. Nothing in this Agreement gives Concentric any
---------------
right or license to use, reproduce, or distribute any technology or intellectual
property rights in the Dial-Up System or otherwise belonging to Netscape.
Except for Netscape's right to make use of the Concentric Pages and Concentric's
trademarks, trade names, servicemarks, logos and other materials as specified in
this Agreement, nothing in this Agreement will give Netscape any right or
license to use, reproduce, or distribute any technology or intellectual property
rights in Concentric's Internet access system or otherwise belonging to
Concentric.
13. Term and Termination of Agreement.
----------------------- ---------
(a) Term. This Agreement is for a period of one year beginning on the
----
Effective Date, at which time it will automatically renew subject to Section
13(b).
(b) Termination at Will. Either party may terminate this Agreement at
-------------------
will at any time during the term of this Agreement with or without cause, by
written notice given to the other party given not less than thirty (30) days
prior to the effective date of such termination.
(c) Commission Rights on Termination or Expiration. Following
----------------------------------------------
termination or expiration of this Agreement, Concentric will pay to Netscape all
commissions not yet paid on all Subscribers who registered with Concentric
through the Dial-Up Client System at any time prior to the termination or
expiration of this Agreement, regardless of when Concentric's obligation to pay
such commission accrues.
(d) Development Expenses Incurred Prior to Termination. If this
--------------------------------------------------
Agreement is terminated prior to expiration, and the development expenses
incurred by Netscape under Section 7 above have not been fully paid prior to
such early termination, Concentric will pay to Netscape such percentage of the
total development expenses as is determined by the ratio of the actual time that
-5-
<PAGE>
Netscape has spent on modifying the Dial-Up System pursuant to Section 7 prior
to such early termination divided by the total, planned development time.
(e) Survival. Sections 7, 8, 10, 11, 12, 13(c), 14 will survive
--------
termination or expiration of this Agreement.
14. Limitation of Liability. EXCEPT FOR EACH PARTY'S OBLIGATIONS UNDER
-----------------------
SECTION 11, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS OR ANY
FORM OF SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES FROM ANY CAUSES OF ACTION
OF ANY KIND, WHETHER ARISING IN TORT (INCLUDING NEGLIGENCE), CONTRACT, OR
OTHERWISE, EVEN IF IT HAS BEEN INFORMED IN ADVANCE OF THE POSSIBILITY OF SUCH
DAMAGES. NETSCAPE WILL HAVE NO LIABILITY FOR ANY UNAUTHORIZED TRANSACTIONS OR
OTHER ACTIVITY ON PROVIDER'S CREDIT CARD APPROVAL SYSTEM. IN NO EVENT WILL
NETSCAPE'S TOTAL LIABILITY UNDER THIS AGREEMENT EXCEED THE TOTAL AMOUNTS PAID TO
IT BY PROVIDER UNDER, OR IN CONNECTION WITH, THIS AGREEMENT.
15. General.
-------
(a) Assignment. This Agreement is not assignable by either party,
----------
except that either party may assign this Agreement to an entity controlling,
controlled by, or under common control with it or to any entity that acquires
all or substantially all of such party's assets, or into which it is merged or
otherwise reorganized. Any attempted assignment in violation of this paragraph
will be void. The provisions of this Agreement will be binding upon and inure to
the benefit of the parties, their successors, and permitted assigns.
(b) Independent Contractor. Netscape's relationship with Concentric
----------------------
during the term of this Agreement will be that of an independent contractor, and
not a partner or joint venturer.
(c) Notices. All notices and demands under this Agreement will be in
-------
writing and will be delivered by personal service, confirmed fax, confirmed e-
mail, express courier, or certified mail, return receipt requested, to the
address of the receiving party set forth in this Agreement (or at such different
address as may be designated by such party by written notice to the other
party), and will be effective upon receipt.
(d) Governing Law and Venue. The laws of the State of California,
-----------------------
excluding that body of law controlling conflicts of law, will govern all
disputes arising out of or relating to this Agreement. Each party hereby
consents to personal jurisdiction and service of process on it in the State of
California and waives any right to object thereto.
(e) Compliance with Law. Each party will at all times comply with all
-------------------
applicable international, national, state, regional, and local laws and
regulations, including U.S. export control laws, in performing its duties under
this Agreement.
-6-
<PAGE>
(f) Force Majeure. Neither party will be responsible for any failure
-------------
to perform its obligations under this Agreement due to causes beyond its
reasonable control, including but not limited to acts of God, war, riot,
embargoes, acts of civil or military authorities, fire, floods, accidents,
strikes, or shortages of transportation, facilities, fuel, energy, labor or
materials.
(g) Waiver. The waiver by either party of any breach of this
------
Agreement by the other party will not waive subsequent defaults by such party of
the same or a different kind.
(h) Severability. In the event any provision of this Agreement is
------------
held by a court or other tribunal of competent jurisdiction to be unenforceable,
the other provisions of this Agreement will remain in full force and effect.
(i) Publicity. Neither party will disclose any of the terms of this
---------
Agreement to any third party. Netscape and Concentric shall cooperate with each
other so that each party may issue a press release concerning this Agreement,
provided that each party must approve any press release prior to its release.
Concentric will not disclose the existence of this Agreement until after
Netscape publicly issues such press release.
(j) Entire Agreement. This Agreement, together with its attachments,
----------------
constitutes the complete and exclusive agreement between the parties pertaining
to the subject matter hereof, and supersedes in its entirety any and all prior
written or oral agreements or communications between the parties with respect to
such subject matter. Concentric acknowledges that it is not entering into this
Agreement on the basis of any representations not expressly contained herein.
Any modifications or waivers under this Agreement must be in writing and signed
by both parties.
-7-
<PAGE>
The parties have executed this Agreement as of the Effective Date.
CONCENTRIC RESEARCH CORPORATION NETSCAPE COMMUNICATIONS
CORPORATION
Signature: /s/ Peter J. Bergeron Signature: /s/ Conway Rulon-Miller
------------------------- ---------------------------
Name: Peter J. Bergeron Name: Conway (Todd) Rulon-Miller
------------------------------ --------------------------------
Title: Secretary Title: VP Soler
----------------------------- -------------------------------
Date: 8/21/95 Date: 8/24/95
------------------------------ --------------------------------
-8-
<PAGE>
ATTACHMENT A
DIAL-UP CLIENT PRODUCT AND DIAL-UP SYSTEM DESCRIPTION
-----------------------------------------------------
[The document titled "Milan Customer Registration Process-Release 1.1" is
to be attached here.]
<PAGE>
CRP - Navigator
[***]
- ------------------------
[***]Certain information in this exhibit has been omitted and filed
separately with the Securities and Exchange Commission. A total of 16 pages
containing such information has been omitted from this exhibit. Confidential
treatment has been requested with respect to the omitted portions.
-5-
<PAGE>
ATTACHMENT B
CONCENTRIC INFRASTRUCTURE/DELIVERABLES & DEVELOPMENT EXPENSES
-------------------------------------------------------------
1. Concentric Infrastructure for Internet Access
---------------------------------------------
(a) Nationwide coverage with local access in at least 100 Points of
Presence (POPs)
(b) PPP support- UNIX based registration process running at
Concentric
(c) Ability to do on-line credit card authorization and billing
(d) support for POP3 or SMTP mail servers
(e) Support for NNTP for news
(f) Account for testing dialer and Netscape Navigator connection, as
specified below, to be delivered within five (5) business days after the
Effective Date:
(i) Concentric test accounts for testing the dialer and
Netscape Navigator on the Concentric network.
(ii) A specification of the protocol used to create Concentric
Internet accounts over a TCP/IP connection. Typically, such a protocol
describes the "language" spoken by Concentric's registration server and how
Netscape needs to interact with it.
(iii) A list of the required data items used to create accounts
(this may be part of the protocol).
(iv) An Concentric contact for dealing with protocol,
implementation and testing problems/issues.
(v) A means to test communication/' interaction between
Netscape's registration server and Concentric's. Ideally, this is a specific
Concentric test machine to which Netscape has access over the Internet.
(vi) A means to create "free" test accounts on Concentric's
registration server. This is used for testing and promotional purposes.
2. Concentric Deliverables.
-----------------------
2.1 Provider Page. [See Attachment B-I for Concentric's Provider
-------------
Page]
<PAGE>
2.2 Other Concentric Deliverables.
-----------------------------
(a) Information on Concentric's platform on which its
registration server runs. This is required for Netscape to provide the
Concentric with SSLD for Concentric's registration server.
(b) A description of Concentric's services and prices. In
addition, Concentric must provide Netscape with an Concentric logo (gif format)
and a Wi/n/dows 32x32 icon. The logo is used to represent Concentric on the
registration server pages, and the icon is used on the client side for the
dialer.
(c) A list of POPs
(d) Contact for updates and changes to the POPs
(e) in' automated process to update the POP numbers Netscape
displays to users; and an updated list each time a new POP becomes effective.
3.
Development Expenses.
--------------------
[*]
- --------------------------
[*]Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
-2-
<PAGE>
ATTACHMENT B-1
Netscape pricing sheet plan
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
The Concentric Network
If you have questions, call (800) 745-2747
- --------------------------------------------------------------------------------
<S> <C>
Promotional offers Buy one month, get the second month free. Never a
start-up fee. Your choice of four pricing plans,
rates apply 24 hours a day, 7 days a week.
- --------------------------------------------------------------------------------
Unlimited Plan US $29.95 per month for unlimited connect time
- --------------------------------------------------------------------------------
Hourly Plan US $19.95 per month for 20 hours; additional hours
$1.50.
- --------------------------------------------------------------------------------
Beginner's Plan US $7.95 per month for 5 hours; additional hours
$1.95
- --------------------------------------------------------------------------------
Toll-Free Plan US $10 per month for 2 hours; additional hours $5
- --------------------------------------------------------------------------------
Start-up fee (all plans) $0
- --------------------------------------------------------------------------------
Customer Support 24 hours a day, 7 days a week (800) 745-2747
- --------------------------------------------------------------------------------
</TABLE>
Concentric Network
Key Advantages
. With flat rate service, unlimited connect time for one low monthly price.
. Low hourly fee plans for light users.
. Never a start-up fee.
. Rates apply 24 hours a day, 7 days a week.
. Up to 5 megs of storage space for your FREE personal WWW page
. 24-hour, 7-day a week Customer Service
. 135 dial-in nodes nationwide (Expanding to 242 soon).
Terms & Conditions
Once you are signed on, please read our terms of service at
http://WWW.cris.com/terms. If you do not agree on our terms of service, please
call (800) 745-2747 to cancel your account.
<PAGE>
ATTACHMENT C
ISP TECHNICAL SUPPORT TERMS
1. Netscape will provide front-level support to a potential Subscriber
during the installation process for the Dial-up Client and the initial
registration with Provider. Provider will provide back-line support to
Netscape.
2. Beginning on the conclusion of the registration process, Provider will
be responsible for all Subscriber support relating to Internet access services.
3. Following the conclusion of the registration process, Provider will
provide each new Subscriber with a copy of Provider's terms and conditions of
service for review by Subscriber.
4. Provider and Netscape will each provide front-line support of the
Dial-Up Client to the Subscriber free of charge for ninety (90) days after the
Subscriber registers with Provider (the Initial Support Period). Such support
includes call receipt, entitlement verification, call screening, installation
assistance, problem identification and diagnosis. Provider will assign an
adequate number of properly qualified and trained personnel to provide front-
line support for the Dial-Up Client. If Netscape support representatives are
being contacted by Provider for front line support or Internet access questions,
or for excessive back line support then, upon Netscape's request, Provider and
Netscape will cooperate to minimize such contact.
5. Netscape will provide back-end support for the Dial-Up Client to
Provider (as well as front end support to Subscribers described in Section 4
above). Back-end support to Provider includes efforts to identify defective
source code and to provide corrections, workarounds and/or patches to
reproducible deviations in the Dial-Up Client from the applicable specifications
shown in the applicable reference manuals ("Program Errors").
(a) Netscape will provide Provider with a telephone number and an e-
mail address which Provider may use to report Program Errors during Netscape's
local California business hours (8am - 5pm PST). Provider will provide
sufficient information for Netscape to enable Netscape to duplicate the Program
Error. At any given time, Netscape will provide back line support to Provider
for the then-current version of the Dial-Up Client, and for the immediately
preceding version until it has been superseded for a period of six (6) months.
(b) Provider will identify one (1) member of its customer support
staff and one (1) alternate to act as the primary technical liaisons responsible
for all communications with Netscape's support representatives. Such liaisons
will have sufficient technical expertise, training and/or experience, for
Provider to perform its obligations hereunder. Provider may substitute contacts
at any time by providing one (1) week's prior written and/or electronic notice
thereof to Netscape. Provider's initial liaison(s) are:
<PAGE>
_________________________ and _________________________
primary alternate
6. Following the Initial Support Period, each of Netscape and
Provider may, in its discretion, stop offering Subscriber support, continue to
offer Subscriber support free of charge, or may charge for Subscriber support.
-3-
<PAGE>
ATTACHMENT D
COMMISSION RATES
----------------
[*]
- ---------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. A total of 1 page containing such
information has been omitted from this exhibit. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
ATTACHMENT E
REPORT FORMAT
-------------
Number of Subscribers
Subscribers billed 1st Subscribers billed 2nd via Dial-Up System
month month Since Effective Date
- ---------------------- ---------------------- ----------------------
<PAGE>
ATTACHMENT F
MUTUAL CONFIDENTIAL DISCLOSURE AGREEMENT
WHEREAS, Netscape Communications Corporation ("Netscape") has
developed unique and proprietary computer programs; and
WHEREAS, CONCENTRIC RESEARCH CORP. ("Company") and Netscape wish to
-------------------------
discuss a proposed business relationship between Netscape and Company.
NOW, THEREFORE:
Each party (the "Receiving Party") understands that the other party
(the Disclosing Party") has disclosed or may disclose information (including,
without limitation, computer programs, code, algorithms, names and expertise of
employees and consultants, know-how, formulas, processes, ideas, inventions
(whether patentable or not), schematics and other technical, business, financial
and product development plans, forecasts, strategies and information), which to
the extent previously, presently, or subsequently disclosed to the Receiving
Party is hereinafter referred to as "Proprietary Information" of the Disclosing
Party. All Proprietary Information disclosed in tangible form by the Disclosing
Party shall be marked "confidential" or "proprietary" and all Proprietary
Information disclosed orally or otherwise in intangible form by the Disclosing
Party shall be designated as "confidential" or "proprietary" at the time of
disclosure and shall be reduced to writing and delivered to the Receiving Party
within thirty (30) days following the date of disclosure.
In consideration of the parties' discussions and any access the
Receiving Parry may have to Proprietary Information of the Disclosing Party, the
Receiving Party hereby agrees as follows:
1. The Receiving Party agrees (i) to hold the Disclosing Party's
Proprietary Information in confidence and to take all necessary precautions to
protect such Proprietary Information (including, without limitation, all
precautions the Receiving Party employs with respect to its own confidential
materials), (ii) not to divulge any such Proprietary Information or any
information derived therefrom to any third person, (iii) not to make any use
whatsoever at any time of such Proprietary Information except to evaluate
internally whether to enter into the currently contemplated business
relationship with the Disclosing Party, (iv) not to remove or export any such
Proprietary Information from the country of the Receiving Party, and (v) not to
copy or reverse engineer, reverse compile or attempt to derive the composition
or underlying information of any such Proprietary Information. The Receiving
Party shall limit the use of and access to the Disclosing Party's Proprietary
Information to the Receiving party's employees who need to know such Proprietary
Information for the purpose of such internal evaluation and shall cause such
employees to comply with the obligations set forth herein. The Receiving Party
shall treat the Proprietary Information with at least the same degree of care
and protection as it would use with respect to its own proprietary information.
The foregoing obligations shall survive for a period of three (3) years from the
date of disclosure of the Proprietary Information. Without granting any right or
license, the Disclosing Party agrees that the foregoing shall not apply
<PAGE>
with respect to information the Receiving Party can document (i) is in the
public domain and is readily available at the time of disclosure or which
thereafter enters the public domain and is readily available, through no
improper action or inaction by the Receiving party or any affiliate, agent or
employee, or (ii) was in its possession or known by it prior to receipt from the
Disclosing Party, or (iii) was rightfully disclosed to it by another person
without restriction, or (iv) is independently developed by the Receiving Party
without access to such Proprietary Information, or (v) is required to be
disclosed pursuant to any statutory or regulatory authority, provided the
Disclosing Party is given prompt notice of such requirement and the scope of
such disclosure is limited to the extent possible.
2. Immediately upon (i) the decision by either parry not to enter
into a business relationship as contemplated by paragraph 1, or (ii) a request
by the Disclosing Party at any time (which will be effective when actually
received at the Receiving Party's address herein), the Receiving Party will turn
over to the Disclosing Party all Proprietary Information of the Disclosing Party
and all documents or media containing any such Proprietary Information and any
and all copies or extracts thereof. The Receiving Parry understands that
nothing herein (i) requires the disclosure of any Proprietary Information of the
Disclosing Party, which shall be disclosed if at all solely at the option of the
Disclosing Party, or (n) requires the Disclosing Party to proceed with any
proposed transaction or relationship in connection with which Proprietary
Information may be disclosed.
3. Except to the extent required by law, neither party shall disclose
the existence or subject matter of the negotiations or business relationship
contemplated by this Agreement.
4. The Receiving Parry acknowledges and agrees that due to the unique
nature of the Disclosing Party's Proprietary Information, there can be no
adequate remedy at law for any breach of its obligations hereunder, that any
such breach may allow the Receiving Party or third parties to unfairly compete
with the Disclosing Party resulting in irreparable harm to the Disclosing Party,
and therefore, that upon any such breach or any threat thereof, the Disclosing
Parry shall be entitled to seek appropriate equitable relief in addition to
whatever remedies it might have at law. The Receiving Party will notify the
Disclosing Party in writing immediately upon the occurrence of any such
unauthorized release or other breach. In the event that any of the provisions
of this Agreement shall be held by a court or other tribunal of competent
jurisdiction to be unenforceable, the remaining portions hereof shall remain in
full force and effect. This Agreement supersedes all prior discussions and
writings with respect to the subject matter hereof, and constitutes the entire
agreement between the parties with respect to the subject matter hereof. No
waiver or modification of this statement will be binding upon either party
unless made in writing and signed by a duly authorized representative of such
party and no failure or delay in enforcing any right will be deemed a waiver.
-2-
<PAGE>
5. This Agreement shall be governed by the laws of the State of
California, without regard to conflicts of laws provisions thereof and each
party submits to the jurisdiction and venue of any California State or federal
courts generally serving the Santa Clara county area with respect to the subject
matter of this Agreement.
NETSCAPE COMMUNICATIONS CONCENTRIC RESEARCH CORP.
CORPORATION
By: /s/ Alan Louie By: /s/ Randy Maslow
------------------------------- -------------------------------
Alan Louie Randy Maslow
Address: Address:
501 East Middlefield Road
Mountain View California 94043
Date: 6/5/95 Date:
------------------------------ ------------------------------
-3-
<PAGE>
EXHIBIT 10.15
NETSCAPE COMMUNICATIONS CORPORATION
"INTERNET ACCOUNT SERVER" PARTICIPATION AGREEMENT
This Agreement is made as of January 14, 1997 ("Effective Date") between
--------------
Netscape Communications Corporation, a Delaware corporation with its principal
place of business at 501 East Middlefield Road, Mountain View, CA 94043
("Netscape") and Concentric Network Corporation, a Florida corporation with its
principal place of business at 10590 N. Tantau Avenue, Cupertino, CA 95014
("Provider").
--------
A. Netscape develops and markets technology and services for use in
connection with the Internet. Netscape has a system ("Account Server") that
--------------
assists Internet users in the U.S. and Canada to select, and sign up with, an
Internet Service Provider from a menu of access providers that have entered into
agreements with Netscape.
B. Provider is an Internet Service Provider that wishes to be included in
the menu ("Menu") of Internet Service Providers used with the Account Server so
----
that users of Netscape's Account Server who wish to become subscribers of
Provider's Internet access services may sign up with Provider through the
Account Server ("Subscribers").
-----------
Netscape and Provider agree as follows:
1. Account Server. The current description of the Account Server is
--------------
contained in Attachment A. Provider acknowledges that this may be revised by
------------
Netscape from time to time in response to technology changes and/or market
conditions. Netscape will issue specific written procedures for participation
on the Account Server. Provider's participation on the Account Server will be
in accordance with the terms of this Agreement, including its Attachments, and
Netscape's written procedures.
2. Menu of Providers. Subject to the terms and conditions of this
-----------------
Agreement (including Provider's payment in full of the fees and expenses
specified in Section 7, Netscape will include Provider in the Menu. Provider
acknowledges that Netscape will determine the format, ordering, and contents of
the Menu (including the total number of Internet access providers listed in the
Menu at any time, whether or not the Menu is divided into categories of service
providers, the placement of such categories, and service Provider's placement
within the categories and Menu) in its sole discretion, and may revise such
format, ordering, and contents at any time.
3. Provider Infrastructure/Deliverables.
------------------------------------
3.1 Requirements for Internet Access Infrastructure.
-----------------------------------------------
Netscape requires, and Provider agrees to establish and maintain and be
solely responsible for the infrastructure for Internet access as described in
Attachment B in order that Netscape may provide Subscribers with a choice of
- ------------
competitive Internet access services.
<PAGE>
3.2 Requirements for Account Creation Infrastructure.
------------------------------------------------
Netscape requires, and Provider agrees to establish and maintain the
infrastructure for account creation as described in Attachment B in order that
------------
Netscape may integrate Provider with Netscape's Account Server.
3.3 Provider Deliverables.
---------------------
3.3.1 Provider Pages.
--------------
(a) Function of Provider Pages. When a user of the
--------------------------
Account Server wishes to team about a specific Internet service provider, the
user may select the provider from the Menu and will then be linked to one or
more informational HTML pages containing the provider's fee schedule and
describing its service offerings ("Provider Pages"), which are intended to aid
--------------
the user in deciding which provider to subscribe to.
(b) Delivery of Provider Pages. Provider will deliver to
--------------------------
Netscape, within ten (10) days of Netscape's provision of the appropriate form
to Provider, the Provider Pages of the Provider in final form, a copy of which
is to be attached as part of Section 3.1 of Attachment B, for incorporation into
------------
the Account Server. Provider may update its Provider Pages up to once each
month by delivering revised pages to Netscape in final form by the 25th day of
the previous month. Netscape will update the Account Server with such revised
pages within ten (10) days of their delivery by Provider, subject to subsection
(c) below.
(c) Review and Approval of Provider Pages. Netscape will
-------------------------------------
have the right to review the content and format of each Provider Page prior to
including any such page in the Account Server. If Netscape determines, in its
sole discretion, at any time before or after delivery of any such page by
Provider that such page contains any material, or presents any material in a
manner, that is not appropriate for use in the Account Server, Netscape will
inform Provider of such determination and, if such page is already incorporated
in the Account Server, Netscape may immediately remove such page from the
Account Server. Instead of Netscape incorporating such Provider Page in the
Account Server, Provider will deliver to Netscape a revised Provider Page that
Netscape determines, in its sole discretion, is appropriate for use in the
Account Server. In no event will Netscape be required to incorporate any
Provider Page or other information in the Account Server except as described in
this paragraph.
3.3.2 Other Provider Deliverables. Additionally, Provider will
---------------------------
provide Netscape with and be solely responsible for other deliverables as
described in Attachment B.
------------
4. License Rights. Provider grants to Netscape a non-exclusive license
--------------
during the term of this Agreement to use, reproduce, electronically distribute,
publicly display, and publicly perform the materials delivered to Netscape by
Provider in connection with the Account Server. Nothing in this Agreement gives
either party any exclusive marketing or distribution rights.
-2-
<PAGE>
5. Marketing and Promotion.
-----------------------
(a) Marketing. Netscape will determine in its sole discretion the
---------
manner of, and resources it will devote to, advertising, promoting, and
otherwise marketing the Account Server under this Agreement. Provider
acknowledges that the commercial success of the Account Server is highly
speculative and that Netscape has made no representation to Provider that
Provider will obtain or maintain any Subscribers through Provider's
participation on the Account Server. Provider agrees to participate in press
announcements regarding the creation and deployment of the Account Server as
reasonably requested by Netscape.
(b) Trademark Usage in Marketing Materials. Netscape will have the
--------------------------------------
right to use Provider's trademarks, trade names, servicemarks, and/or logos in
any advertising, promotional, and other marketing materials for the Account
Server in a manner consistent with Provider's standard trademark usage. Netscape
will submit samples of such materials to Provider from time to time upon
Provider's request.
6. Technical Support. Netscape will provide front-line (first line)
-----------------
technical support to users of the Account Server during the account creation
process in accordance with Netscape's then current technical support policies.
Provider agrees to provide back-up (second line) technical support to Netscape
during the account creation process. Provider will have sole responsibility for
end user support for Internet access services once the user has become a
Subscriber of Provider's services, including the configuration (whether manual
or automatic) of the end-user's computer to connect to Provider's service and
the user account that is created.
7. Payments.
--------
(a) Bounties. Provider agrees to pay Netscape a bounty for each new
--------
Subscriber. The amount of each bounty will be calculated as specified in
Attachment C and will accrue as to each Subscriber on the [*] of service to such
Subscriber by Provider. Provider will pay Netscape bounties on a calendar month
basis within thirty (30) days of the end of the month in which the bounty
accrued. The payment may be made either (i) with the monthly report required to
be submitted by Provider under Section 8 below or (ii) by electronic wire
transfer to an account designated by Netscape.
(b) Taxes. All bounty payments are payable in U.S. Dollars and are
-----
exclusive of any applicable taxes. Provider shall be responsible for all
national, state and local taxes, value added or sales taxes, levies and
assessments and withholding taxes pertaining to the bounties payable by Provider
(except taxes based upon Netscape's net income from the receipt of bounties from
the Provider) except to the extent Provider provides Netscape with a valid
applicable tax exemption
- --------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE>
certificate. If any applicable law requires Provider to withhold amounts from
any bounty payments to Netscape hereunder, Provider shall effect such
withholding, remit such amounts to the appropriate taxing authorities and
promptly furnish Netscape with tax receipts evidencing the payment of such
amounts.
(c) Equipment Required for Provider. Provider agrees to pay all
-------------------------------
incremental expenses required to establish communication links between the
Provider's sign up system and the Account Server system. The type and amount of
such incremental expenses and the implementation schedule is to be mutually
agreed to by the parties.
(d) Development Expenses. Provider agrees to pay Netscape the
--------------------
expenses incurred by Netscape in modifying the Account Server to make it
properly interface with Provider's sign up system. The type and amount of such
development expenses and the development schedule is to be mutually agreed to by
the parties and to be attached as part of Attachment B. Netscape will own all
------------
modifications to the Account Server.
(e) Toll-Free Telephone Charges. For subscribers that access the
---------------------------
Account Server through Netscape's 800# access, each month Netscape will bill
Provider, and Provider will pay Netscape an amount equal to [*]. Provider will
pay the Toll Charges within thirty (30) days upon receipt of invoice from
Netscape. Provider shall have the right, no more than once per twelve month
period, upon reasonable prior written notice to Netscape, to have an independent
third party verify that the amount of the Toll Charges billed to Provider is
correct, or if incorrect, the amount which such third party believes Provider
should have been charged. Provider shall not have the right to learn the total
number of new subscribers for all providers on the Menu.
8. Records and Reports. Provider shall use the "REG_CHANNEL" identifier
-------------------
passed from Netscape to Provider during account creation to sort and total the
Subscribers for each unique marketing channel created by Netscape. Within
thirty (30) days after the end of each month, Provider will deliver to Netscape
in writing or by e-mail a report in the format as specified in Attachment D
------------
showing the number of Subscribers acquired by Provider for each REG_CHANNEL
through the Account Server system for whom Provider provided the 61st day of
service during such month. Bounty payments must accompany the monthly report.
Provider will maintain, for at least three (3) years after termination of this
Agreement, accurate books and records relating to Subscribers who signed up for
Provider's services through the Account Server. Netscape shall have the right,
no more than once per twelve month period, upon reasonable prior written notice
to Provider, to have an independent third party verify Provider's compliance
with Provider's reporting and payment obligations, including, without
limitations, that the number of Subscribers per REG_CHANNEL reported to Netscape
is correct. Provider shall not have the right to learn information about, or
the identity of, each unique marketing channel created by Netscape.
- --------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE>
9. Subscriber Fees and Terms. Provider will determine its Internet
-------------------------
subscription fees and the terms of its service offerings in its sole discretion.
10. Confidential Information. Confidential information of each party
------------------------
disclosed in connection with this Agreement ("Confidential Information") will be
------------------------
treated as specified in the agreement contained in Attachment E. In the event
such agreement terminates or expires, its terms will continue to govern the
Confidential Information. Information pertaining to Subscribers, as referenced
in Section 12 of this Agreement, will not be considered Confidential
Information.
11. Indemnity. Each party will defend, indemnify, and hold the other
---------
party harmless against any third party claims arising from the manufacture, use,
reproduction, or distribution, as authorized in this Agreement, of any
technology, content, or other information supplied by it under this Agreement,
including but not limited to arising out of any alleged infringement or
misappropriation of any copyright, trademark, trade secret, patent, or other
intellectual property tight, or violation of any laws or right of privacy or
publicity or content regulation.
12. Proprietary Rights.
------------------
(a) Ownership. Provider acknowledges that Netscape and its licensors
---------
own all right, title, and interest in and to the Account Server. Netscape
acknowledges that Provider and its licensors own all right, title, and interest
in and to Provider's Internet access system. Provider and Netscape both
acknowledge that Provider and Netscape shall co-own (without rights of
inspection or any duty to account) any information pertaining to Subscribers of
Provider's services, including, but not limited to the name, address and new
email address of Subscriber. Any use of such Subscriber information shall be in
compliance with applicable privacy laws.
(b) No Right to Use. Nothing in this Agreement gives Provider any
---------------
right or license to use, reproduce, or distribute any technology or intellectual
property rights in the Account Server or otherwise belonging to Netscape. Except
for Netscape's right to make use of the Provider Pages and Provider's
trademarks, trade names, servicemarks, logos and other materials as specified in
this Agreement, nothing in this Agreement will give Netscape any right or
license to use, reproduce, or distribute any technology or intellectual property
rights in Provider's Internet access system or otherwise belonging to Provider.
13. Term and Termination of Agreement.
---------------------------------
(a) Term. This Agreement is for a period of one year beginning on
----
the Effective Date, and thereafter it will automatically renew subject to
Section 13(b).
(b) Termination at Will. Either party may terminate this Agreement
-------------------
at will at any time during the term of this Agreement with or without cause, by
written notice given to the other party given not less than thirty (30) days
prior to the effective date of such termination.
-5-
<PAGE>
(c) Bounty Rights on Termination. Following termination of this
----------------------------
Agreement, Provider will pay to Netscape all bounties not yet paid on all
Subscribers who registered with Provider through the Account Server at any time
prior to the termination of this Agreement, regardless of when Provider's
obligation to pay such bounty accrues.
(d) Other Expenses and Fees Incurred Prior to Termination. If this
-----------------------------------------------------
Agreement is terminated, and the development expenses incurred by Netscape under
Section 7 above have not been fully paid prior to such early termination,
Provider will pay to Netscape such percentage of the total development expenses
as is determined by the ratio of the actual time that Netscape has spent on
modifying the Account Server pursuant to Section 7 prior to such early
termination divided by the total, planned development time. All other expenses
and fees due to Netscape shall be payable in full.
(e) Survival. Sections 7, 8, 10, 11, 12, 13(c), 13(d), 14 and 15 will
--------
survive termination of this Agreement.
14. Limitation of Liability. EXCEPT FOR EACH PARTY'S OBLIGATIONS UNDER
-----------------------
SECTION 11, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS OR ANY
FORM OF SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES FROM ANY CAUSES OF ACTION
OF ANY KIND, WHETHER ARISING IN TORT (INCLUDING NEGLIGENCE), CONTRACT, OR
OTHERWISE, EVEN IF IT HAS BEEN INFORMED IN ADVANCE OF THE POSSIBILITY OF SUCH
DAMAGES. NETSCAPE WILL HAVE NO LABILITY FOR ANY UNAUTHORIZED TRANSACTIONS OR
OTHER ACTIVITY BY SUBSCRIBERS OR POTENTIAL SUBSCRIBERS. IN NO EVENT WILL
NETSCAPE'S TOTAL LIABILITY UNDER THIS AGREEMENT EXCEED THE TOTAL AMOUNTS PAID TO
IT BY PROVIDER UNDER, OR IN CONNECTION WITH, THIS AGREEMENT.
15. General.
-------
(a) Assignment. This Agreement is not assignable by either party
----------
without the other party's written consent.
(b) Independent Contractor. Netscape's relationship with Provider
----------------------
during the term of this Agreement will be that of an independent contractor, and
not a partner or joint venturer.
(c) Notices. All notices and demands under this Agreement will be in
-------
writing and will be delivered by personal service, confirmed fax, confirmed
email, express courier, or certified mail, return receipt requested, to the
address of the receiving party set forth in this Agreement (or at such different
address as may be designated by such party by written notice to the other
party), and will be effective upon receipt.
(d) Governing Law and Venue. The laws of the State of California,
-----------------------
excluding that body of law controlling conflicts of law, will govern all
disputes arising out of or relating to this
-6-
<PAGE>
Agreement. Each party hereby consents to personal jurisdiction and service of
process on it in the State of California and waives any right to object thereto.
(e) Compliance with Law. Each party will at all times comply with
-------------------
all applicable international, national, state, regional, and local laws and
regulations, including U. S export control laws, in performing its duties under
this Agreement.
(f) Force Majeure. Neither party will be responsible for any failure
-------------
to perform its obligations under this Agreement due to causes beyond its
reasonable control, including but not limited to acts of God, war, riot,
embargoes, acts of civil or military authorities, fire, floods, accidents,
strikes, or shortages of transportation, facilities, fuel, energy, labor or
materials.
(g) Waiver. The waiver by either party of any breach of this
------
Agreement by the other party will not waive subsequent defaults by such party of
the same or a different kind.
(h) Severability. In the event any provision of this Agreement is
------------
held by a court or other tribunal of competent jurisdiction to be unenforceable,
the other provisions of this Agreement will remain in full force and effect.
(i) Publicity. Neither party will disclose any of the terms of this
---------
Agreement to any third party. Provider agrees that Netscape may issue a press
release regarding this Agreement, subject to Provider's approval of the contents
thereof.
(j) Entire Agreement. This Agreement, together with its attachments,
----------------
constitutes the complete and exclusive agreement between the parties pertaining
to the subject matter hereof; and supersedes in its entirety any and all prior
written or oral agreements or communications between the parties with respect to
such subject matter. Provider acknowledges that it is not entering into this
Agreement on the basis of any representations not expressly contained herein,
any modifications or waivers under this Agreement must be in writing and signed
by both parties.
The parties have executed this Agreement as of the Effective Date.
PROVIDER: NETSCAPE COMMUNICATIONS
-------------------------- CORPORATION
Signature: /s/ Henry Nothhaft Signature: /s/ Mike Homer
------------------------- -----------------------
Name: Henry Nothhaft Name: Mike Homer
------------------------------ ----------------------------
Title: President and CEO Title: Senior Vice President,
----------------------------- ---------------------------
Marketing
----------
Date: 3/13/97 Date: 3/17/97
------------------------------ ----------------------------
REVIEWED BY
-7-
<PAGE>
NETSCAPE LEGAL
Initial /s/ SSL
----------------------------
-8-
<PAGE>
ATTACHMENT A
1. Account Server Description and Specifications
---------------------------------------------
(a) Using either Netscape software or via the Internet, user accesses Account
Server, and a Menu of Providers is presented to user. User chooses a category of
service provider and then a specific Provider, and Account Server communicates
with Provider's sign up server via the ISP Protocol (Mecca). All communications
are secured using SSL Security Protocol. Account is created, user becomes a
Subscriber and:
1. Account Server passes account parameters to Subscriber's computer for
automatic configuration by Netscape supplied account setup software,
(if user accesses the Account Server via Netscape software)
or
2. Account Server presents the account parameters, including ISP's
support phone number, to Subscriber for printing and manual
configuration. (if user accesses the Account Server via the Internet).
(b) A front-end server for the ISP Protocol is provided by Netscape.
NETSCAPE ISP PROTOCOL SERVER SPECIFICATION
------------------------------------------
The document entitled "Netscape REGD Specification" is attached here or has
already been provided.
(c) A front-end server for the SSL Security Protocol is provided by Netscape.
NETSCAPE SECURITY SERVER SPECIFICATION
--------------------------------------
The document titled "Netscape SSLD Specification" is attached here or has
already been provided.
<PAGE>
ATTACHMENT B
PROVIDER INFRASTRUCTURE/DELIVERABLES & DEVELOPMENT EXPENSES
- -----------------------------------------------------------
1. Provider Infrastructure for Internet Access.
-------------------------------------------
(a) All POPs must support PPP, with PAP/CHAP compliancy.
(b) Support for POP3 and SMTP mail servers.
(c) Support for NNTP for news.
(d) Support for "Free" accounts for testing that are valid for no
less than 5 days.
2. Provider Infrastructure for Account Creation.
--------------------------------------------
(a) Installation of ISP Protocol Server (REGD) per Attachment A including
SSLD Security Server, on a Unix-based system. Both server front-ends
are provided by Netscape to Provider.
(b) Support for real-time account provisioning. Once an error-free account
creation process is complete, Subscriber must be able to access
Provider's service through Provider's POPS, with a delay of no more
than 10 minutes.
(c) Support for creating "Free" test accounts for testing account creation
process, and Provider's Infrastructure.
(d) Support for capturing and reporting the REG_CHANNEL identifiers and
total number of subscribers for each REG_CHANNEL identifier.
(e) Back-end support staff available via phone and email 24 hours per day,
7 days per week to monitor, troubleshoot and support the Account
Creation Infrastructure.
(f) Support for maintaining [*] uptime of the Account Creation
Infrastructure.
3. Provider Deliverables.
---------------------
3.1 Provider Pages.
--------------
Provider will provide to Netscape:
(i) Provider's official company name, as it is to be displayed by our account
creation interface. This will be used in all text fields and buttons
containing Provider's company name.
- --------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
(ii) Logo and icon files. Two gif image files of Provider's logo, one 48 x 48
pixels, and one 82 x 50 pixels. Gifs should be the full given size,
preferable with a white background. One Windows 3.1 icon file, ico (32 x
32 pixels), to be placed on Windows 3.1 user's desktop should also be
delivered.
(iii) Sales Phone Number. This phone number appears at the top of Provider's
offer page and is used to get pre-sales information about the services
provided.
(iv) A paragraph describing any features that apply to all price plans. This
information is passed in the "plan_info" field of the account_parameters_
sent packet. An example would be: 'Activation Fee/One time charge of US
$5.00 for initial connection.'
(v) Price plan names and descriptions. This information is passed in the
"price_plans" field of the account_parameters_sent packet. As the
following example shows, HTML may be included in the descriptions.
"price_plans=type=select'Aplan=plan 1'Bdescription=[P]l day free[/P] US
$0.00 per month for 0 hours per month.'Aplan=plan 2'Bdescription=[P]l day
free[/P]US $00.00 per month for 00 hours per month [BR] All hours are
[B]Free.[/B]'M"
(vi) Support information and phone number. The phone number must be passed in
the "support_number" field of the account_created packet.
(vii) Key Advantages. Provide a brief description of the advantages of
Provider's service relative to other providers. This information is added
by Netscape into the HTML of the Provider Pages. This information is
required to be a list of items. Some possibilities include:
. Special modem support such as 28.8 or ISDN. Reliability and
availability of dialup connections.
. Number and location of access points. Roaming support. 800 number
dial-ins.
. If your support methods are better or more available. If you have an
800 number.
. Length of experience as an ISP.
. Newsgroup access. Application access. Special content access.
. Web page hosting services for subscribers.
(viii) Terms and Conditions. The terms and conditions of Provider's service
will be described using the following format:
"Once your service connection is completed, please be sure to review the
[ISP] terms and conditions for service located at [URL]. If you do not
agree to these please notify us at [Support Phone Number] to cancel your
service."
(ix) Confirmation message. The confirmation message is displayed to the
subscriber while they decide whether to accept creation of the account.
The message to be displayed is passed in
-2-
<PAGE>
the "message" field of the send_confirmation packet, and is a free-form
page created by Provider.
An example confirmation message is:
"Welcome to [ISP]. You have chosen [describe plan]. [describe any special
features not highlighted previously]. [describe anything that might be
important about the account]. [describe more terms and conditions]."
3.2 Other Provider Deliverables.
---------------------------
(a) Information on Provider's platform on which the Unix-based REGD Mecca
Protocol server will run. This is required for Netscape to provide the
Provider with the REGD front-end ("Protocol Server") and SSLD front-
end ("SSL Security Server").
(b) Domain name for Provider's system. IP address, name and port number
for their sign up server machine (host for ISP Protocol Server and SSL
Security Server). Whether POPs are VJ compression enabled.
(c) Contacts for updates and changes to the POPS, offer pages, system
configurations, maintenance procedures and protocol revisions.
4. Incremental Expenses (Section 7(c)).
-----------------------------------
The type and amount of incremented expenses and the schedule are to be
mutually agreed upon in writing by the parties.
5. Development Expenses (Section 7(d)).
-----------------------------------
The type and amount of development expenses and the development schedule
are to be mutually agreed upon in writing by the parties.
-3-
<PAGE>
ATTACHMENT C
BOUNTY RATES
------------
[*]
- --------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. A total of 1 page containing such
information has been omitted from this exhibit. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
ATTACHMENT D
REPORT FORMAT
-------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------
REG_CHANNELs Number of Subscribers
- ------------------------------------------------------------
<S> <C>
Example: NSCP1OO1
[*]
- ------------------------------------------------------------
</TABLE>
- --------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
ATTACHMENT E
MUTUAL CONFIDENTIAL DISCLOSURE AGREEMENT
Each party (the "Receiving Party") understands that the other party (the
"Disclosing Party") may disclose information (including, without limitation,
computer programs, code, algorithms, names and expertise of employees and
consultants, know-how, formulas, processes, ideas, inventions (whether
patentable or not), schematics and other technical, business, financial and
product development plans, forecasts, strategies and information) which, to the
extent disclosed to the Receiving Party is hereinafter referred to as
"Proprietary Information" of the Disclosing Party. All Proprietary Information
disclosed in tangible form by the Disclosing Party shall be marked
"confidential" or "proprietary" and all Proprietary Information disclosed orally
or otherwise in intangible form by the Disclosing Party shall be designated as
confidential or proprietary at the time of disclosure and shall be reduced to a
writing marked "confidential" or "proprietary" and delivered to the Receiving
Party within thirty (30) days following the date of disclosure.
In consideration of the parties' discussions and any access the Receiving
Party may have to Proprietary Information of the Disclosing Party, the Receiving
Party hereby agrees as follows:
1. The Receiving Party agrees (i) to hold the Disclosing Party's
Proprietary Information in confidence and to take all necessary precautions to
protect such Proprietary Information, (ii) not to divulge any such Proprietary
Information or any information derived therefrom to any third person, (iii) not
to make any use whatsoever at any time of such Proprietary Information except to
fulfill the purposes of the Internet Account Server Participation Agreement to
which this Attachment E is attached, (iv) not to remove or export any such
Proprietary Information from the country of the Disclosing Party, and (v) not to
copy or reverse engineer, reverse compile or attempt to derive the composition
or underlying information of any such Proprietary Information. The Receiving
Party shall limit the use of and access to the Disclosing Party's Proprietary
Information to the Receiving Party's employees who need to know such Proprietary
Information for the purpose of such internal evaluation and shall cause such
employees to comply with the obligations set forth herein. The Receiving Party
shall treat the Proprietary Information with at least the same degree of care
and protection as it would use with respect to its own proprietary information.
The foregoing obligations shall survive for a period of three (3) years from the
date of disclosure of the Proprietary Information. Without granting any right or
license, the Disclosing Party agrees that the foregoing shall not apply with
respect to information that (a) is publicly available at the time of disclosure
or which thereafter becomes publicly available, through no improper action or
inaction by the Receiving Party or any affiliate, agent or employee of the
Receiving Party, or (b) was in the Receiving Party's possession or known by it
prior to receipt from the Disclosing Party, or (c) was rightfully disclosed to
the Receiving Party by another person without restriction, or (d) is
independently developed by the Receiving Party without access to such
Proprietary Information, or (e) is required to be disclosed pursuant to any
statutory or regulatory authority, provided the Disclosing Party is given prompt
notice of such requirement and the scope of such disclosure is limited to the
extent possible, or (f) is
<PAGE>
required to be disclosed by a court order, provided the Disclosing Party is
given prompt notice of such order and provided the opportunity to contest it.
2. Immediately upon request by the Disclosing Party at any time, the
Receiving Party will turn over to the Disclosing Party all Proprietary
Information of the Disclosing Party and all documents or media containing any
such Proprietary Information and any and all copies or extracts thereof. The
parties understand that nothing herein (i) requires the disclosure of any
Proprietary Information, which shall be disclosed, if at all, solely at the
option of the Disclosing Party, or (ii) requires either party to proceed with
any proposed transaction or relationship in connection with which Proprietary
Information may be disclosed.
3. The Receiving Party acknowledges and agrees that due to the unique
nature of the Disclosing Party's Proprietary Information, there may be no
adequate remedy at law for any breach of its obligations. The Receiving Party
further acknowledges that any such breach may allow the Receiving Party or third
parties to unfairly compete with the Disclosing Party resulting in irreparable
harm to the Disclosing Party and, therefore, that upon any such breach or any
threat thereof, the Disclosing Party shall be entitled to seek appropriate
equitable relief in addition to whatever remedies it may have at law. The
Receiving Party will notify the Disclosing Party in writing immediately upon the
occurrence of any such unauthorized release or other breach.
4. Neither party acquires any intellectual property rights under this
Attachment or through any disclosure hereunder, except the limited right to use
such Proprietary Information in accordance with this Attachment. No warranties
of any kind are given with respect to the Proprietary Information disclosed
under this Attachment or any use thereof; except as may be otherwise agreed to
in writing.
CONCENTRIC NETWORK CORPORATION
------------------------------
NETSCAPE COMMUNICATIONS (Company)
CORPORATION
By: /s/ Mike Homer By: Henry R. Nothhaft
---------------------------- ---------------------------
Mike Homer
Address: Address:
------------------------------
501 East Middlefield Road 10590 N. Tantau Ave.
------------------------------
Mountain View, California 94043 Cupertino, CA 95014
------------------------------
Date: 3/17/97 Date: 3/13/97
------------------------- -------------------------
REVIEWED BY
NETSCAPE LEGAL
Initial /s/ SSL
------------
-2-
<PAGE>
EXHIBIT 10.16
Special Customer Arrangement
This MCI Special Customer Arrangement ("Agreement") is made between MCI
Telecommunications Corporations ("MCI") and Sattell Communications LLC
("Customer"), and shall be effective thirty (30) days from the first day of the
next billing cycle following Customer's signature date ("Effective Date").
The rates, discounts and certain other provisions applicable to MCI tariffed
services are set forth in the Contract Tariff.
1. Authority: Customer represents and warrants that Customer has the full
---------
right, power and authority to enter into this Agreement, to perform Customer's
obligations hereunder and that the execution, delivery and performance by
Customer of this Agreement will not conflict with or constitute a default under
any contract, agreement or other obligation to which Customer is subject.
2. Confidential Information: Each party shall not disclose to any third party
------------------------
during the Term of this Agreement, or during the three (3) year period after
expiration or termination of this Agreement, any of the terms and conditions of
this Agreement unless such disclosure is lawfully required by any federal
governmental agency or is otherwise required to be disclosed by law or is
necessary in any legal proceeding establishing rights and obligations under this
Agreement. Each party reserves the right to terminate this Agreement by giving
written notice to the other party in the event of any unpermitted third party
disclosure hereunder.
3. Government Law: This Agreement and all causes of action arising out of the
--------------
Agreement, shall be subject to the Communications Act of 1934, as amended (the
"Act"), or, if any part of this Agreement is not covered by the Act, by the
domestic law of the State of Georgia without regard to its choice of law
principles. In the event of a conflict between this Agreement and any subsequent
translations, this English language version shall prevail.
4. Notices: All notices, requests, or other communications (excluding
-------
invoices) hereunder shall be in writing and hand delivered or addressed and sent
by certified or registered mail, postage prepaid and return receipt requested to
the parties at the address below or such other addresses as may be specified by
written notice. All notices shall be effective when received.
5. Severability: All provisions of this Agreement are severable, and the
------------
unenforceability or invalidity of any of the provisions shall not affect the
validity or enforceability of the remaining provisions. The remaining provisions
will be construed in such a manner as to carry out the full intention of the
parties. Section titles or references used in this Agreement shall not have
substantive meaning or context and are not a part of this Agreement.
6. Entire Agreement: This Agreement, including the Contract Tariff,
----------------
constitutes the entire agreement between the parties with respect to MCI
Tariffed services and the applicable MCI Tariffs and Tariff Option, and
supersedes all other representations, understandings or agreements which are not
fully expressed herein, whether oral or written. No amendment to this Agreement
shall be valid unless in writing and signed by both parties.
7. Signature Authorization: The parties have duly executed and agreed to be
-----------------------
bound by this Agreement as evidenced by the signatures of their authorized
representatives above. Each party represents and warrants to the other that the
signatory identified beneath its name above has full authority to execute this
Agreement on its behalf.
<PAGE>
8. Service Provisioning and Receipt: MCI will provide to Customer interstate
--------------------------------
and international telecommunications service(s) provided pursuant to the MCI
Tariff FCC No.1, MCI Tariff FCC No. 5, WUI Tariff FCC No.27, and any other
interstate and international tariff of MCI and its affiliates, each as
supplemented by this Agreement, and intrastate telecommunications services
provided pursuant to MCI's state tariffs governing such services ("MCI
Tariffs"). This Agreement incorporates by reference the terms of each such
tariff. MCI may modify its tariffs from time to time in accordance with law and
thereby affect the service(s) furnished to Customer. This is s Specialized
Customer Arrangement as defined in Section B-17.03 of the Tariff.
MCI will, if required, file a tariff option ("TO") consistent with the
terms of Attachment A, which is fully incorporated herein. In the event a TO
required to implement the terms of this Agreement is suspended or rejected, or
is inconsistent with this Agreement, then Customer may, as its sole remedy,
elect to terminate this Agreement without liability on thirty (30) days' written
notice given not later than thirty (30) days after the event giving rise to the
termination right, unless MCI substantially cures the problem within the notice
period. MCI will use best reasonable commercial efforts to provide Customer with
notice that the TO required to implement this Agreement has been suspended,
rejected, or found to be inconsistent with this Agreement.
The rates, discounts, terms and conditions of this Agreement, except as set
forth in Attachment A, are those set forth in applicable MCI Tariffs. In the
event of inconsistency between the TO and MCI Tariffs, the TO shall govern. In
the event of inconsistency between this Agreement and applicable MCI Tariffs or
the TO, the TO or applicable MCI Tariffs shall govern. If, where and to the
extend that MCI is no longer required to file Tariffs, MCI will continue to
provide to the Customer MCI services pursuant to the terms and conditions of
this Agreement.
Sattell Communications LLC MCI Telecommunications Corporation
9145 Deering Avenue Three Ravinia Drive
Chatsworth, CA 91311 Atlanta, GA 30346
/s/ Daniel W. Latham /s/ Tom Schilling
- ----------------------------------- -----------------------------------
Authorized Customer Signature Authorized Signature
Daniel W. Latham Tom Schilling, Director
- ----------------------------------- -----------------------------------
Print Name and Title Print Name and Title
May 16, 1996 May 17, 1996
- ----------------------------------- -----------------------------------
Date Date
-2-
<PAGE>
ATTACHMENT A TO SCA
Contract Tariff
This Attachment A to the Agreement contains the rates, terms and conditions of
the MCI services provided under Schedule I.
1. Term of Service: The term of service is twenty-four (24) months (beginning
---------------
thirty (30) days from the first day of the first billing cycle following the
date of the Customer's execution of this Contract Tariff). Upon completion of
the term of service, the service arrangement under this Agreement shall continue
on a month-to-month basis, and Customer shall receive the rates and discounts
for MCI services as set forth in this Agreement provided, Customer's monthly
usage equals or exceeds one-twelfth of the Annual Minimum.
2. Description of Service: Service may consist of any one or more standard
----------------------
tariffed MCI services.
3. Minimum Volume Requirements: For purposes of this Contract Tariff, Base
---------------------------
Rates are defined as the rates and discounts for which the Customer qualifies
under this Contract Tariff.
3.1 Annual Minimum: During each consecutive twelve (12) month period of
--------------
the term of service ("Annual Period"), the Customer's use of MCI services under
this Contract Tariff must equal or exceed [*], calculated at Base Rates
("Annual Minimum"). During the thirteenth month of the term of Service, Customer
may upon sixty (60) days prior written notice to MCI, decrease the Annual
Minimum to [*]. The rates and discounts for MCI services will be adjusted as
of the effective date of the notice. Customer may only decrease the Annual
Minimum one time during the term of the service.
4. Rates and Charges: The Customer will be charged the following rates for
-----------------
domestic interstate service usage. (For all domestic intrastate and
international service charge usage, the Customer shall pay standard tariffed
rates set forth in the applicable MCI tariffs.)
4.1 Postalized Rates: The Customer will be charged the following
----------------
postalized rates for the Customer's Interstate usage. [*]
4.1.1 MCI 800 Service:
---------------
(1) In Lieu of any other rates and discounts, the Customer will be
charged the following per-minute rates for domestic interstate MCI 800
DAL usage, depending on termination type and the time of day that the
call is made:
<TABLE>
<CAPTION>
Termination Type Business Day Non-Business Day
------------------ ------------ ----------------
<S> <C> <C>
800 DAL [*] [*]
800 CBL [*] [*]
</TABLE>
- ---------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-3-
<PAGE>
(2) If the Customer decreases the Annual Minimum to [*] pursuant to
paragraph 1 above, in lieu of any other rates and discounts, the
Customer shall be charged the following per-minute rates for domestic
interstate MCI 800 DAL usage as of the effective date of the decrease,
depending on the termination type and the time of day that the call is
made:
<TABLE>
<CAPTION>
Termination Type Business Day Non-Business Day
------------------ ------------ ----------------
<S> <C> <C>
800 DAL [*] [*]
800 CBL [*] [*]
</TABLE>
5. Volume Discounts: In each Annual Period of the term of service in which the
----------------
Customer satisfies the Annual Minimum, the Customer will be charges the rates
and receive the discounts set forth under the Contract Tariff.
5.1 MCI HyperStream Frame Relay Service. Pursuant to the Customer's
------------------------------------
revenue commitments for domestic MCI HyperStream Frame Relay Service, Customer
shall receive with the standard HPP discounts associated with the Monthly
minimum schedule applicable to the two (2) year term of service as set forth in
the Tariff.
5.2 Charges Not Eligible for Discount: These rates do not apply to the
----------------------------------
following charges for MCI services other than those described in Section 2; non-
tariffed products; access or egress (or related) charges imposed by third
parties; Directory Assistance charges; standard tariffed non-recurring charges;
taxes or governmental surcharges.
6. Classifications, Practices and Regulations:
------------------------------------------
6.1 Underutilization: If in any Annual Period, the Customer's use of
-----------------
service under this Contract Tariff, calculated at Base Rates, fails to satisfy
the Annual Minimum, the Customer will be billed and required to pay: (1) all
outstanding amounts billed to the Customer during that Annual Period; and (2) a
underutilization charge (which Customer agrees is reasonable) equal [*].
6.2 New Technology Change: Customer will not be liable for
----------------------
underutilization charges where such underutilization charges arise solely as a
result of a provided that in any case Customer shall use its best reasonable
efforts to: (1) direct to MCI new traffic or traffic not currently carried by
MCI in order to meet the Annual Minimum; and (2) certain MCI as the provider of
the service required pursuant to the [*]. In the event Customer's Usage Charges
fall below [*] of the Annual Minimum during the Service Team as the result of a
Customer and MCI shall use good faith efforts to renegotiate the terms and
conditions of the Agreement, including but not limited to all rates and
discounts; provided, however, that if a new agreement is not reached within
sixty (60) days of MCI's notice to Customer
- ------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE>
that Customer's Usage Charges have fallen below [*] of the Annual Minimum
during the Service Term, MCI may terminate this agreement without liability to
customer, upon ninety (90) days written notice to customer.
6.3 Business Downturn: Customer will not be liable for underutilization
-----------------
charges where such underutilization charges are solely due to [*]. In the event
the Customer's Usage Charges fall below [*] of the Annual Minimum during the
Service Term as a result of such business downturn, MCI and Customer will
cooperate in efforts to develop a mutually agreeable alternative proposal that
will address the concerns of both parties and comply with all applicable legal
and regulatory requirements and restrictions, provided, however, that if a new
agreement is not reached within thirty (30) days of MCI's notice to Customer
that Customer's Usage Charges have fallen below [*] of the Annual Minimum, MCI
may terminate this Agreement without liability to Customer upon ninety (90) days
written notice. By way of example and not limitation, the alternative proposal
may include changes in discounts, credits, revenue and/or volume commitments,
the multi-year service period, and other provisions. Subject to all applicable
legal and regulatory requirements of the Federal Communications Commission and
the Communications Act of 1934, MCI will prepare and file any tariff revisions
necessary to implement such mutually agreeable alternative proposal. This
provision shall not apply to a change resulting from a decision by a Customer
to: (1) reduce its overall use of telecommunications service; (2) alter its
telecommunications network architecture; or (3) transfer portions of its
telecommunications traffic or projected growth to carriers other than MCI. This
provision shall also not apply during the first twelve (12) months of the
Service Term and, after the first twelve (12) months, may only be used one (1)
time by Customer during the Service Term. Customer must give MCI immediate
written notice of the conditions it believes will require the application of
this provision.
6.4 Force Majeure: Customer will not be liable for the underutilization
--------------
charges where such underutilization are solely due to events beyond the
reasonable control of the customer. The Customer shall promptly notify MCI of
the force majeure circumstances, and the Service Team shall be extended by the
time of the deal caused by the force majeure event.
6.5 Termination:
-----------
6.5.1. Except as set forth below, if the Customer terminates
service under the Contract Tariff after the Effective Date and before
the expiration of the term of service, it will constitute a breach of
this Contract Tariff and Customer will be billed and required to: [*]
- ------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<PAGE>
6.5.2. The Customer may terminate this Contract prior to the
expiration of the term of service without termination liability if
Customer enters into another Contract Tariff with term and volume
commitments equal to or greater than the commitments under this
Contract Tariff.
6.5.3. If the Customer becomes dissatisfied with the agreement or
the MCI services or with MCI's performance in connection with the
provision of MCI services under this Agreement within thirty (30) days
of the Effective Date, Customer terminates this Agreement pursuant to
this paragraph 6.5.3, MCI will release to Customer the surety provided
in paragraph 6.7 below, less the amount of Customer's unpaid Usage
Charges up to the time of such termination.
6.6 Service Interruptions
---------------------
6.6.1. Customer shall be entitled to Credit Allowances for Service
Interruptions in accordance with Section B.15 of the Tariff. A Service
Interruption begins when Customer reports the interruption to MCI and
releases the "Service Element" (as hereinafter defined) for testing
and repair ad ends when MCI retenders the Service Element to Customer.
For the purpose of determining the Annual Minimum, MCI will not reduce
Usage Charges by the amount of Credit Allowances applied. For purposes
of this Agreement, "Service Element" refers to the specific MCI
service affected at the specific geographic Customer location
affected.
6.6.2. Customer may discontinue receipt of service on a Service
Element at any time without liability except as otherwise expressly
provided for in the Tariff or this Agreement (an example of such a
provision might be where a private line installation charge is waived
but is to be assessed if the line is not in place for a minimum
period). If Customer discontinues receipt of service on a Service
Element having chronic Service Interruptions and does not take
substitute service form MCI, the Annual Minimum for purposes of
assessing underutilization charges shall be reduced by the average
monthly Usage Charges for the discontinued Service Element measured
over the last three (3) billing months prior to discontinuation. A
Service Element with chronic Service Interruptions is one on which
there have been three or more Service Interruptions, each consisting
of thirty (30) or more minutes, totaling twenty-four (24) or more
hours within three (3) consecutive calendar months.
6.7 Payment Arrangements: The Customer is required to pay MCI for its
--------------------
services within thirty (30) days of the Customer's receipt of MCI's invoice. In
consideration for services provided by MCI, Customer agrees to pay surety in the
amount of [*]. Surety shall be provided by June 3, 1996. Initial surety
requirements shall be based on estimated usage projections and MCI shall reserve
the right to require additional surety based on MCI traffic reporting and/or
actual usage. Should the customer fail to provide additional surety, MCI may
elect to disconnect all services immediately and without further notice. Surety
may be in the form of a cash deposit, an Irrevocable
- ------------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<PAGE>
Letter of Credit for a term of one year issued by am MCI approved financial
institution of a Cross Corporate Guarantee from Diana Corporation. If Customer
elects to provide the Cross Corporate Guarantee, MCI will release the surety
upon receipt of such Guarantee. Cash deposits will be retained in an interest
bearing account held by MCI for a minimum of twelve (12) months. MCI shall
reserve the right to determine the customer's eligibility for refund of the
deposit based on customer's payment history and financial solvency and to retain
such deposit as is required to limit MCI's exposure.
6.8 Tariffed Rates: If MCI offers discounts applicable to a combination of
---------------
its services (as opposed to discounts on an individual service), the Customer
who has subscribed to one of the combined services may elect to receive the
benefits of such discounts in lieu of its SCA discounts. If the Customer so
chooses, the new discounts become binding for the remainder of the terms of
service.
6.9 Conditions: In order for Customer to be eligible to receive the rates
-----------
and discounts provided under this Agreement, Customer must satisfy the following
conditions on an annual basis:
6.9.1. Customer agrees that it will utilize MCI [*] of Customer's
domestic interstate dedicated 800 traffic during the Service Term (the
Exclusive Carrier Requirement").
6.9.2. MCI may request in writing and Customer will promptly
provide to MCI in writing, proof satisfactory to MCI that Customer is
satisfying the terms of the Exclusive Carrier Requirement for any
Annual Period ("Documentation"). MCI may review the Documentation
solely for the purpose of determining Customer's compliance with the
Exclusive Carrier Requirement.
6.9.3. The rates and discounts for MCI Services set forth in this
Agreement are conditioned upon Customer's satisfaction of the
Exclusive Carrier Requirement. If Customer fails to satisfy the
Exclusive Carrier Requirements during any Annual Period, then the
rates and discounts which shall be applied to Customer's usage of MCI
Services for such Annual Period shall be MCI standard Tariff rates
(less standard discounts) notwithstanding anything to the contrary in
the Agreement.
6.9.4. If the percentage of Customer's usage of MCI 800 Service
terminating via dedicated access facilities during any annual billing
period (excluding usage routed to switched lines for disaster recovery
purposes only) is less [*] of its total usage of MCI 800 Service (as
measured in minutes of use), Customer will pay an additional [*] per
minute of usage of MCI 800 Service terminating via dedicated access
facilities below such [*] threshold.
6.9.5. If the percentage of Customer's usage of interstate MCI 800
Service is less than eighty percent (80%) of its total usage of MCI
800 Service (as measured in minutes of use), Customer will pay an
additional [*] per minute of usage of interstate MCI 800 Service
under such eighty percent (80%) threshold.
- --------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-7-
<PAGE>
6.9.6. If the percentage of Customer's usage of MCI 800 Service
occurring during the Non-Business Day time period is less than sixty
percent (60%) of its total usage of MCI 800 Service, Customer will
pay an additional [*] per minute of usage of Non-Business Day MCI
800 Service under such sixty percent (60%) threshold.
6.10 Credits:
-------
6.10.1. The Customer will receive a credit, not to exceed [*],
for the one-time charges associated with the implementation of MCI
service under this Contract Tariff. Such credits will be issued from
time to time throughout the term of office as MCI service under this
Contract Tariff is installed. Any applicable Tariffed promotional
credits will be applied prior to this credit.
6.10.2. If the Customer decreases the Annual Minimum to [*]
pursuant to paragraph 1 above, for each consecutive three (3) month
period following the effective date of the decrease (each a Quarterly
Period"), Customer shall receive a credit of ten percent (10%)
calculated and applied to the [*] of the Customer's total domestic
interstate MCI 800 DAL Usage Charges for each Quarterly Period.
7. This agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties hereto. Neither this agreement,
nor any rights or obligations of Customer herein shall be transferable or
assignable by Customer without MCI's prior written consent, which consent shall
not be reasonable withheld.
8. Service under this option is available to Customers ordering service within
30 days of the Effective Date of this option.
- -----------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-8-
<PAGE>
FIRST AMENDMENT
TO MCI SPECIAL CUSTOMER ARRANGEMENT
This is the first amendment (the "Amendment") to the MCI Special Customer
Arrangement between MCI Telecommunications Corporation ("MCI") and Sattell
Communications LLC ("Customer"), which was signed by Customer on May 16, 1996
(the "Original Agreement"). This Amendment is effective as of thirty (30) days
after the first day of the next full month's billing cycle following the
Customer signature date ("Amendment Effective Date").
1. Survival of Original Agreement. Except as otherwise expressly modified or
------------------------------
amended herein, all terms and conditions contained in the Original
Agreement shall remain in full force and effect and shall not be altered or
changed by this Amendment. The Original Agreement including this Amendment
shall be referred to as the "Agreement".
2. Effective Date. The opening paragraph of the Original Agreement shall be
--------------
deleted in its entirety and restated as follows:
"This MCI Special Customer Arrangement ("Agreement") is made between
MCI Telecommunications Corporation ("MCI") and Sattell Communications
LLC ("Customer") and shall be effective as of June 7, 1996 ("SCA
Effective Date")."
3. Add New Paragraph 4.1.1(3). A new paragraph 4.1.1(3) is hereby added and
--------------------------
incorporated into Attachment A of the Original Agreement as follows:
"This is a featureless product offering. Customer will incur
additional charges for any features ordered."
4. Add New Paragraph 4.1.2. A new paragraph 4.1.2 is hereby added and
-----------------------
incorporated into Attachment A of the Original Agreement as follows:
"4.1.2 MCI Vision Service:
------------------
(1) Except as set forth in paragraph 4.1.2 (2) below, for domestic MCI
Vision Service, Customer will pay the standard rates pursuant to the
Vision Power Rate Program as set forth in the Tariff and receive the
discounts associated with the MCI Vision Power Rate Value Insurance
Plan Two (2) year and [*] commitment levels as set forth in the
Tariff except that minimum term and volume levels shall not apply.
- ---------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
(2) In lieu of the discounts set forth in paragraph 4.1.2(1) above, for
interstate MCI Vision Service, Customer shall pay the following postalized
rates depending on the type of access and the time of day that the call
occurs.
<TABLE>
<CAPTION>
Access Peak Off-Peak
---------- -------- ----------
<S> <C> <C>
Dedicated [*] [*]
Switched [*] [*]
</TABLE>
5. Paragraph 5.1 Modification. Paragraph 5.1 of Attachment A to the Original
--------------------------
Agreement shall be deleted in its entirety and restated as follows:
"5.1 MCI HyperStream Frame Relay Service. Pursuant to the Customer's
-----------------------------------
revenue commitments for domestic MCI HyperStream Frame Relay Service,
Customer shall receive with the standard HPP discount associated with
a [*] Monthly Minimum and two (2) year term of service as set forth
in the Tariff."
6. Paragraph 6.5.3 Modification. Paragraph 6.5.3 of Attachment A to the
----------------------------
Original Agreement shall be deleted in its entirety and restated as
follows:
"6.5.3 If the Customer becomes dissatisfied with this Agreement within
forty (40) days of the Effective Date, Customer may terminate this
Agreement without termination liability. If Customer terminates this
Agreement pursuant to this paragraph 6.5.3, MCI will release to
Customer the surety provided in paragraph 6.7 below, less the amount
of Customer's unpaid Usage Charges up to the time of such
termination."
7. Paragraph 6.7 Modification. Paragraph 6.7 of Attachment A to the Original
--------------------------
Agreement shall be deleted in its entirety and restated as follows:
"6.7 Payment Arrangements: The Customer is required to pay MCI for
--------------------
its services within thirty (30) days of the Customer's receipt of
MCI's invoice. In consideration for services provided by MCI, customer
agrees to pay surety in the amount of [*]. Surety shall be provided
by June 3, 1996. Initial surety requirements shall be based on
estimated usage projections and MCI shall reserve the right to require
additional surety based on MCI traffic reporting and/or actual usage.
Should the customer fail to provide additional surety in a form
acceptable to MCI within ten (10) business days after Customer's
notice of such requirement, MCI may elect to disconnect all services
immediately and without further notice. Surety may be in the form of a
cash deposit, an Irrevocable Letter of Credit for a term of one year
issued by an MCI approved financial institution, a
- ----------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE>
performance bond with terms and conditions and from an issuer
acceptable to MCI or a cross corporate guarantee from Diana
Corporation. If Customer elects to provide the cross corporate
guarantee; MCI will release other forms of surety upon receipt of such
cross corporate guarantee. However, should Customer elect to terminate
the cross corporate guarantee currently in effect under this
Agreement, Customer must provide alternative surety acceptable to MCI
concurrently with such termination of the cross corporate guarantee.
Cash deposits will be retained in an interest bearing account held by
MCI for a minimum of twelve (12) months. MCI shall reserve the right
to determine the customer's eligibility for refund of the deposit
based on customer's payment history and financial solvency and to
retain such deposit as is required to limit MCI's exposure."
Once this Agreement has been fully executed, any further amendments must be
in writing and signed by both parties.
Accepted and agreed:
Sattell Communications LLC MCI Telecommunications Corporations
By: /s/ James Fiedler By: /s/ Tom Schilling
-------------------------- ----------------------------
Name: James Fiedler Name: Tom Schilling
-------------------------- --------------------------
Title: Chairman & CEO Title: Director
------------------------- -------------------------
Date: 7/1/96 Date: 7/2/96
-------------------------- --------------------------
-3-
<PAGE>
SECOND AMENDMENT
TO MCI SPECIAL CUSTOMER ARRANGEMENT
This is the Second Amendment (this "Amendment") to MCI Special Customer
Arrangement by and between MCI Telecommunications Corporation ("MCI") and
Concentric Network Corporation ("Customer") and amends that certain MCI Special
Customer Arrangement between MCI and Sattel Communications L.L.C. ("Sattel")
which was effective as of June 7, 1996 (the "SCA") and amended by that certain
First Amendment to MCI Special Customer which was signed by Sattel on July 1,
1996 (the "First Amendment"). The SCA and the First Amendment shall
collectively be referred to as the "Original Agreement." The Original Agreement
was assigned to Customer by Sattel pursuant to an Assignment and Novation
Agreement entered into as of August 7, 1996. Unless otherwise defined herein,
capitalized terms used in this Amendment shall have the same meanings as set
forth in the Original Agreement.
The parties hereby agree that the Original Agreement is amended as follows:
1. Survival of Original Agreement. Except as otherwise expressly modified or
------------------------------
amended herein, all terms and conditions contained in the Original
Agreement shall remain in full force and effect and shall not be altered or
changed by this Amendment. The Original Agreement and this Amendment shall
collectively be referred to as the "Agreement."
2. Effective Date. This Amendment is effective as of November 1, 1996.
--------------
3. Revised Attachment A to SCA. Attachment A of the Original Agreement shall
---------------------------
be deleted in its entirety and replaced by the revised Attachment A
attached to, and incorporated by reference into, this Amendment.
4. Complete Agreement. The Agreement, together with MCI's F.C.C. Tariffs No.
------------------
1 and 8, as amended from time to time, constitutes the complete agreement
of the parties and supersedes all other prior agreements and
representations concerning its subject matter.
This offer shall remain open and be capable of being accepted by Customer
until October 24, 1996. Once this Amendment has been fully executed, any
further amendments must be in writing and signed by both parties.
<PAGE>
Accepted and agreed:
MCI Telecommunications Corporation Concentric Network Corporation
By: /s/ Edward W. Smith By: /s/ John Peters
-------------------------------- -----------------------------
Name: Edward W. Smith Name: John Peters
------------------------------ ---------------------------
Title: Director Title: Exec VP
----------------------------- --------------------------
Date: 11/1/96 Date: 10/17/96
------------------------------ ---------------------------
<PAGE>
ATTACHMENT A TO SCA
Contract Tariff
This Attachment A to the Agreement contains the rates, discounts, terms and
conditions of the MCI services provided under Schedule I.
1. Term of Service. The term of service is twenty-four (24) months from June
---------------
7, 1996 (the "Effective Date"). Upon completion of the term of service, the
service arrangement under this Agreement will continue on a month-to-month
basis, and Customer will receive the rates and discounts for MCI services
as set forth in this Agreement provided, Customer's monthly usage equals or
exceeds one-twelfth (1/12th) of the Second Minimum, as that term is defined
in Section 3 below.
2. Description of Service. Service may consist of any one or more standard
----------------------
tariffed MCI services.
3. Minimum Volume Requirements. For purposes of this Contract Tariff, Base
---------------------------
Rates are defined as the rates and discounts for which Customer qualifies
under this Contract Tariff.
3.1 Customer's Minimums. From the Effective Date through April 30, 1997
-------------------
(the "First Period"), Customer's use of MCI services under this
Contract Tariff must equal or exceed [*], calculated at Base Rates
(the "First Minimum"). From May 1, 1997 through June 6,1998 (the
"Second Period"). Customer's use of MCI services under this Contract
Tariff must equal or exceed [*], calculated at Base Rates (the "Second
Minimum"). Any time after July 1, 1997, Customer may, upon sixty (60)
days prior written notice to MCI, decrease the Second Minimum to [*].
The rates and discounts for MCI services will be adjusted as of the
effective date of such notice. Customer may only decrease the Second
Minimum one time during the term of the service.
3.2 Data Sub-Minimum. During the First and Second Periods combined,
----------------
Customer's use of MCI Dedicated Leased Line Services under this
Contract Tariff must equal or exceed [*], calculated at Base Rates
(the "Data Sub-Minimum"). Customer usage of MCI Dedicated Leased Line
Services will be eligible to count towards each of the First and
Second Minimums and the Data Sub-Minimum.
- -------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
4. Rates and Charges. The Customer will be charged the following rates for
-----------------
domestic interstate service usage. (For all domestic intrastate and
international service usage, Customer will pay standard tariffed rates set
forth in the applicable MCI tariffs.)
4.1 Postalized Rates. The Customer will be charged the following
----------------
postalized rates for Customer's interstate usage. [*]
4.1.1 MCI 800 Service:
---------------
(1) In lieu of any other rates and discounts, Customer will
be charged the following per-minute rates for domestic
interstate MCI 800 DAL usage, depending on termination
type and the time of day that the call is made:
<TABLE>
<CAPTION>
Termination Type Business Day Non-Business Day
---------------- ------------- ----------------
<S> <C> <C>
800 DAL [*] [*]
800 CBL [*] [*]
</TABLE>
(2) If Customer decreases the Second Minimum to Three
Million Six Hundred Thousand Dollars ($3,600,000)
pursuant to Section 3.1 above, in lieu of any other
rates and discounts, Customer will be charged the
following per-minute rates for domestic interstate MCI
800 DAL usage as of the effective date of the decrease,
depending on the termination type and the time of day
that the call is made:
<TABLE>
<CAPTION>
Termination Type Business Day Non-Business Day
---------------- ------------ ----------------
<S> <C> <C>
800 DAL [*] [*]
800 CBL [*] [*]
</TABLE>
(3) This is a featureless product offering. Customer will
incur additional charges for any features ordered.
- -------------------------
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE>
4.1.2 MCI Vision Service:
------------------
(1) Except as set forth in paragraph 4.1.2(2) below, for
domestic MCI Vision Service, Customer will pay the
standard rates pursuant to the Vision Power Rate
Program as set forth in the Tariff and receive the
discounts associated with the MCI Vision Power Rate
Value Insurance Plan Two (2) year and [*] commitment
levels as set forth in the Tariff except that minimum
term and volume levels will not apply.
(2) In lieu of the discounts set forth in paragraph
4.1.2(l) above, for interstate MCI Vision Service,
Customer will pay the following postalized rates
depending on the type of access and the time of day
that the call occurs.
<TABLE>
<CAPTION>
Access Peak Off-Peak
--------- --------- ----------
<S> <C> <C>
Dedicated [*] [*]
Switched [*] [*]
</TABLE>
4.1.3 Dedicated Leased Line Services:
------------------------------
(1) In lieu of any other rates and discounts and except as
set forth in paragraph 4.1.3(2) below, Customer will be
charged the following per mile rates for domestic
interstate Inter Office Channel ("OC") Services over
MCI Dedicated Leased Line Services:
Terrestrial Digital Service 1.5 ("TDS 1.5"):
-------------------------------------------
Miles* Monthly Rate
[*] [*]
[*] [*]
[*] [*]
[*] [*]
- -------------------------
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with the Securities and Exchange Commission. Confidential treatment has been
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-3-
<PAGE>
Terrestrial Digital Service 45 ("TDS 45"):
-----------------------------------------
Miles* Monthly Rate
[*] [*]
[*] [*]
[*] [*]
[*] [*]
* Miles are not calculated on an incremental basis, for
example, [*]
(2) Customer shall receive the discounts associated with
the three (3)-year Access Pricing Plan as set forth in
the Tariff on Customer's Dedicated Leased Line Service
usage. The standard term and volume commitments set
forth in the Tariff shall apply. To the extent that
Customer has its circuits located at MCI facilities or
locations, or has otherwise provided for local access,
Customer will not be obligated to pay Access
Collocation and/or Central Office Connection charges as
set forth in the Tariff.
5. Volume Discounts. Except as set forth in Sections 3.1 and 4.1.2 above, if
----------------
Customer satisfies the First and Second Minimums, Customer will be charged
the rates and receive the discounts set forth under this Section 5.
5.1 MCI HyperStream Frame Relay Service. For domestic MCI HyperStream
-----------------------------------
Frame Relay Service, Customer will receive with the standard E{PP
discount associated with a [*] Monthly Minimum and two (2) year term
of service as set forth in the Tariff. This discount does not apply to
the following: charges for MCI services other than those described in
Section 2, non-tariffed products, access or egress (or related)
charges imposed by third parties; Directory Assistance charges;
standard tariffed non-recurring charges; taxes or governmental
surcharges.
6. Classifications, Practices, and Regulations.
-------------------------------------------
6.1 Underutilization. If in either the First or Second Period, Customer's
----------------
use of service under this Contract Tariff, calculated at Base Rates,
fails to satisfy the respective First or Second Minimum, Customer will
be billed and required to pay: (1) all
- -------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-4-
<PAGE>
outstanding amounts billed to Customer during the applicable First
and/or Second Period; and, (2) an underutilization charge (which
Customer agrees is reasonable) equal to [*]
6.2 New Technology Change. Customer will not be liable for
---------------------
underutilization charges where such underutilization charges arise
solely [*] provided that in any case Customer will use its best
reasonable efforts to: (1) direct to MCI new traffic or traffic not
currently carried by MCI in order to meet the First and/or Second
Minimum; and (2) retain MCI as the provider of the service required
pursuant to the New Technology Change. [*] In the event Customer's
Usage Charges fall below seventy percent (70%) of the First and/or
Second Minimum during the term of service as the result of a [*],
Customer and MCI will use good faith efforts to re-negotiate the terms
and conditions of this Agreement, including but not limited to all
rates and discounts; provided however, that if a new agreement is not
reached within sixty (60) days of MCI's notice to Customer that
Customer's Usage Charges have fallen below seventy percent (70%) of
the First and/or Second Minimum during the term of service, MCI may
terminate this Agreement without liability to Customer upon ninety
(90) days prior written notice to Customer.
6.3 Business Downturn. Customer will not be liable for underutilization
-----------------
charges where such underutilization charges are solely [*]. In the
event that Customer's Usage Charges fall below seventy percent (70%)
of the First and or Second Minimum during the term of service as a
result of such business downturn, MCI and Customer will cooperate in
efforts to develop a mutually agreeable alternative proposal that will
address the concerns of both parties and comply with all applicable
legal and
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<PAGE>
regulatory requirements and restrictions, provided, however, that if a
new agreement is not reached within thirty (30) days of MCI's notice
to Customer that Customer's Usage Charges have fallen below [*], MCI
may terminate this Agreement without liability to Customer upon ninety
(90) days written notice. By way of example and not limitation, the
alternative proposal may include changes in discounts, credits,
revenue, and/or volume commitments, the multi-year service period, and
other provisions. Subject to all applicable legal and regulatory
requirements of the Federal Communications Commission and the
Communications Act of 1934, as amended, MCI will prepare and file any
tariff revisions necessary to implement such mutually agreeable
alternative proposal. This provision will not apply to a change
resulting from a decision by Customer to: (1) reduce its overall use
of telecommunications service; (2) alter its telecommunications
network architecture; or (3) transfer portions of its
telecommunications traffic or projected growth to carriers other than
MCI. This provision will also not apply during the first twelve (12)
months of the term of service and, after the first twelve (12) months,
may only be used one (1) time by Customer during the term of service.
Customer must give MCI immediate written notice of the conditions it
believes will require the application of this provision.
6.4 Force Majeure. Customer will not be liable for underutilization
-------------
charges where such underutilization charges are solely due to events
beyond the reasonable control of Customer. The Customer will promptly
notify MCI of the force majeure circumstances, and the term of service
will be extended by the time of the delay caused by the force majeure
event.
6.5 Termination.
-----------
6.5.1 Except as set forth below, if Customer terminates service
under this Contract Tariff after the Effective Date and
before the expiration of the term of service, it will
constitute a breach of this Contract Tariff and Customer
will be billed and required to: (1) repay a pro rata portion
of all credits received under this Contract Tariff; and, (2)
pay an early termination charge equal to one hundred percent
(100%) of the First and/or Second Minimum for the First
and/or Second Period remaining in the term of service or a
pro rata portion thereof for any partial First and/or Second
Period.
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6.5.2 The Customer may terminate this Contract Tariff prior to the
expiration of the term of service without termination
liability if Customer enters into another Contract Tariff
with term and volume commitments equal to or greater than
the commitments under this Contract Tariff.
6.6 Service Interruptions.
---------------------
6.6.1 Customer will be entitled to Credit Allowances for Service
Interruptions in accordance with Section 6.15 of the Tariff.
A Service Interruption begins when Customer reports the
interruption to MCI and releases the "Service Element" (as
hereinafter defined) for testing and repair and ends when
MCI retenders the Service Element to Customer. For the
purpose of determining the First and/or Second Minimum, MCI
will not reduce Usage Charges by the amount of Credit
Allowances applied. For purposes of this Agreement, "Service
Element" refers to the specific MCI service affected at the
specific geographic Customer location affected.
6.6.2 Customer may discontinue receipt of service on a Service
Element at any time without liability except as otherwise
expressly provided for in the Tariff or this Agreement (an
example of such a provision might be where a private line
installation charge is waived but is to be assessed if the
line is not in place for a minimum period). If Customer
discontinues receipt of service on a "Service Element having
chronic Service Interruptions" and does not take substitute
service from MCI, the First and/or Second Minimum for
purposes of assessing underutilization charges will be
reduced by the average monthly Usage Charges for the
discontinued Service Element measured over the last three
(3) billing months prior to discontinuation. For purposes of
this Contract Tariff, a Service Element having chronic
Service Interruptions is one on which there have been three
(3) or more Service Interruptions, each consisting of thirty
(30) or more minutes, totaling twenty-four (24) or more
hours within three (3) consecutive calendar months.
6.7 Payment Arrangements. The Customer is required to pay MCI for its
--------------------
services within (30) days of the date of MCI's invoice. In
consideration for services provided by MCI, Customer agrees to pay
surety in the amount of [*]. Initial surety requirements will be based
on estimated usage projections and MCI will reserve the right to
require additional surety based on MCI traffic reporting and/or actual
usage. Should Customer fail to provide additional surety in a form
acceptable to MCI within
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<PAGE>
ten (10) business days after Customer's notice of such requirement,
MCI may elect to disconnect all services immediately and without
further notice. Surety may be in the form of a cash deposit, an
Irrevocable Letter of Credit for a term of one (1) year issued by an
MCI approved financial institution, a performance bond with terms and
conditions and from an insurer acceptable to MCI or a cross corporate
guarantee from Diana Corporation. If Customer elects to provide the
cross corporate guarantee, MCI will release other forms of surety upon
receipt of such cross corporate guarantee. However, should Customer
elect to terminate the cross corporate guarantee currently in effect
under this Agreement, Customer must provide alternative surety
acceptable to MCI concurrently with such termination of the cross
corporate guarantee. Cash deposits will be retained in an interest
bearing account held by MCI for a minimum of twelve (12) months. MCI
will reserve the right to determine Customer's eligibility for refund
of the deposit based on Customer's payment history and financial
solvency and to retain such deposit as is required to limit MCI's
exposure.
6.8 Tariffed Rates. If MCI offers discounts applicable to a combination
--------------
of its services (as opposed to discounts on an individual service),
Customer who has subscribed to one of the combined services may elect
to receive the benefits of such discounts in lieu of its SCA
discounts. If Customer so chooses, the new discounts become binding
for the remainder of the term of service.
6.9 Conditions. In order for Customer to be eligible to receive the rates
----------
and discounts provided under this Agreement, Customer must satisfy the
following conditions on an annual basis:
6.9.1 Customer agrees that it will utilize MCI [*] during the term
of service (the "Exclusive Carrier Requirement").
6.9.2 MCI may request in writing and Customer will promptly
provide to MCI in writing, proof satisfactory to MCI that
Customer is satisfying the terms of the Exclusive Carrier
Requirement for the First and/or Second Period
("Documentation"). MCI may review the Documentation solely
for the purpose of determining Customer's compliance with
the Exclusive Carrier Requirement.
6.9.3 The rates and discounts for MCI Services set forth in this
Agreement are conditioned upon Customers satisfaction of the
Exclusive Carrier Requirement. If Customer fails to satisfy
the Exclusive Carrier Requirement
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<PAGE>
be applied to Customer's usage of MCI Services for the First
and/or Second Period will be MCI standard Tariff rates (less
standard discounts) notwithstanding anything to the contrary
in this Agreement.
6.9.4 If the percentage of Customer's usage of MCI 800 Service
terminating via dedicated access facilities during any
annual billing period (excluding usage routed to switched
lines for disaster recovery purposes only) is less than one
hundred percent (100%) of its total usage of MCI 800 Service
(as measured in minutes of use), Customer will pay an
additional [*] per minute of usage of MCI 800 Service
terminating via dedicated access facilities below such one
hundred percent (100%) threshold.
6.9.5 If the percentage of Customer's usage of interstate MCI 800
Service is less than eighty percent (80%) of its total usage
of MCI 800 Service (as measured in minutes of use), Customer
will pay an additional [*] per minute of usage of
interstate MCI 800 Service under such eighty percent (80%)
threshold.
6.9.6 If the percentage of Customer's usage of MCI 800 Service
occurring during the Non-Business Day time period is less
than sixty percent (60%) of its total usage of MCI 800
Service, Customer will pay an additional [*] per minute of
usage of Non-Business Day MCI 800 Service under such sixty
percent (60%) threshold.
6.9.7 Customer represents that as of April 30, 1997, Customer's
total of all IOC mileage for leased TDS 1.5 circuits will be
equal to an average of [*] miles or less and as of October
31, 1997, TDS 45 circuits will be equal to an average of [*]
miles or less.
6.9.8 Customer represents that as of April 30, 1997, Customer will
lease from MCI a minimum of [*] TDS 1.5 circuits and as of
October 31, 1997, a minimum of [*] TDS 45 circuits;
provided, however, that such TDS 1.5 and 45 circuits are
available to Customer's selected locations.
6.10 Credits.
-------
6.10.1 The Customer will receive a credit, not to exceed [*], for
the one-time charges associated with the implementation of
MCI service under this Contract Tariff. Such credits will be
issued from time to time throughout the
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Contract Tariff. Such credits will be issued from time to
time throughout the term of service as MCI service under
this Contract Tariff is installed. Any applicable Tariffed
promotional credits will be applied prior to this credit.
6.10.2 If Customer decreases the Second Minimum to [*] pursuant to
Section 3.1 above, for each consecutive three (3) month
period following the effective date of the decrease (each a
"Quarterly Period"). Customer will receive a credit of [*]
calculated on and applied to the first [*] of Customer's
total domestic interstate MCI 800 DAL Usage Charges for each
Quarterly Period.
6.10.3 If from the Effective Date until November 30, 1996,
Customer's usage of MCI 800 Service intrastate equals or
exceeds the one (1) of the total 800 intrastate minute
levels set forth below, then Customer will receive one (1)
of the corresponding credits set forth below on Customer's
domestic interstate usage charges
<TABLE>
<CAPTION>
Total 800 Intrastate Minutes Credit
---------------------------- ----------
<S> <C>
[*] [*]
[*] [*]
</TABLE>
Customer is entitled to only one (1) of the above credits
and any such credit to which Customer is entitled to will be
applied to Customer's December 1996 monthly invoice
7. Assignment. This Agreement will be binding upon and inure to the benefit
----------
of the successors and permitted assigns of the parties hereto. Neither this
Agreement, nor any rights or obligations of Customer herein will be
transferable or assignable by Customer without MCI's prior written consent,
which consent will not be unreasonably withheld.
8. Ordered Service. Service under this option is available to other customers
---------------
MCI ordering service within 30 days of the Effective Date of this option.
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
ASSIGNMENT AND NOVATION AGREEMENT
This Assignment and Novation Agreement (the "Agreement") is made and entered
into as of August 7, 1996 (the "Effective Date"), by and between MCI
Telecommunications Corporation ("MCI"), Sattel Communications L.L.C. with
offices located at 9145 Deering Avenue, Chatsworth, California 91311 ("Sattel")
and Concentric Network Corporation with offices located at 10590 N. Tantau
Avenue, Cupertino, California 95014 ("CNC").
1. The parties stipulate and recite that:
a. MCI and Sattel entered into an MCI Special Customer Arrangement, dated
May 17, which was amended by the First Amendment, dated July 2, 1996
(the "SCA"). The SCA provides that Sattel will receive certain MCI
services from MCI pursuant to the terms and conditions set forth in
the SCA.
b. Sattel desires to be discharged from the performance of its
obligations set forth in the SCA (the "Obligations").
c. CNC desires to receive the MCI services pursuant to the SCA and to
perform the Obligations.
d. MCI desires to release Sattel from the Obligations, provided that CNC
agrees to perform the Obligations and to be bound by the terms and
conditions of the SCA and this Agreement.
2. For the reasons recited above, and in consideration of the mutual
covenants contained in this Agreement, the parties agree as follows:
a. Sattel assigns to CNC the SCA, and CNC accepts such assignment from
Sattel. CNC has fully read and understands the SCA and assumes and
shall perform the Obligations.
b. CNC agrees to be bound by all of the terms and conditions of the SCA
in every way, as if it were an original party to the SCA. CNC agrees
that on August 9, 1996, CNC shall pay MCI [*] and that beginning
August 16, 1996, CNC shall pay MCI weekly in advance for MCI services
provided pursuant to the SCA. Such payments shall be via electronic
wire transfer to MCI's bank account. Such payments must be received
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with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
by MCI on Friday of each week by 2:00 PM EST. If the payment date is a
federal holiday, the payment must be received by 2:00 PM EST the next
business day. CNC shall make each electronic wire transfer pursuant to
the instructions set forth below, but MCI may modify these
instructions upon at least thirty (30) days prior written notice to
CNC. The amount of CNC's weekly wire transfers shall be [*]. If the
amount of CNC's prepayments in a calendar month is less than its
actual invoiced MCI charges for said calendar month, CNC shall pay the
difference with its next wire transfer to MCI. CNC shall make each
electronic wire transfer pursuant to the following instructions, and
understands that failure to do so will result in cancellation of MCI
services in accordance with MCI Tariff No. 1 filed with the FCC,
without further notification.
Bank Name: The First National Bank of Chicago
ABA#:
DDA #:
Acct Name: MCI Telecommunication Corporation
Acct#:
Cust Name: Concentric Network Corporation
c. MCI releases Sattel from all claims for any liability that has arisen
or may have arisen with respect to the SCA except for those relating
to outstanding invoices for MCI services provided by MCI to Sattel
before the Effective Date. MCI accepts the liability of CNC in lieu of
the liability of Sattel. MCI shall be bound by the terms and
conditions of the SCA in every way as if CNC were named in the SCA in
place of Sattel.
d. This Agreement may be signed in counterparts.
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requested with respect to the omitted portions.
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<PAGE>
In witness whereof; the parties have caused this Agreement to be executed
by their respective authorized representatives.
Sattel Communications LLC Concentric Network Corporation
By: /s/ Daniel W. Latham By: /s/ Michael F. Anthofer
-------------------------- ----------------------------
Name: Daniel W. Latham Name: Michael F. Anthofer
Title: President Title: Vice President and CFO
------------------------ --------------------------
Date: August 7, 1996 Date: August 7, 1996
------------------------- ---------------------------
MCI Telecommunications Corporation
By: /s/ Edward W. Smith
--------------------------
Name Edward Smith
Title:
------------------------
Date: August 8, 1996
-------------------------
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<PAGE>
EXHIBIT 10.17
MASTER AGREEMENT FOR MCI ENHANCED SERVICES
This Master Agreement for MCI Enhanced Services, together with the ESA
Schedules annexed hereto (collectively, the "Agreement"), is made, effective as
of the Effective Date (as defined in Section 2 below), by and between MCI
Telecommunications Corporation and its appropriate affiliated companies
(collectively, "MCI") and Concentric Network Corporation with offices located at
10590 N. Tantau Avenue, Cupertino, California 95014 ("Customer").
1. MCI Enhanced Service(s).
------------------------
1.1 As used in this Agreement, the term "MCI Enhanced Service(s)" means all
commercially available MCI non-Tariffed services and associated equipment
provided by MCI to Customer pursuant to this Agreement and for which an ESA
Schedule has been annexed hereto, and shall not include any MCI Tariffed
services provided pursuant to any filed tariff of MCI or an MCI affiliated
company. The descriptions of MCI Enhanced Services set forth in the respective
ESA Schedules are subject to revision by MCI from time to time.
2. Service Term: Ramp Period
-------------------------
2.1 The service term of this Agreement shall commence upon the Effective
Date and end thirty-six (36) months after the expiration of the Ramp Period (as
defined below) (the "Term"). After the expiration of the initial Term, the Term
shall be automatically extended on a month-to-month basis until such time as
either party provides the other with at least ninety (90) days prior written,
notice of termination. The "Effective Date" shall mean the first day of the
first full calendar month following the date upon which this Agreement is
executed by MCI, as indicated on the signature lines below
2.2 The Ramp Period shall begin on the Effective Date and end upon the
earlier of:
2.2.1 thirty (30) days after the date of Customer's written notice to MCI that
the Ramp Period be deemed terminated; or
2.2.2 eight (8) months after the Effective Date.
3. Revenue Minimum: Underutilization Charges: New Technology
---------------------------------------------------------
3.1 During each annual billing period of the Term beginning after the
expiration of the Ramp Period, (each, an "Annual Period"). Customer's
Net Usage under this Agreement shall equal or exceed [*] (the "MVR").
For purposes of this Agreement. "Net Usage" means recurring
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<PAGE>
charges accruing to Customer's account, after application of all
discounts and credits, including without limitation charges for usage of
services provided by MCI and for the rental and/or maintenance of
equipment provided by MCI and excluding without limitation all charges
expressly excluded in the applicable ESA Schedule and all taxes and
surcharges.
3.2 If Customer does not satisfy the MVR for any Annual Period, then
Customer will pay to MCI an underutilization charge (which Customer
agrees is reasonable) equal to the [*].
3.3 Customer will not be liable for underutilization charges pursuant to
Paragraph 3.2 above where such underutilization charges arise solely as
a result of a [*], provided that in any case Customer shall use its best
reasonable efforts to: (1) direct to MCI new traffic or traffic not
currently carried by MCI in order to meet the MVR, and (2) retain MCI as
the provider of the service required pursuant to the [*]. In the event
Customer's Net Usage falls below [*] of the MVR during any Annual Period
as the result of a New Technology Change. Customer and MCI shall use
good faith efforts to renegotiate the terms and conditions of this
Agreement, including but not limited to all rates and discounts;
provided, however, that if a new agreement is not reached within sixty
(60) days after MCI's notice to Customer that Customer's Net Usage has
fallen below [*] of the MVR during an Annual Period, MCI may terminate
this Agreement without liability to Customer, upon ninety (90) days
prior written notice to Customer.
4. Provision of ESA Services.
-------------------------
4.1 Each MCI Enhanced Service provided under this Agreement shall have a
corresponding ESA Schedule specifying the applicable rates, discounts
and other terms and conditions on which MCI will provide such MCI
Enhanced Service.
4.2 For all domestic and international access services provided in
conjunction with the MCI Enhanced Services, MCI shall be entitled to
immediately pass through to Customer any charges, fees, taxes and terms
and conditions of service imposed by access suppliers, including but not
limited to increases or decreases in telephone tariffs, communications
charges and access charges that are imposed or enacted by access
suppliers to MCI after the Effective Date.
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separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
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4.3 If at any time during the Term MCI tariffs any of the MCI Enhanced
Services provided pursuant to this Agreement (each a "Newly Tariffed
Service"). Customer and MCI agree to promptly execute appropriate
additional agreements and amendments to this Agreement the effect of
which shall be to eliminate the Newly Tariffed Service from this
Agreement and to incorporate such Newly Tariffed Service into an
agreement for MCI Tariffed services. Customer acknowledges and agrees
that MCI shall have no obligation to include any equipment provided
under this Agreement or any charges payable for such equipment in any
such agreement for Tariffed services.
5. Installation Credits.
--------------------
5.1 Customer shall be eligible for one-time credits in an aggregate amount
not to exceed [*] to be applied against one-time installation and other
one-time nonrecurring charges associated with implementation of MCI
Enhanced Services under this Agreement (the "Install Waiver"). The
application of the Install Waiver to each MCI Enhanced Service may be
more specifically described in the applicable ESA Schedule.
6. MCI Invoices; Payment; Surety.
-----------------------------
6.1 MCI shall invoice Customer on a monthly basis in the month succeeding
the applicable usage month. Customer shall pay the full amount of each
invoice, within thirty (30) days after the date of the invoice. MCI may
use amounts paid by Customer pursuant to any other agreement between the
parties to offset amounts owed by Customer to MCI pursuant to this
Agreement. Failure of MCI to timely invoice Customer for any amounts due
hereunder shall not be deemed a waiver by MCI of its rights to payment
therefor.
6.2 Upon MCI's reasonable request, Customer shall pay MCI weekly in advance
for MCI services provided pursuant to this Agreement. Such payments
shall be via electronic wire transfer to MCI's bank account. Such
payments must be received by MCI on Friday of each week by 2:00 PM EST,
if the payment date is a federal holiday, the payment must be received
by 2:00 PM EST the next business day. Customer shall make each
electronic wire transfer pursuant to the instructions set forth below,
but MCI may modify these instructions upon at least thirty (30) days
prior written notice to Customer. The amount of Customer's weekly wire
transfers shall be in an amount which is one-fourth of MCI's good faith
estimate of Customer's actual monthly usage, which estimate may be
revised from time to time. If the amount of Customer's prepayments in a
calendar month is less than its actual charges for said calendar month
as invoiced by MCI pursuant to Paragraph 6.1 above. Customer shall pay
the difference with its next wire transfer to MCI. Customer shall make
each electronic wire
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separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
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<PAGE>
transfer pursuant to the following instructions. and understands that
failure to do so will result in cancellation of MCI services without
further notification.
Bank Name: The First National Bank of Chicago
ABA#:
DDA #:
Acct Name: MCI Telecommunication Corporation
Acct#:
Cust Name: Concentric Network Corporation
6.3 Customer shall make a separate claim in writing, with adequate support,
for any credit for service interruption to which Customer believes
itself entitled under this Agreement, and MCI and Customer will promptly
address and resolve the claim. The parties shall use reasonable
commercial efforts to resolve any such claim within sixty (60) days
after the date of MCI's notice thereof
6.4 Except as otherwise indicated herein, the charges specified in the
attached Schedule(s) do not include, and Customer agrees to pay, all
taxes levied by any duly constituted taxing authority against or upon
MCI Enhanced Services or otherwise arising out of this Agreement
(including, without limitation, any sales, gross receipts or value-added
taxes), except any such income tax based on or measured in whole or in
part by gross or net income, gross or net payments, profits, or net
worth of MCI or its affiliates (the "Taxes"); so long as, in the case of
foreign tax withholdings, Customer shall agree to cooperate with MCI in
providing foreign tax receipts to MCI; utilize best efforts to comply
with foreign tax laws; and utilize best efforts to provide MCI and/or a
foreign taxing authority with additional information to support MCI's
claim for foreign tax credit(s), as requested in writing by MCI.
7. Customer Obligations
--------------------
7.1 Customer shall be responsible for obtaining, installing, inter-
connecting and maintaining all equipment, software and/or communications
services necessary for inter-connection with MCI's network or otherwise
for use in conjunction with the MCI Enhanced Services. Customer shall
ensure that such equipment, software and/or services, including but not
limited to computer operating systems, are compatible with MCI's
requirements and that they continue to be compatible with subsequent
revision levels of MCI-provided equipment, software and services. MCI
shall exercise reasonable business efforts to provide Customer with
prior notice of an modifications in MCI's requirements that may affect
compatibility. Unless otherwise expressly agreed in writing. MCI shall
have no responsibility for the availability, capacity and/or condition
of any equipment, software or services obtained by
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<PAGE>
Customer hereunder. Should Customer undertake to connect any MCI
products or services to any other service or network, Customer shall
indemnify and hold harmless MCI from any damages, costs, liabilities and
expenses resulting from such connection or attempted connection,
including but not limited to damages resulting from unauthorized use of,
or access to, MCI's network.
7.2 Customer shall take, at its sole expense, all physical and information
systems security measures reasonably necessary to protect all equipment,
software and systems provided by MCI and its subcontractors in
connection with the MCI Enhanced Services, whether owned by Customer,
MCI, or MCI's subcontractors. Further, Customer shall be responsible for
ensuring the security of Customer's data, and Customer acknowledges and
agrees that MCI shall have no liability for any loss resulting from any
unauthorized third-party access to any Customer data.
7.3 Customer agrees to provide MCI and its subcontractors and their
respective employees and agents access to Customer's sites where any MCI
Enhanced Services are provided (including access to associated
equipment) as reasonably necessary for MCI and its subcontractors to
perform the MCI Enhanced Services ordered hereunder.
7.4 Customer shall be responsible for obtaining any and all local permits
and licenses necessary for performance under this Agreement (including
each ESA Schedule annexed hereto). MCI shall reasonably cooperate with
Customer to assist in the obtaining of permits. Customer shall indemnify
and hold harmless MCI, its subcontractors and their respective agents
and affiliates from and against all damages, costs, liabilities and
expenses (including reasonable attorneys' fees) arising out of
Customer's failure to obtain the appropriate permits and licenses.
7.5 Customer is responsible for preparing all equipment installation areas
at Customer sites with adequate wiring, power sources, telephone
connections and other physical facilities and services that may be
necessary to implement the MCI Enhanced Services, and MCI shall have no
obligation to provide any MCI Enhanced Service that requires equipment
to be installed at any site(s) where such site requirements have not
been fulfilled. MCI shall cooperate with Customer to provide site
requirements.
8. Software and Documentation.
--------------------------
8.1 All rights, including but not limited to copyright, patent, trademark
and other intellectual property rights, in any software and/or
documentation provided by MCI in connection with any MCI Enhanced
Service shall remain the exclusive property of MCI or its licensor(s).
MCI grants to Customer a non-exclusive license to use such software and
documentation solely for Customer's internal business purposes in
accordance with the terms of this Agreement. No portion of such software
or documentation shall be copied, decompiled, downloaded, translated, or
delivered to a third party without MCI's prior written consent,
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<PAGE>
except that Customer shall be permitted to copy MCI-provided software
for Customer's internal emergency use.
9. Termination
9.1 A party may terminate this Agreement immediately upon notice to the
other party if (i) such other party dissolves, discontinues or
terminates its business to which this Agreement pertains; (ii) such
other party fails to pay its debts as they become due or admits that it
is, or is reasonably believed to be, unable to pay its debts as they
become due; (iii) any bankruptcy, reorganization, insolvency,
dissolution or similar proceeding is instituted against such other
party; (iv) such other party makes any assignment for the benefit of
creditors; or (v) such other parry takes any corporate action in
furtherance of any of the foregoing.
9.2 MCI may terminate this Agreement immediately upon notice to Customer if
Customer fails to meet any payment obligation hereunder and such failure
is not cured within ten (10) business days after Customer's receipt of
written notice from MCI notifying Customer of such failure. MCI may also
terminate this Agreement upon thirty (30) days written notice to
Customer if Customer fails to comply with any other material term of
this Agreement and Customer does not cure such failure within such
thirty (30) day period.
9.3 In addition to MCI's rights of termination under Sections 9.1 and 9.2
above, MCI may, immediately upon written notice to Customer, interrupt,
suspend and/or terminate any facility, equipment, or service provided
under this Agreement if:
9.3.1 MCI determines in its sole discretion that continued provision of such
facility, equipment, or service would contravene any national or
international regulation, law, or tariff; or
9.3.2 MCI determines that interruption or termination of an MCI Enhanced
Service is necessary to prevent or protect against fraud or otherwise
protect its personnel, agents, facilities, or services; or
9.3.3 Any third-party subcontractor or vendor to MCI is unable to continue to
provide such facility, equipment, or service for any reason; provided,
however, that where such third party has ceased to provide any facility,
equipment, or service, MCI will use reasonable efforts to continue to
provide to Customer a comparable facility, equipment, or service by or
through another vendor under comparable terms and conditions.
9.4 Customer may terminate this Agreement without further liability to MCI
upon thirty (30) days written notice to MCI if:
9.4.1 MCI fails to comply with a material term of this Agreement and does not
cure such failure within such thirty (30) day period; or
-6-
<PAGE>
9.4.2 as of the expiration of the Ramp Period, MCI fails to make the following
MCI locations available to Customer (per those specifications
communicated by Customer to MCI as of August 13,1996) for inclusion in
that certain Support Services Agreement by and between the parties,
dated August 9,1996; provided that such termination right shall be
--------
deemed to have expired upon Customer's written notice to MCI pursuant to
Paragraph 2.2.1 above that the Ramp Period be deemed terminated:
Auburndale, Florida; Austell, Georgia; Downers Grove, Illinois:
Charlton, Massachusetts and Hillburn, New York.
9.5 In the event Customer terminates this Agreement other than in accordance
with Section 9.4. then, in addition to any other rights and remedies
available to MCI. Customer shall pay to MCI an Early Termination Charge
(which Customer agrees is reasonable) equal to [*].
9.6 Either party may terminate this Agreement without further liability in
the event that the parties have not, within sixty (60) days after MCI
Tariffs a service provided pursuant to this Agreement, executed
appropriate additional agreements and/or Amendments to this Agreement as
set forth in Paragraph 4.3 above. All of the terms and conditions of
this Agreement shall apply during said sixty (60) day period, provided
that such application is permissible pursuant to regulatory and legal
constraints.
10. Warranty.
--------
10.1 MCI's warranty obligations, if any, with respect to each Enhanced
Service shall be set forth in the applicable ESA Schedule. EXCEPT AS
SPECIFICALLY SET FORTH IN THIS AGREEMENT (INCLUDING THE ESA SCHEDULES),
MCI MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MCI ENHANCED
SERVICES. MCI SPECIFICALLY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED
WARRANTIES, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY INTELLECTUAL
PROPERTY WARRANTIES OF ANY TYPE
11. Indemnification
---------------
11.1 Customer agrees to indemnify MCI and its affiliates and their respective
employees, officers, directors, agents and subcontractors, and hold them
harmless against any damages and expenses incurred by any of them
arising out of Customer's acts, omissions and/or breach of its
obligations hereunder and/or Customer's use of any MCI Enhanced Services
in a manner other than as contemplated herein, including without
limitation any use that gives rise to infringement of any patent,
copyright, trademark, or other proprietary right of a third party,
except to the extent that such use constitutes a direct infringement by
Customer of a third party proprietary right that was solely contributed
to or solely induced by MCI.
- --------------------
[*] Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
-7-
<PAGE>
12. Export and Legal Compliance
---------------------------
12.1 The parties acknowledge that certain equipment, software and technical
data which may be provided hereunder may be subject to export and re-
export controls under the U.S. Export Administration Regulations and/or
similar regulations of the U.S. or any other country. No party shall
export or re-export any such equipment, software, technical data or any
direct product thereof in violation of any such laws.
12.2 Customer is responsible for complying with alt laws and regulations,
including but not limited to import and customs laws and regulations.
MCI shall provide reasonable assistance to Customer and its affiliates
to facilitate such compliance. Such assistance may include preparation
of import and customs forms and/or, where requested by Customer, acting
as Customer's agent in the import process.
13. Limitation Of Liability.
-----------------------
13.1 NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL,
EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES EVEN IF IT HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
13.2 WITHOUT LIMITATION OF THE PROVISIONS OF PARAGRAPH 13.1 ABOVE, THE TOTAL
LIABILITY OF MCI TO CUSTOMER IN CONNECTION WITH THIS AGREEMENT SHALL BE
LIMITED TO THE LESSER OF (A) DIRECT DAMAGES PROVEN BY CUSTOMER OR (B)
THE AGGREGATE AMOUNTS PAID BY CUSTOMER TO MCI UNDER THIS AGREEMENT FOR
THE ONE (1) MONTH PERIOD PRIOR TO ACCRUAL OF SUCH CAUSE OF ACTION AND
FOR THE SPECIFIC PRODUCT OR SERVICE WHICH FORMS THE BASIS FOR SUCH CAUSE
OF ACTION. THE FOREGOING LIMITATION APPLIES TO ALL CAUSES OF ACTIONS AND
CLAIMS, INCLUDING WITHOUT LIMITATION BREACH OF CONTRACT, BREACH OF
WARRANTY, NEGLIGENCE, STRICT LIABILITY, MISREPRESENTATION AND OTHER
TORTS, FURTHER, NO CAUSE OF ACTION WHICH ACCRUED MORE THAN ONE (1) YEAR
PRIOR TO THE INSTITUTION OF A LEGAL PROCEEDING ALLEGING SUCH CAUSE OF
ACTION MAY BE ASSERTED BY EITHER PARTY AGAINST THE OTHER.
MCI SHALL NOT BE RESPONSIBLE FOR PROTECTION OF TRANSMISSION FACILITIES
AND CUSTOMER PREMISES EQUIPMENT FROM UNAUTHORIZED ACCESS. MCI SHALL NOT
BE LIABLE, EITHER IN CONTRACT OR IN TORT, FOR UNAUTHORIZED ACCESS TO, OR
ALTERATION, THEFT, OR DESTRUCTION OF, DATA FILES, PROGRAMS, OR
INFORMATION OF CUSTOMER WHETHER OCCURRING THROUGH ACCIDENT OR FRAUD.
-8-
<PAGE>
MCI'S LIABILITY WITH RESPECT TO INDIVIDUAL MCI ENHANCED SERVICES MAY
ALSO BE LIMITED PURSUANT TO THE TERMS AND CONDITIONS OF THE APPLICABLE
ESA SCHEDULE.
14. Confidential Information.
------------------------
14.1 Neither party shall disclose to any third party during the Term of this
Agreement, or during the three (3) year period after expiration or
termination of this Agreement, any of the terms and conditions of this
Agreement unless such disclosure is lawfully required by any federal
governmental agency, is otherwise required to be disclosed by law, is
necessary in any legal proceeding establishing rights and obligations
under this Agreement or is made to a third party under similar
confidentiality obligations. Each party reserves the right to terminate
this Agreement by giving written notice to the other party in the event
of any unpermitted third party disclosure hereunder.
15. Miscellaneous
-------------
15.1 Neither party may assign this Agreement, or any rights or obligations
hereunder, without the prior written consent of the other party, which
consent shall not be unreasonably withheld. Any attempted assignment
without such prior written consent shall be void. Notwithstanding the
foregoing, MCI may assign this Agreement to its parent or any of their
subsidiaries or affiliates.
15.2 Other than as the result of an assignment permitted in accordance with
Paragraph 15.1 above, this Agreement shall not be deemed to provide
third parties with any remedy, claim, right of action, or other right
15.3 The construction, interpretation and performance of this Agreement, and
all causes of action arising out of this Agreement, whether in contract,
indemnity, warranty, strict liability, tort, or otherwise, shall be
governed as follows: (1) subject to the Communications Act of 1934, as
amended ("the Act"), by the Act; and (2) as to elements not controlled
by the Act, by the domestic law of the State of New York without regard
to its choice of law principles.
15.4 Any dispute arising out of or related to this Agreement, which cannot be
resolved by negotiations shall be settled by binding arbitration in
accordance with the J.A.M.S/ENDISPUTE Arbitration Rules and Procedures
("Endispute Rules"), as amended by this Agreement. The costs of
arbitration, including the fees and expenses of the arbitrator, shall be
shared equally by the parties unless the arbitration award provides
otherwise. Each party shall bear the cost of preparing and presenting
its case. The parties agree that this provision and the Arbitrator's
authority to grant relief shall be subject to the United States
Arbitration Act. 9 U.S.C. 1-16 et seq. ("USAA"), the provisions of this
Agreement, and the ABA-AAA Code of Ethics for Arbitrators in Commercial
Disputes. The parties agree that the arbitrator shall have no power or
authority to make awards or issue orders of any kind except as expressly
permitted by this Agreement, and in no event shall the arbitrator have
the
-9-
<PAGE>
authority to make any award that provides for punitive or exemplary
damages. The Arbitrator's decision shall follow the plain meaning of the
relevant documents, and shall be final and binding. The award may be
confirmed and enforced in any court of competent jurisdiction. All post-
award proceedings shall be governed by the USAA.
15.5 If any paragraph or clause of this Agreement shall be held to be invalid
or unenforceable by any body or entity of competent jurisdiction, then
the remainder of the Agreement shall remain in full force and effect and
the parties shall promptly negotiate a replacement provision or agree
that no replacement is necessary.
15.6 If either party fails, at any time, to enforce any right or remedy
available to it under this Agreement, that failure shall not be
construed to be a waiver of such party's right to enforce each and every
provision of this Agreement.
15.7 Any notice or other communication required to be given to the other
party under this given in Agreement shall be in writing, in the English
language and either (1) delivered in person, (2) sent by United States
certified or registered mail, postage prepaid, or (3) sent by an
overnight courier service, to the following addresses:
15.7.1 If to MCI:
MCI Telecommunications Corporation
201 Spear Street
San Francisco, California 94105
FAX:[*]
Attn: Legal Department
15.7.2 with copy to:
MCI Telecommunications Corporation
2560 North First Street, Bldg. F. 2d Floor,
San Jose, California 95131
FAX: [*]
Attn: Branch Manager
- --------------------
[*]Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
-10-
<PAGE>
15.7.3 If to Customer:
Concentric Network Corporation
10590 N. Tantau Avenue
Cupertino, California 95014
FAX: 408 342-2810
Attn: Chief Financial Officer
15.7.4 The address for notice may be changed by giving written notice in
accordance with this Section. If mailed in accordance with this Section,
notice shall be deemed given three (3) days after mailing. If sent by an
overnight courier service, notice shall be deemed given one (1) day
after deposit with the courier service.
15.8 Any delay in or failure of performance by either party under this
Agreement (other than a failure to comply with payment obligations)
shall not be considered a breach of this Agreement if and to the extent
caused by events beyond the reasonable control of the party affected,
including but not limited to acts of God, embargoes, governmental
restrictions, strikes (other than those only affecting Customer),
subcontractor failures or delays, riots, wars or other military action,
civil disorders, rebellion, vandalism, or sabotage. Market conditions
and/or fluctuations (including a downturn of Customer's business) shall
not be deemed force majeure events. The party whose performance is
affected by such events shall promptly notify the other party giving
details of the force majeure circumstances, and the obligations of the
party giving such notice shall be suspended during but not longer than
the continuance of the force majeure, and the time for performance of
the affected obligation hereunder shall be extended by the time of the
delay caused by the force majeure event. In the event that a force
majeure event occurs, each party has the duty to mitigate or its
damages.
15.9 Nothing in this Agreement shall create in either party any rights in any
trademark, trade name, service mark, insignia, symbol, identification
and/or logotype of the other party. Before either party uses any such
mark of the other party, it shall obtain the prior written consent of
the other party.
15.10 This Agreement has been written in the English language and, in the
event of any conflict or inconsistency between the English-language
version and any translation hereof the English language version shall
prevail.
15.11 The headings and captions of the various sections of this Agreement are
included solely for convenience and shall not be deemed to be a part of
this Agreement or considered in construing the terms and conditions
hereof.
15.12 Unless otherwise expressly provided herein, all rights and remedies
provided for in this Agreement shall be cumulative and in addition to
every other right and remedy available under this Agreement or otherwise
at law or in equity.
-11-
<PAGE>
15.13 This Agreement, including the ESA Schedules (which are incorporated
herein by this reference), constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof, and there are
no representations, understandings or agreements relative thereto which
are not fully expressed herein. No amendment, change, waiver, or
discharge hereof shall be valid unless in writing and signed by an
authorized representative of the party against which such amendment,
change, waiver, or discharge is sought to be enforced.
15.14 The parties have duly executed and agreed to be bound by this Agreement
as evidenced by the signatures of their authorized representatives
below. Each party represents and warrants to the other that the
signatory identified beneath its name below has full authority to
execute this Agreement on its behalf.
15.15 Customer must sign and return to MCI this document in duplicate on or
before September 18, 1996. After such time, Customer's ability to make
an offer to MCI consistent with the terms and conditions stated in this
document shall be deemed terminated.
MCI Telecommunications Corporation Concentric Network Corporation
By: /s/ Edward W. Smith By: /s/ Michael F. Authofer
------------------------------- --------------------------------
Name: Edward W. Smith Name: Michael F. Authofer
--------------- -------------------------------
Title: Director Title: VP & CFO
-------- ------------------------------
Date: 10/23/96 Date: Sept. 11, 1996
-------- -------------------------------
-12-
<PAGE>
ESA Schedule No. 1
MCI Hyperstream Asynchronous Transfer Mode Service
1. Description: MCI Hyperstream Asynchronous Transfer Mode (ATM) is a
connection oriented public/private network data service. Hyperstream
ATM - is a cell-based broadband technology which allows seamless high
speed wide area and local area network connections. A wide range of data
applications connect with HyperStream ATM including local area network
(LAN) interconnections, high-speed transmission of digitized, medical
imaging across the country' and desktop videoconferencing enabling users
to share multimedia applications.
2. Rates & Charges; Net Usage.
[*]
- --------------------
[*]Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
-13-
<PAGE>
2.0.1 Monthly Recurring Charges (simplex):
[*]
- --------------------
[*]Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
-14-
<PAGE>
2.1 "Net Usage" of MCI Hyperstream Asynchronous Transfer Mode Service shall
include only Recurring Port and Usage Charges, as set forth above. "Net
Usage" shall not include Nonrecurring Port and Usage Charges or Access
charges, as set forth above.
3. [*]
- --------------------
[*] Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
-15-
<PAGE>
EXHIBIT 10.20
Contract for Services
This Agreement (the "Agreement") is entered into this 14th day of June,
1996, by and between MFS Telephone, Inc. ("MFS") and Concentric Network
Corporation ("Customer"). Pursuant to this Agreement, MFS agrees to arrange for
services specified herein to be delivered to Customer. In providing the services
identified herein, MFS will be acting as Customer's agent in procuring
telecommunications services from various affiliates of MFS, including (but not
limited to) MFS Intelenet, Inc. and MFS Telecom, Inc. The telecommunications
services provided to Customer hereunder are offered pursuant to the terms and
conditions contained in applicable state and federal tariffs of MFS and its
affiliates; except to the extent modified by this Agreement, Customer agrees to
be bound by the terms and conditions of the applicable tariffs.
1. TERM
MFS Telecom and Customer agree that the term of this agreement shall be one
year, commencing on the date specified above. The term shall automatically renew
for successive one year periods unless either party notifies the other in
writing no less than 30 days prior to the expiration of the initial or renewal
term of its intention to terminate the Agreement at the expiration of the then-
current term.
2. RATES AND CHARGES
In consideration of the special and unique services to be provided to
Customer hereunder, including but not limited to "inward foreign exchange
service," in which local telephone calls to Customer from outside Customer's
service area can be routed to Customer's location through use of different
telephone numbers in each different area, Customer agrees to pay MFS the
following rates for MFS on-net T-1 trunk service offered and available in the
following Local Exchange Carrier "LEC") territories (rates stated are per month,
per T-1):
<TABLE>
<CAPTION>
State T1 Trunk Charge
- ----- ---------------
<S> <C>
California [*]
Maryland [*]
New York [*]
Georgia [*]
Illinois & Michigan [*]
</TABLE>
- -------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
The rates and services listed above are subject to availability; MFS's
obligation to provide the services in each state listed above is contingent on
MFS securing agreements with the applicable LEC allowing MFS to provision such
services on commercially reasonable terms.
3. DISCOUNTS
In the event that Customer orders and MFS installs more than [*]
T-1 trunks in the United States, Customer shall receive a discount of [*] off of
the rates listed above for each T-1 in excess of [*]. In the event that Customer
orders and MFS installs more than [*] T-1 trunks in the United States, Customer
shall receive a discount of [*] off of the rates listed above for each T-1 in
excess of [*]. The discounts stated in this section shall apply only to the
extent that Customer has ordered T-l's in excess of the numbers listed in this
section. As an example, if Customer has ordered and MFS has installed [*] T-l's
then Customer's monthly charges for [*] T-l's shall be determined by the rates
in Section 2, and Customer's monthly charges for [*] T-l's shall be determined
by the rates in Section 2, less [*]. If Customer has ordered and installed [*]
T-I's, then the monthly charges shall be: (a) the prices listed in Section 2 for
[*] T-1's; (b) [*] off of those prices for [*] T-1's; and (c) [*] off those
prices for [*] T-1's.
4. INSTALLATION CHARGES
Customer shall pay MFS [*] for each T-1 installed by MFS pursuant to
this Agreement, which installation fee shall be billed after installation.
5. MINIMUM MONTHLY USAGE COMMITMENT
Customer agrees to maintain a minimum monthly usage commitment of [*]
of monthly billings for T-1 Trunk Charges listed in section 2 hereof. In any
month where Customer's actual billings fall below the minimum monthly usage
commitment, Customer agrees to pay a shortfall fee equal to the difference
between Customer's actual bill and the minimum monthly usage commitment. Only
the T-1 Trunk Charges contribute toward the minimum monthly usage commitment.
Charges that do not contribute to the minimum monthly usage commitment include
installation fees, access charges, late payment penalties, taxes and other
government-imposed surcharges.
6. TERMINATION LIABILITY
If Customer terminates this Agreement prior to the end of the initial or
any renewal term, or MFS terminates this Agreement due to Customer's material
default, Customer shall pay to MFS, as liquidated damages and not as a penalty,
a termination charge equal to the minimum monthly usage commitment multiplied by
the number of months remaining on the initial or renewal term. Customer
- ------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE>
may terminate this Agreement without liability if Customer provides written
notification of such cancellation to MFS, postmarked within 90 days of the date
of this Agreement. Written notification must be sent to:
MFS Telecom Companies, Inc.
55 South Market Street, Suite 1250
San Jose, CA 95113
Attn: Contracts Department
Notwithstanding cancellation of this Agreement, Customer shall be
responsible for all charges incurred under this Agreement through the date of
Customer's disconnection from MFS service.
7. ENTIRE AGREEMENT AND MODIFICATIONS
The terms and conditions contained in this Agreement constitute the entire
agreement of the parties and supersede all previous written and oral
representations and/or agreements respecting the same subject matter between the
parties. This Agreement may be amended only by a writing signed by Customer and
MFS's Customer Contracts Administrator.
Customer Acceptance MFS Acceptance
/s/ John Peters /s/ Douglas T. Hickey
- ----------------------------- -------------------------------
Authorized Customer Signature Authorized MFS Signature
6/17/96 6/17/96
- ----------------------------- -------------------------------
Date Date
John Peters Douglas T. Hickey
- ----------------------------- -------------------------------
Typed or Printed Name Typed or Printed Name
Executive Vice President President
- ----------------------------- -------------------------------
Title Title
-3-
<PAGE>
EXHIBIT 10.21
CONTRACT TARIFF ORDER FORM
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CUSTOMER AT&T
- -------------------------------------------------------------------------------
<S> <C>
1. NAME: Concentric Network Corporation
- -------------------------------------------------------------------------------
2. STREET: 10590 North Tantau Avenue 7. STREET: 2730 San Tomas Expressway
- -------------------------------------------------------------------------------
3. CITY: Cupertino 8. CITY: Santa Clara
- -------------------------------------------------------------------------------
4. STATE & ZIP: California, 95014 9. STATE & ZIP: California, 95051
- -------------------------------------------------------------------------------
5. Att'n: Tony Zeis 10. Att'n: David Coff
- -------------------------------------------------------------------------------
</TABLE>
1. CUSTOMER hereby orders and AT&T agrees to provide communications
services (the "Services") pursuant to a Contract Tariff ("CT"), which AT&T will
file with the FCC consistent with the attached tariff pages. The Services will
be provided in accordance with the rates, terms and conditions described in the
CT and, except as provided in the CT, the rates, terms and conditions in
Applicable Tariffs pertaining to the Services. Applicable Tariffs are the AT&T
tariffs referenced in the CT, as such tariffs may be revised from time to time.
2. CUSTOMER may, as its sole remedy, cancel its order without liability
before the CT becomes effective if, without the consent of CUSTOMER: (a) AT&T
fails to file the CT within thirty (30) days after the effective date of this
Agreement; (b) the CT as filed is not consistent with the attached tariff pages;
or (c) the CT does not go into effect within 120 days after filing. In no event,
however, shall CUSTOMER have a right to cancel its order under this Section for
any condition that is caused by CUSTOMER.
3. CUSTOMER may be required to pay a deposit or advance payment before
service is provided pursuant to the terms of the CT and the Applicable Tariffs.
If CUSTOMER fails to pay any such required deposit or advance payment within 30
days after AT&T's request for such payment, CUSTOMER will be deemed to have
cancelled this order.
4. In the event of any inconsistency between the terms of any Applicable
Tariff and the CT, the terms of the CT shall prevail. In the event of any
inconsistency between the terms of this Agreement and any Applicable Tariff or
the CT, the terms of the Applicable Tariff or the CT shall prevail. Nothing
contained in this Agreement shall require AT&T to take any action prohibited or
omit to take any action required by the FCC or any other regulatory authorities.
5. EXCEPT FOR ANY WARRANTIES EXPRESSLY MADE IN THE CT OR THE APPLICABLE
TARIFFS, AT&T EXCLUDES ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANT ABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. AT&T'S LIABILITY TO CUSTOMER IS SUBJECT TO THE LIMITATIONS
STATED IN THE CT AND APPLICABLE TARIFFS.
6. This Agreement shall be governed by the law of the State of New York
(excluding its choice of law principles), or applicable federal statutes.
<PAGE>
7. If any provision of the CT is held to be invalid or unenforceable,
then AT&T and CUSTOMER shall cooperate to develop a mutually agreeable
replacement for such provision. If the parties are unable to reach agreement on
a replacement for the CT provision within 30 days after the provision is held to
be invalid or unenforceable (or within such additional time as the parties agree
in writing), then this Agreement shall be immediately terminated. CUSTOMER shall
remain liable for all charges and liabilities for services provided under the CT
prior to such termination.
8. Neither party shall publish or use any advertising, sales promotions,
press releases or other publicity matters which use the other party's corporate
or trade names, logos, trademarks, trade dress, or service marks (or which use
confusingly similar corporate or trade names, logos, trademarks, trade dress, or
service marks) without the prior written approval of the other party, except to
the limited extent as may be permissible under applicable law. Neither party is
licensed hereunder to conduct business under the other party's corporate or
trade names, logos, trademarks, trade dress, or service marks (or under any
confusingly similar corporate or trade names, logos, trademarks, trade dress, or
service marks).
9. AT&T's relationship with CUSTOMER under this Agreement shall be that
of an independent contractor.
10. Notices pursuant to this Agreement shall be in writing to the
addresses specified above.
11. This Agreement, the CT, and the Applicable Tariffs constitute the
entire agreement between the parties with respect to the Services. This
Agreement supersedes all prior agreements, proposals, representations,
statements, or understandings, whether written or oral, concerning the Services
or the rights and obligations relating to the Services. No change, modification
or waiver of any of the terms of this Agreement, except for revisions to the
Applicable Tariffs, shall be binding unless reduced to writing and signed by
authorized representatives of both parties hereto and, to the extent required by
law, filed with the FCC.
12. Each party represents and warrants that the person executing this
Agreement on its behalf is fully authorized to do so.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ORDERED BY CUSTOMER: ACCEPTED BY AT&T:
- --------------------------------------------------------------------------------
<S> <C>
11. Signature: /s/ John Peters 15. Signature: /s/ Greg Hopkins
- --------------------------------------------------------------------------------
12. Printed Name: John Peters 16. Printed Name: Greg Hopkins
- --------------------------------------------------------------------------------
13. Title: Executive Vice President 17. Title: Division Manager
- --------------------------------------------------------------------------------
14. Date: 5/28/96 18. Date: 6-17-96
- --------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
Addendum
to
AT&T Contract Tariff Order
The AT&T Contract Tariff Order dated contemporaneously herewith
("Agreement"), between AT&T Corp. ("AT&T") and Concentric Network Corporation
------------------------------
("CUSTOMER") is hereby revised by adding a new Section, as follows:
In the event of a business downturn beyond CUSTOMER's control or a network
optimization using other AT&T services, that significantly reduces the volume of
network services required by the CUSTOMER, with the result that CUSTOMER will be
unable to meet its revenue and/or volume commitments under this Contract
(notwithstanding CUSTOMER's best efforts to avoid such a shortfall), AT&T and
CUSTOMER will cooperate in efforts to develop a mutually agreeable alternative
proposal that will satisfy the concerns of both parties and comply with all
applicable legal and regulatory requirements. By way of example and not
limitation, such alternative proposals may include changes in rates,
nonrecurring charges, revenue and/or volume commitments, discounts, the multi-
year service period and other provisions. Subject to all applicable legal and
regulatory requirements, including the requirements of the Federal
Communications Commission and the Communications Act of 1934, AT&T will prepare
and file any tariff revisions necessary to implement such mutually agreeable
alternative proposal. This provision shall not apply to a change resulting from
a decision by CUSTOMER to transfer portions of its traffic or projected growth
to carriers other than AT&T. The CUSTOMER must give AT&T written notice of the
conditions it believes will require the application of this provision. This
provision does not constitute a waiver of any charges, including shortfall
charges, incurred by the CUSTOMER prior to the time the parties mutually agree
to amend or replace this Contract.
CUSTOMER AT&T
By: /s/ John Peters By: /s/ Greg Hopkins
------------------------------- ---------------------------------
Title: Executive VP Title: Division Manager
---------------------------- ------------------------------
Date: 5/28/96 Date: 6/17/96
----------------------------- -------------------------------
<PAGE>
CONTRACT TARIFF NO. XXXX
TITLE PAGE
This Contract Tariff applies to AT&T Private Line Services consisting of:
Domestic ACCUNET Spectrum of Digital Services, Domestic ACCUNET T1.5 Service,
Domestic ACCUNET T32 Service, Domestic ACCUNET T45 Service, Domestic ACCUNET
Fractional T45 Service, Domestic DATAPHONE Digital Services, InterSpan Frame
Relay Service and AT&T Local Channel Services for interstate or foreign
communications in accordance with the Communications Act of 1934, as amended.
Telecommunication services provided under this Contract Tariff are furnished by
means of wire, radio, satellite, fiber optics or any suitable technology or
combination of technologies.
-2-
<PAGE>
CONTRACT TARIFF NO. XXXX
CHECK SHEET
The Title Page and Pages 1 through 15 inclusive of this tariff are effective as
of the date shown.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Check Sheet 1
List of Concurring, Connecting and Other Participating Carriers 1
Explanation of Symbols Coding of Tariff Revisions 1
Trademarks and Service Marks 2
Explanation of Abbreviations 2
Contract Summary 3
</TABLE>
LIST OF CONCURRING, CONNECTING AND OTHER PARTICIPATING CARRIERS
Concurring Carriers - NONE
Connecting Carriers - NONE
Other Participating Carriers - NONE
EXPLANATION OF SYMBOLS - Coding or Tariff Revisions
Revisions to this tariff are coded through the use of symbols. These symbols
appear in the right margin of the page. The symbols and their meanings are:
R - to signify reduction.
I - to signify increase.
C - to signify changed regulation.
T - to signify a change in text but no change in rate or regulation.
S - to signify reissued matter.
M - to signify matter relocated without change.
N - to signify new rate or regulation.
D - to signify discontinued rate or regulation.
Z - to signify a correction,
Other marginal codes are used to direct the tariff reader to a footnote for
specific information. Codes used for this purpose are lower case letters of the
alphabet, e.g., x, y and z. These codes may appear beside the page revision
number in the page header or in the right margin opposite specific text.
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<PAGE>
TRADEMARKS AND SERVICE MARKS - The following marks, to the extent, if any, used
throughout this tariff, are trademarks and service marks of AT&T Corp.
Trademarks Service Marks
---------- -------------
None ACCUNET
DATAPHONE
InterSpan
EXPLANATION OF ABBREVIATIONS
Adm. - Administrator
IOCS - Inter Office Channels
kbps - kilobits per second
Mbps - Megabits per second
-4-
<PAGE>
CONTRACT TARIFF NO. XXXX
1. Services Provided:
A. AT&T private Line Services (AT&T Tariff F.C.C. No. 9) consisting of:
1. Domestic ACCUNET Spectrum of Digital Services (ASDS)
2. Domestic ACCUNET T1.5 Service
3. Domestic ACCUNET T32 Service
4. Domestic ACCUNET T45 Service
5. Domestic ACCUNET Fractional T45 Service
6. Domestic DATAPHONE Digital Services(DDS)
B. AT&T Local Channel Services (AT&T Tariff F.C.C. No. 11)
C. AT&T InterSpan Frame Relay Services (FRS) (AT&T Tariff F.C.C. No. 4)
1.1. Initial Quantities - The Initial Quantities of AT&T Private Line and Local
Channel Service components are as follows:
A. AT&T Private Line Services
[*]ACCUNET T1.5 IOC's with an average mileage of more than [*] miles.
[*]ACCUNET T1.5 M-24 Multiplexing Office Function.
[*]ACCUNET T45 Service IOC with an average mileage of less than [*] miles
[*]ACCUNET T45 Service Access Connections
B. AT&T Local Channels and associated service components
[*]kbps ACCUNET Generic Digital Access Local Channel Services with an average
mileage of more than [*] miles.
[*]Terrestrial 1.544 Mbps Local channel Services with an average mileage of
more than [*] miles.
[*]AT&T Terrestrial 45 Mbps Local channel Services with an average mileage of
less than [*] miles.
- ------------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<PAGE>
[*]AT&T Terrestrial 45 Mbps Local Channel Services Access Coordination
Functions
C. AT&T InterSpan Frame Relay Services
[*]128 kbps FRS Domestic Ports
[*]256 kbps FRS Domestic Ports
[*]384 kbps FRS Domestic Ports
[*]512 kbps FRS Domestic Ports
[*]768 kbps FRS Domestic Ports
[*]1544 kbps FRS Domestic Ports
[*]56/64 kbps FRS Domestic Two-Way Permanent Virtual Circuits (PVCs)
[*]128 kbps FRS Domestic Two-Way PVCs
[*]192 kbps FRS Domestic Two-Way PVCs
[*]256 Kbps FRS Domestic Two-Way PVCs
[*]384 Kbps FRS Domestic Two-Way PVCs
2. Contract Term; Renewal Options - The term of this Contract Tariff is 3
years beginning with the Customer's Initial Service Date (CISD). No renewal
option is available for this Contract Tariff.
3. Minimum Commitments Charges
A. AT&T Private Line and Local Channel Services - The combined
undiscounted Minimum Monthly Revenue Commitment (MMRC) for the AT&T Private Line
and Local Channel Services provided under this Contract Tariff is [*] per month,
which will be satisfied by undiscounted recurring charges for Multi-Service
Volume Pricing Plan (MSVPP) eligible service components as specified in AT&T
Tariff F.C.C. Nos. 9 and 11, as amended from time to time, excluding the ACCUNET
T45 Services specified in Section 4.A.3., following. If in any month the
Customer fails to meet the combined MMRC, the Customer will be billed [*] less
an amount equal to the discounts associated with the MSVPP MMRC of [*] for 3
years as specified in AT&T Tariff F.C.C. Nos. 9 and 11, as amended from time to
time, multiplied by the undiscounted recurring Rates and undiscounted recurring
Charges for the service components in service for that month.
B. AT&T InterSpan Frame Relay Services - The undiscounted Minimum Monthly
Revenue Commitment (MMRC) for the FRS provided under this Contract Tariff is [*]
which will be satisfied by including undiscounted Frame Relay Volume Price Plan
(FRVPP) Eligible FRS Charges as specified in AT&T F.C.C. Tariff No. 4, as
amended from time to time, using the rates and charges as specified in Section
7., following. If the sum of the FRVPP Eligible FRS Charges in any month is
equal to or greater than the MMRC, the Customer will be billed the sum of the
FRVPP Eligible FRS Charges less the discount specified in Section 5.C,
following. If the sum of the FRVPP Eligible FRS charges in any
- ----------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<PAGE>
month falls below the MMRC, the Customer will be billed an amount equal to the
MMRC less an amount obtained by applying the discount as specified in Section
5.C, following, to the sum of the FRVPP Eligible FRS Charges.
In addition, if in any month the Customer's FRVPP Eligible FRS Charges
exceed the MMRC for that month, the amount greater than the MMRC may be applied
to satisfy the MMRC in any subsequent month in which the IRVPP Eligible FRS
Charges are less than the MMRC. Throughout the Contract Tariff Term, no more
than [*] of such excess may be applied in any one month, and no more than [*] of
such excess may be applied in total for the Contract Tariff Term.
4. Contract Price
A. AT&T Private Line and Local Channel Services
1. The Contract Price for the AT&T Private Line Services provided
under this Contract Tariff is the same as The undiscounted Recurring and
Nonrecurring Rates and Charges specified in AT&T Tariff F.C.C. No. 9, as amended
from time to time. The Discounts specified in Section 5., following, will be
applied to the MSVPP-eligible undiscounted recurring Charges.
2. The Contract Price for the AT&T Local Channel Services provided
under this Contract Tariff is the same as the undiscounted Recurring and
Nonrecurring Rates and Charges specified in AT&T Tariff F.C.C. No. 11, as
amended from time to time. The Discounts specified in Section 5., following,
will be applied to the MSVPP-eligible undiscounted recurring Charges.
3. The Contract Price for the 1 ACCUNET T45 Service IOC with an
average mileage of less than 228 miles. 2 ACCUNET T45 Service Access
Connections, 2 AT&T Terrestrial 45 Mbps Local Channel Services with average
mileage of less than 8 miles and 2 AT&T Terrestrial 45 Mbps Local Channel
Services Access Coordination Functions is [*] for the Contract Tariff Term and
will be billed at [*] per month. The Discounts specified in Section 5,
following, do not apply to this amount.
4. The Contract Price to add or delete the AT&T Private Line
Services provided under this Contract Tariff is the same as the undiscounted
Recurring and Nonrecurring Rates and Charges specified in AT&T Tariff F.C.C. No.
9, as amended from time to time. The Discounts specified in Section 5.,
following, will be applied to the MSVPP-eligible undiscounted recurring Charges.
Nonrecurring Charges do not apply to the deletion of AT&T Private Line Services.
5. The Contract Price to add or delete the AT&T Local Channel
Services provided under this Contract Tariff is the same as the undiscounted
Recurring and Nonrecurring Rates and
- -------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-7-
<PAGE>
Charges specified in AT&T Tariff F.C.C. No. 11, as amended from time to time.
The Discounts specified in Section 5., following, will be applied to the MSVPP-
eligible undiscounted recurring Charges. Nonrecurring Charges do not apply to
the deletion of AT&T Local Channel Services.
B. AT&T InterSpan Frame Relay Services
1. The Contract Price for the FRS provided under this Contract
Tariff is the same as the undiscounted Recurring and Nonrecurring Rates and
Charges for FRS as specified in Section 7., following. The Discounts specified
in Section 5.C, following, will be applied to the FRVPP Eligible FRS Charges.
2. The Contract Price to add or delete the FRS provided under this
Contract Tariff is the same as the undiscounted Recurring and Nonrecurring Rates
and charges for FRS as specified in Section 7., following. The Discounts
specified in Section 5.c, following, will be applied to the FRVPP Eligible FRS
Charges.
5. Discounts - The following discounts are the only discounts for the Services
Provided under this Contract Tariff. No other discounts apply. Except as
specified below, the Base Discounts are the same discounts as specified in the
AT&T tariffs referenced in Section 1, preceding as amended from time to time.
A. AT&T Private Line Services
1. Base Discounts - [*].
2. Additional Discounts - [*] .
B. AT&T Local Channel Services
1. Base Discounts - [*] .
2. Additional Discounts - [*] .
C. AT&T InterSpan Frame Relay Services - [*] .
1. Base Discounts - [*] .
- ------------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-8-
<PAGE>
5.C. AT&T InterSpan Frame Relay Services (continued)
[*].
- --------------------------
[*]Certain information in this exhibit has been omitted and filed
separately with the Securities and Exchange Commission. A total of 1 page
containing such information has been omitted from this exhibit. Confidential
treatment has been requested with respect to the omitted portions.
-9-
<PAGE>
6. Classification, Practices and Regulations
A. Except as otherwise provided in this Contract Tariff, the rates and
regulations that apply to the Services Provided specified in Section 1.,
preceding, are as set forth in the AT&T tariffs that are referenced in Section
1., preceding, as such tariffs are amended from time to time.
B. Monitoring Conditions - Beginning in the first month following the
CISD, the Customer must maintain throughout the Contract Tariff Term 1 ACCUNET
T45 IOC with an average mileage of less than 228 miles, 2 ACCUNET T45 Access
connections, 2 T45 Local channels with an average mileage of less than 8 miles
and 2 T45 Access Coordination Functions, as specified in Section 4.A.3.,
preceding.
If the Customer fails to maintain the service quantities as specified above
the Customer will be billed [*] per month for the remaining months of the
Contract Tariff term.
C. Promotions, Credits and Waivers
The Customer is ineligible for any promotions, credits or waivers for the
Services Provided under this Contract Tariff, which are filed or which may be
filed in the AT&T tariffs specified in Section 1., preceding.
1. AT&T InterSpan Frame Relay, Private Line and Local Channel Services
[*]
D. Discontinuance - In lieu of any Discontinuance With or Without
Liability provisions that are specified in the AT&T Tariffs referenced in
Section 1., preceding, the following provisions shall apply.
The Customer may discontinue this Contract Tariff prior to the end of the
Contract Tariff Term, provided the Customer replaces this Contract Tariff with
another AT&T Contract Tariff including AT&T Tariff F.C.C. Nos. 4 InterSpan Frame
Relay Services and AT&T Tariff F.C.C. Nos. 9 and 11 Private Line and Local
Channel Services, with a term commitment that is equal to or longer than the
remaining term commitment under this Contract Tariff, but not less than three
years and MMRCs that are equal to or greater than the MMRCs under this Contract
Tariff. In addition, the Customer may
- ------------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-10-
<PAGE>
discontinue this Contract Tariff without liability upon 30 days written notice
to AT&T after the 25th month following the CISD if the total of the undiscounted
FRVPP Eligible FRS charges and MSVPP-eligible AT&T Tariff F.C.C. Nos. 9 and 11
charges, excluding the ACCUNET T45 Services specified in Section 4.A.3.,
preceding under this Contract Tariff [*].
If the Customer discontinues this Contract Tariff for any reason other than
specified above prior to the expiration of the Contract Tariff Term, a
Termination Charge will apply. The Termination Charge for AT&T Private Line,
Local Channel and InterSpan Frame Relay Services will be an amount equal to [*].
E. Availability - This Contract Tariff has been developed for Customers
who: (1) have an existing AT&T Local Channel Service Access Value Plan for at
least 160 AT&T Terrestrial 1.544 Mbps Local channels, (2) do not have existing
56 kbps FRS Domestic or U.S. Global Ports and (3) will order this Contract
Tariff only once, either by the Customer or any Affiliate of the Customer, which
is any entity that owns a controlling interest in either the Customer or an
Affiliate of the Customer, or any entity in which a controlling interest is
owned by either the Customer or an Affiliate of the Customer. This Contract
Tariff is available to any similarly situated Customer who orders service within
90 days after the effective date of this Contract Tariff for initial
installation of the Services Provided under this Contract Tariff within 90 days
after the date ordered.
- ----------------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-11-
<PAGE>
7. Stabilized Rates
A. AT&T InterSpan Frame Relay Service - The following is provided to show
the AT&T InterSpan Frame Relay Service rates that apply in lieu of the rates in
AT&T Tariff F.C.C. No. 4 for the following service components for this Contract
Tariff.
[*]
- -------------------------
[*] Certain information in this exhibit has been omitted and filed
separately with the Securities and Exchange Commission. A total of 6 pages
containing such information has been omitted from this exhibit. Confidential
treatment has been requested with respect to the omitted portions.
-12-
<PAGE>
EXHIBIT 10.22
MASTER LEASE
AGREEMENT NUMBER CON 01C
This Agreement ("Agreement") is entered into this 4th day of August, 1994
by and between Racal-Datacom, Inc., a Delaware corporation, (hereinafter
referred to as "Lessor"), having its principal place of business located at 1601
North Harrison Parkway, Sunrise, Florida 33323-2899 and Concentric Research
Corporation, a Florida corporation (hereinafter referred to as "Lessee") having
its principal place of business at 400 Forty-First Street, Bay City, MI 48708.
WITNESSETH THAT
WHEREAS, Lessor is the manufacturer of data communication products which
are composed of hardware (hereinafter referred to as "Equipment") and software
which is defined as a set of processor instructions that can be ported into a
processor and executed to provide a defined functionality (hereinafter referred
to as "Software"); and
WHEREAS, Lessee is desirous of leasing such Equipment or Software from
Lessor for use with Lessee's communications network; and
WHEREAS, both parties are desirous of establishing the terms and conditions
which shall govern all orders issued pursuant to this Agreement.
NOW THEREFORE, in consideration of the covenants, premises and mutual
agreements contained herein, the parties do hereby agree as follows:
PURPOSE
-------
The purpose of this Agreement is to set forth the terms and conditions
pursuant to which Lessee may submit orders (as defined in Article III) to
Lessor, All Orders must be accepted by Lessor at its headquarters, Sunrise,
Florida.
<PAGE>
II. Term of Agreement
-----------------
This Agreement shall commence upon the date first written above and shall
continue for a term of twelve (12) months. The Agreement shall govern all
Orders placed hereunder provided such orders are received by Lessor within
twelve (12) months and the Equipment and Software ordered is installed within
fourteen (14) months, both of said periods beginning upon the date of
commencement of this Agreement. Thereafter, this Agreement shall automatically
renew itself in twelve (12) month increments unless either party notifies the
other of its decision to terminate this Agreement by providing the other party
sixty (60) days written notice prior to the expiration of the period then in
effect.
Notwithstanding that this Agreement may terminate prior to the expiration
of an individual Orders term, it is expressly agreed that any Order issued
pursuant to this Agreement shall continue to be in full force and effect until
the expiration of such Orders stated minimum term, and shall continue to be
governed by the terms of this Agreement.
III. Ordering Procedure
------------------
Lessee shall issue Orders to Lessor on Lessors order form or Lessee's order
form. At a minimum, such Orders shall include the following information:
a. Description of Equipment to be leased and Software to be licensed.
b. Quantity of each item of Equipment or Software.
c. Monthly lease rate, license fee and lease term for each item.
d. Unit installation price for each item (if applicable).
e. Unit purchase price for each item.
f. Requested delivery date.
g. Shipping location and Lessee prime contact at shipping location.
h. Billing address and billing contact.
i. Required Lessor services such as standard handling, installation,
maintenance, training and engineering costs (if applicable), and their
respective charges.
Lessor will acknowledge acceptance or rejection of orders within fifteen
(15) days after receipt of the order at Lessor's principal place of business,
Sunrise, Florida. Once accepted, the order is noncancelable. If Lessor
proposes a delivery schedule different from the schedule requested by Lessee,
Lessee must notify Lessor of its rejection of such alternate delivery schedule
within fifteen (15) days after mailing of such notification by Lessor, or the
Lessor acknowledged shipping date shall be deemed to be accepted by Lessee.
IV. Commencement and Term of Order
------------------------------
An Order for an individual unit of Equipment or Software shall be binding
from the date it is accepted by Lessor. Commencement of term and monthly rental
as to each unit of Equipment and Software shall commence fifteen (15) days after
the deployment of CRC's Wide Area Network, the
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<PAGE>
Lessee, an AT&T , whichever first occurs (the "Commencement Date"). Monthly
rental for a diagnostic controller applicable, shall commence thirty (30) days
following the Deployment Date by Lessor. The lease term shall continue for the
number of full months set forth on the Order, commencing on the first day of the
month following the Commencement Date.
Network deployment shall mean that Lessors Equipment which is deployed at
the available sites set forth on the deployment schedule agreed to by the
parties and attached hereto as Exhibit 4 is operational. Operational shall mean
that the Lessor supplied Equipment is functioning in accordance with the
parameters set forth in Exhibit 3 notwithstanding the operational capability or
lack thereof of any other equipment or services provided by any other party
relating thereto or in connection therewith.
Lessee agrees to complete a Certificate of Acceptance for each unit of
Equipment and Software shipped under this Agreement. Such Certificate of
Acceptance shall be forwarded to Lessor within seven days of the Commencement
Date set forth above and shall indicate that: (i) Lessee has fully inspected the
Equipment and Software; (ii) Lessee has acknowledged that the Equipment and
Software is in good condition and repair; and, (iii) Lessee agrees that the
Equipment and Software meets their respective Lessor published specifications.
Failure of Lessee to provide a Certificate of Acceptance shall not affect any
Lessee obligations set forth in this Agreement, including but not limited
to payment.
The Order may be renewed for an extended term in accordance with Lessor's
policies in effect at time of the Order's expiration. Either party must notify
the other in writing at least sixty (60) days prior to expiration of the lease
term of its decision to either renew the Order or terminate any or all of the
Equipment and Software leased thereunder. Without such notice, the Order shall
continue at the same rate and under the same conditions until such sixty (60)
day notice is given by either party.
Notwithstanding that the lease contemplates the lease term set forth on the
face of the Order, it is agreed that if Lessee is a governmental entity and is
fiscally funded, continuance of the Order for said term is dependent upon the
annual legislative approval of funding. Lessee agrees to utilize its best
efforts to assure funding for the continuance of the Order; however, if fiscal
funding is denied, the Lessee may terminate the lease by providing Lessor with
written notice as outlined in this provision.
V. Return of Equipment and Software
--------------------------------
Upon termination by expiration or otherwise of each Order, Lessee shall, at
Lessee's expense, disconnect the Equipment or de-install the Software and allow
Lessor to enter Lessee's premises to pack and ship the Equipment and Software.
Such Equipment and Software returned to Lessor shall be in the same condition as
delivered by Lessor, reasonable wear and tear excepted and capable of meeting
all recertification requirements. If Lessor is not allowed to remove the
Equipment and Software as noted within two (2) weeks after the effective date of
Lessee's notice of termination, such termination shall be void, and the lease
shall continue in full force and effect until new notice is given followed by
removal of Equipment and Software in accordance with this paragraph.
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<PAGE>
VI. Payment
-------
The Equipment and Software is to be leased for the term set forth on the
Order and is non-cancelable. Lessee shall pay to Lessor, the monthly rate set
forth on the Order during each month of the term of such Order. Lessors initial
---------------
payment due hereunder shall be paid on the fifteenth (15th) day following the
- -----------------------------------------------------------------------------
Commencement Date. The remainder of the rental payments for the lease term
- ---------------------------------------------------------------------------
shall be due and payable on the first day of each calendar month thereafter.
- ---------------------------------------------------------------------------
The Equipment furnished hereunder may be new, remanufactured or contain used
components at Lessor's option. If the Commencement Date of each unit of
Equipment leased hereunder is other than the first day of each month, the first
payment due hereunder shall be equal to one thirtieth of the monthly rate set
forth on the Order for each day from and including the Commencement Date through
and including the last day of the month prior to the beginning of the term and
the monthly rate for the full initial month. Lessor reserves the right to impose
a late payment charge of one and one-half percent (1-1/2%) per month, but not in
excess of the lawful maximum, on any past due balance in the event Lessee shall
fail to pay any charges within fifteen (15) days after same are due, and Lessee
agrees to pay same. If such rate exceeds the amount authorized by law in the
jurisdiction in which the Equipment or Software is located, interest shall be
computed at the maximum legal rate at that location. Payments shall be made to
the Lessor address stated on each invoice. Charges for Lessor services (such as
standard handling, installation, engineering costs (if applicable) and training)
shall also be at the prevailing rates at time of order. Any applicable taxes
will be invoiced.
VII. Assignment
----------
Without Lessor's prior written consent, Lessee shall not (a) assign,
transfer, pledge, hypothecate, or otherwise dispose of all or any part of
Lessee's right, title or interest in and to this Agreement, any Order, the
Equipment or Software, or (b) sublet or lend the Equipment or Software or permit
it to be used by anyone other than Lessee or Lessee's employees. Lessor may
sell or assign or grant a security interest or participation in all or any part
of Lessor's right, title or interest in and to this Agreement, any Order and the
Equipment or Software without notice to Lessee, and Lessor's assignee or secured
party may then re-assign such interest without notice to Lessee. Lessee agrees
that any such assignment or re-assignment shall not change Lessee's or Lessors
----------
duties or obligations under this Agreement or any Order and Lessee hereby
consents to any such assignment or re-assignment. Each such assignee and/or
secured party shall have all the rights but none of the obligations of Lessor
under such Order unless Lessee is otherwise notified by Lessor. Lessee shall
recognize such assignments and/or security agreements and agrees that upon
notice of such assignment it shall pay directly to assignee (unless otherwise
directed by assignee) without abatement, deduction or setoff all amounts which
become due hereunder and further agrees that it will not assert against assignee
any defense, counterclaim or setoff for any reason whatsoever in any action for
lease payments or possession brought by assignee. Upon such assignment and
except as may otherwise be provided therein, all references in this Agreement to
Lessor shall include Assignee.
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<PAGE>
VIII. Net Lease
---------
Lessee and Lessor acknowledge and agree that each Order constitutes a net
lease with all costs, expenses and liability associated with the Equipment or
Software or its Order to be borne by Lessee unless expressly agreed to the
contrary in writing by Lessor. Subject to Lessee's right to terminate
hereunder, in the event an assignment of this lease by the Lessor, the Lessee's
obligations to pay all monthly rates and any and all amounts payable by Lessee
under any Order shall be to the assignee, absolute and unconditional and shall
not be subject to any abatement, reduction, set-off, defense, counterclaim,
interruption, deferment or recoupment for any reason whatsoever and that such
payments shall by and continue to be payable in all events.
IX. Representations and Warranties of Lessee
----------------------------------------
Lessee hereby represents, warrants and covenants that, with respect to this
Agreement and each Order executed hereunder
a. The execution, delivery and performance thereof by the Lessee have been
duly authorized by all necessary corporate action.
b. The individual executing such was duly authorized to do so.
c. This Agreement and each Order constitute legal, valid and binding
agreements of the Lessee enforceable in accordance with their respective terms.
d. The Equipment and Software is personal property and when subjected to
use by the Lessee will not be or become fixtures under applicable law.
e. Lessee shall furnish, upon request by Lessor, audited financial
statements for the most recent period.
X. Title and Location
------------------
Nothing contained in any Order shall give or convey to Lessee any right,
title or interest in or to the Equipment or Software, except as a Lessee as set
forth therein and Lessee represents and agrees that Lessee shall hold the
Equipment and Software subject and subordinate to the rights of Lessor, and
Lessee shall furnish Lessor with such documentation as Lessor shall reasonably
require with respect thereto.
Lessor is hereby authorized by Lessee, at Lessee's expense, to cause this
Agreement, any Order, or any statement or other instrument in respect of any
Order as may be required or permitted by law showing the interest of Lessor, in
the Equipment or Software to be filed and Lessee appoints Lessor as its
attorney-in-fact to execute and file on behalf of Lessee, at Lessee's expense,
any UCC financing statements and amendments Lessor deems advisable to secure the
interests of Lessor. Without limiting the foregoing, Lessee shall execute one or
more financing statements, in form and
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<PAGE>
substance satisfactory to Lessor, covering all Equipment or Software leased
to Lessee pursuant to this Agreement. The parties have agreed that a
photographic copy or other reproduction of this Agreement, either together with
or in lieu of an appropriate form under the UCC, is sufficient as a financing
statement for purposes of filing and perfection under the UCC. Any filing of
such financing statements or any public recordation of this Agreement is
intended by the parties solely to protect the interest to Lessor and Lessee, and
no such filing or recordation shall in any manner imply or be construed as
implying that the relationship of Lessor to Lessee with respect to this
Agreement or to the Equipment or Software is anything other than that of a
personal property Lessor to a personal property Lessee.
Lessee shall request Lessors consent, in writing, at least fifteen (15)
days before Lessee intends to move any of the Equipment or Software from its
original "ship to" location. Lessors response to such request shall be in
writing and shall not be unreasonably withheld. Lessee agrees to provide Lessor
with fifteen (15) days written notice of its intention to change its name or
corporate identity or structure, by merger, consolidation, reorganization or
otherwise. In the event Lessee fails to comply with this paragraph or the
preceding paragraph, Lessee agrees to indemnify Lessor for any losses or damages
Lessor incurs thereby.
Lessee shall, at its expense, protect and defend Lessors title against all
persons claiming against or through Lessee and shall at all times keep the
Equipment or Software free and clear from any legal process, liens or
encumbrances whatsoever (except any placed thereon by Lessor or person or entity
-------------------
claiming through Lessor) and shall give Lessor immediate written notice thereof
- -----------------------
and shall indemnify and hold Lessor harmless from and against any loss caused
thereby.
XI. Lessor's Ownership Rights
-------------------------
The Equipment and Software shall at all times remain the property of
Lessor. Lessee covenants and agrees that, upon the request of Lessor, it shall
cause the Equipment and Software to remain labeled as a Lessor unit of Equipment
or Software. Lessee shall replace any such stenciling, tag or plate which may
be removed or destroyed or become illegible. Lessee shall keep all Equipment
and Software free from any marking or labeling which might be interpreted as a
claim of ownership thereof by Lessee or might be interpreted as a claim or
anyone so claiming through Lessor.
XII. Binding Nature
--------------
Each Order shall be binding upon and shall inure to the benefit of Lessor,
Lessee and their respective successors, legal representatives and assigns.
XIII. Installation
------------
Lessor is to install Equipment or Software, Lessee shall, in addition to
--------------
being liable for Lessors installation rates in effect at time of order, have the
- ----------------------------------------------------------------------
site prepared prior to the beginning of the installation period at Lessee's
-----------
expense. Installation will be scheduled Monday through Friday (excluding Lessor
- -------
holidays), 8:00 a.m. to 6:00 p.m., local time. "After Hours" installation is
available
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<PAGE>
and if requested by Lessee, Lessor will respond with a quotation for such
installation. Lessee shall provide timely computer programming support, if
required, during installation at no charge to Lessor. Preparation shall be in
accordance with Lessors installation site preparation specifications. Lessor
shall install the Diagnostic Controller (if applicable).
XIV. Warranty and Remedy
-------------------
Lessor warrants all Equipment obtained hereunder to be free from defects in
material and workmanship in normal service and under normal conditions for one
(1) year from date of the initial invoice, and further, that the Equipment
obtained under the initial order hereunder is fit for the purposes described in
the Data Network Description attached hereto as Exhibit 3 and conforms to the
standard specifications at the time of the Order. THE FOREGOING WARRANTY IS IN
LIEU OF ALL OTHER WARRANTIES EXPRESSED, IMPLIED, OR STATUTORY, INCLUDING
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THIS WARRANTY
IS VOID AS TO EQUIPMENT AND SOFTWARE LOCATED OUTSIDE OF THE UNITED STATES OF
AMERICA.
Should a unit of Equipment, which is not subject to an effective Lessor
-------------------------------------------
maintenance agreement fail in normal service and under normal conditions through
- ---------------------
no fault of the Lessee during the warranty period, Lessee shall return the
failed unit at Lessor's expense to Lessor's point of origin facility. Lessor
shall either repair the unit at the factory or furnish a used, refurbished
replacement unit for the Lessee. No charges will be made for repair or
replacement. Lessee shall connect and adjust the unit in accordance with
accompanying instructions. Each repaired or replacement unit of equipment is
warranted (as set forth above) for sixty (60) days from the date of shipment of
such repaired unit, or the remaining portion of the original Equipment's
warranty, whichever is longer. Lessee agrees to pay Lessor's then standard time
and material charges for repairs made outside of those covered by the Warranty.
For any nonconformance of the Software (if applicable) to its specification
which affects performance and is reported to Lessor by Lessee, in writing,
during the initial ninety (90) days following deployment, Lessor shall provide
an analysis of the problem and workable solution. For Software nonconformances
----------------------------
which are recorded in writing to Lessor by Lessee subsequent to the
- -------------------------------------------------------------------
aforementioned ninety (90) day Software warranty period, Lessee agrees to pay
- -------------------------------------------------------
Lessors then current Software charges for analysis and efforts to obtain
workable solutions provided outside of those covered by the Warranty. Lessee
agrees that it will in no event, alter, modify, repair, disassemble, or adjust
the Equipment or Software obtained hereby, except in accordance with Lessor
instructions. Lessor's obligations hereunder are contingent upon proper storage,
installation, use and maintenance and are limited to: (1) repair, or at its
option, replacement (as described herein above) of any parts or Equipment when
the parties agree that the Equipment does not conform to the Warranty; (2)
analyzing and providing a workable solution to Software problems when Lessor
determines that the nonconformance significantly affects performance in
accordance with standard specifications and the specifications required pursuant
to Exhibit A; (3) termination of the lease and if the remedy provided for herein
has failed of its essential purpose, recovery of such damages as provided for
herein by the Lessee. Maintenance of Software, as used herein, is the
implementation by Lessee of Software revisions provided by Lessor. Revisions
consist of improvements of specified programs. THE FOREGOING CONSTITUTES
LESSEE'S SOLE
-7-
<PAGE>
AND EXCLUSIVE REMEDY AND IS IN LIEU OF ANY AND ALL OTHER REMEDIES WHICH MAY BE
AVAILABLE TO LESSEE.
XV. Care, Use and Maintenance
-------------------------
Lessee shall, at its sole expense, at all times during the term of each
Order, maintain the Equipment and Software in good operating order, repair,
condition and appearance and protect the Equipment and Software from
deterioration, other than normal wear and tear. Lessee shall not use the
equipment or Software for any purpose other than that for which it was designed.
Lessee shall, at its sole expense, enter into and maintain in force, for the
term of each Order, a maintenance agreement.
XVI. Software License
----------------
a. Lessor hereby grants to Lessee a revocable, nonexclusive license
to uses copy of the Software in object code form, and only on a singly
designated processing unit for Lessee's own internal use, except that Lessee may
execute the Software on another processing unit on a temporary basis during a
malfunction which prevents execution of the Software on the existing processing
unit. Lessee agrees not to copy Software in whole or in part without the written
consent of Lessor except Lessee may maintain an archival copy of the Software
for back-up purposes. Lessee agrees to reproduce any copyright and/or
confidentiality notices on any copy of the Software or any portion thereof made
by Lessee. Additional copies of Software required by Lessee for its use must be
licensed from Lessor.
b. Lessee agrees to maintain complete and accurate records which identify
the type and location of the Software. Within thirty (30) days after receiving
a request from Lessor, Lessee shall provide copies of the applicable records to
Lessor.
c. Lessor warrants the Software obtained hereunder shall conform to its
standard specifications and to the specifications required according to Exhibit
3 at the time that it is received by Lessee.
d. Title to the Software shall not pass to Lessee. This license may not
be assigned, sublicensed, or otherwise transferred by Lessee, except that Lessee
may transfer the license to a transferee and such transferee will have the sole
benefit of the Software as transferred from Lessee provided that Lessee gives
Lessor prior written notice of such transfer and transferee agrees in writing to
be bound under this license to the same degree as Lessee.
e. The term of an individual units license shall be from the date of
Lessor's acceptance of an individual Order for Software until expiration of the
term set forth on the face of the individual Order or upon any default of Lessee
of any term, covenant or obligation under this Agreement. This license may be
renewed for additional one (1) or multiple year terms provided both parties
agree to such renewal in writing at least sixty (60) days prior to the
expiration of the initial term or renewal term. Such renewal shall be in
accordance with Lessor's standard pricing policies in effect at time of
-8-
<PAGE>
renewal. Lessee agrees that upon termination or expiration of term of
individual Orders placed under license, Lessee will discontinue use of the
Software and shall certify in writing within three (3) days of termination of
this license that the Software and all copies thereof have been returned to
Lessor or destroyed.
f. If Lessee exercises the purchase conversion (set forth in Article
-----------------------------------------------------------------
XXXVII below) the Software license granted to Lessee herein shall remain in
- ---------------------------------------------------------------------------
effect pursuant to the terms and conditions set forth herein.
- ------------------------------------------------------------
g. Lessee acknowledges that the Software supplied by Lessor constitutes
Lessors trade secrets and agrees to treat all Software as confidential and
proprietary.
h. Lessee shall not, without prior written permission of Lessor, transfer,
disclose or otherwise provide the programs to any person outside of Lessee's
organization.
i. Lessee shall not, without prior written permission of Lessor, modify,
reverse assemble or reverse compile any of the Software.
j. Lessee agrees that it shall thoroughly safeguard the confidentiality of
the Software supplied by Lessor, and in no event shall it be to a lesser extent
that Lessee safeguards its own proprietary information. Lessee agrees that
access to such Software will be given only to employees who require access in
the course of Lessee's business and such employees will be informed of the
confidential nature thereof and will be required to observe provisions of
confidence as set forth herein.
XVII. Software
--------
Lessor has no responsibility as to the unauthorized or improper, misuse or
--------------------------------------------------------------------------
misapplication of the Software. Lessee assumes full responsibility for data
- ------------------------------
entry, data maintenance and the functional adequacy of the Software in meeting
Lessee's requirements except as provided herein, where the Software does not
conform to the specifications required by Exhibit 3.
XVIII. Taxes and Fees
--------------
Lessee covenants and agrees to pay when due or reimburse and indemnify and
hold Lessor harmless from and against all taxes, fees or other charges of any
nature whatsoever (together with any related interest or penalties not arising
from negligence on the part of Lessor) now or hereafter imposed or assessed
against Lessor, Lessee or the Equipment or Software by any Federal, state,
county or local governmental authority upon or with respect to the Equipment or
Software or upon the ordering, ownership, delivery, teasing, possession, use,
operation, return or other disposition thereof or upon the rents, receipts or
earnings arising therefrom or upon or with respect to any Order (excepting only
Federal, state and local taxes based on or measured by the net income of
Lessor). If Lessee warrants that the Order shall be exempt from sales tax, it
is Lessee's responsibility to provide Lessor with valid sales tax exemption
certificates within thirty (30) days of date Order is placed.
-9-
<PAGE>
Notwithstanding the foregoing, unless otherwise specified in the Order, Lessor
shall be responsible for the filing of all personal property tax returns in
respect to the Equipment or Software and shall pay all taxes indicated thereon.
Lessee shall reimburse Lessor for all such taxes within thirty (30) days of
receipt of Lessor's invoice therefor. The final invoice for personal property
taxes with respect to the lease term may be issued subsequent to the expiration
of the term due to the nature and timing of notification by the state or local
governmental authority.
XIX. Purchase Orders
---------------
If a Purchase Order is required for payment, Lessee agrees to provide the
applicable Purchase Order Number(s) to Lessor. If no Purchase Order is required
for payment, Lessee guarantees that payment will not be delayed.
XX. Force Majeure
-------------
Neither party shall be considered in default in performance of such
obligations is prevented or delayed by acts of God or government, labor
disputes, failure or delay of transportation, or by vendors of subcontractors,
or any other similar cause or causes beyond the reasonable control of the other
party. Time of performance of either parties obligations hereunder shall be
extended by the time period reasonably necessary to overcome the effects of such
force majeure occurrences.
XXI. Patent Indemnity
----------------
Lessor will defend, at as own expense, any action brought against Lessor's
Lessee to the extent that it is based upon a claim that Lessor provided
Equipment or Software, infringes any patent, trade secret or copyright and
Lessor will pay costs and monetary damages finally awarded against Lessor's
Lessee in any such actions which are attributable to such claim.
Such defense and liability is conditioned on and limited by: (a) Lessor
being notified promptly in writing by Lessee of any such action; (b) Lessor
having sole control of the defense and all negotiations for settlement of such
action: Lessee providing all available information, assistance and authority to
enable Lessor to defend, negotiate and settle such action.
Should such Equipment or Software become, or in Lessors opinion be likely
to become, the subject to a claim of infringement or the use thereof become
restricted by a final non-appealable Court awarded injunction, the Lessee shall
permit Lessor, at Lessor's option and expense, the right to either: (a) procure
for the Lessee the right to continue using such Equipment or Software; (b)
replace or modify such Equipment or Software so it is free from infringement or
injunction provided that the same function is performed by the replacement or
modified Equipment or Software. In the event that Lessor does not provide the
remedial action described in (a) or (b), then Lessor may recover such Equipment
or Software from the Lessee in which case, the only rights and liabilities
between Lessor and Lessee are that: (i) the lease shall be void as to the
Equipment or Software on the date of recovery; and (ii) Lessor has the right to
collect lease payments, if any, due from the Lessee for the Lessee's possession
of such Equipment or Software up through the date of Lessors recovery thereof
-10-
<PAGE>
or the date on which Lesee's use of such Equipment or Software is enjoined by a
court of competent jurisdiction whichever is earlier.
Lessor shall have no liability to the Lessee under any provision of this
clause with respect to any claim or infringement which is based upon:
a. Equipment or Software based on specifications furnished by the Lessee,
or
b. the combination or utilization of Equipment or Software furnished
hereunder with Equipment or Software not provided by Lessor in accordance with
Exhibit 3, or
c. an unauthorized modification by the Lessee of Equipment or Software
---------------
furnished hereunder which affects the infringement.
The foregoing expresses the entire liability of Lessor for patent or
copyright infringement by Lessor Equipment or Software to Lessee.
XXII. Default
-------
With the exception of a Default in the initial payment, which shall
constitute an immediate breach, failure of Lessee to make payments or to perform
any other condition of this Agreement or any Exhibit hereto, which shall
--------------------------------------------
continue for a period of fifteen (15) business days following written notice
- ----------------------------------------------------------------------------
thereof shall constitute breach of the affected Order(s) placed hereunder. The
failure by Lessee, within sixty (60) days after the commencement of any
proceeding against Lessee seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future statute, law, regulation, to obtain the dismissal of such proceeding or,
within sixty (60) days after the appointment, without the consent or
acquiescence of Lessee, of any trustee, receiver or liquidation of Lessee or of
all or any substantial part of the properties of Lessee to vacate such
appointment shall constitute a breach of all Orders placed hereunder. In case
of breach, Lessor may cancel the defaulted Order(s) declare the entire amount of
the unpaid commitment and any other charges immediately due and payable and use
all available remedies to take possession and remove Equipment and Software with
all costs, including attorney's fees, to be borne by Lessee. Lessor's right to
recover possession of the Equipment and Software is in addition to all available
remedies at law or in equity.
XXIII. Severability
------------
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
provided such provision still expresses the intent of the parties. If the intent
of the parties cannot be preserved, the Agreement shall either be renegotiated
or rendered null and void.
-11-
<PAGE>
XXIV. Limitation of Liability
-----------------------
LESSOR SHALL NOT BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS OR REVENUE,
LOSS OR USE OF THE EQUIPMENT OR SOFTWARE OR ANY ASSOCIATED EQUIPMENT OF SOFTWARE
OR COST OF SUBSTITUTED FACILITIES, EQUIPMENT, SOFTWARE OR SERVICES WHICH ARISE
OUT OF PERFORMANCE OR FAILURE TO PERFORM ANY OBLIGATION CONTAINED WITHIN THIS
AGREEMENT, OR OUT OF NEGLIGENCE IN THE COURSE OF SUCH PERFORMANCE, WHETHER THE
CLAIM FOR DAMAGES IS BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT
LIABILITY OR OTHERWISE.
Except for claims for personal injury or for damage to real or tangible
personal property to the extent caused by Lessors fault or negligence, Lessors
maximum liability to Lessee for any claim for damages relating to Lessors
performance or nonperformance under this Agreement shall be limited to the
lesser of the amount of payments for Equipment and Software received by Lessor
at the time the cause of action accrued or $500,000.
XXV. Governing Law; Forum
--------------------
This Agreement shall be governed and construed in accordance with the laws
of the State of Florida. The parties hereby consent and submit to the exclusive
jurisdiction of the appropriate state or federal court serving Broward County,
Florida, as to any dispute or controversy arising either directly or indirectly,
under or in connection with this Agreement.
XXVI. Waiver
------
No waiver by either party of any default shall operate as a waiver of any
other default or of the same default on a future occasion. No delay, course of
dealing or omission on the part of either party in exercising any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
either party of any right or remedy shall preclude any other or further exercise
thereof or the exercise of any other right or remedy.
XXVII. Insurance
---------
Lessee shall, at its own expense, and at all times during the term of an
individual Order keep the Equipment and Software insured against all risks of
loss or damage from every cause whatsoever for not less than the then current
purchase price of the Equipment or Software, provided that the amount of such
insurance shall be sufficient so that neither Lessor nor Lessee shall be
considered a co-insurer. Lessee shall also carry public liability insurance
covering both personal injury and property damage caused by the Equipment or
Software. All such policies of insurance shall name Lessor as loss payee or
additional insured as the case may be. Lessee shall deliver to Lessor a copy of
such Certificates of Insurance. Each insurer shall agree by endorsement upon
each policy issued by it or by independent instrument furnished with such policy
to Lessor, that it shall give Lessor no less
-12-
<PAGE>
than thirty (30) days written notice before any such policy shall be materially
altered or canceled Lessee hereby appoints Lessor as Lessee's attorney-in-fact
to make claim for, receive payment of, and execute and endorse all documents,
checks or drafts for loss or damage under any such policies of insurance
XXVIII. Risk of Loss
------------
Lessee shall bear the entire risk of loss, theft, damage or destruction of
the Equipment and Software from any cause whatsoever (except Lessors negligence)
from the time shipment is received by Lessee until return shipment is received
in Sunrise, Florida by Lessor.
XXIX. Government Obligations
----------------------
Lessee warrants that it is, and will remain, in compliance with all export
requirements, including, but not limited to, the requirements of the Export
Administration Act and regulations, the Arms Export Control Act and regulations,
and any orders and licenses issued thereunder. Such requirements include, but
are not limited to, obtaining all proper authorizations or licenses from the
Department of Commerce or the Department of State for the export or re-export of
any item, product, article, commodity or technical data. Lessee additionally
warrants that it has not been, and is not currently, debarred or suspended from
or otherwise prohibited or impaired from exporting, re-exporting, receiving,
purchasing, procuring, or otherwise obtaining any item, product, article,
commodity, or technical data regulated by any agency of the government of the
United States. Lessee agrees to indemnify Lessor and hold Lessor harmless from
any costs, penalties, or other losses caused by, or related to, any violation of
the warranties contained in this contract.
XXX. Intention of Parties
--------------------
It is the intention of Lessor and the Lessee that any lease Orders placed
under this Agreement will be characterized as "true leases" and not "financing
leases" or "leases intended for security".
XXXI. Custom Systems
--------------
Supplements to this Agreement, which include any specially-configured
systems are non-cancelable. Once acknowledged, any changes in supplements which
include specially-configured systems will result in a minimum reconfiguration
charge by Lessor to Lessee of at least Five Hundred Dollars ($500).
XXXII. Compliance with Laws
--------------------
Lessee shall comply with all applicable laws, ordinances, rules and
regulations and Lessee shall obtain any and all permits, licenses,
authorizations and/or certificates that may be required in any jurisdiction or
by any regulatory or administrative agency in connection with the use and/or
operation of the Equipment or Software.
-13-
<PAGE>
XXXIII. Quiet Enjoyment
---------------
Lessor hereby agrees and covenants, so long as no default has occurred and
is continuing, that Lessee shall have, hold and quietly enjoy, subject to this
Agreement, the Equipment and every unit and part thereof during the term of this
Agreement.
XXXIV. Certificate of Deposit
----------------------
As a condition precedent to Lessors obligations, including but not limited
to the acceptance of an Order hereunder, and as partial security for Lessee's
payment obligations hereunder, Lessee agrees to provide Lessor with a
Certificate of Deposit which shall be held in an escrow account pursuant to an
escrow agreement between the parties hereto. Certain of the agreed upon
material terms of the proposed escrow agreement are set forth on Exhibit One,
attached hereto.
XXXV. Warrants in Stock
-----------------
As a further condition precedent to shipment of any product hereunder
Lessee and Lessor shall enter into an agreement pursuant to which Lessor shall
receive Warrants in Lessee's company stock. Certain of the agreed upon material
terms of such agreement are set forth on Exhibit Two, attached hereto.
XXXVI. Leased Equipment Upgrade
------------------------
Throughout the lease term of items of Equipment leased under this
Agreement, Lessee shall have the right to terminate the lease of individual
units of Equipment leased hereunder for the sole purpose of replacing such
Equipment with other Lessor Equipment. Such terminations can be made only if
ALL of the following conditions are met:
A. The units of Equipment being terminated must have been on lease for at
least fifty percent (50%) of their original lease term; and,
B. The units of Equipment being terminated must have an original lease
term of twenty-four (24) months or longer; and,
C. Lessee shall provide at least sixty (60) days prior written notice to
Lessor to exercise this option; and,
D. The replacement Equipment must be leased for the same initial term as
the Equipment which is being replaced; and,
E. Replacement Equipment must be of equal or greater functionality and of
equivalent or greater Capital Value; and,
-14-
<PAGE>
F. The total monthly lease and maintenance payments for the replacement
Equipment must be at least seventy percent (70%) of the total monthly lease and
----------------------------
maintenance payments for the Equipment being terminated; and,
G. For all Equipment being terminated, all Amounts due and payable under
the lease, including monthly lease payments to the date of termination, and any
taxes, charges and fees which arise on or before the date of termination must be
paid in full; and,
H. If maintenance was taken on Equipment being terminated, maintenance
must be taken on replacement Equipment; and,
I. De-installation and installation by Lessor will be at standard Hourly
Labor rates, unless specified otherwise by contract; and,
J. The order must indicate it is an upgrade and must include all serial
numbers of Equipment to be terminated.
XXXVII. Purchase Conversion
-------------------
Lessee shall at all times during the term of a lease order issued pursuant
to this Agreement have an option to purchase the Equipment leased hereunder by
paying Lessor the purchase conversion price. The purchase conversion price
shall be an amount equal to the unit purchase price set forth on the face of the
Lessor's Order Form or Lessee's Order form, reduced by fifty percent (50%) of
all lease payments paid applicable to the unit which is being converted to
purchase. However, in no event shall the purchase conversion price be less than
twenty percent (20%) of the unit purchase price set forth on the face of the
Lessors Order Form or Lessee's Order Form or the remaining lease obligation.
Exercise of this option shall in no way relieve Lessee for lease payments due up
to the date of conversion, but not yet paid, on the unit which is being
converted to purchase.
In addition, Lessee shall have an option, upon expiration of the initial
------------------------------------------------------------------------
lease term, to Purchase the Equipment leased hereunder by paying Lessor the
- ---------------------------------------------------------------------------
purchase conversion price. The Purchase conversion price shall be twenty
- -------------------------------------------------------------------------
percent (20%) of the unit purchase price set forth on the face of the Lessors
- -----------------------------------------------------------------------------
Order Form or Lessee's Order form. Exercise of this option shall in no way
- ---------------------------------------------------------------------------
relieve Lessee for lease payments due up to the date of conversion, but not yet
- -------------------------------------------------------------------------------
paid on the unit which is being converted to purchase.
- -----------------------------------------------------
XXXVIII. Board of Directors
------------------
As a condition precedent to Lessor's obligation to accept an order and/or
ship equipment or software hereunder, the parties have agreed that they shall
have executed a side letter pursuant to which Lessor shall have the option of a
seat on the Lessee's board of directors.
-15-
<PAGE>
XXXIX. Further Assurances
------------------
As a condition to Lessor's performance hereunder or any Order placed
pursuant hereto, Lessee agrees that it shall furnish such financial reporting
documents to Lessor on a quarterly basis, such financial reports shall include
but not limited to audited financial statements and certificates of acceptance.
XL. Notices
-------
Any notices or communications given or required under this Agreement shall
--------------------------------------------------------------------------
be sufficiently given if delivered personally in writing, or sent by telex or
- -----------------------------------------------------------------------------
facsimile, federal express, registered or certified mail, postage prepaid, to
- -----------------------------------------------------------------------------
the other party at the following address:
- ----------------------------------------
TO: Racal-Datacom, Inc.
P.O. Box 407044
Ft. Lauderdale, Florida 33340
Attn: Sr. Vice President and General Counsel
TO: Concentric Research Corporation
400 Forty-First Street
Bay City, Michigan 48708
Attn: President
With a copy to:
Susan Cook, Esq.
Lambert, Leser, Cook, Schmidt & Giunta, P.C.
309 Davidson Building, P.O. Box 835
Bay City, Michigan 48707
Such notice or other communications shall be deemed received (a) on the
-----------------------------------------------------------------------
date delivered, if delivered personally; or (b) upon receipt, if sent by telex
- ------------------------------------------------------------------------------
or facsimile federal express or (c) three (3) business days after being sent, if
- --------------------------------------------------------------------------------
sent registered or certified mail.
- ---------------------------------
XLI. Maintenance Agreement
---------------------
As a condition precedent to Lessor's and Lessee's obligation to accept an
order and/or ship product hereunder, the parties shall have executed and
delivered a maintenance agreement which provides for the first year of its term,
free maintenance between them respecting equipment and software purchased
hereunder.
-16-
<PAGE>
XLII. Entire Agreement
----------------
The terms and conditions contained in this Agreement and the referenced
----------
Exhibits which are hereby incorporated herein shall be applicable to all Orders
- ---------------------------------------------
placed on Lessor by Lessee during the effectiveness of this Agreement whether
referenced or not on such Orders. Additional or different terms contained in
Lessee's purchase orders shall not be applicable to such Orders unless expressly
agreed to in writing by Lessors authorized representative. This Agreement,
including all Orders accepted hereunder, expresses the entire understanding and
agreement of the parties with reference to the subject matter hereof, and is a
complete and exclusive statement of the terms of this Agreement, and no
representations or agreements modifying or supplementing the terms of this
Agreement shall be valid unless in writing, signed by persons authorized to sign
agreements on behalf of both parties.
IN WITNESS WHEREOF, this Agreement was entered into as of the day and year
first written above.
ACCEPTED: CONCENTRIC RESEARCH CORP. ACCEPTED: RACAL-DATACOM. INC.
------------------------- --------------------------
LESSEE: /s/ Mark Collins-Rector LESSOR /s/ Scott A. Thomas
--------------------------- -----------------------------
BY: Mark Collins-Rector BY: Scott A. Thomas
------------------------------- --------------------------------
TITLE: CEO TITLE: District Sales Manager
---------------------------- -----------------------------
DATE: 8/4/94 DATE: 8/4/94
----------------------------- ------------------------------
-17-
<PAGE>
EXHIBIT ONE
CERTIFICATE OF DEPOSIT/LETTER OF CREDIT
A Certificate of Deposit shall be: (i) provided by a mutually agreed upon
third party at least ten (10) days order to the initial shipment hereunder, (ii)
-----------------------------------------------------------
in an amount of $500,000 or 12.5% of the initial Order placed hereunder,
whichever is less (iii) placed in escrow pursuant to an escrow agreement to be
negotiated between the parties. Lessee may replace the security at any time
with a Certificate of Deposit or Letter of Credit issued by Lessee in a form
---------
acceptable to Lessor. The Certificate of Deposit may be released or replaced by
- -------------------- ------------------------------
Lessee when all of the following conditions am obtained by Lessee and
- ---------------------------------------------------------------------
satisfactorily demonstrated to Lessor:
- -------------------------------------
a. Lessee's net worth exceeds $3,155,000; and
------------------------------------------
b. current ratio exceeding 2:1' and
--------------------------------
c. no defaults or violations of loan covenants exist on outstanding debts
----------------------------------------------------------------------
of Lessee; and
- --------------
d. Lessor has been paid on all balances owed to Lessor.
---------------------------------------------------
-18-
<PAGE>
EXHIBIT TWO
WARRANTS IN STOCK
Warrants issued to Lessor for the initial order hereunder shall equal ten
-----
percent (10%) of the Equipment Gross Lease Value. The option price of the
-----------------------
Warrants issued shall be $1.00 per share. Lessor agrees to exercise said
- ------------------------
warrants at any time, or from time to time as it may in its sole discretion
- ---------------------------------------------------------------------------
decide, within forty-eight (48) months from date of issue; after said forty-
- ------------------------------- -----
eight (48) months, said warrants shall expire.
- ----------
The parties agree to enter into a mutually agreeable Warrants Agreement
-------------------------------------------------------------------
prior to shipment of any Equipment hereunder.
- --------------------------------------------
-19-
<PAGE>
EXHIBIT 3
DATA NETWORK DESCRIPTION
The communication system engineered by R-D is designed to provide Customer
consumers with asynchronous dial-in connectivity to Customer supported
applications and access gateways.
The communication system as designed, provides consumer access to Customer
remote data services through the interconnection of telco circuits provisioned
by or through either a Wide Area Network provider (e.g. AT&T and/ or Racal,
whichever provides such service) or a local exchange carrier (i.e., Ameritech)
hereinafter referred to as the WAN provider.
The WAN provider will aggregate the inbound calls and provide a total of 24
calls per T-1 connection. The R-D ASET-1 product has been designed to support
incoming calls from asynchronous dial-up users at speeds ranging from 300 to
14,400 bps on an aggregate T-1 circuit supplied by the WAN provider. While the
ASET-1 product was designed primarily to support aggregate incoming point of
sale transactions, outbound calls can also be initiated through the terminal
server connected to the ASET-1 chassis at the current supported speeds.
The Customer consumer (herein dial-in user) will initiate a call through
their modem to the R-D ASET-1 product (or functionally equivalent) which will
establish a call path to an interconnected terminal server. The Terminal Server
will establish a session via IR. The IP traffic will be muted through the AT&T
Interspan (Frame Relay Network) by a router to Customers data center.
The WAN providers network infrastructure will transport the user traffic to
the R-D T1 CSU and central site routers (located in the Customer data center)
where it will route the IP traffic onto the Customer local area network (LAN)
for communication to the Customer host(s).
The R-D Equipment will provide outbound IP connectivity from the Customer
host(s) to the other data centers (hosts such as SBSs information providers,
corporate data centers, etc.) connected to the WAN providers network using R-D
provided Equipment.
-20-
<PAGE>
Performance
The level of service provided by the WAN providers network (i.e., Frame
Relay network) will vary and is contingent upon such things to include (but not
limited to) actual system use/load, level of usage, and the bandwidth or
committed information rate (CIR) purchased by Customer. Network response times
may by adversely affected if insufficient bandwidth is purchased or network
usage exceeds application operational thresholds.
R-D, working in concert and in cooperation with the WAN Provider and
Customer, will jointly determine the cause of problems which adversely affect
the network, utilization levels must be monitored on a regular basis by Customer
staff and the WAN Provider. R-D will monitor the network performance throughout
the course of the installation process and will suggest and advise Customer as
to the need for remedial action necessary to maintain peak performance.
The level of service (performance) as perceived by the network users will
depend upon many factors, some of those factors are listed below:
1. The bit rate of the network user's dial-up connection will directly
affect the data transfer rate. A faster connection will naturally allow a
greater amount of data to be transported in a shorter period of time. R-D will
make every effort to ensure that its' Equipment is able to connect to the
network users at the fastest rate possible based upon equipment readily
available to network users in the commercial marketplace and that such equipment
will meet generally agree upon standards of speed/operation (such as CCITT
specifications).
2. The use of error correcting modems such as MNP, V.42 bis, V-fast
protocols and speed will improve the level of service provided to the network
user by detecting telephone line induced errors and retransmitting the network
users' data. Error correction functionality may introduce some delay when
errors are detected which result in the retransmission of data. R-D's Equipment
will conform to generally accepted levels of service as demonstrated by
competitive modems accomplishing the same task.
3. High network utilization of a particular network access point or point
of presence POP) may affect the level of service perceived by the network users.
The speed of the link in to the WAN provider's network must offer sufficient
capacity to provide consistent and adequate response times.
4. Network users connecting via SLIP or PPP may put a greater load on the
network and R-D Equipment.
-21-
<PAGE>
EXHIBIT 4
[*]
- --------------------------------
[*]Certain information in this exhibit has been omitted and filed separately
with the Securities and Exchange Commission. A total of 19 pages containing
such information has been omitted from this exhibit. Confidential treatment
has been requested with respect to the omitted portions.
-22-
<PAGE>
The Racal Corporation
Law Department
1801 N. Harrison Parkway
Sunrise, Florida 33323-2899
Telephone
Telecopier
Please reply to:
PO Box 407044
Ft. Lauderdale, FL 33340-7044
Direct Dial:
March 30, 1995
Mr. Don Schutt, Chief Operating Officer
Concentric Research Corporation
400 Forty First Street
Bay City, MI 48708
Dear Don:
I am writing to confirm the agreements that we reached at our meeting today
respecting certain matters involving the business relationships between Racal-
Datacom, Inc. ("RDI") and Concentric Research Corporation ("CRC") as set forth
below.
1. With respect to the Master Lease Agreement No. CON01C, dated August 4, 1994,
between RDI and CRC (the "Agreement"), we agreed that (a) the Commencement
Date as defined in section iv. of the Agreement shall be March 31, 1995. The
Equipment (as that term is defined in the Agreement) has been Deployed at
the sites set forth in Exhibit A which is attached to this letter.
2. With respect to initial monthly billing and payments, we have agreed as
follows:
(a) The monthly billing as of this date based upon Equipment which has been
ordered pursuant to an RDI sales order in not less than [*] per month
and may equal [*] per month for the term stated on each order. RDI
believes that the monthly billing amount equals [*]. RDI shall provide
CRC with documentation to support its contention of the current monthly
billing amount.
- ---------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
(b) Payments for the items set forth in 2(a) for the months of April, May
and June, 1995 shall be deferred until and shall commence on July 15,
1995. The payments due for April, May and June, 1995 shall be amortized
over the six month period commencing July 15, 1995 through December 15,
1995 (the "Deferred Payment period"). The resulting monthly payment
will be:
[*]
The total does not include any other RDI charges for additional equipment
or services ordered after this date or charges provided for in any of the
agreements existing between CRC and RDI on the date hereof.
3. Certain outstanding nor invoices to CRC are set forth below. They will be
paid as follows:
(a) RDI invoice number 796676 for professional services in the amount of
[*]. This invoice shall be paid prior to April 15, 1995.
(b) RDI Invoice number 796677 in the amount of [*]. RDI shall provide CRC
with the documentation in its possession and cooperate with CRC in
efforts to secure the credit from AT&T to CRC which was previously
negotiated among CRC, RDI and AT&T for the invoiced amount. CRC shall
pay RD: the invoiced amount immediately upon CRC's receipt of the
credit in this amount from AT&T.
(c) RDI Invoice number INV5435 in the amount of [*] for actual freight
charges for Equipment shipped pursuant to the Agreement. RD: shall
provide CRC with such backup material for the freight charges incurred
as reasonably requested by CRC. This invoice shall be paid prior to
April 15, 1995.
We have agreed that the invoices set forth in items 3(a) and 3(c) shall
accrue interest at a rate of 10% commencing on March 31, 1995 and
continuing until the invoices have been paid, provided, however, if CRC has
paid the aforementioned invoices on or prior to April 15, 1995, RDI shall
waive the accrued interest.
4. The Sun Bank loan will be repaid by CRC in accordance with the terms set
forth in the Reimbursement Agreement between nor and CRC dated as of
February 15, 1995 or prior to April 15, 1995, whichever occurs earlier.
- ----------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
5. CRC and RDI are parties to a Remote Network Operations Agreement number
CON03C between CRC and RDI, dated October 14, 1994 (the "Net Ops
Agreement") which provides for monthly payments from CRC to RDI in the
amount of [*] for a period of forty-eight (48) months (extended
value [*]), CRC has expressed a desire to secure services in lieu of
those provided for in the Net Ops Agreement. RDI has proposed a Network
services Transition Program. CRC and RDI agree to negotiate in good faith
to attempt to reach an agreement respecting the provision of a Network
Services program by RDI which would supersede the Net Ops Agreement.
6. RDI shall prepare and present to CRC and Critical Technologies Inc.
("Critical") proposed leases for space in connection with the eight RDI
locations which are currently P.O.P. sites for the deployed Equipment. RDI,
CRC and Critical shall negotiate in good faith towards a lease for the
P.O.P. site.
7. Prior to assuming its seat on CRC'S Board of Directors, RDI will exercise
its warrants on 100,000 shares of CRC'S common stock at one dollar per
share. We have further agreed that the exercise price can, at RDI's option,
be payable by the forgiveness of debt, in the form of the issuance of a
credit to CRC.
Other than item 2, respecting the deferral of CRC's payment obligations for the
months of April, May and June, 1995, nothing contained in this letter is
intended to or shall amend, alter, cancel, or extinguish any rights or
obligations of CRC or RDI under any existing agreements between us.
If the foregoing is acceptable to CRC, please signify by signing in the space
provided below.
Joseph E. Carpenter, Jr.
General Counsel and
Senior Vice President, Administration
Accepted on behalf of Concentric Research Corporation this 30th day of
March, 1995.
Concentric Research Corporation
By: Don Schutt
as its Chief Operating Officer
- -----------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
Exhibit A
[*]
- ---------------------
[*]Certain information in this exhibit has been omitted and filed
separately with the Securities and Exchange Commission. A total of 4 pages
containing such information has been omitted from this exhibit. Confidential
treatment has been requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.23
LEASE AGREEMENT NUMBER CONO4C
This lease agreement ("Agreement") is entered into this 26th day of June,
1996 by and between Concentric Network Corporation, a Florida corporation
(hereinafter referred to as "Lessee") having its principal place of business at
10590 North Tantau Avenue, Cupertino, California 95014 and Racal-Datacom, Inc.,
a Delaware corporation, (hereinafter referred to as "Lessor" or "R-D"), having
its principal place of business located at 1601 North Harrison Parkway, Sunrise,
Florida 33323-2899, organizations duly authorized by law.
WITNESSETH THAT
WHEREAS, Lessor is the manufacturer of data communication products which
are composed of hardware (hereinafter referred to as "Equipment"), and software
which is defined as a set of processor instructions that can be ported into a
processor and executed to provide a defined functionality (hereinafter referred
to as "Software"); and,
WHEREAS, Lessee is desirous of leasing such Equipment or Software from
Lessor for use with Lessee's communications network; and,
WHEREAS, both parties are desirous of establishing the terms and conditions
which shall govern all orders issued pursuant to this Agreement.
NOW THEREFORE, in consideration of the covenants, premises and mutual
agreements contained herein, the parties do hereby agree as follows:
I. PURPOSE
-------
The purpose of this Agreement is to set forth the terms and conditions
pursuant to which Lessee may submit orders (as defined in Article III) to
Lessor. All Orders must be accepted by Lessor at its headquarters, Sunrise,
Florida.
II. TERM OF AGREEMENT
-----------------
This Agreement shall commence upon the date first written above and shall
continue for a term of twelve (12) months thereafter. This Agreement shall
govern all Orders placed hereunder provided such Orders are received by Lessor
within twelve (12) months and the Equipment and Software ordered is installed
within fourteen (14) months, both of said periods beginning upon the date of
commencement of this Agreement. Thereafter, this Agreement shall automatically
renew itself in twelve (12) month increments unless either party notifies the
other of its decision to terminate this Agreement by providing the other party
sixty (60) days written notice prior to the expiration of the period then in
effect.
<PAGE>
Notwithstanding that this Agreement may terminate prior to the expiration
of an individual Order's term, it is expressly agreed that any Order issued
pursuant to this Agreement shall continue to be in full force and effect and
continue to be governed by the terms hereof until the expiration of such Order's
stated minimum term.
III. ORDERING PROCEDURE
------------------
Lessee shall issue Orders (hereinafter defined as "Orders") to Lessor on
Lessor's order form or Lessee's order form. At a minimum, such Orders shall
include the following information:
1. Description of Equipment to be leased and Software to be licensed.
2. Quantity of each item of Equipment or Software.
3. Monthly lease rate, lease term and license fee for each item.
4. Unit installation price for each item (if applicable).
5. Unit purchase price for each item.
6. Requested delivery date.
7. Shipping location and Lessee prime contact at shipping location.
8. Billing address and billing contact.
9. Required Lessor services such as standard handling, installation,
maintenance, training and engineering costs (if applicable), and their
respective charges.
Lessor will acknowledge acceptance or rejection of Orders within fifteen
(15) days after receipt of the Order at Lessor's principal place of business,
Sunrise, Florida. Once accepted, the Order is noncancelable. If Lessor
proposes a delivery schedule different from the schedule requested by Lessee,
Lessee must notify Lessor of its rejection of such alternate delivery schedule
within fifteen (15) days after mailing of such notification by Lessor, or the
Lessor proposed shipping date shall be deemed to be accepted by Lessee.
IV. COMMENCEMENT AND TERM OF ORDER
------------------------------
An Order for an individual unit of Equipment or Software shall be binding
from the date it is accepted by Lessor. Monthly rental as to each unit of
Equipment and Software shall commence fourteen (14) days after shipment
(hereinafter referred to as the "Commencement Date") and shall be set forth on
the initial lease invoice. Monthly rental for a Custom System Order (as defined
in Article XXVI), if applicable, shall commence thirty (30) days after shipment
(hereinafter referred to as the
-2-
<PAGE>
"Commencement Date"). The lease term shall continue for the number of full
months set forth on the Order, commencing on the first day of the month
following the Commencement Date.
The Order may be renewed for an extended term in accordance with Lessor's
policies in effect at time of the Order's expiration. Either party must notify
the other in writing at least sixty (60) days prior to expiration of the lease
term of its decision to either renew the Order or terminate any or all of the
Equipment and Software leased thereunder. Without such notice, the Order shall
continue at the same rate and under the same conditions until such sixty (60)
day notice is given by either party.
Notwithstanding that the Order contemplates the lease term set forth on the
face of the Order, it is agreed that if Lessee is a governmental entity and is
fiscally funded, continuance of the Order for said term is dependent upon the
annual legislative approval of funding. Lessee agrees to utilize its best
efforts to assure funding for the continuance of the Order; however, if fiscal
funding is denied, Lessee may terminate the Order by providing Lessor with
written notice as outlined in this provision.
Upon termination by expiration or otherwise of each Order, Lessee shall, at
Lessee's expense, disconnect the Equipment or de-install the Software and allow
Lessor to enter Lessee's premises to pack and ship the Equipment and Software.
Such Equipment and Software returned to Lessor shall be in the same condition as
delivered by Lessor, reasonable wear and tear excepted and capable of meeting
all recertification requirements. If Lessor is not allowed to remove the
Equipment and Software as noted within two (2) weeks after the effective date of
Lessee's notice of termination, such termination shall be void, and the lease
shall continue in full force and effect until new notice is given followed by
removal of Equipment and Software in accordance with this paragraph on the
original terms thereof or the terms of any renewal previously agreed upon by the
Lessor, as applicable.
V. CHARGES AND PAYMENT
-------------------
Lessee shall pay to Lessor, the monthly rate set forth on an Order during
each month of the term of such Order. The monthly lease rate shall be Lessor's
published rates which are in effect at the time that the Equipment or Software
is ordered. Payments are due monthly, in advance on the first day of each
calendar month. The Equipment furnished hereunder may be new, remanufactured or
contain used components at Lessor's option. If the Commencement Date of each
unit of Equipment leased hereunder is other than the first day of a month, the
first payment due hereunder shall be equal to one thirtieth of the monthly rate
set forth on the Order for each day from and including the Commencement Date
through and including the last day of the month prior to the beginning of the
term and the monthly rate for the full initial month. Lessor reserves the right
to impose a late payment charge of one and one-half percent (1 1/2%) per month,
but not in excess of the lawful maximum, on any past due balance in the event
Lessee shall fail to pay any charges within fifteen (15) days after same are
due, and Lessee agrees to pay same. If such rate exceeds the amount authorized
by law in the jurisdiction in which the Equipment or Software is located,
interest shall be computed at the maximum legal rate at that location. Payments
shall be made to the Lessor address stated on each invoice. Charges for Lessor
services (such as standard handling, installation, engineering costs (if
applicable) and training) shall also be at the
-3-
<PAGE>
prevailing rates at time of Order. Any applicable taxes will be invoiced. The
Equipment and Software is to be leased for the term selected and is non-
cancelable.
If a purchase order is required for payment, Lessee agrees to provide the
applicable purchase order number(s) to Lessor. If no purchase order is required
for payment, Lessee guarantees that payment will not be delayed.
VI. ASSIGNMENT
----------
Without Lessor's prior written consent, Lessee shall not: (a) assign,
transfer, pledge, hypothecate, or otherwise dispose of all or any part of
Lessee's right, title or interest in and to this Agreement, any Order, the
Equipment or Software; or (b) sublet or lend the Equipment or Software or permit
it to be used by anyone other than Lessee or Lessee's employees. Lessor may
sell, assign, grant a security interest or participation in all or any part of
Lessor's right, title or interest in and to this Agreement, any Order and the
Equipment or Software without notice to Lessee, and Lessor's assignee or secured
party may then re-assign such interest without notice to Lessee. Lessee agrees
that any purchase of all or substantially all of Lessee's assets, any merger or
consolidation into or with Lessee (regardless of whether Lessee is the surviving
entity) or any entity acquiring twenty percent (20%) of Lessee's voting
securities shall be deemed to be a transfer under this Agreement. Lessee agrees
that any such assignment or re-assignment shall not change Lessee's duties or
obligations under this Agreement or any Order and Lessee hereby consents to any
such assignment or re-assignment. Each such assignee and/or secured party shall
have all the rights but none of the obligations of Lessor under such Order
unless Lessee is otherwise notified by Lessor. Lessee shall recognize such
assignments and/or security agreements and agrees that upon notice of such
assignment it shall pay directly to assignee (unless otherwise directed by
assignee) without abatement, deduction or set off all amounts which become due
hereunder and further agrees that it will not assert against assignee any
defense, counterclaim or setoff off any reason whatsoever in any action for
lease payments or possession brought by assignee. Upon such assignment and
except as may otherwise be provided therein, all references in this Agreement to
Lessor shall include assignee.
VII. NETLEASE
--------
Lessee and Lessor acknowledge and agree that each Order constitutes a net
lease with all costs, expenses and liability associated with the Equipment or
Software or its Order to be borne by Lessee unless expressly agreed to the
contrary in writing by Lessor. Lessee's obligations to pay all monthly rates
and any and all amounts payable by Lessee under any Order shall be absolute and
unconditional and shall not be subject to any abatement, reduction, set-off,
defense, counterclaim, interruption, deferment or recoupment for any reason
whatsoever and that such payments shall be and continue to be payable in all
events. Without limiting the foregoing, no defect or unfitness of any item of
Equipment or Software shall relieve Lessee of its obligations to make rental
payments, pay any other sum when due or otherwise perform any other obligation
due to Lessor and its successors and assigns under this Agreement. Nothing
contained herein shall affect Lessee's rights to bring an action against Lessor
of any breach of Lessor's obligation hereunder.
-4-
<PAGE>
VIII. TITLE AND LOCATION
------------------
The Equipment and Software is and shall remain Lessor's personal property
irrespective of its manner of attachment to realty or its use. Nothing
contained in any Order shall give or convey to Lessee any right, title or
interest in or to the Equipment or Software, except as a Lessee as set forth
therein and Lessee represents and agrees that Lessee shall hold the Equipment
and Software subject and subordinate to the rights of Lessor.
Lessor is hereby authorized by Lessee, at Lessee's expense, to cause this
Agreement, any Order, or any statement or other instrument in respect of any
Order as may be required or permitted by law showing the interest of Lessor, in
the Equipment or Software to be filed and Lessee appoints Lessor as its
attorney-in-fact to execute and file on behalf of Lessee any UCC financing
statements and amendments Lessor deems advisable to secure the interests of
Lessor. Without limiting the foregoing, Lessee shall execute one or more
financing statements, in form and substance satisfactory to Lessor, covering all
Equipment or Software leased to Lessee pursuant to this Agreement. The parties
have agreed that a photographic copy or other reproduction of this Agreement,
either together with or in lieu of an appropriate form under the UCC, is
sufficient as a financing statement for purposes of filing and perfection under
the UCC. Any filing of such financing statements or any public recordation of
this Agreement is intended by the parties solely to protect the interest to
Lessor and Lessee, and no such filing or recordation shall in any manner imply
or be construed as implying that the relationship of Lessor to Lessee with
respect to this Agreement or to the Equipment or Software is anything other than
that of a personal property lessor to a personal property lessee.
Lessee shall request Lessor's consent, in writing, at least fifteen (15)
days before Lessee intends to move any of the Equipment or Software from its
original "ship to" location. Lessor's response to such request shall be in
writing and its consent shall not be unreasonably withheld. Lessee shall pay
all costs and expenses for filing additional UCC financing statements in
connection with moving the Equipment or Software. Lessee agrees to provide
Lessor with fifteen (15) days written notice of its intention to change its name
or corporate identity or structure, by merger, consolidation, reorganization or
otherwise and to pay all costs and expenses for filing additional UCC financing
statements in connection therewith. In the event Lessee fails to comply with
this paragraph or the preceding paragraph, Lessee agrees to indemnify Lessor for
any losses or damages Lessor incurs thereby.
Upon Lessor's request Lessee will provide landlord's waivers permitting
Lessor to have access to the Equipment and Software in the event of a default by
Lessee hereunder and such other provisions as Lessor may reasonably request.
Lessee shall, at its expense, protect and defend Lessor's title against
all persons claiming against or through Lessee and shall at all times keep the
Equipment or Software free and clear from any legal process, liens or
encumbrances whatsoever (except any placed thereon by Lessor) and shall give
Lessor immediate written notice thereof and shall indemnify and hold Lessor
harmless from and against any loss caused thereby.
-5-
<PAGE>
IX. INSTALLATION
------------
If R-D is to install Equipment and Software, Lessee shall, at its expense:
provide proper site environment according to site preparation guidelines;
provide voice telephone line and number for installer; ensure that Telco circuit
installation is complete; provide immediate access to site and Equipment and
Software to be installed; provide R-D on-site personnel with application
assistance during installation; provide AC power requirements within ten (10)
feet of equipment location; connect and verify operation of equipment not
provided by R-D; and provide central site configuration support for remote only
installations.
R-D's Equipment and Software installation service will consist of field
activities required to accomplish the set-up and connection of R-D supplied
Equipment and Software at a Customer location. The principal period of
installation is 9:00 a.m. to 5:00 p.m., Monday through Friday, local time,
excluding R-D holidays.
Equipment and Software installation service includes: unpacking and
inspection of the Equipment; placement of Equipment; inter-rack and device
cabling; testing AC power and power application to Equipment; configuring the
Equipment and Software for connectivity; connecting Telco dial, dedicated and/or
dial back-up lines to Equipment; conducting test with distant end if central
site is supported; notifying Customer of any Telco problem or problem with
Equipment or Software not provided by R-D; and providing reasonable cutover
support to ensure passage of live data, if contiguous with installation.
R-D installation service does not include: site surveys; relocating or
installation of equipment, software or cables not provided by R-D; configuring
or reconfiguring customer DTE or Software, running cables under floors, above
ceilings or through walls; problem diagnosis of Telco circuits; network taps;
central site configuration support for a remote-only installation; nonproductive
time on-site through no fault of R-D; and additional trips to site required
through no fault of R-D.
Services not included under Equipment or Software installation service may
be performed with prior agreement between the parties at the Time and Material
rates for such services in effect at the time of request.
X. WARRANTY AND REMEDY
-------------------
1. Warranty
--------
Lessor warrants all Equipment obtained hereunder to be free from
defects in material and workmanship in normal service and under normal
conditions for one (1) year from date of the initial invoice, and to
conform to its standard specifications at the time of Order. Lessor
warrants the Software (if applicable) obtained hereunder will conform
to its specification at the time it is received by Lessee. THE
FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES EXPRESSED,
IMPLIED, OR
-6-
<PAGE>
STATUTORY, INCLUDING WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. THIS WARRANTY IS VOID AS TO EQUIPMENT AND SOFTWARE
LOCATED OUTSIDE OF THE UNITED STATES OF AMERICA.
2. Remedy
------
Should a unit of Equipment fail in normal service and under normal
conditions through no fault of Lessee during the warranty period,
Lessee shall return the failed unit at Lessee's expense to Lessor's
point of origin facility. Lessor shall either repair the unit at the
factory or furnish a used, refurbished replacement unit for Lessee. No
charges will be made for repair or replacement of the unit. Lessee
shall connect and adjust the unit in accordance with accompanying
instructions. Each repaired or replacement unit of Equipment is
warranted (as set forth above) for sixty (60) days from the date of
shipment of such repaired unit, or the remaining portion of the
original Equipment's warranty, whichever is longer. Lessee agrees to
pay Lessor's then standard time and material charges for repairs made
outside of those covered by the Warranty. For any nonconformance of the
Software (if applicable) to its specification which significantly
affects performance and is reported to Lessor by Lessee, in writing,
during the initial ninety (90) days following receipt by Lessee of the
Software, Lessor shall provide an analysis of the problem and provide a
workable solution. Lessee agrees to pay Lessor's then current Software
charges for analysis and efforts to obtain workable solutions provided
outside of those covered by the Warranty. Lessee agrees that it will in
no event, alter, modify, repair, disassemble, or adjust the Equipment
or Software obtained hereby, except in accordance with Lessor
instructions. Lessor's obligations hereunder are contingent upon proper
storage, installation, use and maintenance and are limited to: (1)
repair, or at its option, replacement (as described herein above) of
any parts or Equipment when Lessor determines that the Equipment does
not conform to the Warranty; (2) analyzing and providing a workable
solution to Software problems when Lessor determines that the
nonconformance significantly affects performance in accordance with its
specifications. Maintenance of Software, as used herein, is the
implementation by Lessee of Software revisions provided by Lessor.
Revisions consist of improvements of specified programs. THE FOREGOING
CONSTITUTES LESSEE'S SOLE AND EXCLUSIVE REMEDY AND IS IN LIEU OF ANY
AND ALL OTHER REMEDIES WHICH MAY BE AVAILABLE TO LESSEE AND IS SUBJECT
IN ADDITION TO THE LIMITATIONS SET FORTH IN SECTION XIX.
XI. CARE, USE AND MAINTENANCE
-------------------------
Lessee shall, at its sole expense and at all times during the term of each
Order, maintain the Equipment and Software in good operating order, repair,
condition and appearance and protect the Equipment and Software from
deterioration, other than normal wear and tear. Lessee shall not use the
Equipment or Software for any purpose other than that for which it was designed.
Lessee shall, at its
-7-
<PAGE>
sole expense, enter into and maintain in force, for the term of each Order, a
maintenance agreement on the Equipment and Software.
XII. SOFTWARE LICENSE
----------------
1. Lessor hereby grants to Lessee a revocable, nonexclusive license to use
a copy of the Software only in object code form, and only on a single
designated processing unit for Lessee's own internal use, except that
Lessee may execute the Software on another processing unit on a
temporary basis during a malfunction which prevents execution of the
Software on the existing processing unit. Lessee agrees not to copy
Software in whole or in part without the written consent of Lessor
except Lessee may maintain an archival copy of the Software for back-up
purposes. Lessee agrees to reproduce any copyright and/or
confidentiality notices on any copy of the Software or any portion
thereof made by Lessee. Additional copies of Software required by
Lessee for its use must be licensed from Lessor.
2. Lessee agrees to maintain complete and accurate records which identify
the type and location of the Software. Within thirty (30) days after
receiving a request from Lessor, Lessee shall provide copies of the
applicable records to Lessor.
3. Title to the Software shall not pass to Lessee. This license may not
assigned, sublicensed, or otherwise transferred by Lessee, except that
Lessee may transfer the license to a transferee and such transferee
will have the sole benefit of the Software as transferred from Lessee
provided that Lessee gives Lessor prior written notice of such transfer
and transferee agrees in writing to be bound under this license to the
same degree as Lessee.
4. The term of an individual units license shall be from the date of
Lessor's acceptance of an individual Order for Software until
expiration of the term set forth on the individual Order or upon any
default of Lessee of any term, covenant or obligation under this
Agreement. This license may be renewed for additional one (1) or
multiple year terms provided both parties agree to such renewal in
writing at least sixty (60) days prior to the expiration of the initial
term or renewal term. Such renewal shall be in accordance with Lessor's
standard pricing policies in effect at time of renewal. Lessee agrees
that upon termination or expiration of term of individual Orders placed
under license, Lessee will discontinue use of the Software and shall
certify in writing within three (3) days of termination of this license
that the Software and all copies thereof have been returned to Lessor
or destroyed.
5. Lessee acknowledges that the Software supplied by Lessor constitutes
Lessor's and/or it's suppliers trade secrets and agrees to treat all
Software as confidential and proprietary.
-8-
<PAGE>
6. Lessee shall not, without prior written permission of Lessor, transfer,
disclose or otherwise provide the programs to any person outside of
Lessee's organization.
7. Lessee shall not, without prior written permission of Lessor, modify,
reverse assemble or reverse compile any of the Software.
8. Lessee agrees that it shall thoroughly safeguard the confidentiality of
the Software supplied by Lessor, and in no event shall it be to a
lesser extent that Lessee safeguards its own proprietary information.
Lessee agrees that access to such Software will be given only to
employees who require access in the course of Lessee's business and
such employees will be informed of the confidential nature thereof and
will be required to observe provisions of confidence as set forth
herein.
9. If Lessee exercises the purchase conversion (set forth in Article XXX,
below) the Software license granted to Lessee herein shall remain in
effect pursuant to the terms and conditions set forth herein.
XIII. SYSTEM RESPONSIBILITY
---------------------
Lessor has no responsibility as to the use or application of the Equipment
and/or Software. Lessee assumes full responsibility for data entry, data
maintenance and the functional adequacy of the Equipment and/or Software
configurations as applied in the installation and for all system analysis and
system engineering work.
XIV. TAXES
-----
Lessee and Lessor acknowledge and agree that the liability for all taxes
associated with the Equipment or Software or its Order will be borne by Lessee
unless expressly agreed to the contrary in writing by Lessor. Lessee's
obligations to pay all taxes shall be absolute and unconditional and shall not
be subject to any abatement, reduction, defense or counterclaim except and only
to the extent that Lessee claims lawful tax exemptions and provides Lessor with
valid exemption certificates on or before the execution of such Order.
Notwithstanding the foregoing, Lessee and Lessor further acknowledge and
agree that Lessor shall be responsible for filing personal property tax returns
in respect of the Equipment or Software under the lease hereunder, unless
expressly agreed to the contrary in writing by Lessor, and shall bill Lessee for
such taxes incurred.
XV. FORCE MAJEURE
-------------
Lessor shall not be considered in default in performance of its
obligations hereunder if performance of such obligations to provide, repair or
install the Equipment and Software is prevented or delayed by acts of God or
government, labor disputes, failure or delay of transportation, or by vendors
-9-
<PAGE>
or subcontractors, or any other similar cause or causes beyond its reasonable
control. No such occurrence shall excuse the Lessee's performance of its
obligations hereunder. Time of performance of either party's obligations
hereunder shall be extended by the time period reasonably necessary to overcome
the effects of such force majeure occurrences.
XVI. PATENT INDEMNITY
----------------
Lessor will defend, at its own expense, any action brought against Lessee
to the extent that it is based upon a claim that Lessor provided Equipment or
Software infringes any patent, trade secret or copyright and Lessor will pay
costs and monetary damages finally awarded against Lessee in any such actions
which are attributable to such claim.
Such defense and liability is conditioned on and limited by: (a) Lessor
being notified promptly in writing by Lessee of any such action; (b) Lessor
having sole control of the defense and all negotiations for settlement of such
action; (c) the damage award liability of Lessor not exceeding the purchase
price for such infringing Lessor provided Equipment or Software; and (d) Lessee
providing all available information, assistance and authority to enable Lessor
to defend, negotiate and settle such action.
Should such Equipment or Software become, or in Lessor's opinion be likely
to become, the subject to a claim of infringement or the use thereof become
restricted by a final non-appealable Court awarded injunction, Lessee shall
permit Lessor, at Lessor's option and expense, the right to either: (a) procure
for Lessee the right to continue using such Equipment or Software; (b) replace
or modify such Equipment or Software so it is free from infringement or
injunction provided that the same function is performed by the replacement or
modified Equipment or Software; or (c) recover such Equipment or Software from
Lessee, in which latter case, the only rights and liabilities between Lessor and
Lessee are that: (i) the lease shall be void as to the Equipment or Software on
the date of recovery; and (ii) Lessor has the right to collect lease payments,
if any, due from Lessee for Lessee's possession of such Equipment or Software up
through the date of Lessor's recovery thereof.
Lessor shall have no liability to Lessee under any provision of this clause
with respect to any claim of infringement which is based upon the:
(1) Equipment or Software based on specifications furnished by Lessee; or
(2) combination or utilization of Equipment or Software furnished hereunder
with equipment or software not provided by Lessor; or
(3) modification by Lessee of Equipment or Software furnished hereunder.
The foregoing expresses the entire liability of Lessor for patent, trade
secret or copyright infringement by Lessor Equipment or Software delivered to
Lessee.
-10-
<PAGE>
XVII. DEFAULT
-------
Failure of Lessee to make payments or to perform any other condition of
this Agreement shall constitute breach of the affected Order(s) placed
hereunder.
In addition, the occurrence of any of the following events shall
constitute a breach of all Orders placed hereunder: (1) a receiver, trustee or
liquidator of Customer is appointed for any of its properties or assets; (2)
Customer becomes insolvent or admits in writing its inability to pay its debts
as they mature; (3) Customer makes a general assignment for the benefit of
creditors; (4) a petition for the reorganization of Customer or an arrangement
with its creditors, or readjustment of its debt or its dissolution or
liquidation or similar relief is filed by or against Customer under any law or
statute; (5) Customer ceases doing business or commences dissolution or
liquidation.
In case of breach, Lessor may cancel the defaulted Order(s), declare the
entire amount of the unpaid commitment and any other charges immediately due and
payable and use all available remedies to take possession and remove Equipment
and Software with all costs, including attorneys' fees, to be borne by Lessee.
Lessor's right to recover possession of the Equipment and Software is in
addition to all other available remedies at law or in equity.
Each Order by Lessee placed under this Agreement shall be treated as a
separate contract and default by either party arising out of a particular Order
shall not constitute or be deemed to constitute a default of any other Order
under this Agreement.
XVIII. SEVERABILITY
------------
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
provided such provisions still express the intent of the parties. If the intent
of the parties cannot be preserved, the Agreement shall either be renegotiated
or rendered null and void.
XIX. LIMITATION OF LIABILITY
-----------------------
LESSOR SHALL NOT BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS OR REVENUE,
LOSS OR USE OF THE EQUIPMENT OR SOFTWARE OR ANY ASSOCIATED EQUIPMENT OF SOFTWARE
OR COST OF SUBSTITUTED FACILITIES, EQUIPMENT, SOFTWARE OR SERVICES WHICH ARISE
OUT OF PERFORMANCE OR FAILURE TO PERFORM ANY OBLIGATION CONTAINED WITHIN THIS
AGREEMENT, OR OUT OF NEGLIGENCE IN THE COURSE OF SUCH PERFORMANCE, WHETHER THE
CLAIM FOR DAMAGES IS BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT
LIABILITY OR OTHERWISE.
-11-
<PAGE>
EXCEPT FOR CLAIMS FOR PERSONAL INJURY OR FOR DAMAGE TO REAL OR TANGIBLE
PERSONAL PROPERTY TO THE EXTENT CAUSED BY LESSOR'S FAULT OR NEGLIGENCE, LESSOR'S
MAXIMUM LIABILITY TO LESSEE FOR ANY CLAIM FOR DAMAGES RELATING TO LESSOR'S
PERFORMANCE OR NONPERFORMANCE UNDER THIS AGREEMENT SHALL BE LIMITED TO $100,000.
XX. GOVERNING LAW: FORUM
--------------------
This Agreement shall be governed and construed in accordance with the laws
of the State of Florida. The parties hereby consent and submit to the exclusive
jurisdiction of the appropriate state or federal court serving Broward County,
Florida, as to any dispute or controversy arising either directly or indirectly,
under or in connection with this Agreement.
XXI. WAIVER
------
1. No waiver by either party of any default shall operate as a waiver of
any other default or of the same default on a future occasion. No delay, course
of dealing or omission on the part of either party in exercising any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
either party of any right or remedy shall preclude any other or further exercise
thereof or the exercise of any other right or remedy.
2. Lessee hereby specifically waives any and all its rights and remedies
conferred upon Lessee by UCC Sections 2A - 208 through UCC 2A - 222, including
(without limitation) Lessee's rights to (i) cancel or repudiate this Agreement,
(ii) reject or revoke acceptance of any Equipment or Software, (iii) recover
damages from Lessor for breach of warranty or for any other reason, (iv) claim a
security interest in any rejected property in Lessee's possession or control,
(v) deduct from rental payments all or any part of any claimed damages resulting
from Lessor's default under this Agreement, (vi) accept partial delivery of the
Equipment or Software, (vii) "cover" by making any purchase or lease of other
property in substitution for property due from Lessor, (viii) recover from the
Lessor any general, special, incidental or consequential damages, for any reason
whatsoever, and (ix) seek specific performance, replevin or the like for any of
the Equipment or Software. To the extent permitted by applicable law, Lessee
also hereby waives any rights now or hereafter conferred by statute or otherwise
which may require Lessor to sell, lease or otherwise use any Equipment or
Software in mitigation of Lessor's damages or which may otherwise limit or
modify any of Lessor's rights or remedies hereunder including any other rights
set forth in Article 2A of the Uniform Commercial Code. Nothing in this lease
shall be construed as a waiver of Lessee's right to seek damages or other
remedies on account of Lessor's failure to perform its obligations under this
Agreement.
XXII. INSURANCE
---------
Lessee shall, at its own expense, and at all times during the term of an
individual Order keep the Equipment and Software insured against all risks of
loss or damage from every cause whatsoever for not less than the then current
purchase price of the Equipment or Software, provided that the amount
-12-
<PAGE>
of such insurance shall be sufficient so that neither Lessor or Lessee shall be
considered a co-insurer. Lessee shall also carry public liability insurance
covering both personal injury and property damage caused by the Equipment or
Software. All such policies of insurance shall name Lessor as loss payee or
additional insured as the case may be. Lessee shall deliver to Lessor a copy of
such certificates of insurance. Each insurer shall agree by endorsement upon
each policy issued by it or by independent instrument furnished with such policy
to Lessor, that it shall give Lessor no less than thirty (30) days written
notice before any such policy shall be materially altered or canceled. Lessee
hereby appoints Lessor as Lessee's attorney-in-fact to make claim for, receive
payment of, and execute and endorse all documents, checks or drafts for loss or
damage under any such policies of insurance.
XXIII. RISK OF LOSS
------------
Lessee shall bear the entire risk of loss, theft, damage or destruction
of the Equipment and Software from any cause whatsoever (except Lessor's
negligence) from the time shipment is received by Lessee until return shipment
is received in Sunrise, Florida by Lessor. For purposes of this provision the
value of the Equipment and Software shall be the purchase price set forth on the
Order.
XXIV. GOVERNMENT OBLIGATIONS
----------------------
Lessee warrants that it is, and will remain, in compliance with all
export requirements, including, but not limited to, the requirements of the
Export Administration Act and regulations, the Arms Export Control Act and
regulations, and any orders and licenses issued thereunder. Such requirements
include, but are not limited to, obtaining all proper authorizations or licenses
from the Department of Commerce or the Department of State for the export or re-
export of any item, product, article, commodity or technical data. Lessee
additionally warrants that it has not been, and is not currently, debarred or
suspended from or otherwise prohibited or impaired from exporting, re-exporting,
receiving, purchasing, procuring, or otherwise obtaining any item, product,
article, commodity, or technical data regulated by any agency of the government
of the United States. Lessee agrees to indemnify Lessor and hold Lessor harmless
from any costs, penalties, or other losses caused by, or related to, any
violation of the warranties contained in this Agreement.
XXV. INTENTION OF PARTIES
--------------------
It is the intention of Lessor and Lessee that any lease Orders placed
under this Agreement will be characterized as "true leases" and not "financing
leases" or "leases intended for security".
XXVI. CUSTOM SYSTEMS
--------------
Any changes in orders which include specially-configured Equipment
("Custom Systems") will result in a minimum reconfiguration charge by Lessor to
Lessee of at least five hundred dollars ($500).
-13-
<PAGE>
XXVII. BINDING NATURE
--------------
Each order shall be binding upon and shall inure to the benefit of
Lessor, Lessee and their respective successors, legal representatives and
assigns.
XXVIII. FURTHER ASSURANCES
------------------
Lessee shall comply with all applicable laws, ordinances, rules and
regulations and Lessee shall obtain any and all permits, licenses,
authorizations and/or certificates that may be required in any jurisdiction or
by any regulatory or administrative agency in connection with the use and/or
operation of the Equipment or Software.
Lessee agrees that, upon the request by Lessor and in connection with
the execution and delivery of this Agreement or in connection with each Order,
Lessee shall furnish documents as Lessor may reasonably require, including but
not limited to audited financial statements and certificates of acceptance.
XXIX. QUIET ENJOYMENT
---------------
Lessor hereby agrees and covenants, so long as no default has occurred
and is continuing, that Lessee shall have, hold and quietly enjoy, subject to
this Agreement, the Equipment and every unit and part thereof during the term of
this Agreement.
XXX. PURCHASE OPTION FOR LEASED EQUIPMENT
------------------------------------
Lessee shall at all times during the term of a lease order issued
pursuant to this Agreement have an option to purchase the Equipment then leased
thereunder by paying Lessor the purchase conversion price. The purchase
conversion price shall be calculated in accordance with the following table:
<TABLE>
<CAPTION>
TERM PURCHASE CONVERSION
FACTOR (PCF)
<S> <C>
12 [*]
24 [*]
36 [*]
48 [*]
60 [*]
</TABLE>
At the end of a lease term, the above percentages can be applied against
the "if sold" value, which was in effect at the time the Equipment was acquired.
In addition to the above, in the event
- ---------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-14-
<PAGE>
Lessee requires a purchase conversion during the lease term Lessee would also be
responsible for all lease payments until the end of the original lease term.
Exercise of this option shall in no way relieve Lessee for lease payments
due up to the date of conversion, but not yet paid, on the unit which is being
converted to purchase. Maintenance terms existing on Equipment converted to
purchase shall remain in effect for the duration of said term.
XXXI. SUBSTITUTION
------------
Lessor shall have the right, at Lessor's sole option, to replace any or
all BayNetworks equipment provided or to be provided by Lessor pursuant to this
Agreement with comparable equipment manufactured or supplied by Lessor as such
comparable equipment becomes available. After such comparable equipment
manufactured or supplied by Lessor becomes available, Lessor may, at Lessor's
sole option, substitute such comparable equipment for BayNetworks equipment for
any future Order placed by Lessee pursuant to this Agreement.
XXXII. ENTIRE AGREEMENT
----------------
The terms and conditions contained in this Agreement shall be applicable
to all Orders placed on Lessor by Lessee during the effectiveness of this
Agreement whether this Agreement is referenced or not on such Orders. Additional
or different terms contained in Lessee's purchase orders shall not be applicable
to such Orders unless expressly agreed to in writing by Lessor's authorized
representative. This Agreement, including all Orders accepted hereunder,
expresses the entire understanding and agreement of the parties with reference
to the subject matter hereof, and is a complete and exclusive statement of the
terms of this Agreement, and no representations or agreements modifying or
supplementing the terms of this Agreement, including but not limited to Lessee's
purchase order, shall be valid unless in writing and signed by persons
authorized to sign agreements on behalf of both parties.
IN WITNESS WHEREOF, this Agreement was entered into as of the day and
year first written above.
ACCEPTED: ACCEPTED:
Concentric Network Corporation Racal-Datacom, Inc.
- --------------------------------- ----------------------------------------
(Lessee) (Lessor)
By:/s/ Michael F. Anthofer By:/s/ Kathleen Walsh
------------------------------ -------------------------------------
Name: Michael F. Anthofer Name: Kathleen Walsh
--------------------------- -----------------------------------
Title: V.P. & CFO Title: Director of Contracts & Proposals
-------------------------- ---------------------------------
Date: 6-26-96 Date: 6-26-96
--------------------------- ----------------------------------
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<PAGE>
EXHIBIT 10.24
MASTER ON-SITE MAINTENANCE PLAN
AGREEMENT NUMBER CON02C
This Master On-Site Maintenance Plan agreement (hereinafter referred to as
"Agreement") is entered into this _________24th____________ day of August, 1994,
by and between Concentric Research Corporation, a Florida corporation,
(hereinafter referred to as "Customer"), having its principal place of business
located at 400 Forty-First Street, Bay City, Ml 48708 and Racal-Datacom, Inc., a
Delaware corporation, (hereinafter referred to as "R-D"), having its principal
place of business located at 1601 N. Harrison Parkway, Sunrise, Florida 33323-
2899, organizations duly authorized by law.
WITNESSETH THAT
WHEREAS, R-D is the manufacturer of data communications equipment
(hereinafter referred to as "Equipment") and software (hereinafter referred to
as "Software") which is purchased by or leased to the general public; and,
WHEREAS, Customer is desirous of establishing a plan (hereinafter referred
to as the "On-Site Maintenance Plan agreement") for on-site maintenance on
Equipment and Software:
and,
WHEREAS, 100th parties are desirous of establishing the terms and
conditions which shall govern all On-Site Maintenance Plan agreement orders
issued pursuant to this Agreement.
NOW THEREFORE, in consideration of the covenants, premises and mutual
agreements contained herein, the parties do hereby agree as follows:
I. TERM OF AGREEMENT
-----------------
This Agreement shall commence upon the date first written above and shall
continue for a term of twelve (12) months. This Agreement shall govern all
Orders (as defined in Article III) placed hereunder provided such Orders are
received by R-D within twelve (12) months beginning upon the date of
commencement of this Agreement. Thereafter this Agreement shall automatically
renew itself in twelve (12) month increments unless either party notifies the
other of its decision to terminate this Agreement by providing the other party
sixty (60) days written notice prior to the expiration of the period then in
effect.
<PAGE>
II. EQUIPMENT AND SOFTWARE ELIGIBILITY
----------------------------------
Equipment and Software set forth in the published R-D price book as being
supported by the On-Site Maintenance Plan agreement and installed within the 48
contiguous United States and the District of Columbia are eligible for coverage
under the On-Site Maintenance Plan agreement provided herein and will be covered
hereunder if such services are ordered.
III. TERM OF INDIVIDUAL ORDER
(a) Leased Equipment and/or Software. Customer has ordered Basic Coverage
-------------------------------- -----------------------------------
maintenance coverage for a four (4) year term on R-D Order Number 132450. R-D
- -----------------------------------------------------------------------------
agrees to provide Basic Coverage maintenance coverage at no charge to Customer
- ------------------------------------------------------------------------------
for the initial one (1) year of said four (4) year term for all Equipment set
- -----------------------------------------------------------------------------
forth on said Order. The terms and conditions set forth herein shall govern such
- --------------------------------------------------------------------------------
Order. Such one (1) year free maintenance coverage shall apply only to Equipment
- --------------------------------------------------------------------------------
which is set forth on R-D Order Number 132450 and any applicable replacement
- ----------------------------------------------------------------------------
Equipment for such Order.
- ------------------------
For Equipment ordered subsequent to Order Number 132450, within one (1)
year of the execution of this Agreement or such time as Customer's financing
conditions meet the requirements of Exhibit One to Master Agreement Number
CONO1C, whichever first occurs, (the "Introductory Period"). Customer may elect
to order Basic Coverage maintenance coverage for a four (4) year term and obtain
free coverage for the first year of said term. The payment schedule and order
amount shall be determined at the time of each order is placed during the
Introductory Period.
For Equipment orders placed after the Introductory Period, Customer and R-D
shall determine the term of the Basic Coverage, if any, and the price and
payment schedule for each respective Order.
For Equipment not set forth on R-D Order Number 132450, and for ANY
-------------------------------------------------------------------
Equipment coverage subsequent to the expiration of the one (1) year "no-charge"
- -------------------------------------------------------------------------------
coverage, monthly maintenance payments for Equipment shall be made in accordance
- --------------------------------------------------------------------------------
with Master Agreement Number CON01C. Upon expiration of the initial lease term
- ----------------------------------- -----------------------------------------
Customer may renew Basic Coverage for each subsequent committed lease term
- --------------------------------------------------------------------------
extension of one (1) year or more by paying R-D's monthly maintenance charges
- -----------------------------------------------------------------------------
for the committed lease term and coverage required in effect at the time of each
- --------------------------------------------------------------------------------
such lease extension. If Customer does not extend for a committed term. Basic
- -------------------- --------------------------------------------------------
Coverage services shall be provided on a month-to-month basis. Maintenance
- ------------------------------------------------------------- -----------
payments shall be made for the duration of the initial lease term or renewal
- ----------------------------------------------------------------------------
term, if renewed. In addition. Customer shall be entitled to Extra Coverage
- ---------------- ---------------------------------------------------------
under the conditions set forth below. and at the charges stated therein.
- -----------------------------------------------------------------------
(b) Purchased Equipment. Customer may obtain coverage under this
-------------------
Agreement pursuant to the conditions set forth below in one (1) or multiple year
increments immediately following the purchase of a unit of Equipment. If
Customer converts to purchase a leased unit of Equipment with On-Site
Maintenance Plan agreement coverage, the duration of such On-Site Maintenance
Plan agreement coverage shall be for the remaining term of the original
commitment. On-Site Maintenance Plan agreement payments for such units shall be
made in accordance with the applicable R-D Order under
-2-
<PAGE>
which the Equipment is purchased. Upon expiration of the initial term, Customer
may renew coverage for additional one (1) or multiple year increments by paying
R-D's On-Site Maintenance Plan agreement charges in effect at the time of each
such renewal. For Customers on an annual payment basis, if R-D does not receive
payments within thirty (30) days after notification to Customer of such renewal,
the On-Site Maintenance Plan agreement coverage shall expire. If Customer has
elected to pay the On-Site Maintenance Plan agreement charges on a monthly
basis, the On-Site Maintenance Plan agreement services shall be provided on a
month-to-month basis, until either party notifies the other, with at least
thirty (30) days prior written notification, of its decision to either renew the
order or terminate any or all of the Equipment covered thereunder. R-D reserves
the right to increase the maintenance rates for those units of Equipment and
Software which are on a month-to-month term upon thirty (30) days written
notice.
(c) Equipment and Software Eligibility. At R-D's sole option, R-D may add
----------------------------------
or delete Equipment and Software types eligible under the On-Site Maintenance
Plan agreement as provided for hereunder at any time. Deletion of any or all
Equipment and Software types will have no effect on such types of installed
Equipment or Software already covered hereunder, but will rescind Customers
option to extend coverage for such types of installed Equipment and Software
under the terms of "a" and "b" above and will make coverage unavailable for
newly installed Equipment and Software of such types.
IV. ORDERING PROCEDURE
Customer shall issue Orders to R-D on R-D's order form or Customer's order
form. As a minimum, such Orders shall include the following information:
1. Description of Equipment or Software to be maintained.
2. Quantity of each item of Equipment or Software to be maintained.
3. Extent of maintenance required and charges.
4. Customer contact for maintenance.
5. Billing address and billing contact.
6. Location and serial numbers of Equipment. R-D will acknowledge
----------------------------------------
acceptance or rejection of orders within fifteen (15) days after receipt of the
order at R-ID, Sunrise, Florida Once accepted. the Order is noncancelable.
V. COVERAGES PROVIDED
------------------
The On-Site Maintenance Plan agreement provided by R-D to Customer consists
of the following coverages:
-3-
<PAGE>
1. Basic Coverage
(A) Equipment. For the initial ninety (90) days from Commencement
---------
Date as defined in Section IV of Master Lease Agreement Number CON01("IMP") R-
D's Maintenance shall be twenty-four (24) hours per day, seven (7) days per
week, with no 4 additional charge to Customer. R-D's normal response time for
Customer requests for on-site maintenance received by R-D during the IMP shall
be within H' four (4) hours for Zone A locations and within eight (8) hours for
all other locations.
Thereafter, the Principal Period of Maintenance ("PPM") shall be 8:00
a.m. to 6:00 p.m., local time, Monday through Friday, excluding R-D holidays. R-
D's normal response time for Customer requests for on-site maintenance received
by R-D during PPM shall be within four (4) PPM hours for Zone A locations and
within eight (8) PPM hours for all other locations. Zone A locations shall be as
listed in R-D's published price book in effect at the time the On-Site
Maintenance Plan agreement services are ordered.
The Equipment On-Site Maintenance Plan agreement coverage includes
such services as will be provided by R-D, or its authorized representative, to
Customer. For Support Category A Equipment, as set forth in R-ID's published
price book, such services consist of : telephone technical consultation and
troubleshooting available 24 hours a day, 7 days a week; dial-up test facilities
available for all Equipment possessing dial-up capability; on-call remedial
maintenance during PPM which is required due to the failure of Equipment;
preventive maintenance at R-IDs discretion; and delivery of replacement
Equipment. For Support Category B Equipment, as set forth in R-D's published
price list, such services consist of: telephone technical consultation and
troubleshooting available 8 hours a day, 5 days a week, excluding R-D holidays;
dial-up test facilities available for all Equipment possessing dial-up
capability; on all remedial maintenance during PPM which is required due to
failure of Equipment; preventive maintenance at R-D's discretion; and delivery
of replacement Equipment.
Engineering or firmware changes deemed mandatory by R-D will be
installed by R-D on replacement units. Customer elected engineering or firmware
changes that are not deemed mandatory by R-D, will be made available to Customer
at the rates set forth in R-D's price book in effect at the time of the request
and are not included in this Agreement.
(B) Software. The Software On-Site Maintenance Plan agreement
--------
coverage provided by R-D to the Customer will consist of: For Support Category A
Software as set forth in R-D's published price book, Customer access to
available R-D Bulletin Board; telephone technical consultation and
troubleshooting 24 hours a day, 7 days a week; and on-site installation of
Software maintenance releases recommended by R-D during PPM hours. For Support
Category B Software, as set forth in R-D's published price list, Customer access
to available R-D Bulletin Board: telephone technical consultation and
troubleshooting S hours a day, 5 days a week; and copies of Software maintenance
releases. A Software maintenance release shall mean a Software program fix or
improvement that solves a problem or enhances the performance of the Software
but does not necessarily expand the functionality of the Software. The Software
maintenance releases will be provided to Customer by R-D at the time of their
production release. Certain maintenance releases will be made available on R-D's
Electronic Bulletin
-4-
<PAGE>
Board service for downtime loading to the Customers Equipment. Other Software
maintenance releases will be made available to Customer on diskettes. One copy
of each maintenance release will be made available to Customer for each Software
product under maintenance. Each maintenance release is licensed to run only on
the unit under maintenance. For Support Category B Software, Customer shall use
---
its best efforts to implement each revision within sixty (60) days from receipt
- -------------------- ---------
of notice in order to continue Software maintenance coverage.
R-D shall use its best efforts to provide a workable solution to
Software problems in a timely manner when R-D determines the Software does not
conform to its specification.
(C) Exclusions. The following services are outside the scope of Basic
----------
Coverage under this On-Site Maintenance Plan: electrical work external to the
Equipment; repair or replacement work or increase in service time due to fire,
flood, water, wind, lightning, power surges, neglect, misuse; inadequate
electrical power, air conditioning or humidity control; unauthorized persons
modifying, repairing or servicing the unit; and "no trouble found" calls.
In addition to the above, the following items are considered consumables
and not included as covered parts under this Agreement: cathode ray tubes whose
only problem is burnt phosphor, platens, exterior finishes, fuses, bulbs,
supplies, disk packs and cartridges; and, diskettes.
2. Extra Coverage. Extra Coverage is such services as will be provided by
--------------
R-D, or its authorized representative, and for which Customer shall be
separately billed at the hourly rate of [*] per hour, with a two (2) hour
minimum, for services performed. Extra Coverage consists of: those services
described above as "Basic Coverage" which are requested by the Customer to be
performed by R-D outside PPM hours; any maintenance service which the Customer
requests and R-D agrees to perform which is not included in "Basic Coverage",
e.g., relocation of Equipment or Software, utilization of R-D personnel to
supervise or perform the packaging and crating of Equipment or Software, etc.;
any service call resulting from or required by the "Exclusions" set forth above;
and any service performed when R-D determines that the cause of Equipment or
Software failure was not the result of failure in Equipment, Software or
communication facilities provided by R-D.
Subsequent to the IMP set forth above, Customer may request R-D to perform
Basic Coverage services outside the PPM set forth above. Customer agrees to pay
an hourly rate equal to [*] per hour, with a two (2) hour minimum, any Basic
Coverage services performed outside the PPM provided R-D 4, responded to such
request within four (4) hours for any Zone A locations or within eight (8) hours
for any other locations. In the event R-D does not respond to such Basic
Coverage service request within the time frames set forth herein, Customer shall
have no obligation to pay R-D the hourly rate. Zone A locations shall be as
listed in R-D's published price book in effect at the time of request.
- --------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-5-
<PAGE>
Any other Extra Coverage services performed hereunder shall be invoiced, and
paid, at the hourly rate of [*] per hour, regardless of the time such service
was performed.
The monthly On-Site Maintenance Plan agreement prices for the Initial Order
placed hereunder is set forth on Order Number 132450. Such prices are for Basic
Coverage as set forth in Article III.a, Term of Individual Order, Leased
Equipment and/or Software. Thereafter, Customer may elect to order maintenance
coverage at rates, and for specific term lengths, to be mutually determined at
time of Order.
VI. CUSTOMER ASSISTANCE
-------------------
Customer shall, in all cases where Customer personnel is available, and at
no charge to R-D, perform such non-skilled checks and tests as reasonably
required by R-D's written instructions provided in Installation and Operation
Manuals and by telephone from R-D Field Support Centers. These tests shall not
require Customer to furnish specialized test equipment.
VII. FREEDOM OF ACCESS
-----------------
Customer agrees that R-D or its authorized representative, shall have
reasonable and free access to the Equipment and Software. My unreasonable delays
or return service calls required because of denial of reasonable and free access
to the Equipment or Software will be separately billed to the Customer as "Extra
Coverage".
VIII. CUSTOMER RESPONSIBILITIES
-------------------------
In regard to each unit of Equipment and Software covered by this Agreement,
Customer agrees to prevent unauthorized adjustment, repairs or modifications,
and to ensure that the Equipment and Software is utilized in accordance with the
applicable R-D published specifications or the specifications set forth in
Exhibit 3 of Master Agreement Number CON01C. In the event that either one of
these responsibilities is not fulfilled, R-D shall have the right to immediately
withdraw the affected Equipment and Software from coverage under this Agreement.
IX. SYSTEM RESPONSIBILITY
---------------------
R-D agrees the Equipment will meet its published specifications in the
----------------------------------------------------------------------
application proposed by R-D as set forth in Exhibit 3 of Master Agreement Number
- --------------------------------------------------------------------------------
CON01C. The Customer assumes full responsibility for data entry, data
- ------
maintenance, the functional adequacy of the Equipment and Software configuration
as applied in the installation and for all system analysis and system
engineering work except as warranted in Article XIV of Master Agreement Number
-------------------------------------------------------------
CON01C.
- ------
- --------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-6-
<PAGE>
X. MOVEMENT OF EQUIPMENT
---------------------
The On-Site Maintenance Plan agreement charges specified on an order apply
only to the Equipment at the location specified on the order. Equipment moved to
any area serviced by R-D is eligible for continued coverage in accordance with
R-D's rates and terms then in effect for that location. Customer is responsible
for proper movement, risk of loss or damage to the Equipment or Software and all
associated costs.
R-D shall be the sole point of contact with regard to all maintenance
performed under this Agreement. In the event additional charges accrue against
or are paid by R-D as a result of direct Customer request to any third party for
maintenance services, or any maintenance services provided because of causes
other than normal wear and tear (i.e. unauthorized attempts to repair, maintain
or modify the Equipment or Software, fault or negligence of customer, operator
error, improper use or misuse of the Equipment or Software; causes external to
the Equipment or Software, such as but not limited to fluctuations of humidity
or temperature), Customer shall reimburse R-D an amount equal to any such
charges.
XI. CREDIT FOR EQUIPMENT DOWNTIME
-----------------------------
If for reasons solely within its control, 9-0 fails to restore a failed
unit of Equipment to operating condition within twenty-four (24) hours
subsequent to a "Normal Response Time", then Customer shall be entitled to a
credit for that unit of Equipment for that period of time and each subsequent
full twenty-four (24) hour period during which the failure continues. The amount
of such credit for a leased unit shall be 1/30th of the monthly lease rate and
for a purchased unit shall be 1/30th or R-D's published thirty-six (36) month
lease rate for the affected unit. Irrespective of any such claims, Customer
shall continue to make any payments otherwise due R-D under the Order for such
Equipment and services, nor shall such claim(s) entitle Customer to cancel such
order except as provided for in Article XIV.3 of Master Agreement Number CON01C.
-------------------------------------------------------------------------
XII. FORCE MAJEURE
-------------
Neither party shall be considered in default in performance of its
obligations hereunder if performance of such obligations is prevented or delayed
by acts of God or government, labor disputes, failure or delay of
transportation, or by vendors or subcontractors, or any other similar cause or
causes beyond the reasonable control of the other party. Time of performance of
either parties obligations hereunder shall be extended by the time period
reasonably necessary to overcome the effects of such force majeure occurrences.
XIII. LIMITATION OF LIABILITY
-----------------------
NEITHER CUSTOMER OR R-D SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS
OR REVENUE, LOSS OF USE OF THE EQUIPMENT OR SOFTWARE, OR ANY
-7-
<PAGE>
ASSOCIATED EQUIPMENT AND SOFTWARE, OR COST OF SUBSTITUTED FACILITIES, EQUIPMENT
OR SERVICES WHICH ARISE OUT OF PERFORMANCE OR FAILURE TO PERFORM ANY OBLIGATION
CONTAINED WITHIN THIS AGREEMENT OR OUT OF NEGLIGENCE IN THE COURSE OF SUCH
PERFORMANCE, WHETHER THE CLAIM FOR DAMAGES IS BASED IN CONTRACT, TORT (INCLUDING
NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
Except for claims for personal injury or for damage to real or tangible
personal property to the extent caused by R-D's fault or negligence, R-D's
maximum liability to Customer for any claim for damages relating to R-D's
performance or non-performance under this Agreement shall be limited to [*].
XIV. PAYMENT TERMS
-------------
(a) Recurring Costs: All charges for billable services performed under
--------------- -------------------------------------------------
this Agreement shall be invoiced upon completion. The initial invoice for Basic
- ------------------------------------------------ -----------------------------
Coverage for Equipment covered during the Initial Year shall be in accordance
- -----------------------------------------------------------------------------
with the Article III.a entitled Term of Individual Order. Leased Equipment
- --------------------------------------------------------------------------
and/or Software, set forth above. Payments are due monthly in advance, on the
- --------------------------------
first day of each month. First payment due for services ordered hereunder shall
include 1/30th of the month's payment for each day elapsing since commencement.
(b) Nonrecurring Costs: Payments are net thirty (30) days from date of
-----------------------------
invoice. All charges for billable services performed hereunder shall be
- -------
invoiced upon completion.
(c) For purchased items, if the net discounted value of accumulative
billings for maintenance services is less than [*] a year, or [*] a month,
payment will be made on an annual payment basis only.
(d) Payments shall be made to R-D at address stated on each invoice.
(e) If a purchase order is required for payment of any services (including
Extra Coverage) performed hereunder, Customer agrees to provide the applicable
purchase order number(s). Customer guarantees that payment will not be delayed.
XV. DEFAULT
-------
Failure of Customer to make payments as defined herein or to perform any
other condition of this Agreement shall constitute breach of the affected
order(s) issued hereunder. The failure by Customer, within sixty (60) days
after the commencement of any proceeding against Customer seeking
- --------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-8-
<PAGE>
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law,
regulation, to obtain the dismissal of such proceeding or within sixty (60) days
after the appointment without the consent or acquiescence of Customer, of any
trustee, receiver or liquidation of Customer or of all or any substantial part
of the properties of Customer to vacate such appointment shall constitute breach
of all orders placed hereunder. In case of breach, R-D may cancel the defaulted
Order(s), declare the entire amount of any unpaid commitments and any other
charges to be immediately due and payable.
R-D reserves the right to impose a late payment charge of one and one-half
percent (1-1/2%) per month, but not in excess of the lawful maximum on any past
due balance in the event Customer shall fail to pay any charges within fifteen
(15) business days after same are due, and Customer agrees to pay same.
--------
XVI. TAXES AND FEES
--------------
Customer covenants and agrees to pay when due or reimburse and indemnify
and hold R-D harmless from and against all taxes, fees or other charges of any
nature whatsoever (together with any related interest or penalties not arising
from negligence on the part of R-D) now or hereafter imposed or assessed against
R-D, Customer or the Equipment or Software by any Federal, State, County or
local governmental authority upon or with respect to the Equipment or Software
or upon the ordering, ownership, delivery, possession, use or operation, return
or other disposition thereof or upon the rents, receipts or earnings arising
therefrom or upon or with respect to any order (excepting only Federal, State
and local taxes based on or measured by the net income of R-D). If Customer
warrants that the Order shall be exempt from sales tax, it is the Customer's
responsibility to provide R-D with valid sales tax exemption certificates within
thirty (30) days of date Order is placed.
XVII. REQUESTS FOR ON-SITE MAINTENANCE SERVICE
----------------------------------------
All requests for service shall be initiated by an authorized representative
of Customer. The request for service shall be directed to the Technical
Assistance Center for support Category A Equipment and Software and to the
Regional Service Office for support Category A Equipment and Software. The
applicable offices are set forth in Schedule A, attached hereto and incorporated
herein. Each service request shall contain the following information:
Name and address of Equipment and Software users
Name of the person to be contacted and telephone number
Equipment and Software type and serial number
Equipment and Software location
Description of problem
XVIII. REPLACED EQUIPMENT OR PARTS
---------------------------
-9-
<PAGE>
When replacement Equipment, or any part thereof, is provided to the
Customer, the replaced Equipment, or part thereof, shall become the property of
R-D. Replacement parts shall be either new parts or parts equivalent in
performance to new parts when used with the Equipment.
XIX. GOVERNING LAW: FORUM
--------------------
This Agreement shall be governed and construed in accordance with the laws
of the State of Florida. The parties hereby consent and submit to the exclusive
jurisdiction of the appropriate state or federal courts serving Broward County,
Florida, as to any dispute or controversy arising either directly or indirectly,
under or in connection with this Agreement.
XX. WAIVER
------
No waiver by either party of any default shall operate as a waiver of any
other default or of the same default on a future occasion. No delay, course of
dealing or omission on the part of either party in exercising any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
either party of any right or remedy shall preclude any other or further exercise
thereof or the exercise of any other right or remedy.
XXI. SEVERABILITY
------------
Each order by Customer hereunder shall be treated as a separate contract
and default by either party arising out of a particular order shall not
constitute or be deemed to constitute a default of any other Order under this
Agreement.
XXII. NOTICES
-------
Any notices or communications given or required under this Agreement shall
be sufficiently given if delivered personally, in writing or sent by telex or
facsimile, federal express, registered or certified mail, postage prepaid, to
the other party at the following address:
TO: Racal-Datacom, Inc.
P.O. Box 407044
Ft. Lauderdale, FL 33340
Attn: Director of Contracts
cc: Sr. Vice President and General Counsel
TO: Concentric Research Corporation
400 Forty-First Street
Bay City, MI 48708
With a copy to:
Susan Cook, Esq.
-10-
<PAGE>
Lambert, Leser, Cook, Schmidt and Giunta, P.C.
309 Davidson Building, P.O. Box 835
Bay City, MI 48707
Such notice or other communications shall be deemed received (a) on the
date delivered, if delivered personally; or (b) upon receipt, if sent by telex
or facsimile, federal express or (c) three (3) business days after being sent,
if sent registered or certified mail.
XXIII. ENTIRE AGREEMENT
----------------
The terms and conditions contained in this Agreement shall be applicable to
all orders placed on R-D by Customer during the effectiveness of this Agreement
whether referenced or not on such orders. Additional or different terms
contained in Customers purchase orders shall not be applicable to such orders
unless expressly agreed to in writing by R-D's authorized representative. This
Agreement expresses the entire understanding and agreement of the parties, with
reference to the subject matter hereof, and is a complete and exclusive
statement of the terms of this Agreement, and no representations or agreements
modifying or supplementing the terms of this Agreement including but not limited
to Customers purchase order and R-D's order acknowledgment form, shall be valid
unless in writing, signed by persons authorized to sign agreements on behalf of
both parties.
IN WITNESS WHEREOF, this Agreement was entered into as of the day and year
first written above.
ACCEPTED: ACCEPTED:
CONCENTRIC RESEARCH CORP. RACAL-DATACOM, INC.
Customer (R-D)
By: /s/ Donald Schutt By: /s/ Kathleen Walsh
-------------------------------- ---------------------------------
Name: Donald Schutt Name: Kathleen Walsh
------------------------------ -------------------------------
Title: CEP Title: Director of Contracts
----------------------------- ------------------------------
Date: 8/24/94 Date: September 16, 1994
------------------------------ -------------------------------
-11-
<PAGE>
SCHEDULE A
For support Category A units:
TECHNICAL ASSISTANCE CENTER
OFFICE LOCATION
- ---------------
400 Embassy Row
Suite 300
Atlanta, GA 30328
<TABLE>
<CAPTION>
For support Category B units:
REGIONAL SUPPORT OFFICE
LOCATION ASSIGNED TERRITORY
- -------- ------------------
<S> <C> <C>
Northeast Region
- ---------------- Connecticut
Racal-Datacom, Inc. Delaware New York
1010 Campus Drive West Maine Pennsylvania
Morganville, New Jersey 07751 Massachusetts Rhode Island
New Hampshire Vermont
Central Region
- --------------
Midwest Office Illinois Nebraska
Racal-Datacom, Inc. Indiana North Dakota
3455 Salt Creek Lane, Suite 100 Iowa Ohio
Arlington Heights, Illinois 60005 Kansas Oklahoma
Kentucky South Dakota
Michigan Texas
Southwest Office Minnesota West Virginia
Racal-Datacom, Inc. Missouri Wisconsin
12092 Forestgate Drive
Dallas, Texas 75243
Southeast Region
- ---------------- Alabama Mississippi
Racal-Datacom, Inc. Arkansas North Carolina
503 Oak Place, Suite 590 Florida South Carolina
Atlanta, Georgia 30349 Georgia Tennessee
Louisiana Virginia
Maryland Washington, DC
Westcoast Region
- ---------------- Alaska Montana
Racal-Datacom, Inc. Arizona Nevada
600 S. Placentia Avenue California Oregon
Placentia, California 92670 Colorado Utah
Hawaii Washington
Idaho Wyoming
</TABLE>
<PAGE>
EXHIBIT 10.31
INTERNET ACCESS SERVICES AGREEMENT
THIS INTERNET ACCESS SERVICES AGREEMENT is effective as of August 1, 1995
(the "Effective Date"), by and between Intuit Inc., a Delaware corporation
("Intuit"), and Concentric Network Corporation, a Florida corporation formerly
known as Concentric Research Corporation ("CNC"), with reference to the
following facts:
RECITALS
--------
A. Intuit creates, markets and distributes certain financial, tax and
other software products and services.
B. CNC is an on-line telecommunications services and Internet access
provider that offers various services through the CNC Network, as defined below,
including non-Internet telecommunications, access to the Internet, electronic
mail, USENET news, Telnet and various Internet Protocols, as defined below.
C. Intuit desires to offer Internet Services on the terms and conditions
set forth in this Agreement to persons who license the Products defined below
("Customers") by (i) incorporating the Internet Features into the Products and
(ii) obtaining the CNC Services from CNC to permit access to the Internet, and
CNC is willing to perform the Development Project and provide the CNC Services
to support Intuit's provision of the Internet Services to the Customers and
other communications requirements.
D. The parties hereto agree and acknowledge that this Agreement
memorializes actions that occurred, or obligations undertaken, on or after the
Effective Date, and reflects their agreement with respect to future performance
as set forth herein.
NOW, THEREFORE, for valuable consideration, the parties hereto agree as
follows:
1. Definitions. In addition to any other capitalized terms defined in
-----------
this Agreement, the following terms shall have the meanings provided below:
1.1 "Access" shall mean the provision of telecommunications transport
and/or an interconnection to the Internet Services via the CNC Network using a
POP Access or a Non-POP Access, as the case may be.
1.2 "Agreement" shall mean this Internet Access Services Agreement,
including its exhibits and attachments, all by this reference incorporated into
and made a part hereof.
1.3 "Browser" shall mean the client access software including the
dialer, registration wizard, image viewer, TCP/IP stack and other software
permitting the establishment of a point-to-point protocol (PPP) connection with
the Internet through the CNC Network.
1.4 "Commitment Agreements" shall mean that certain Stand-By
Financing Agreement and that certain Warrant Issuance Agreement by and between
the parties hereto, and certain CNC shareholders, dated as of the Execution Date
and their related agreements.
1.5 "CNC Code" shall mean the POP, login server, registration server,
encryption, data security and other software, including object code and source
code, described or referred to
<PAGE>
in this Agreement, and developed by CNC to support the Internet Services
provided by Intuit, including any related documentation.
1.6 "CNC Network" shall mean the computing, information services,
hardware, software (including the CNC Code), telecommunications, access and
provisioning provided by CNC as further described in this Agreement and in that
certain CNC Private Placement Memorandum dated November 3, 1995, as such network
may be modified, improved and expanded during the Term of this Agreement.
1.7 "CNC Services" shall mean any and all of the services rendered
and support that CNC is required to provide under the terms of this Agreement
including, but not limited to, those relating to the provision of Internet
Services, Non-Internet Traffic Services, customer support, billing and
collection, and ongoing System development.
1.8 "Customer Charge(s)" shall mean the charges set by Intuit from
time to time and payable by the Customers for the Internet Services as further
described in Section 4.3.
1.9 "Customer Information" shall mean all the information and records
collected, processed or compiled by CNC, including (without limitation) lists of
Customer names, addresses, and telephone numbers; registration, credit and
financial information; information respecting Customer needs, usage and demands;
product; entry point; and such other marketing information as may be useful to
or desired by Intuit to promote or improve the Internet Services or its
Products.
1.10 "Development Project" shall mean the activities of CNC and Intuit
to develop and test the CNC Network's ability to support the Internet Services
as further described in Section 3 and Exhibit "B".
-----------
1.11 "Full Internet Service(s)" shall mean a service that provides a
Customer with access to the Intuit Areas via the CNC Network and unrestricted
access via the CNC Network to all generally accessible locations and services on
the Internet.
1.12 "Information Statements" shall mean monthly statements prepared
and made available by CNC to the Customers and Intuit for on-line viewing on the
CNC Network pursuant to Section 4.3 and Exhibit "D" attached hereto.
-----------
1.13 "Internet" shall mean the network of computers, information
systems and communications systems using the TCP/IP protocols and commonly
referred to as the Internet.
1.14 "Internet Connection Services" shall mean providing general
access to the Intuit Areas to persons who are connected to the Internet via any
mechanism other than through the Access provided by CNC.
1.15 "Internet Features" shall mean the Browser, CNC Services,
topology, schematics, hardware and software, and other systems and features
offered by or through Intuit in conjunction with the Products that enable a
Customer to gain access to and use the Internet Services through the Products.
1.16 "Internet Protocols" shall mean file transfer protocol (FTP),
Internet Relay Chat (IRC), World Wide Web access and other current and future
protocols.
1.17 "Internet Services" shall mean the Full Internet Services, the
Restricted Internet Services and the Internet Connection Services.
2
<PAGE>
1.18 "Intuit Areas" shall mean locations on various host computers,
including those which may be operated by CNC, which provide various information
and services to various Customers accessing such host computers by using
Internet Protocols including, without limitation, World Wide Web sites operated
by Intuit. Intuit will determine, in its sole discretion, which information and
services to provide to which Customers in the Intuit Areas.
1.19 "Intuit Systems" shall mean Intuit's host computers which are not
providing the Internet Areas.
1.20 "Network Plan" shall mean the CNC Network deployment plan
described in Exhibit "A".
-----------
1.21 "Network Specifications" shall mean the description, performance
standards, topology and specifications for the CNC Network as described in this
Agreement.
1.22 "Non-Internet Traffic Services" shall mean telecommunications
access other than continuous session-based services using Internet Protocols
such as the World Wide Web, e.g., the burst disconnect asynchronous
----
communications of banking data is non-Internet traffic.
1.23 "Non-POP Access" shall mean that a Customer in a given geographic
location may gain access to the CNC Network through a long distance or 800#
phone number, and not through a local POP.
1.24 "Performance Standards" shall mean the established target and
minimum performance measurements for the CNC Network and the CNC Services as
described in this Agreement.
1.25 "POP" or "Point of Presence" shall mean the hardware (such as
modems, terminal servers and routers), software, networks and telecommunications
connections operated by CNC at a local facility or site through which a Customer
may gain access to the Internet through a dial-up TCP/IP link with the CNC
Network.
1.26 "POP Access" shall mean that a Customer in a given geographic
location can gain access to the Internet through a link with the CNC Network
through a local phone number. CNC may provide POP Access either through a
physical POP or through any mechanism by which a local-access telephone
connection is re-routed to the CNC Network at no charge to the Customer.
1.27 "Port" shall mean a modem connection on a terminal server at a
POP.
1.28 "Products" shall mean Intuit's Quicken personal financial
software product, Quickbooks small business accounting software product,
ProSeries professional tax preparation software product, and TurboTax personal
tax preparation software product, and such other Intuit software products as
shall be added to the coverage of this Agreement at the sole discretion of
Intuit by an addendum hereto executed and delivered between CNC and Intuit.
1.29 "Restricted Internet Service(s)" shall mean a service that
provides a Customer with access via the CNC Network to various Intuit Areas and
to certain other Internet locations and services as Intuit shall specifically
authorize for such Customer from time to time.
1.30 "Service Charge(s)" shall mean the charges for CNC Services to be
paid by Intuit to CNC as provided in Section 4.3 hereof.
3
<PAGE>
1.31 "Term" shall mean from and after the Effective Date until the
expiration or termination of the Service Term.
1.32 "URL" or "Uniform Resource Location" shall mean the address of a
resource on the Internet, e.g., "http://www.cris.com".
----
1.33 Certain other terms used herein are defined in the following
provisions:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Effective Date Preamble
Customer(s) Recital "C"
Integrated Browser 2.4
Alternate Services 2.4
System 3.1
Release Date 4.1
Service Term 4.1
Contract Year 4.1
Customer Support Center 4.2.4
Confidential Information 5.1.1
License Agreement 5.4
Transition Period 6.4
Execution Date Signature Page
Minimum Performance Standard(s) Exhibit "A"
Target Performance Standard(s) Exhibit "A"
Monthly Reconciliation Exhibit "D"
</TABLE>
2. Concept of Operations and General Agreement.
-------------------------------------------
2.1 Concept of Operations. Intuit desires to make available the
---------------------
Internet Services to its Customers by the distribution of certain Internet
Features with any or all of the Products as Intuit may determine in its sole
discretion, and to obtain Non-Internet Traffic Services from CNC from time to
time. As a part of the CNC Services, CNC shall provide the following: Customer
logon and registration in a format provided or approved by Intuit, service
upgrades, account management, credit approvals, Customer billing; reporting
network and infrastructure management, operation and maintenance; Access;
provision of Internet Services and Non-Internet Traffic Services; and
4
<PAGE>
customer and technical support. CNC will charge Intuit for the CNC Services in
accordance with Section 4.3. Intuit will independently establish its charges to
Customers for the Internet Services, and CNC will bill the Customers on behalf
of Intuit on such terms and conditions as Intuit may determine in its sole
discretion.
2.2 CNC Network Structure. The current and proposed structure of the
---------------------
CNC Network is described in Exhibit "A" attached hereto. CNC has established
-----------
and is implementing the Network Plan to expand, improve and enhance the
capabilities of the CNC Network to facilitate its support of Intuit.
2.3 General Agreement. Intuit and CNC will perform the Development
-----------------
Project pursuant to Section 3 to support CNC's ability to provide the Internet
Services. Thereafter, subject to the terms of this Agreement, CNC will provide
during the Service Term, and Intuit will use, the CNC Services in the
continental United States and Canada so long as CNC is not in breach of this
Agreement. CNC will perform the CNC Services in accordance with the highest
professional and technical standards for services of this nature, and will
strictly comply with any related performance capabilities, accuracy,
completeness, characteristics, specifications, configurations, standards and
requirements set forth in this Agreement. However, notwithstanding anything to
the contrary in this Agreement, Intuit shall have the right to determine which,
if any, Internet Services to include with each of its Products.
2.4 Qualified Exclusivity. During the Service Term (except during
---------------------
any Transition Period), Intuit will offer any Intuit-branded Internet access
services to Customers in the continental United States and Canada using Internet
browsers integrated into the Products exclusively through CNC. However, the
foregoing exclusivity provision shall not apply to high band width access
services (such as interactive television, cable modem, ISDN, or other services
which operate at speeds greater than 28.8 Kbps). Furthermore, the foregoing
exclusivity provision shall not prevent or prohibit any of the following
activities, provided that Intuit does not provide an Integrated Browser in
conjunction with such activities: (a) Intuit from providing general access to
the Intuit Areas from, by or through the Internet or any other networks, content
areas, content providers, on-line services or access service providers (for the
purposes of this Section 2.4, collectively referred to as "Alternate Services")
(b) Intuit's customers from using any other Alternate Services in any manner
they choose, (c) Intuit from maintaining content areas on or through other
Alternate Services, (d) Intuit from providing links to the Intuit Areas from, by
or through other Alternate Services, or (e) Intuit from engaging in marketing or
promotional activities (including but not limited to joint product distribution)
with other Alternate Services. An Integrated Browser shall be defined as an
Internet browser which is both (a) distributed with an Intuit Product and (b)
integrated with such Product so that it is installed via the same installation
routine and can be launched from directly within such Product. Upon (i) the
termination or expiration of this Agreement or (ii) CNC's Net Working Capital
(as defined in the Stand-By Financing Agreement) falling below [*], the
foregoing exclusivity provision shall cease to be effective and in any event
shall not apply to any Transition Period during which Intuit uses CNC Services
pursuant to Section 6.4.
3. System Development and Tests.
----------------------------
3.1 System Development. In accordance with the Development Project
------------------
Work Statement attached hereto as Exhibit "B", the parties shall perform their
-----------
respective Development Project obligations (at their own cost) to develop,
implement, execute, integrate and test the software code (including the CNC
Code), hardware and software systems, procedures and installation to develop an
overall system to offer the Internet Services (collectively, the "System").
During the Term of this Agreement, CNC (i) warrants that the CNC Code shall meet
all its specifications to support Intuit's provision of the Internet Services,
(ii) will provide to Intuit at no
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
5
<PAGE>
charge unlimited telephone access to CNC's technical support staff to obtain
assistance relating to the CNC Code, and (iii) will develop and deliver to
Intuit at no charge any maintenance or feature releases, and related
documentation, to correct a programming error or other defect or to increase or
enhance the features or functionality of the CNC Code which CNC makes available
as a standard feature of its standard commercial release during the Term.
3.2 System Tests. Upon completion of the development phase, Intuit
------------
and CNC shall jointly test the System and CNC Network to ensure compliance with
the Network Specifications and the Performance Standards. The tests and related
acceptance procedures for the System and CNC Network are set forth in the
Development Project Work Statement.
4. Post-Development Provision of Services.
--------------------------------------
4.1 Introduction of Services. Once the development and testing of
------------------------
the CNC Services and the System is completed to Intuit's satisfaction, then
Intuit may announce the availability of the Internet Services in connection with
the release of one or more of the Products in a manner that Intuit shall
determine. If Intuit elects to offer the availability of the Internet Services,
the date that Intuit sets for the release of its first Product offering the
Internet Services shall be the "Release Date," which the parties acknowledge is
October 26, 1995. For an initial period of three years from and after the
Release Date plus the length of any Transition Period pursuant to Section 6.4
(together, the "Service Term"), CNC shall provide the CNC Services and Intuit
shall pay for the CNC Services in accordance with this Agreement. Thereafter,
the Service Term may be extended at the option of Intuit in successive one-year
periods up to a maximum of three additional years, provided that Intuit notifies
CNC in writing of Intuit's election to extend this Agreement at least 120 days
prior to the expiration of the Service Term then in effect. Each twelve month
period during the Service Term commencing on the Release Date, or its
anniversary, shall be known as a "Contract Year," i.e., First Contract Year,
----
Second Contract Year, etc.
---
4.2 Ongoing Operations and Customer Support. With respect to
---------------------------------------
Internet Services offered by Intuit, CNC shall perform the following obligations
during the Service Term:
4.2.1 Customer Logon, Registration and Upgrades. CNC shall logon,
-----------------------------------------
register and upgrade Customers in accordance with the procedures set forth in
Exhibit "C" attached hereto or as the parties may otherwise agree. CNC shall
- -----------
collect and maintain Customer Information in a form available for electronic
access by Intuit and as Intuit may from time to time direct. CNC shall
periodically provide to Intuit Customer Information collected by CNC in a scope
and format reasonably requested by Intuit.
4.2.2 Customer Information. Notwithstanding anything to the
--------------------
contrary in this Agreement, Intuit shall be the sole owner of all Customer
Information, including any and all associated intellectual property rights. CNC
acknowledges that (i) the Customer Information is a "trade secret" under the
Uniform Trade Secrets Act of California, (ii) Intuit has maintained and intends
to maintain the Customer Information as proprietary and confidential
information, and (iii) the unauthorized use, loss or disclosure of such Customer
Information will cause irreparable harm to Intuit. Therefore, notwithstanding
anything to the contrary in this Agreement, during and after the Term hereof,
CNC shall (i) use and copy the Customer Information only for purposes reasonably
related to and as permitted by this Agreement, and not, directly or indirectly,
use the Customer Information for its benefit or the benefit of anyone else, or
in any way against Intuit's interest, and (ii) diligently safeguard the Customer
Information and shall not permit or authorize the disclosure of any of the
Customer Information to any third person or entity, either directly or
indirectly, without Intuit's prior written authorization. Notwithstanding the
above, CNC shall have the right to maintain and use general network usage
statistics including the usage by the Intuit Customers, provided that
6
<PAGE>
such aggregated data does not contain information on individual Customers. CNC
shall return or destroy (and provide a written officer's certificate to such
effect) any Customer Information, and all copies thereof, in any form upon
Intuit's request and, in any event, upon the termination or expiration of this
Agreement. CNC acknowledges that a breach of this section would cause
irreparable harm to Intuit, which would entitle Intuit to seek the relief
described in Section 5.1.3.
4.2.3 Customer Account Management. CNC shall use reasonable
---------------------------
efforts to make detailed usage and billing information available in electronic
format on line to each Customer and Intuit. CNC is responsible for verifying
all Customer credit and billings, and bears the risk of loss for any subsequent
credits given to Customers where such credits are caused by CNC's failure to
perform in accordance with this Agreement.
4.2.4 CNC Customer Support Center. CNC shall establish and
---------------------------
maintain, or cause to be established and maintained, facilities, equipment,
staffing and programming, collectively making up the "Customer Support Center,"
as necessary to collect and maintain the Customer Information, and provide
Internet Services and technical and account support to the Customers and Intuit.
In this regard, CNC shall do each of the following:
4.2.4.1 Plan for, provide, maintain, operate, and manage the
Customer Support Center, including space, equipment, utilities, personnel and
systems. The Customer Support Center shall include a telephonic help desk for
Customers, which will be staffed by knowledgeable CNC employees and/or
subcontractors capable of providing assistance relating to Access and use of the
Internet Services. Such telephone assistance shall be available to Customers on
a continuous basis, twenty-four (24) hours per day, seven (7) days per week.
4.2.4.2 Plan for, acquire, install, maintain, repair, operate,
manage, and expand, improve, or replace hardware as necessary or appropriate to
support and operate the Customer Support Center, including any computer systems,
direct access storage devices, tape units, communications control units, and
associated equipment.
4.2.4.3 Plan for, obtain, install, maintain, operate, and enhance
the operating system software, languages, utilities, and other system software
as necessary or appropriate to support and operate the Customer Support Center.
4.2.4.4 Maintain the Customer Information, including related
Customer Information structures; provide back-up measures, recovery procedures,
file maintenance and expansion, updating, tape storage, management, and control
of space utilization; and provide related data security and administration.
4.2.4.5 Establish and administer change controls, problem
resolution management, and provide planning, availability management,
performance reporting, implementation procedures, and other controls.
4.2.4.6 Notify Intuit reasonably in advance of making any
material changes to the Customer Support Center or CNC Network.
4.2.4.7 Meet as requested with Intuit and evaluate the Customer
Support Center and related Customer technical support services with a view
toward enhancing them to meet the needs and demands of Customers.
4.2.5 CNC Network Performance, Maintenance and Upgrades.
-------------------------------------------------
7
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4.2.5.1 CNC Network Performance. During the Term, the CNC Network
-----------------------
shall perform at a level satisfying or exceeding the Performance Standards.
During the Service Term, upon request, CNC will meet with Intuit to review the
network performance. Subsequent to such a review, Intuit may request that CNC
(i) improve and enhance the CNC Services and operation of the CNC Network
(including increasing capacity and coverage by the addition of Ports and POPs)
in excess of the improvements and enhancements set forth in the Network Plan, or
(ii) develop and maintain the CNC Network so that it is at least comparable to
and competitive with the functions and features available from other Internet
access providers. If CNC declines to make improvements reasonably requested by
Intuit in a timely manner, Intuit may elect to terminate the Agreement as
provided in Section 6.1. Periodic reports on the CNC Network's operations and
performance shall be developed and provided to Intuit as it may reasonably
request, in addition to any other reports required by this Agreement.
4.2.5.2 General Network Maintenance. During the Service Term, CNC
---------------------------
shall do each of the following:
(a) Plan for, obtain, provide, operate, and maintain the CNC Network
facilities and hardware, whether at its central sites or at POPs, hubs or remote
nodal sites or central location sites, including ordering, installing and
maintaining owned or leased telecommunications lines, backbones, tail circuits,
dial-switched services and satellite services, modems, multiplexers,
concentrators, control computers, switching devices, and satellite transmitting
and receiving equipment.
(b) Develop and maintain Internet Protocol interfaces, and
configuration, and provide capacity planning, technology evaluation and
selection, communications tariff evaluation, topology planning, network control
planning and related software development, interface standards development,
protocol conversion and development of protocol converters.
(c) Operate and maintain the CNC Network on a twenty-four hour a day
seven days a week basis, including monitoring the network; provide necessary
repairs, network back-up, problem resolution, and testing; and provide for
recovery of the CNC Network and the physical security of the CNC Network and its
related operating facilities.
(d) Provide and maintain any interfaces between the Intuit Areas and
the Customers (provided that Intuit is responsible for the cost of any direct
phone lines between CNC and Intuit).
(e) Provide library and address maintenance, management, and
administration and such other resources as may be reasonably necessary or
appropriate for the development and maintenance of the database containing the
Customer Information.
4.2.5.3 Telephone Assistance Provided to Intuit. CNC shall maintain
---------------------------------------
a technical help desk for Intuit, which will be staffed by knowledgeable CNC
employees capable of providing technical assistance regarding the CNC Services,
CNC Network and Customer Information. Such telephone assistance shall be
available to Intuit on a continuous basis, twenty-four (24) hours per day, seven
(7) days per week. The help desk also will administer resolution of network
problems encountered by Intuit and the Customers and keep Intuit apprised of the
efforts to be taken to remedy such problems until complete restoration of
service.
4.2.5.4 Annual Service Plans. At least ninety days before the
--------------------
beginning of each Contract Year, Intuit shall prepare and deliver to CNC a non-
binding services
8
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forecast that identifies Intuit's estimated usage and demand requirements for
such period, including estimated capacity requirements and resource use in terms
(for example) of the estimated number of Customers and usage volumes, and
additional Customer Information that will be required by Intuit. CNC and Intuit
shall meet and confer for the purpose of refining the services forecast on a
basis that reasonably takes into account the Customers' expected needs and CNC's
existing and planned resources. CNC shall use its reasonable best efforts to
make available the resources at the level required to support Intuit's
forecasted annual services.
4.2.5.5 Priorities and Response Time. In the event of any
----------------------------
unscheduled downtime of the CNC Network or the System, or problems affecting
the functioning or productivity thereof or the provision of Internet Services or
the CNC Services, CNC shall provide installation and emergency maintenance and
repair service as determined in accordance with the following priority
classifications:
(a) Priority 1: Any problem that interrupts the continued
availability of the CNC Network or CNC Services to Intuit or the Customers, or
causes severe user disservice. In such event, CNC shall take immediate
corrective action regarding the problem, on a continuous basis, twenty-four
hours per day, seven days per week, until the problem is resolved.
(b) Priority 2: A critical problem involving any application or
system of the CNC Network that does not yet, but could if not corrected,
interrupt the continued availability of the CNC Services or cause severe user
disservice. CNC shall take immediate corrective action regarding the problem,
on a continuous basis during normal business hours (eight hours per day, five
days per week), until the problem is resolved.
(c) Priority 3: A problem that does not impair the availability of
the CNC Services or CNC Network significantly, because temporary procedures are
in place to provide acceptable alternative operation of functionality. CNC
shall schedule and work on the class of problem on a time-available basis.
4.2.5.6 Scheduled Downtime. CNC shall provide at least ten days
------------------
advance written notice to Intuit and affected Customers of any
scheduled downtime of the CNC Network or other events that may affect the
availability of the CNC Services. CNC shall schedule major upgrades, downtime,
repairs, or maintenance to the CNC Network during times mutually agreeable with
Intuit.
4.3 Charges for CNC Services.
------------------------
4.3.1 Quarterly Usage Forecasts. Each month, Intuit shall provide
-------------------------
CNC with a non-binding monthly usage forecast for the subsequent three calendar
months containing the information set forth in Exhibit "D" (e.g. in October,
----------- ----
Intuit would provide a usage forecast for each of November, December and
January). The forecasts will be based, in part, on the usage data made
available by CNC.
4.3.2 Service and Customer Charges.
----------------------------
4.3.2.1 Service Charges. The Service Charges are the fees
---------------
payable by Intuit to CNC for the CNC Services based on the Customers' connect
time. If Intuit systematically and fundamentally alters the way it offers and/or
prices Internet access to its Customers, the parties will negotiate in good
faith regarding appropriate adjustments to this Agreement. CNC and Intuit shall,
pursuant to the procedures in Exhibit "D", perform the Monthly Reconciliation to
-----------
determine the Service Charges payable by Intuit. Any delinquent payments by
9
<PAGE>
either party under this Agreement shall bear interest at the rate of 1.5% per
month commencing thirty days after such payment is due.
4.3.2.2 Most Favorable Treatment. During the Service Term but
------------------------
excluding the Transition Period, CNC warrants to Intuit on a continuing basis
that the rates and terms under this Agreement for the CNC Services shall not
exceed those offered by CNC to other CNC customers purchasing the same or fewer
quantities of connect hours for the same or similar services. If CNC offers to
any other similarly situated customer similar work, services, or products at
lesser rates or on more favorable terms, CNC shall immediately notify Intuit of
such circumstances and, thereafter, CNC shall charge Intuit such lesser service
charges and offer such more favorable terms for all remaining CNC Services under
this Agreement.
4.3.3 Customer Charges, Billing and Collection. The Customer
----------------------------------------
Charges are the fees payable by the Customers for the Internet Services provided
by Intuit. Intuit reserves the right, exercised in its sole discretion, to
charge and may charge the Customers additional fees (i.e., an amount greater
----
than the Service Charges) for their access to and use of the Internet Services.
The initial procedures for such charges are set forth in Exhibits "B" and "D"
---------------------
hereto. CNC assumes sole responsibility and risk for establishing credit
accounts, verifying and billing Customers' credit card accounts and billing and
initiating processing for all Customer Charges for the Internet Services as
described in Exhibits "B" and "D". Processing fees paid to third parties for
---------------------
the purpose of processing credit card, debit card or other payment transactions
shall be Intuit's responsibility.
4.3.4 Record Keeping and Audits. CNC shall maintain complete and
-------------------------
accurate books, records and accounts relating to the CNC Services and Internet
Services to support and document all charges, billings, mark-up amounts, and
credits, in accordance with standard accounting principles consistently applied
with respect to prior periods. Intuit's representatives, including any
independent auditor or accounting organization retained by Intuit, shall have
access to such books, records and accounts, upon reasonable notice to CNC, for
purposes of reviewing, verifying and copying such books, records and accounts.
Intuit shall have the right to demand such an audit up to two times in any given
12 month period. If such an audit discloses an under calculation in excess of
five percent (5%) of the amount payable to Intuit, then CNC shall bear the cost
of such examination, and shall promptly correct the calculation of amounts
payable and pay any underpaid amount, plus interest for delinquent payments as
set forth in Section 4.3.2.1 from the date such amount was due and payable.
4.3.5 No Other Payment, Etc. Except as otherwise expressly
---------------------
provided in this Agreement, neither party shall be entitled to payment, cost
reimbursement, or other compensation from the other party in respect of its
performance, and each party shall bear all its own expenses incurred in
rendering performance, including facilities, work space, utilities, management,
personnel, communications, clerical, supplies, and the like.
4.3.6 Taxes. CNC is responsible for promptly collecting and
-----
paying all federal, state, county, services or other taxes, however designated
and whether levied or based upon the CNC Services, exclusive however of taxes
based on Intuit's net income.
4.4 Customer Information and CNC Network Security. CNC shall develop
---------------------------------------------
and implement systems and procedures to maintain strict security of all Customer
Information (including credit card information). Guidelines on the security of
such information is set forth in Exhibit "E" attached hereto. Intuit's
-----------
representatives, upon reasonable advance notice to CNC, may conduct periodic
security audits of CNC's sites and the systems relating to the Internet Services
and CNC Services to determine whether the security mechanisms (physical,
processes, etc.) are sufficient to protect the applicable data.
---
10
<PAGE>
5. Related Covenants.
-----------------
5.1 Confidential Information.
------------------------
5.1.1 Confidential Nature. During the course of this relationship,
-------------------
the parties may disclose to the other certain confidential information orally,
in writing or through facility visits, which information may include, but is not
limited to, financial information or projections; lists of and information about
agents, vendors, suppliers, dealers, customers, potential customers, and
statistical and financial information associated therewith; specifications and
uses of products and services; product research; sales, marketing and strategic
plans; pricing policies; products and availability information; and information
otherwise defined as "trade secrets" under the Uniform Trade Secrets Act of
California (collectively, "Confidential Information"); provided, however, that
Confidential Information does not include information that can be documented as
being known within the industry prior to the Effective Date or information that
becomes publicly available thereafter through no breach of this Agreement by any
party hereto. The parties have maintained and will continue to maintain the
Confidential Information as their own private, proprietary and confidential
information and as their business trade secrets. Sometimes this information may
be stamped "Trade Secret," "Confidential," or with a similar designation, but
failure to do so will not in and of itself impair the classification of
information as Confidential Information.
5.1.2 Restrictions. The Confidential Information contains
------------
valuable business and technical information and constitutes trade secrets, and
the parties acknowledge that the unauthorized use, loss or disclosure of such
Confidential Information will cause irreparable harm to the owner of such
Confidential Information. The parties shall use the Confidential Information
only for purposes relative to and as permitted by this Agreement. During the
Term and for a period of two years thereafter, neither party shall directly or
indirectly use the Confidential Information for its benefit or the benefit of
anyone else, except as otherwise permitted in writing, or in any way against the
other party's interest. Each party shall diligently safeguard the Confidential
Information and shall not, during the Term and for a period of two years
thereafter, disclose, permit the disclosure of, or authorize the disclosure of
any of the Confidential Information to any third person or entity, either
directly or indirectly, unless prior written authorization is granted by the
owner thereof. The parties shall not make any copies of any of the Confidential
Information, except as reasonably required to perform its obligations under this
Agreement, and shall return any such Confidential Information including, without
limitation, all notes, memoranda, records, plans, sketches, or other documents,
and all copies thereof, embodying, regarding or derived from any Confidential
Information, upon oral or written request, and, in any event, upon the
termination or expiration of this Agreement.
5.1.3 Injunctive Relief. The parties acknowledge that a breach of
-----------------
this Section 5.1 would cause irreparable harm to an owning or injured party,
which would not have an adequate remedy at law with respect to disclosure or
threatened disclosure of the Confidential Information. Therefore, in the event
of a breach or threatened breach of the obligations contained in this Section
5.1, either party is entitled to seek the immediate issuance, without notice,
hearing, or bond, of a temporary restraining order precluding the continuance of
the conduct in question and may pursue other injunctive relief.
5.2 Publicity. CNC shall not issue press releases, conduct
---------
promotional efforts or engage in any other publicity of any nature regarding
this Agreement or CNC's relationship with Intuit or disclose any of the terms of
this Agreement without the prior written approval of Intuit, except to the
extent required for regulatory or statutory public reporting purposes.
11
<PAGE>
5.3 Relationship of Parties. The parties acknowledge and
-----------------------
agree that each party has entered into this Agreement as an independent
contractor. Nothing in this Agreement shall be construed as creating any other
relationship between the parties including, but not limited to, any partnership
or joint venture between Intuit and CNC.
5.4 Grant of License. Concurrent with the execution and
----------------
delivery of this Agreement, Intuit and CNC shall execute and deliver a License
Agreement substantially in the form of Exhibit "F" attached hereto (the "License
-----------
Agreement").
5.5 Future Network Services. CNC acknowledges and agrees that
-----------------------
implementation of the CNC Services as contemplated in this Agreement will
require a significant percentage of CNC's available resources. CNC therefore
agrees that from the Effective Date until February 28, 1996, CNC shall not
provide, or enter into any material agreement to provide, telecommunications or
access services to any other companies or engage in any public financing
activities without Intuit's express written consent exercised in its sole
discretion, not to be unreasonably withheld, based on Intuit's evaluation of the
effect of such services or activities on CNC's ability to perform its
obligations under this Agreement. Intuit shall indicate its consent or lack
thereof within five working days of being provided with sufficient information
to make an informed judgment.
5.6 Branding of Services. The Internet Services offered by
--------------------
Intuit, directly or indirectly, shall be branded according to Intuit's
directions, i.e., screen logos, written or electronic communications with
----
Customers, customer service phone announcements, etc.; provided, however, that
----
the welcome pages in the registration process shall provide an attribution that
the network connection services are being provided by and are the responsibility
of CNC. CNC's reproduction or use of any Intuit copyrighted materials,
trademarks or service marks shall be strictly in accordance with the guidelines
provided by Intuit from time to time. CNC hereby acknowledges receipt of
Intuit's current copyright and trademark guidelines. CNC's use of Intuit's
proprietary rights is limited solely in relation to its provision of the CNC
Services pursuant to this Agreement.
5.7 Compliance With Laws and Regulations. Each party shall,
------------------------------------
at its own expense, comply with any governmental law, statute, ordinance,
administrative order, rule, or regulation relating to its duties, obligations,
and performance under this Agreement and shall procure all governmental licenses
and pay all fees and other charges required thereby.
5.8 Appointment of CNC as Billing and Collections Agent. Intuit
---------------------------------------------------
hereby appoints CNC as its agent to bill and collect amounts pursuant to the
procedures set forth in this Agreement owing to Intuit from Customers who have
registered to receive Internet Services; provided, however, that such billings,
receivables and amounts shall be the sole property of Intuit. Intuit may
terminate this appointment and make other arrangements for Customer billing and
collections in its sole discretion.
5.9 Project Manager and Project Technical Coordinators. Each
--------------------------------------------------
party shall designate an initial Project Manager and Project Technical
Coordinator within ten (10) business days of the Effective Date (and such other
managers and coordinators as may be reasonably required), with such changes as
either Party may notify to the other from time to time.
5.10 Financial Information. During the Term, CNC shall provide
---------------------
to Intuit the financial reports and information described in Section 5 of that
certain Warrant Issuance Agreement for Warrants to Purchase Series B Preferred
Stock between the parties hereto.
6. Term and Termination.
--------------------
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6.1 Termination on Notice for Intuit Dissatisfaction. If, in
------------------------------------------------
Intuit's judgment, CNC's performance is not satisfactory for any reason
(including but not limited to network access and reliability, features and
capabilities, host operations, customer satisfaction, programming support,
management strength and financial condition) at any time, Intuit may terminate
this Agreement by providing six month written notice of such intention to
terminate.
6.2 Immediate Termination by Intuit for CNC Failure to Meet
--------------------------------------------------------
Minimum Performance Standards. If, in any given month, CNC fails to meet the
- -----------------------------
Minimum Performance Standards for any performance measurement, then Intuit may
terminate this Agreement by providing written notice of such intention to
terminate. Upon receipt of such notice, CNC may immediately provide Intuit with
a detailed corrective action plan and timetable to correct the default and
request a period of 30 days in which to cure the default. Unless Intuit
reasonably believes that CNC cannot or will not promptly and permanently correct
the deficiency and restore the CNC Services, then Intuit will delay the
termination of the Agreement during such 30-day period. If, however, CNC fails
to correct such deficiency during such 30-day period or Intuit subsequently
determines during such period that CNC's proposed corrective action plan will
not be completed within such 30 day period, then Intuit may immediately
terminate the Agreement on further written notice to CNC.
6.3 Mutual Termination Rights Upon Default and Breach.
-------------------------------------------------
6.3.1 Upon the occurrence of any of the following events of
default, after giving written notice to the defaulting party and following the
completion of the cure period set forth in Section 6.3.2, the non-defaulting
party may declare the other party to be in breach of this Agreement and may
immediately terminate this Agreement:
6.3.1.1 the failure of either party substantially
to perform or comply with any material provision of this Agreement;
6.3.1.2 the admission in writing by either party
of its inability to pay its debts as they mature, or the making by either party
of an assignment for the benefit of its creditors;
6.3.1.3 the party becomes insolvent as evidenced
by the fact that the party is generally not paying its debts as they become due
(unless such debts are the subject of a bona fide dispute) and/or the sum of
such party's debts is greater than all of such party's property valued at fair
market value;
6.3.1.4 the filing of a petition under any
bankruptcy act, receivership statute or like law or statute as they now exist or
may be subsequently amended by either party, or the filing of such a petition by
any third party against either party, or the making of an application for a
receiver by either party, where such petition or application is not dismissed or
otherwise favorably resolved within sixty days; or
6.3.1.5 in addition to the foregoing, with respect
to CNC, the breach by CNC or any of its majority shareholders of their
respective obligations under the Commitment Agreements if such breach is not
cured within the applicable cure period contained in the Commitment Agreements.
6.3.2 Upon receipt of a notice of default, the defaulting
party will have a period of thirty days in which to cure the default. If the
non-defaulting party does not believe that the default has been cured during the
foregoing cure period, then the non-defaulting party may
13
<PAGE>
terminate this Agreement immediately upon written notice to the defaulting
party. If a defaulting party repeatedly defaults under this Agreement (as
evidence by the issuance of a notice of default by the other party two or more
times in a twelve month period), then the non-defaulting party may elect to
terminate this Agreement on thirty days advance written notice without the
defaulting party having a right to cure. During any notice and cure period,
both parties shall continue to be bound by all the terms and conditions of this
Agreement.
6.3.3 The rights and remedies of the non-defaulting party
are not exclusive and are in addition to any other rights and remedies it may
have available under law or equity. Notwithstanding anything to the contrary
contained herein, the rights and obligations of the parties pursuant to Sections
1, 2.3, 4.2.2, 4.3, 4.4, 5.1, 5.2, 5.4, 5.6, 6.4, 7.3, 7.4, 7.5, 7.6 and 8 will
survive any termination or expiration of this Agreement.
6.4 Transition Period. Notwithstanding the expiration or
-----------------
termination of this Agreement for any reason, at its election, Intuit may
request, and CNC shall continue to provide, the CNC Services on a non-exclusive
basis for a period of up to one year beyond such expiration or termination on
the terms and conditions in effect at that such time (the "Transition Period").
In the event of a termination or expiration of this Agreement, CNC shall
cooperate in planning and executing with Intuit (each party to bear its own
costs) a transition plan for the transfer of the Internet access services from
CNC to Intuit or Intuit's designee, and Intuit shall be entitled to use such CNC
Confidential Information as may be necessary to effect such transition. Each
party shall take any actions or deliver any documents reasonably requested by
the other party to effect the expiration or termination of this Agreement, and
the transfer of access services.
6.5 Force Majeure Extension.
-----------------------
6.5.1 Definitions. For the purposes of this Section 6.5, the
-----------
following definitions shall apply:
6.5.1.1 A "Force Majeure Event" shall be a delay by CNC
in its performance of, or a failure by CNC to perform pursuant to, this
Agreement where such delay or failure is caused by an act of God, acts of civil
or military authority, fire, flood, strikes, war, epidemics or some other
unforeseeable cause beyond CNC's reasonable control and without its fault or
negligence that adversely affects the availability of services by all
telecommunications and/or Internet access services providers like CNC, such as a
major malfunction of a public telecommunications network in the Northeastern
region of the United States.
6.5.1.2 A "Termination Event" shall mean a circumstance
in which Intuit has given notice of default to CNC pursuant to Section 6.2 or
Section 6.3.1.1 because of CNC's failure to provide the CNC Services in
accordance with this Agreement.
6.5.2 Extension of Cure Period. If the primary cause of the
-------------------------
Termination Event is a Force Majeure Event, then Intuit agrees to provide CNC
with an overall cure period of sixty days from the date of Intuit's notice of
default or termination (the "Extended Cure Period") subject to CNC's
satisfaction of the following conditions: (1) CNC shall immediately notify
Intuit of any circumstances which result (or may result) in a Force Majeure
Event (in advance when the situation permits), (2) CNC shall (i) immediately
develop and implement a corrective action plan designed to promptly reestablish
the CNC and Internet Services to Intuit and the Customers, and (ii) use its best
efforts to avoid, mitigate or remove such circumstances and to reestablish the
CNC and Internet Services at its expense by providing alternate access services
to Intuit and its Customers, e.g., the establishment of toll free 800# service,
----
(3) CNC shall provide detailed updates upon request to Intuit of CNC's progress
in executing the corrective action plan and restoring the
14
<PAGE>
CNC and Internet Services, and (4) CNC shall immediately continue its
performance in accordance with this Agreement whenever such conditions are
removed.
6.5.3 Consequences of Continuing Default. Notwithstanding the
----------------------------------
provisions of Section 6.5.2, Intuit may immediately terminate this Agreement in
accordance with the original time periods and procedures set forth in Section
6.2 or 6.3.1.1, as applicable, if (1) CNC fails to cure any breach or default
within the Extended Cure Period, or (2) CNC otherwise breaches the conditions
for Intuit's grant of the Extended Cure Period, such as where CNC fails to use
its best efforts to reestablish services to Intuit and its Customers in the case
of a Force Majeure Event.
7. Representations, Warranties and Indemnities.
-------------------------------------------
7.1 No Conflicts. Each party hereto represents and warrants to the
------------
other that the execution, delivery, and performance of this Agreement by such
party will not conflict with or result in any breach of, or constitute a default
under, any material agreement, instrument or undertaking to which it is a party
or by which any of its property is bound.
7.2 Authority. Each party hereto represents and warrants to the
---------
other that it has the power to make and carry out the terms of this Agreement
and each has taken, and will take, all actions, corporate or otherwise,
necessary or advisable to authorize the execution, delivery and performance of,
and to perform, its respective obligations under this Agreement.
7.3 No Infringement. CNC represents and warrants on a continuing
---------------
basis that neither the CNC Code, nor the exercise by Intuit of any of the rights
granted under this Agreement, will infringe any intellectual property right of
any third party and that there is no litigation or claim pending or, to CNC's
knowledge, threatened relating thereto. CNC shall and hereby does indemnify and
defend Intuit and hold it harmless from and against any and all claims,
liabilities, losses, costs and expenses including, but not limited to,
reasonable attorneys' fees and costs of suit, incurred by Intuit as a result of
or arising from any claim or proceeding made or brought against Intuit that the
use, reproduction, marketing, sale, sublicensing or distribution of CNC Code or
use of the CNC Services, infringes any patent, copyright or other rights of any
third party, or that the CNC Code or CNC Services are defective. This indemnity
shall not apply to the extent such claims result from Intuit's own modification
or alteration of the CNC Code. Intuit shall promptly notify CNC of any such
claim(s) and shall, at CNC's request and expense, cooperate in the investigation
and defense of such claim(s).
7.4 Indemnification by Intuit. Intuit shall and hereby does
-------------------------
indemnify and hold harmless CNC and its officers, directors, stockholders,
employees and any other agents from any claim, demand, liability, cost or
expense they may incur to any third party relating in any manner to the use of
the CNC Network by Intuit or its Customers (except to the extent such claims or
demands result from CNC's negligence, gross negligence or willful misconduct or
are otherwise indemnifiable by CNC pursuant to this Agreement). CNC agrees to
give Intuit prompt notice of any claim or demand to which it becomes aware as to
which this Section may apply and to cooperate with Intuit in the defense of such
claim or demand.
7.5 Indemnification by CNC. CNC shall and hereby does indemnify and
----------------------
hold harmless Intuit and its officers, directors, stockholders, employees and
any other agents from any claim, demand, liability, cost or expense they may
incur to any third party relating in any manner to the use, operation or
malfunction of the CNC Network by CNC or customers of CNC (except to the extent
such claims or demands result from Intuit's negligence, gross negligence or
willful misconduct or are otherwise indemnifiable by Intuit pursuant to Section
7.4 of this Agreement). Intuit agrees to give CNC prompt notice of any claim or
demand to which it becomes aware as to
15
<PAGE>
which this Section may apply and to cooperate with CNC in the defense of such
claim or demand. During the Service Term, CNC shall use commercially reasonable
efforts to obtain, maintain and provide a reasonable amount of insurance against
claims covered by this indemnification provision naming Intuit as an additional
named insured and, if obtained, provide evidence of the same to Intuit.
7.6 Limitation of Liability. EXCEPT PURSUANT TO THEIR RESPECTIVE
-----------------------
INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTIONS 7.3, 7.4 AND 7.5 ABOVE,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR INCIDENTAL, CONSEQUENTIAL,
INDIRECT, OR SPECIAL DAMAGES OF THE OTHER PARTY ARISING OUT OF THIS AGREEMENT.
8. Miscellaneous.
-------------
8.1 Notices. Except as otherwise specified herein, all notices,
-------
requests, demands or communications required hereunder shall be in writing and
delivered personally, or sent either by the equivalent of U.S. certified mail,
postage prepaid return receipt requested or by overnight delivery air courier
(e.g., Federal Express), or sent by facsimile (if such facsimile notice is
- -----
followed immediately by a letter delivered personally or by overnight delivery
air courier), to the parties at their respective addresses set forth on the
signature page hereto. All notices, requests, demands, or communications shall
be deemed effective immediately upon the earlier of personal delivery or
confirmed facsimile transmission, three days following deposit in the mails as
set forth above, or one day following delivery to the overnight delivery air
courier in accordance with this Section. The parties may change their
respective points of contact, or addresses or phone or facsimile numbers for
notification from time to time on five days advance written notice pursuant to
the procedures set forth in this section.
8.2 Entire Agreement. This Agreement will not be effective unless
----------------
and until the parties have fully executed and delivered this Agreement. This
Agreement may be executed by the parties in separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterprats
shall together constitute one and the same instrument. This Agreement
constitutes the entire understanding between the parties with respect to the
provision of the CNC Services contemplated herein and supersedes all prior
agreements, written or oral, between the parties hereto with respect thereto.
The provisions of the exhibits to this Agreement are supplementary to the body
of the Agreement and shall be interpreted in such a manner; provided, however,
that in the event of an irreconcilable conflict arising between the provisions
of the exhibits and the body of this Agreement, the exhibits shall prevail.
This Agreement shall not be modified except in a writing signed by and exchanged
between both of the parties and expressly referencing this Agreement. Any
additional or different terms in the parties communications, whether
acknowledgments, invoices or otherwise, are hereby deemed to be material
alterations and notice of objection to them and rejection of them is hereby
given. No waiver of any provision of the Agreement or any right or obligations
of either party hereunder shall be effective, except pursuant to a writing
signed and delivered by the party waiving compliance. Any such written waiver
shall not be construed as, or constitute, a continuing waiver of such breach, or
of other breaches of the same or other provisions of this Agreement. Neither
party shall by mere lapse of time without giving notice or taking other action
hereunder be deemed to have waived any breach by the other party of any of the
provisions of this Agreement.
8.3 California Law. This Agreement shall be governed by and
--------------
construed in accordance with the substantive laws of the State of California
(not including its choice of law provisions).
16
<PAGE>
8.4 No Assignment. Neither party shall assign its rights or delegate
-------------
its obligations under this Agreement without the prior written consent of the
other party hereto; provided, however, that Intuit may assign this Agreement, in
whole or in part, to any subsidiary or affiliate. This Agreement shall be
binding on all successors and permitted assigns of the parties.
8.5 Severability. If any provisions of this Agreement shall be held
------------
by a court, arbitrator or other tribunal of competent jurisdiction to be invalid
or unenforceable, such provisions shall be deemed valid and enforced to the
maximum extent permissible and the remaining portions of this Agreement shall
remain in full force and effect.
8.6 No Third Party Beneficiaries. Except for permitted assigns, this
----------------------------
Agreement does not create, and shall not be construed as creating, any rights
enforceable by any person or entity not a party to this Agreement; provided,
however, that any subsidiary or affiliate of Intuit may use the CNC Services or
offer Internet Services using the CNC Network on the terms and conditions set
forth in this Agreement.
8.7 Construction. The parties acknowledge and agree that the terms
------------
hereof reflect extensive negotiations between the parties and that this
Agreement shall not be deemed, for the purpose of construction and
interpretation, that either party drafted this Agreement. Each party is
responsible for paying its own legal and professional fees and costs with
respect to the negotiations, execution and performance of the Agreement. The
headings used in this Agreement are for convenience only and shall not be
considered in its interpretation.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the Execution Date and agree that is shall be effective as of the Effective
Date and it shall be deemed accepted and made in San Diego, California.
Execution Date: December 11, 1995
INTUIT INC. CONCENTRIC NETWORK CORPORATION
By: /s/ William Harris By: /s/ Henry Nothhaft
------------------------------ ---------------------------------
William Harris, Executive Vice Henry Nothhaft, President and CEO
President
Address: 6256 Greenwich Drive Address: 10590 N. Tantau Avenue
San Diego, CA 92122 Cupertino, CA 95014
17
<PAGE>
<TABLE>
<CAPTION>
LIST OF EXHIBITS
- ----------------
<S> <C>
A - CNC Network
B - Development Project Work Statement
C - CNC Network Operations and Customer Service
D - Service and Customer Charges
E - Security Guidelines
F - License Agreement
</TABLE>
18
<PAGE>
EXHIBIT "A"
-----------
CNC NETWORK
A. Current CNC Network Structure: The general description of the CNC
-----------------------------
Network is depicted in Attachment A-1 hereto and in that certain CNC Private
Placement Memorandum dated November 3, 1995 (the "PPM"). Additionally, an
identification of certain material equipments and systems comprising the CNC
Network are identified in that certain Master Lease between CNC and Racal-
Datacom, Inc., dated August 4th, 1994. For the purposes of this Agreement, the
CNC Network shall be deemed to be the end-to-end communications and related
information systems (a) beginning at either the local number of a POP, or the
local exchange number in the case of someone using a Non-POP Access, and (B)
ending at the Intuit Systems or Intuit Areas.
B. Points of Presence. A list of the current POPs (and their associated
------------------
Ports) operated by CNC in the continental United States and Canada is set forth
in the PPM and in Attachment A-1 hereto, which information shall be updated and
--------------
provided to Intuit as it changes. Further, pursuant to the terms of this
Agreement, CNC shall do each of the following:
1 Increase the number of Ports in the CNC Network in the
continental United States to at least [*] Ports by January 1, 1996; provided,
that CNC shall use all commercially reasonable efforts to increase the number of
such Ports to at least [*] by January 1, 1996.
2 Expand, improve and maintain on an ongoing basis the CNC
Network to cover the top 150 metropolitan areas in the continental United States
(determined by personal computer ownership statistics developed and published by
International Data Corporation (IDC) from time to time) and, within each such
metropolitan area, provide "local access" (i.e., without message unit charges)
----
for at least 92% of the general population. CNC has used commercially
reasonable efforts to accomplish the foregoing expansion by the Execution Date
of the Agreement and, within ten days of the Execution Date, shall accomplish
the foregoing expansion of coverage. In the United States, a "metropolitan
area" shall mean the metropolitan/geographic regions used by IDC in publishing
its statistics.
3 Provide local access to the CNC Network for the Intuit Customers
in the seven largest Canadian metropolitan areas (as measured by population) by
November 1, 1995; provided, that CNC shall use all commercially reasonable
efforts to provide such local access to such Canadian metropolitan areas by
October 1, 1995. In Canada, a "metropolitan area" shall mean the geographic
areas as mutually agreed between the parties or, in the absence of an agreement,
based on Canadian government census areas.
4 Cause the CNC Network to consistently support modem speeds up to
28,800 bps, and to be enhanced to be competitive with industry standards that
develop over time and that reflect the modem speeds used by Intuit's Customers.
Notes:
(1) Local access commitments made by CNC above may be provided either
via the installation of a physical POP or by use of a Virtual Local Access
("VLA") arrangement, at CNC's option. A VLA is defined as the provision of
local dial access for a customer to gain local access to the CNC Network via a
local phone number that is call forwarded to a modem facility that is centrally
located. The total number of modems (ports) at the central facility shall be
sized to support the aggregate of all VLAs being supported (i.e., as if each VLA
----
is a POP).
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
19
<PAGE>
(2) In calculating the number of Ports serving an area, the parties
shall take into account any "Port equivalents" offered by a VLA arrangement,
i.e., CNC may have fewer physical Ports in a VLA arrangement then it would
- ----
otherwise require if it deployed physical POPs to serve VLA territories. (For
example: 50 POPs with 10 Ports each may be sufficiently served by a single
central VLA termination point of 250 Ports.)
C. Performance Standards.
---------------------
1 General Concept. CNC acknowledges that Intuit requires access
---------------
for its Customers to the Intuit Areas and Internet that is reliable and rapid,
has the ability to handle peak demands, is flexible in terms of future expansion
for geographic coverage, functional enhancements and capacity increases, and can
rapidly and accurately handle all registration, billing and customer service.
The parties have established the Performance Standards set forth in this
Agreement as a benchmark for initial operations, but CNC acknowledges and agrees
that such standards may increase in the future as customer expectations heighten
and the Internet access/services industry develops. Therefore, during the Term,
the parties shall cooperate and act in good faith in evaluating, developing and
agreeing on such changes in the Performance Standards.
2 Performance Standards.
---------------------
a. Network Accessibility Performance Standard. The CNC Network
------------------------------------------
will exhibit an average busy rate below the following Performance Standard for
Intuit Customers attempting to access the CNC Network:
Target Performance Standard: [*]%
Minimum Performance Standard: [*]%
Comments:
--------
(1) The busy rate at each POP will be determined statistically by
comparing (A) the average hourly traffic load for each of CNC's
three busiest hours during a month to (B) the POP's traffic
capacity at [*] grade-of-service using standard Erlang B traffic
statistics for the number of active Ports at the POP. The average
of this data will yield that POP's average busy rate for the
month. By way of example, assume the average hourly traffic load
for the 3 busiest hours for the San Francisco POP (with an average
of 72 ports ) during June 1995 was 61.0, 58.0, and 53.5 Erlangs (#
of hours of traffic through that POP per hour), resulting in an
average of 57.5 Erlangs over the three busiest hours of the month.
Using the standard Erlang B tables, a 72 port hunt-group
supporting 57.5 Erlangs of traffic extrapolates to 0.97% which
produces a P.01 grade of service, i.e., the POP's average busy
----
rate for the month. (sample Erlang B tables are attached hereto
as Attachment A-2.)
--------------
(2) Then, the weighted average busy rate for the CNC Network will be
computed across all POPs. The weighted average will be calculated
based on the number of Ports at each POP. By way of example,
assume the CNC Network only had 5 POPs with the following number
of ports and average monthly busy rates as calculated in 2a(1):
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
20
<PAGE>
<TABLE>
<CAPTION>
POP Ports Avg Busy
- ----- ----- --------
<S> <C> <C>
1 24 .035
2 36 .015
3 48 .025
4 10 .005
5 72 .010
</TABLE>
The weighted average busy rate for this 190 port network as a
whole is .01763 (or 1.763%).
(3) The weighted average busy rate calculated above will yield a
number which will be compared to the applicable Performance
Standard to determine whether or not CNC has met its Network
Accessability performance goal for the month. By way of example,
comparing the weighted average busy rate of P=.01763 to the Target
Performance Standard of [*] reflects that CNC has performed better
than targeted on this performance metric for the month of June.
b. Network Processing Capacity Performance Standards (Latency).
-----------------------------------------------------------
At peak periods of the day, the CNC Network latency shall meet the following
Performance Standards as measured on a monthly basis:
Target Performance Standard: [*] milliseconds .
Minimum Performance Standard: [*] milliseconds.
Comments:
--------
(1) CNC will test the CNC Network for latency at least 3 days per
week during the three busiest hours of the day as determined either a) by the
prior month's three busiest hours EST (e.g., 10, 11, 12 PM EST) of the CNC
----
Network in general, or b) by the three busiest hours of use by Intuit
subscribers) if CNC can calculate the Intuit-specific busy hours. Each day's
test will include a series of 10 or more ICMP "Ping" tests containing 50 bytes
of payload from a CNC host in either Bay City, MI or Cupertino, CA to a router
in each of at least 50 of CNC's U.S. POP sites. The average round-trip
latency of each sampled POP (minimum of 10 samples per POP per test) will be
computed. Once a month, the average, 95th, and 90th percentile of all sampled
POP's average latencies will be computed and compared against the Performance
Standards.
(2) By way of example, assume the network only had 5 POP sites. A
sample of 10 Ping tests are run at 11PM EST on September 15th from Bay City to
each of these 5 POPS with the following results:
<TABLE>
<CAPTION>
POP Ping Samples (in milliseconds) Average
- ----- --------------------------------------- -------
<S> <C> <C>
1 100 120 150 200 275 150 120 120 100 090 142.5
2 085 095 100 120 110 175 300 100 090 105 128.0
3 110 145 090 100 095 080 095 100 110 105 103.0
4 200 220 250 190 275 245 255 280 200 275 239.0
5 100 090 095 105 095 100 105 100 110 105 100.5
-----
</TABLE>
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
<TABLE>
<S> <C> <C>
Overall Average 142.6
</TABLE>
Assume a similar test was conducted on 15 other days during the month
yielding a total of 80 sample averages. At the end of the month, the
average (A) and standard deviation (SD) of the 80 data samples would
be computed. Using elementary statistics, the 95th percentile can be
computed as "A / (1.65 x SD)", and the 90th percentile would equal "A
/ (1.25 x SD)".
c. Customer Service/Support Performance Standards. Within ten
----------------------------------------------
days of its receipt of CNC's monthly usage reports, Intuit will develop and
provide to CNC a non-binding forecast of anticipated customer service volumes
(i.e., number of calls) for the following month. So long as actual call volumes
- -----
are not more than [*] greater than Intuit's forecasted call volumes, the
following Performance Standards shall apply.
(1) Occurrence of Busy Signals on Customer Calls
--------------------------------------------
Service calls by the Customers to the CNC service center (or its
chosen outsourcer) shall experience a busy signal no more often than
the following Performance Standards:
Target Performance Standard: [*] of the total calls received.
Minimum Performance Standard: [*] of the total calls received.
Comments:
--------
(a) The busy rate will be determined by a) actual busies as
reported by the PBX delivering calls to the Intuit hunt group at CNC,
or b) by a statistical estimate of busies based on traffic volume
delivered to Intuit trunk group on a weighted average basis across the
month's two busiest hours of each day (i.e., approximately 60 samples
----
per month).
(b) CNC shall advise Intuit of its automatic call dispatch (ACD)
system's ability to produce this information in the format
required for analysis, provided that CNC will provide any
additional analysis not performed by the ACD.
(2) Average Speed of Answer (ASA)
-----------------------------
Service calls to the CNC service center (or its outsourcer) shall,
once answered by CNC's ACD system, experience an ASA no longer than
the following Performance Standards:
Target Performance Standard: within [*] minutes
Minimum Performance Standard: within [*] minutes
Comments:
--------
(a) First, the ASA will be computed for Intuit's trunks on a
daily basis. Then, the ASA for each month will be computed as the
weighted
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
22
<PAGE>
average of the daily ASAs where the weighted average of the daily ASAs
is the total number of calls offered each day compared to the total
number of calls for the month. By way of example, assume the
following statistics for a given month:
<TABLE>
<CAPTION>
Day Calls Offered ASA Calls Offered x ASA
- ---- ------------- --- -------------------
<S> <C> <C> <C>
1 100 1.25 mins 125.0 call-mins
2 120 2.12 mins 254.4
3 150 1.97 mins 295.5
"
"
"
30 220 1.75 mins 385.0
--- -----
590 calls 1,059.9 call-mins/590 calls = 1.80 min ASA
------------
</TABLE>
If this data represented all 30 days, then the ASA for the month
would be 1.8 minutes which would be compared against the [*] Target
Performance Standard.
(3) Customer Satisfaction Ratings
-----------------------------
Customers shall report a satisfaction with CNC's customer
service (provided directly or indirectly) meeting or exceeding
the following Performance Standards:
Target Performance Standard: [*] on a scale of [*], or the
standard set for either internal or external call centers supporting this
service.
Minimum Performance Standard: [*] on a scale of [*], or the
standard set for either internal or external call centers supporting this
service.
Comments:
--------
(a) Intuit and CNC shall jointly develop and agree on a
customer satisfaction survey and survey methodology, and
update it as required during the Term of the Agreement
to reflect changes in customer expectations and the
market for Internet Services.
(b) The survey will be conducted periodically (but no less
often than monthly), as jointly agreed between CNC and
Intuit.
(c) Intuit will bear the cost of developing and
administering the survey. If Intuit fails to administer
the survey in any given month, CNC shall be assumed to
have satisfied the Target Performance Standard for that
month.
D. Corrective Action and Financial Penalties. If CNC fails to satisfy
-----------------------------------------
the Performance Standards set forth in Section C (above), then it shall take the
corrective actions and be subject to the financial penalties described below.
However, the corrective actions and financial penalties described in this
Exhibit "A" are in addition to, and not in limitation of, any other rights that
Intuit has
23
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
pursuant to the Agreement including, but not limited to its termination rights
pursuant to Section 6 of the Agreement.
1 Corrective Action. If CNC's actual performance in any given
-----------------
month falls below the Target Performance Standard for any of the aforementioned
performance standards, then CNC will use its best efforts to enhance and improve
the CNC Network and its operations so as to reasonably assure that the Target
Performance Standard will be met in the next following and subsequent months.
Such corrective action, by way of example and not of limitation, could include
CNC making available 800# access numbers to Customers who are experiencing
excessive busies when accessing local POPs or adding additional incoming lines
for Customers who are experiencing excessive busies on customer service calls.
2 Financial Penalty.
-----------------
a. Background. The parties acknowledge that problems will
----------
occur in the start-up of the CNC and Internet Services in projecting customer
requirements and in adjusting to differences in actual versus forecasted usage
levels. The assessment of immediate financial penalties to CNC may not serve
either party's best interests because of the potential adverse effect on the
ability of CNC to improve the CNC Services in the short term. Additionally, the
parties' desire to implement a mechanism to ensure that CNC is motivated to
devote the effort required to correct deficiencies in its actual versus targeted
performance, but not to inhibit a motivated CNC from achieving the Performance
Standards. Therefore, the parties will develop mutually satisfactory
forecasting, tracking, reporting and review mechanisms consistent with the
procedures set forth in Section b. below during the initial months of the
Agreement. By May 1, 1996, the parties shall also agree on a methodology to set
and assess financial penalties for CNC's failure to achieve the Performance
Standards. The structure to assess such financial penalties against CNC will
include the consideration of the following factors: (i) CNC's past and current
performance, (ii) the rate of progress CNC has/is making toward achievement of
the Target Performance Standards, (iii) the impact of missed targets on the
Customers and Intuit, (iv) the root causes of CNC's performance deficiencies,
and (v) the willingness, motivation and attitude of CNC in promptly remedying
any performance deficiencies.
b. Review Process.
--------------
(1) CNC and Intuit will conduct a joint Operations
Review of the CNC Network and CNC Services on a monthly basis during the first
six months of the First Contract Year (the "Implementation Phase") at a mutually
agreed location. At this Operations Review, CNC will present Intuit with the
status of the CNC Network, Performance Standards and Customer Service
performance for the prior month, a trend line showing the history of each
Performance Standard, an analysis of the root cause of any Performance Standard
that fell below the Target Performance Standard and an action plan for
correction of any such deficiency. These Operations Reviews are intended to be
a joint learning session whereby the parties can continuously improve the
quality of the overall CNC Services and Internet Services.
(2) Intuit may, at its option, request CNC to alter
its action plan for the correction of deficiencies if, in Intuit's judgment, the
proposed action plan is insufficient to correct the deficiency in a timely
manner.
(3) During the Implementation Phase, CNC and Intuit
shall cooperate and work diligently in performing their respective
responsibilities under the Agreement, including the correction of problems
causing CNC to fail to satisfy the Performance Standards and addressing
excessive or unacceptable levels of Customer complaints. If CNC does not
correct or,
24
<PAGE>
in Intuit's good faith judgment, make sufficient progress to correct such
performance deficiencies or resolve such customer complaints despite the
parties' cooperation, then Intuit may terminate the Agreement, in addition to
exercising any of its rights provided in the Agreement. In such event, CNC
agrees to assist Intuit in transitioning the CNC Services to Intuit or its
designee consistent with the transition procedures set forth in the Agreement.
During the first four months following the commencement of the Transition
Period, Intuit's payments to CNC for Service Charges shall be reduced to [*]
per hour for all Customers/Service Categories. If the transition is not
completed by Intuit within the first four months of the Transition Period, then
the Service Charges will revert to the levels specified in Exhibit D until the
transition is completed. If Intuit chooses to terminate the Agreement, then CNC
will promptly deliver to Intuit the source code for all Intuit registration
server software (except to the extent such source code is owned by third parties
and cannot be delivered by CNC, as may be the case with certain software
development tools) at no cost to Intuit and otherwise perform its obligations
set forth in the Agreement.
(4) By the end of the Implementation Phase, Intuit and
CNC will jointly agree to continue the Operations Reviews as outlined above, or
agree on some other mutually acceptable review and improvement process.
(5) By the end of the Implementation Phase, Intuit and
CNC will jointly agree on (i) a process for determining what and how financial
penalties will be assessed by Intuit against CNC for CNC's failure to achieve
the Performance Standards, and (ii) the amount of the penalty. Any financial
penalties assessed by Intuit against CNC will be made only after a penalty
review conference attended by senior managers of both CNC and Intuit and the
setting of such penalties shall give due consideration to the factors described
above. CNC will not be subject to financial penalties for failure to meet
Performance Standards in any month that the actual CNC Network usage or customer
service call volume relating to Intuit Customers exceeds Intuit's initial
forecast for such month by more than [*]. For example, if Intuit's December 1995
forecast for January, February and March estimates that March 1996 CNC Network
usage will be [*] hours and the actual CNC Network usage by the Customers is [*]
hours, then CNC will not be subject to financial penalties based on its failure
to achieve the applicable Performance Standards for March.
5. Significant Service Interruptions. In addition to its rights to
---------------------------------
terminate the Agreement pursuant to Section 6, Intuit may immediately give
notice of termination of the Agreement if either of the following Service
Interruptions occur, subject only to CNC's rights relating to a Force Majeure
Event pursuant to Section 6.5 (if applicable):
1 A "Network Availability Service Interruption" which shall mean a
service interruption whereby the CNC Network is available for less than ten
hours during any given 48 hour period to more than [*] of the Customers.
2 A "Customer Support Service Interruption" which shall mean a
service interruption whereby customer service or support is available for less
than ten hours during any given 96 hour period to more than [*] of the
Customers.
Attachments:
- -----------
A-1: Network Description (3 pages); List of current CNC POPs and related Ports
(5 pages)
A-2: Sample Erlang B Table (2 pages)
25
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT "B"
-----------
DEVELOPMENT PROJECT WORK STATEMENT
1. Project Coordination
--------------------
Project Managers:
----------------
Intuit: Jennifer Jones-Hall
CNC: John Peters
The Project Manager of each party shall be responsible for arranging all
meetings, visits and consultations between the parties that are of a non-
technical nature. They shall also be responsible for receiving all notices
under this Agreement and for all administrative matters such as invoicing
and payments. All amendments to the Agreement must be signed by an officer
of the respective party.
Technical Coordinators:
----------------------
Intuit: Kim MacPherson
CNC: Mike Sharmon
The Technical Coordinator of each party shall be responsible for technical
and system performance matters, and the transmission and receipt of
deliverables and technical information between the parties.
The designation of a party's Project Manager or Technical Coordinator may
be changed from time to time by written notice to the other party.
2. Project Description. The parties will perform the activities associated
-------------------
with hardware, software and systems development related to the actions generally
described and on the timetable set forth in "Production Schedules" developed by
Intuit based, in part, on supporting production schedules developed and provided
to Intuit by CNC, an example of which is attached hereto as Attachment B-1. The
--------------
Production Schedule shall be modified and updated by the parties as requirements
change. Each party is responsible for providing the number of trained
personnel, facilities and other resources necessary to support the deliverable
deadlines. Each party will be responsible for its own expenses associated with
its performance. Because of the short deadlines associated with the initial
Development Project, the parties will work diligently and in good faith to
develop on a continuing basis all necessary functional and technical
specifications of devices, software code and other deliverables, including any
specific enhancements that may be sought. Each party will cooperate in
developing, performing and/or delivering any reports, reviews, inspections, and
tests to be conducted.
3. Beta Testing Procedures. The description of and schedule for Beta testing
-----------------------
of the System and its components shall be described in "Test Schedules"
developed by Intuit based, in part, on supporting production schedules developed
and delivered to Intuit by CNC . Test Schedules shall be modified and updated
as requirements change. On an ongoing basis, the parties shall review, inspect
and test the deliverables and the performance of the System (including the CNC
Network, e.g., internal quality assurance testing of CNC components such as
----
registration server, billing and account management systems, reconciliation
process, security, etc.) in order to determine whether
---
27
<PAGE>
such comply with the specifications and performance standards therefor. To the
extent that any deliverables fail beta testing, the parties shall use their
reasonable best efforts to correct any problems or defects, which corrections
shall not be deemed completed until the parties determine in good faith that
such meet all applicable specifications and performance standards. Each party
will be responsible for its own expenses associated with its performance.
4. Ongoing System Development. CNC acknowledges that the Internet Services
--------------------------
offered by Intuit will be developed, modified and enhanced during the Term of
the Agreement as, for example, when any supplier of Intuit's Internet browser
software revises its software. Therefore, consistent with its other obligations
pursuant to the Agreement, CNC shall work with Intuit and Intuit's other
suppliers or consultants to improve, modify or take other actions necessary or
reasonable to support the Internet Services over the Term of the Agreement.
Among other things, this support may involve subsequent development projects,
beta testing and service or product introductions on the following terms:
a. CNC will agree to pass-through [*] any network/system
improvements made available to customers at large.
b. CNC will agree to maintain/fix-bugs in the existing Intuit
registration server and "free" account login/screening servers for the First
Contract Year of the Agreement [*]. CNC maintenance for the Second and Third
Contract Years will be offered on a T&M basis at the rates indicated below
c. New feature development (including the registration server) requested
by Intuit will be provided at the rate of [*] per staff-month or [*] for
the First Contract Year, increased by no more than [*]/year for the Second and
Third Contract Years of the Agreement. These charges will become effective as
of the Execution Date of this Agreement (i.e., CNC will eat the development
costs-to-date on the registration/login servers).
d. If CNC and Intuit can not agree on the price, schedule or scope of the
new feature development for the registration server software, then Intuit may
purchase a non-exclusive source code license of the software for [*] and request
CNC to provide facilities management of an Intuit-owned server for a fee of [*]
per server. CNC will provide, at Intuit's request, up to two engineering staff
weeks of time at [*] to assist in the transition of the source code to Intuit's
engineers. It is understood that the source code and any accompanying
documentation is being delivered "as is" on the date of requested delivery.
e. CNC agrees to implement the Netscape "Cookie" functionality at no
additional charge in a mutually agreeable timeframe (target date is December 1,
1995).
(f) CNC will advise Intuit in advance if CNC believes that development or
support services requested by Intuit are chargeable to Intuit.
Attachments:
- -----------
B-1 - Example of Production Schedule
28
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT "C"
-----------
CNC NETWORK OPERATIONS AND CUSTOMER SERVICE
1. Network Operation. CNC is responsible for all ongoing on-line network and
-----------------
related operations such as customer logon procedures, registration, customer
database management, isolation of Customer Information from other data,
procedures regarding access/services upgrades, system maintenance, network
monitoring, surveillance, capacity planning, failure and contingency procedures,
etc.
- ---
2. Customer Service. Intuit's goal is to provide exceptional customer support
----------------
with respect to the Internet Services. The parties acknowledge that the
customer support model initially implemented may change over time as they better
understand the customers' needs and problem areas. Initially, customer support
will be categorized into the following areas:
Category # Description of Customer Support
---------- -------------------------------
1 Customer support relating to Intuit software
applications, e.g., Quicken, Quickbooks, TurboTax,
----
etc.
---
2 Customer support prior to registration, i.e.,
----
"getting started" help (such as browser install,
network configuration and modem setup)
3 Registration support (on-line connection to
registration server for Restricted and Full Internet
Access)
4 Network connection support (i.e., cannot establish
----
connection, routine network trouble calls, busies,
etc.)
---
5 Full Internet Access Support (7 days/week by 24
hours/day)
Initially, Intuit will provide customer support in Categories 1 and 2 at its
expense, and CNC shall provide customer support in Categories 3, 4 and 5 at its
expense. CNC is authorized, with Intuit's prior written consent, to subcontract
technical support to a qualified third party. Subsequently, Intuit (or its
subcontractor), at its election, may assume responsibility for customer support
in Category 3. In such event, CNC shall be responsible for paying Intuit the
cost of all customer support provided by Intuit in Category 3 at a rate agreed
to between the parties based on prevailing outsourcer rates (or, if no agreement
is reached, at the rate of [*]/minute per phone call). Additionally, if
Intuit receives customer service calls in Categories 3, 4 or 5 because of CNC's
inability to service the level of customer calls being received or because
malfunctions on the CNC Network are causing increased customer problems, then
CNC shall, as a part of the Monthly Reconciliation Process described in Exhibit
-------
"D" to the Agreement, reimburse Intuit at a rate agreed to between the parties
- ---
based on prevailing outsourcer rates (or, if no agreement is reached, at the
rate of [*]/minute per call). Conversely, Intuit shall be responsible for
paying CNC the cost of all customer support provided by CNC in Categories 1 or 2
at the rate of [*] per call.
29
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
Intuit and CNC will jointly develop call answering, call transfer and other
customer service related procedures, e.g., use of Intuit brand names. In this
----
regard, CNC will provide technical support training at its expense to Intuit's
call centers (whether call services are performed by Intuit or subcontracted).
3. Customer Support Managers.
-------------------------
Intuit: Jim Bishop
CNC: Eileen Curtis
The Customer Support Manager of each party shall be responsible for arranging
all meetings, visits and consultations between the parties relating to customer
service including forecast reviews, satisfaction of performance standards
relating to customer service and support, implementation plans, escalation
procedures for problems, call flows, call categories, and similar matters
affecting customer support and service. The designation of a party's Customer
Support Manager may be changed from time to time by written notice to the other
party.
4. Customer Billings and Credits.
-----------------------------
A. Background. The parties acknowledge that additional operating experience
----------
with the Internet Services and Customer feedback is required in order to fully
develop effective billing and credit procedures. Therefore, during the period
prior to February 1, 1996, Intuit and CNC will define, develop and implement
customer billing and credit procedures. The following sections identify the
initial procedures prior to February 1, 1996.
B. Customer Billing Procedures. During the initial phase of operations, the
---------------------------
parties will handle Customer billings as follows:
1. When a Customer upgrades from Restricted Internet Service to Full
Internet Service (or such other levels or types of services established in the
future), CNC will promptly conduct a billing account validation pursuant to
customary industry procedures, e.g., confirmation of the card number and
----
expiration date. If the Customer satisfactorily completes the billing account
validation process, then CNC will register the Customer for Full Internet
Service (or such other levels or types of services established in the future)
and store this information in the appropriate data files (an "Upgrade Account").
CNC and Intuit will develop mutually acceptable procedures to refine the billing
account validation process, such as determining the number of times that a
Customer may attempt to upgrade before being denied upgrade because of
validation problems.
2. Shortly after midnight every night, CNC will transfer the Upgrade
Accounts to the appropriate data files and run Customer billings. Customers
shall be billed monthly on their anniversary date in advance for any service
plan-related charges (e.g., where Customers have taken a package billing
----
approach such as seven hours for $9.95), and in arrears for any charges relating
to usage in excess of service plan amounts or where the Customer has elected to
be billed on an hourly basis. The monthly billing information shall be
transmitted to the credit card processor designated by Intuit (the "Processor").
In selecting any Processors, Intuit shall in good faith consider CNC's
recommendations and observations, e.g., the difficulty of working with such
----
Processor, the requirement for CNC to establish new procedures or systems, and
the economic effect on CNC of such changes.
3. All Customer Charges processed by the Processor shall be deposited into
an Intuit account, and shall be Intuit's sole property.
30
<PAGE>
C. Customer Credit Procedures. During the initial phase of operations, the
--------------------------
parties will handle Customer credits as follows:
1. Improper or Inaccurate Billings. If CNC determines that it has
-------------------------------
improperly or inaccurately charged a Customer's credit card for Internet
Services that were not provided to or used by the Customer, then CNC shall file
and process appropriate credits for the Customer with the Processor to correct
the error. If the improper or inaccurate billing also resulted in inaccurate or
improper Service Charges being assessed to Intuit, then CNC shall provide Intuit
with appropriate credits to its Service Charges as a part of the next Monthly
Reconciliation performed pursuant to Exhibit "D."
2. Fraudulent Billings. If a Customer contacts CNC to request a credit
-------------------
because the Customer claims that his/her credit card was stolen or fraudulently
used, then CNC shall refer the Customer to his/her credit card company for
appropriate handling of the matter.
3. Discretionary Usage Credits. Intuit and CNC acknowledge that the
---------------------------
long-term economic success of the Internet Services is affected substantially by
Customers' ongoing use of the Internet Services. Therefore, CNC may exercise its
reasonable judgment and grant usage credits to Customers where it believes such
action is in the best interests of Intuit. By way of example, if a Customer
expresses surprise at receiving a large bill but acknowledges that he or she
actually used that amount of time, then CNC might elect to give the Customer a
partial usage credit (i.e., a dollar amount equivalent to a reasonable number
----
of "free" hours of use on his or her next bill). Intuit, with CNC's assistance,
shall establish guidelines on granting such credits from time to time. CNC shall
not grant usage credits in contravention of such guidelines without Intuit's
written consent. In its monthly reports to Intuit, CNC shall report its grant of
such usage credits.
5. Bad Debts. Initially, upon notification that a Customer's credit
---------
charges will not be paid or have been denied, CNC will take steps to have a
notification of such sent to the affected Customer the next time he/she logs on
to the CNC Network that advises the Customer to contact CNC to resolve the
credit problem and to obtain payment. During the Term, CNC and Intuit will work
together to develop and implement bad debt procedures as the need arises.
31
<PAGE>
EXHIBIT "D"
-----------
SERVICE AND CUSTOMER CHARGES
A. SERVICE CHARGES.
1. Service Charges. The Service Charges during the First
---------------
Contract Year payable to CNC for the CNC Services (subject to any adjustments
pursuant to the Agreement) shall be as follows:
Amount Customer/Service Category
------ -------------------------
[*]
2. Monthly Reconciliation Process. Within 3 business days of the end of each
------------------------------
calendar month, CNC shall conduct a "Monthly Reconciliation" as follows:
a. Prepare and deliver to Intuit a report containing (A) the usage,
customer service and performance information described in Exhibit "A",
and (B) the "Cumulative Service Charges" chargeable to Intuit for the
applicable calendar month, net of all applicable penalties, credits and
reimbursements calculated as follows: (i) the chargeable time and
related cumulative Service Charges for each Customer/Service Category
(Full, Restricted, Non-Internet Traffic, and Off Peak Access) plus (ii)
----
the amount of any Forecast Shortfall Penalty (calculated pursuant to
Item (1) below), if any, minus (iii) financial penalties for CNC's
failure to meet Performance Standards (see Item (2) below), if any, plus
----
(iv) any amounts owed to Intuit for Customer Service Charges
32
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
reimbursable by CNC pursuant to Exhibit "C" of the Agreement, minus (v)
-----
any amounts owed by Intuit to CNC for Customer Service charges
reimbursable by Intuit pursuant to Exhibit "C" of the Agreement, plus or
-------
minus (vi) any other adjustments agreed to between the parties. CNC
-----
shall also include an invoice for the Cumulative Service Charges, as
adjusted pursuant to this Agreement, and Intuit shall pay such invoice
within thirty days of its receipt.
(1) Forecast Shortfall Penalty. Within ten days of its receipt of
--------------------------
CNC's Monthly Reconciliation, Intuit will develop and provide to
CNC a non-binding rolling forecast of anticipated CNC Network usage
by the Customers for the next three calendar months. To the extent
that the actual volume of forecasted hours of a given month is less
than [*] of Intuit's most recent estimate of forecasted hours for
such month, Intuit will pay CNC the difference between the actual
volume and [*] of the most recent estimate for such month using the
then effective Restricted Internet Services hourly charge. By way
of illustration, if Intuit's most recent forecast in December,
1995, estimates an aggregate total Customer usage for January, 1996
of [*] hours and the actual usage for January was [*] hours, then
Intuit would be required to compensate CNC at the foregoing rate
for the difference between [*] hours and [*] hours (i.e., [*] of
the most recent estimate of [*] hours).
(2) CNC Performance Financial Penalty. This credit will be an amount
---------------------------------
equal to the financial penalties payable by CNC to Intuit
established pursuant to Exhibit "A" of the Agreement.
b. Prepare and deliver (or make available for Intuit's ready on-line
access) to Intuit a Customer Charge report reflecting the number of
connect hours for each Customer, the amount of Customer Charges billed
to Customers, the amount of payments billed to and received from
Customers, the amount of any credits given to Customers, and other
related billing or financial information reasonably requested by Intuit.
Additionally, CNC will deliver or make available on-line to Intuit a
report showing all charges to and collections from Customers on a
cumulative basis ("Monthly Customer Collections") including names,
billing numbers, Internet name, anniversary date, time used per billing
period and connection, payment plan, e-mail preference, pay type, and
other information reasonably requested by Intuit.
3. CNC Termination Right. If the average hourly usage of the Full Internet
---------------------
Services Customers is less than five hours per month at the end of the
Implementation Phase, then CNC may request Intuit to enter into an arrangement
to compensate CNC for the difference between the actual average usage of such
Full Internet Services Customers and CNC's desired usage for such Customer of at
least five hours per month. If Intuit declines to enter into such an
arrangement, then CNC may elect to terminate the Agreement effective after the
next major revision and release date for all of the Products covered by the
Agreement subject to CNC's obligation to assist Intuit in transitioning to a new
Internet access services provider pursuant to this Agreement.
B. CUSTOMER CHARGES AND INFORMATION STATEMENTS
Intuit will establish the Customer Charges from time to time in its sole
discretion. As a part of the CNC Services, CNC shall deliver or make available
by December 31, 1995 usage, account and billing information on a continuous
basis to Intuit and all Customers (whether for Restricted or Full Internet
Services) through on-line access such as hours/month usage, charges/credits, and
other information reasonably requested by Intuit (the "Information Statement").
Additionally, upon
33
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
Customer request, CNC shall mail a hard copy of the Information Statement to
such Customer. Prior to December 31, 1995, Customers may call CNC to obtain
their billing and account status.
C. CNC REPORTING
1. Initial Reporting. During the period prior to January 1, 1996, CNC
-----------------
and Intuit will define, develop and implement reporting requirements. During
this initial period, CNC will use its reasonable best efforts to provide Intuit
with requested information, but Intuit acknowledges that CNC's initial reporting
will be minimal.
2. Ongoing Reporting. Not later than January 1, 1996, CNC will implement
-----------------
the report set agreed to between the parties on a monthly basis including
information such as:
<TABLE>
<CAPTION>
<S> <C> <C>
New Subscribers/month (Actual) - Restricted Access, Full Access accounts
with price option 1, and Full Access account
with price option 2
Total # Base Subscribers/month - (same breakdown as above)
(including New)
Average Personal Usage/month - (same breakdown as above)
Peak hours/day - Number of subscribers (same breakdown),
number of hours
Peak day/week - (same breakdown as "per day" report)
Number of inactive accounts - not used in a month per Customer/Service
- category
Customer Service Calls - (breakdown to be developed)
</TABLE>
D. INTUIT FORECASTING
1. Initial Forecasting. During January 1, 1996, CNC and Intuit will
-------------------
define, develop and implement forecasting requirements. During this initial
period, Intuit will use its reasonable best efforts to provide CNC with
requested information, but CNC acknowledges that Intuit's initial reporting will
be minimal.
2. Ongoing Forecasting. Not later than January 1, 1996, Intuit will
-------------------
implement the forecasting set agreed to between the parties including
information such as:
<TABLE>
<CAPTION>
<S> <C> <C>
Estimated New Subscribers/month - Restricted Access, Full Access accounts
Estimated Total # Base - (same breakdown as above)
Subscribers/month
Estimated Average Personal - (same breakdown as above)
Usage/month
</TABLE>
Intuit's forecast shall be a rolling 90 day forecast updated on a monthly basis.
For example, in December 1995, Intuit will make its forecast for the immediately
following January, February and March 1996. Then, in January 1996, Intuit will
issue an updated forecast for the immediately following February and March, and
makes its initial forecast for April. As noted in Section D.2.(b)(5) of Exhibit
"A", CNC shall not be held responsible for failing to achieve those Performance
Standards adversely affected by a situation where Intuit's initial [*] forecast
for a month underestimates actual network usage or customer service calls by
more than [*]; provided, however, that CNC will use its reasonable best efforts
to adjust to changes in Intuit's forecasts and the actual volumes experienced at
any given time so as to attempt to achieve such Performance Standards.
34
- ----------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT "E"
-----------
SECURITY GUIDELINES
CNC acknowledges that the security of Customer Information is an absolute
requirement. During the Implementation Phase, the parties will develop all
necessary or advisable systems, practices, guidelines and procedures to achieve
this requirement, and continue to do so during the Term of the Agreement.
35
<PAGE>
EXHIBIT "F"
-----------
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is effective as of August 1, 1995
(the "Effective Date"), by and between Intuit Inc., a Delaware corporation
("Intuit"), and Concentric Network Corporation, a Florida corporation formerly
known as Concentric Research Corporation ("CNC"), with reference to the
following facts:
RECITALS
--------
A. CNC and Intuit have entered into that certain Internet Access Services
Agreement effective as of August 1, 1995 (the "Access Agreement") pursuant to
which CNC has agreed to license the use of the CNC Code to Intuit.
NOW, THEREFORE, for valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. "CNC Code" shall mean the POP, login server, registration
-----------
server, encryption, data security and other software described in or relating to
the performance of the Access Agreement, including any related documentation,
developed during the Term of the Access Agreement. Any other capitalized terms
not defined herein shall have the meaning given them in the Access Agreement.
2. Grant of License.
----------------
2.1 CNC hereby grants to Intuit (or its designee, e.g., a replacement
Internet access service provider) a world-wide, non-exclusive, fully paid,
perpetual right and license (i) to use all or any portion of the CNC Code in
connection with the production, copying, license, distribution and sale of the
Products, including any portion of the CNC Code which may be distributed or made
available to the Customers in order for them to properly access the CNC Network,
and (ii) to sublicense the copying and use of the CNC Code to the Customers in
connection with the Customers' use of the Products, provided that Intuit's right
to distribute the CNC Code to its Customers shall extend only during the Term
and Transition Period. However, nothing in this Agreement or the Access
Agreement shall affect the continuing right (i) of Intuit to distribute Product
containing the CNC Code that may be in the process of manufacture or held in
inventory at the time that the Term of the Access Agreement terminates or
expires, or (ii) of the Customers to use the CNC Code that is contained in any
Product that they may acquire.
2.2 The grant to Intuit in Section 2.1 includes the right to use, modify,
adapt, copy, display and otherwise exploit the CNC Code in any manner reasonably
necessary or advisable for Intuit (or its designee) to provide Internet services
or access to the Customers during or after the Term of the Access Agreement.
2.3 CNC and Intuit intend that the license granted to Intuit pursuant to
this Agreement shall ensure (A) that Intuit is able (i) to smoothly, quickly,
cost-effectively and efficiently transition the CNC Services from CNC to another
access services provider and (ii) to provide high quality services at the
performance levels specified in the Access Agreement to the Customers on a
continuous basis in the event of such a transition, and (B) that the Customers
are able to use the Internet Services during, from and after such a transition.
However, the definition of the CNC Code and the scope and the duration of the
license and rights granted in this Agreement are not intended to extend beyond
the definition, scope and duration, as applicable, that Intuit reasonably
determines in good faith to be necessary or advisable to accomplish the
intention of the parties as expressed in the foregoing sentence or in the Access
Agreement.
36
<PAGE>
3. No Infringement. CNC represents and warrants on a continuing basis that
---------------
neither the CNC Code, nor the exercise by Intuit of any of the rights granted
under this Agreement, will infringe any intellectual property right of any third
party and that there is no litigation or claim pending or, to CNC's knowledge,
threatened relating thereto. CNC shall and hereby does indemnify and defend
Intuit and hold it harmless from and against any and all claims, liabilities,
losses, costs and expenses including, but not limited to, reasonable attorneys'
fees and costs of suit, incurred by Intuit as a result of or arising from any
claim or proceeding made or brought against Intuit that the use, reproduction,
marketing, sale, sublicensing or distribution of CNC Code infringes any patent,
copyright or other rights of any third party, or that the CNC Code is defective.
This indemnity shall not apply to the extent such claims result from Intuit's
own modification or alteration of the CNC Code. Intuit shall promptly notify
CNC of any such claim(s) of which it becomes aware and shall, at CNC's request
and expense, cooperate in the investigation and defense of such claim(s).
4. Miscellaneous.
-------------
4.1 Entire Agreement. This Agreement shall be governed by and construed
----------------
in accordance with the substantive laws of the State of California (not
including its choice of law provisions). This Agreement, as supplemented by the
Access Agreement, constitutes the entire understanding between the parties with
respect to the licensing of the CNC Code contemplated herein. This Agreement
shall not be modified except in a writing signed by and exchanged between both
of the parties and expressly referencing this Agreement. No waiver of any
provision of the Agreement or any right or obligations of either party hereunder
shall be effective, except pursuant to a writing signed and delivered by the
party waiving compliance. Any such written waiver shall not be construed as, or
constitute, a continuing waiver of such breach, or of other breaches of the same
or other provisions of this Agreement. Neither party shall by mere lapse of
time without giving notice or taking other action hereunder be deemed to have
waived any breach by the other party of any of the provisions of this Agreement.
This Agreement shall be binding on all successors and assigns of the parties.
4.2 No Executory Obligation. CNC acknowledges that this Agreement is not
-----------------------
an "executory contract" within the meaning of the U.S. Bankruptcy Code and shall
not be subject to rejection by any debtor-in-possession, bankruptcy trustee or
the like.
4.3 Severability. If any provisions of this Agreement shall be held by a
------------
court, arbitrator or other tribunal of competent jurisdiction to be invalid or
unenforceable, such provisions shall be deemed valid and enforced to the maximum
extent permissible and the remaining portions of this Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, this Agreement shall be effective as of the Effective
Date and it shall be deemed accepted and made in San Diego, California.
Execution Date: December 11, 1995
INTUIT INC. CONCENTRIC NETWORK
CORPORATION
By: /s/ William Harris By: /s/ Henry Nothhaft
------------------------- ----------------------------------
William Harris, Executive Henry Nothhaft, President and CEO
Vice President
Address: 6256 Greenwich Drive Address: 10590 N. Tantau Avenue
San Diego, CA 92122 Cupertino, CA 95014
37
<PAGE>
AMENDMENT NO. 1 TO
INTERNET ACCESS SERVICES AGREEMENT
THIS AMENDMENT NO. 1 TO INTERNET ACCESS SERVICES AGREEMENT ("Amendment") is made
and effective as of August 15, 1996 (the "Effective Date"), by and between
Intuit Inc., a Delaware corporation ("Intuit"), and Concentric Network
Corporation, a Florida corporation ("CNC"), with reference to the following
facts:
RECITALS
--------
A. Intuit and CNC are parties to that certain Internet Access Services
Agreement effective as of August 1,1995 (the "Agreement").
B. Intuit and CNC desire to expand the types of pricing plans available
to the Customers and, hereby, agree to amend the Agreement as set forth herein.
NOW, THEREFORE, for valuable consideration, the parties hereto agree as
follows:
1. Except as otherwise defined herein, capitalized terms shall have the
meaning given them in the Agreement.
2. Exhibit "D" entitled "SERVICE AND CUSTOMER CHARGES" is hereby revised
and restated in its entirety as follows:
"A. SERVICE CHARGES.
1. Service Charges. Intuit may, at its discretion, offer pricing plans to
---------------
the Customers of various types. As of the date of this Amendment, Intuit intends
to offer plans in the following general categories.
a. Standard Plans.
--------------
(1) "Standard Plans" are arrangements whereby Customers are
charged on an hourly basis, or charged a specified dollar amount for a certain
number of hours of "free" usage per month with monthly usage in excess of the
free amount chargeable at a specified hourly rate, and CNC is compensated on a
hours usage basis. An example of this type of plan is Intuit's current "Frequent
User Plan" under which the Customer receives seven hours of usage for $9.95 per
month, and pays $1.95 for each hour of usage in excess of seven hours in the
specified month. The Service Charges during the First Contract Year payable to
CNC for the CNC Services (subject to any adjustments pursuant to the Agreement)
under Standard Plans shall be as follows:
Amount Customer/Service Category
------ -------------------------
[*] Full Internet Services Customers
[*] Restricted Internet Services Customers
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
* Non-Internet Traffic
[*] "Off-Peak Access" (from 2:00 a.m. to
6:00 a.m. local time, where local is
the respective time zone of the
Customer)
* CNC agrees to provide Intuit the most favored pricing on future Non-
Internet Traffic based on equivalent services offered, terms and
conditions of such offering.
Service Charges for Standard Plans will be calculated pro rata on a one
second incremental basis (rounded to four decimal places). For example, Intuit
would be charged unadjusted total Service Charges of [*] in a Monthly
Reconciliation Report (see below) reflecting a total of 750.7 connection hours
for such period for Full Internet Service Customers (peak time), 1,825.2
connection hours for Restricted Internet Services Customers (peak time), and
2,015.6 connection hours for all Off-Peak Access". A "connection" shall begin
when the CNC Network has validated a name and password, and terminate when the
modem "carrier dropped" message occurs whether triggered by a customer-initiated
disconnect or a shutdown of the connecting application. All Service Charges
under Standard Plans for all Customer/Service Categories for the Second Contract
Year commencing on the first anniversary of the Release Date shall be reduced
[*] for Full Internet Services Customers and from [*] for Restricted Internet
Services Customers. All Service Charges under Standard Plans for all
Customer/Service Categories for the Third Contract Year shall be reduced an
additional [*] from the rates charged in the Second Contract Year, e.g., from
----
[*] for Full Internet Customer Services Customers and from [*]/hour to [*]/hour
for Restricted Internet Services Customers.
(2) Option to Convert Frequent User Standard Plan. After the date of
---------------------------------------------
this Amendment, Intuit by written notice to CNC may elect to convert its current
Frequent User Plan from a Standard Plan to a Package Plan on the following terms
and conditions for Customers that subscribe to such converted plan:
(a) Usage and Customer Charges. The Customer will pay Intuit
--------------------------
[*] in advance for seven hours of usage, and [*] in arrears for each hour of
usage in excess of seven hours in the specified month.
(b) Service Charges. As a part of the Monthly Reconciliation
---------------
Process, CNC will invoice Intuit for, and Intuit will pay CNC, (i) [*] for
each Intuit Frequent User Plan Customer that subscribed to such plan during the
applicable month, and (ii) [*] charged to such Customer for each hour of
"excess" usage by such Customer during the applicable month.
(c) Additional Intuit Compensation. Additionally, as a part of the
------------------------------
Monthly Reconciliation Process, CNC will pay Intuit a [*] "commission" for
each Customer who previously signed up for the Intuit Frequent User Plan and has
paid for at least two successive full months of service under the new Package
Plan arrangement.
2
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
b. Package Plans. "Package Plans" are new arrangements implemented
-------------
under this Amendment whereby Full Internet Services Customers are charged a
specified dollar amount for a certain number of hours of "free" usage per month
with monthly usage in excess of the free amount chargeable at a specified hourly
rate, and CNC is compensated as specified below. In the case that a given
package plan is "unlimited," the Customer may use an unlimited number of hours
for a specified monthly rate. Under Package Plans, CNC will not be paid its
normal hourly Service Charges (as noted above for Standard Plans) but, instead,
Intuit will pay Service Charges in another form to CNC as follows:
(1) Usage and Customer Charges. The Customer will pay Intuit a
--------------------------
specified monthly rate in advance for a designated period of usage on a month-
to-month basis, and in arrears for any usage in excess of the "free" or included
monthly usage amount.
(2) Service Charges. As a part of the Monthly Reconciliation
---------------
Process, CNC will invoice Intuit for, and Intuit will pay CNC, a specified
monthly Service Charge for each Intuit Unlimited Plan Customer that subscribed
to such plan during the applicable month.
(3) Additional Intuit Compensation. Additionally, as a part of the
------------------------------
Monthly Reconciliation Process, CNC will pay Intuit a "commission" (sometimes
referred to as a "bounty") for each Customer who previously signed up for the
applicable Package Plan (including both former Standard Plan Customers and new
Customers) and has paid for at least a specified number of successive full
months of service. Commissions or bounties will be paid once during the
"lifetime" of a Customer when the Customer makes his/her first change from a
Standard Plan to a Package Plan. Additionally, CNC and Intuit will from time to
time review the amount and timing of the payment of the commission to determine
its fairness, and make such changes as the parties may mutually agree.
c. Prepaid Plans. "Prepaid Plans" are new arrangements implemented
-------------
under this Amendment whereby Full Internet Services Customers can purchase a
specified level (which may be unlimited) of monthly usage effectively at a
discounted monthly fee if Customer pre-pays for a specified period. Under a
Prepaid Plan, CNC will not be paid its normal hourly Service Charges (as noted
above for Standard Plans) but, instead, Intuit will pay Service Charges in
another form to CNC as follows:
(1) Usage and Customer Charges. The Customer will pay Intuit a
--------------------------
specified monthly rate in advance for the specified level of (or unlimited)
usage for a designated period of time, e.g.. pre-pay for six months at a monthly
----
rate discounted from the normal "Package Plan" rate for unlimited monthly usage.
(2) Service Charges. As a part of the Monthly Reconciliation
---------------
Process, CNC will invoice Intuit for, and Intuit will pay CNC, a specified
amount per each Intuit Prepaid Plan Customer who subscribed to such plan during
the applicable month.
(3) Additional Intuit Compensation. Additionally, as a part of the
------------------------------
Monthly Reconciliation Process, CNC will pay Intuit a "commission" (sometimes
referred to as a "bounty") for each Customer (including both former Standard
Plan
3
<PAGE>
Customers and new Customers) who previously subscribed for the Prepaid Plan if
such Customer has not canceled such subscription during a specified number of
full months of service under such plan. Commissions or bounties will be paid
once during the "lifetime" of a Customer when the Customer makes his/her first
change from a Standard Plan to a Prepaid Plan. Additionally, CNC and Intuit will
from time to time review the amount and timing of the payment of the commission
to determine its fairness, and make such changes as the parties may mutually
agree.
(4) Cancellation. A Prepaid Plan may be cancelable by the
------------
Customer. Any cancellation adjustments or penalties shall be set forth in the
applicable Plan Amendment (see subsection "d" below).
(5) Continuation Services. In the event that a Customer does not
---------------------
notify CNC or Intuit that he/she intends to extend his/her Prepaid Plan, the
Customer will be notified (at the time of initially signing up for the Prepaid
Plan) that his/her service plan shall automatically revert to the comparable
Package Plan at the end of the applicable prepaid period.
d. Implementation of Plans. A list of the Package Plans and Prepaid
-----------------------
Plans Intuit intends to implement as of the date of this Amendment is attached
hereto as Attachment "D-1". Subsequent changes to these new plans or the
creation of new Package and Prepaid Plans shall be implemented by the parties
through the execution and exchange of ""Plan Amendments" substantially in the
form of Attachment "D-2" hereto.
e. 800# Telephone Services. CNC shall provide 800# telephone services
-----------------------
to the Customers under Standard, Package and Prepaid Plans as a method for the
Customers to gain access to Intuit's Services. Intuit will charge the Customers
at an initial rate of [*] per hour for this service as a part of the periodic
billing of such Customers. Then, as a part of the Monthly Reconciliation
Process, CNC will invoice Intuit for, and Intuit will pay CNC, [*] at the
foregoing hourly charge for each hour of 800# service billed to the Customers
during the applicable month. Intuit and CNC will modify Customer charges, and
any amounts payable by Intuit related thereto, to account for changes in the
cost or pricing of 800# telephone services. Any 800# telephone charges shall be
in addition to any usage charges under the Customer's applicable Standard,
Package or Prepaid Plan.
2. Monthly Reconciliation Process. Within 3 business days of the end of
------------------------------
each calendar month, CNC shall conduct a "Monthly Reconciliation" as follows:
a. Prepare and deliver to Intuit a report containing (A) the usage,
customer service and performance information described in Exhibit "A", and (B)
the "Cumulative Service Charges" chargeable to Intuit for the applicable
calendar month, net of all applicable penalties, credits and reimbursements
calculated as follows: (i) the chargeable time and related cumulative Service
Charges for each Plan/Customer/Service Category (Full, Restricted, Non-Internet
Traffic, and Off Peak Access) plus (ii) the amount of any Forecast Shortfall
----
Penalty (calculated pursuant to Item (1) below), if any, minus (iii) financial
-----
penalties for CNC's failure to meet Performance Standards (see Item (2) below),
if any, plus (iv) any amounts owed to Intuit for Customer Service Charges
----
reimbursable by CNC pursuant to Exhibit "C" of the Agreement, minus (v) any
-----
amounts owed by Intuit to CNC for Customer Service charges
4
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
reimbursable by Intuit pursuant to Exhibit "C" of the Agreement, plus or minus
-------------
(vi) any other adjustments agreed to between the parties. CNC shall also include
an invoice for the Cumulative Service Charges, as adjusted pursuant to this
Agreement, and Intuit shall pay such invoice within thirty days of its receipt.
(1) Forecast Shortfall Penalty. Within ten days of its receipt of
--------------------------
CNC's Monthly Reconciliation, Intuit will develop and provide to CNC a non-
binding rolling forecast of anticipated CNC Network usage by the Customers
subscribing to Standard Plans for the next three calendar months. To the extent
that the actual volume of forecasted hours under Standard Plans for a given
month is less than [*] of Intuit's most recent estimate of forecasted hours for
such month, Intuit will pay CNC the difference between the actual volume of
usage under Standard Plans and [*] of the most recent estimate for Standard Plan
usage for such month using the then effective Restricted Internet Services
hourly charge; provided, however, that Intuit shall not be subject to the
foregoing Forecast Shortfall Penalty if the actual number of Customers who
subscribe for Package and Prepaid Plans for the applicable month is at least [*]
of the number forecasted by Intuit in its most recent monthly forecast for such
month. By way of illustration, if (i) Intuit's most recent forecast in December,
1995, estimated an aggregate total Customer usage under Standard Plans for
January, 1996 of [*] hours and the actual usage for January was [*] hours
and (ii) Intuit achieved only [*] of its aggregate estimate for forecasted users
under both its Package Plans and Prepaid Plans, then Intuit would be required to
compensate CNC at the foregoing rate for the difference between [*] hours and
[*] hours (i.e., [*] of the most recent estimate of [*] hours).
(2) CNC Performance Financial Penalty. This credit will be an amount
---------------------------------
equal to the financial penalties payable by CNC to Intuit established pursuant
to Exhibit "A" of the Agreement.
b. Prepare and deliver (or make available for Intuit's ready on-line
access) to Intuit a Customer Charge report reflecting the number of connect
hours for each Customer, the amount of Customer Charges billed to Customers, the
amount of payments billed to and received from Customers, the amount of any
credits given to Customers, and other related billing or financial information
reasonably requested by Intuit. Additionally, CNC will deliver or make available
on-line to Intuit a report showing all charges to and collections from Customers
on a cumulative basis ("Monthly Customer Collections") including names, billing
numbers, Internet name, anniversary date, time used per billing period and
connection, payment plan, e-mail preference, pay type, and other information
reasonably requested by Intuit.
3. CNC Termination Right. DELETED (no longer applicable)
---------------------
B. CUSTOMER CHARGES AND INFORMATION STATEMENTS
Intuit will establish the Customer Charges from time to time in its sole
discretion. As a part of the CNC Services, CNC shall deliver or make available
by December 31, 1995 usage, account and billing information on a continuous
basis to Intuit and all Customers (whether for Restricted or Full Internet
Services) through on-line access such as hours/month usage, charges/credits, and
other information reasonably requested by Intuit (the "lnformation Statement").
Additionally, upon Customer request,
5
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
CNC shall mail a hard copy of the Information Statement to such Customer. Prior
to December 31, 1995, Customers may call CNC to obtain their billing and account
status.
C. CNC REPORTING
1. Initial Reporting. During the period prior to January 1, 1996, CNC and
-----------------
Intuit will define, develop and implement reporting requirements. During this
initial period, CNC will use its reasonable best efforts to provide Intuit
with requested information, but Intuit acknowledges that CNC's initial reporting
will be minimal.
2. Ongoing Reporting. Not later than January 1, 1996, CNC will implement
-----------------
the report set agreed to between the parties on a monthly basis including
information such as:
<TABLE>
<S> <C>
New Subscribers/month (Actual) - Standard Plans (Restricted
Access, Full Access accounts by
type of usage plan), Package
Plans, and Prepaid Plans.
Total # Base Subscribers/month - (same breakdown as above)
(including New)
Average Personal Usage/month - (same breakdown as above)
Peak hours/day - Number of subscribers (same
breakdown), number of hours
Peak day/week - (same breakdown as "per day"
report)
Number of inactive accounts - not used in a month per
Customer/Service category
Customer Service Calls - (breakdown to be developed)
</TABLE>
D. INTUIT FORECASTING
1. Initial Forecasting. On an ongoing basis during the term of this
-------------------
Agreement, CNC and Intuit will define, develop and implement forecasting
requirements.
2. Ongoing Forecasting. Not later than January 1, 1996, Intuit will
-------------------
implement the forecasting set agreed to between the parties including
information such as:
<TABLE>
<S> <C>
Estimated New Subscribers/month - Standard Plans (Restricted
Access, Full Access
accounts by type of plan),
Package Plans and Prepaid
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
Plans
Estimated Total # Base - (same breakdown as above)
Subscribers/month
Estimated Average Personal - Standard Plans Only
Usage/month
</TABLE>
Intuit's forecast shall be a rolling 90 day forecast updated on a monthly basis.
For example, in December 1995, Intuit would make its forecast for the
immediately following January, February and March 1996. Then, in January 1996,
Intuit would issue an updated forecast for the immediately following February
and March, and makes its initial forecast for April. As noted in Section
D.2.(b)(5) of Exhibit "A", CNC shall not be held responsible for failing to
achieve those Performance Standards adversely affected by a situation where
Intuit's initial forecast for a month underestimates actual network usage or
customer service calls by more than 20%; provided, however, that CNC will use
its reasonable best efforts to adjust to changes in Intuit's forecasts and the
actual volumes experienced at any given time so as to attempt to achieve such
Performance Standards."
3. The parties acknowledge and agree that the reconciliation, reporting
and forecasting of procedures described in Exhibit D shall be deemed amended to
include applicable information for the Package and Prepaid Plans.
4. Intuit's address for notifications given pursuant to Section 8.1 of
the Agreement is hereby modified to the address specified below.
5. Except as otherwise provided in this Amendment, the terms and
conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the Effective Date and it shall be deemed accepted and made in San Diego,
California.
INTUIT INC. CONCENTRIC NETWORK
CORPORATION
By: /s/ WILLIAM HARRIS By: /s/ MICHAEL ANTHOFER
-------------------------- ------------------------
William Harris Michael Anthofer
Executive Vice President Chief Financial Officer
6220 Greenwich Drive 10590 North Tantau Avenue
San Diego, CA 92122 Cupertino, CA 95014
7
<PAGE>
ATTACHMENT "D-1"
PACKAGE AND PREPAID PRICING PLANS
A. PACKAGE PLAN
1. "lntuit Unlimited Plan"
---------------------
(a) Usage and Customer Charges. The Customer will pay Intuit
--------------------------
[*]/month in advance for unlimited usage on a month-to-month basis.
(b) Service Charges. As a part of the Monthly Reconciliation Process,
---------------
CNC will invoice Intuit for, and Intuit will pay CNC, [*] for each Intuit
Unlimited Plan Customer that subscribed to such plan during the applicable
month.
(c) Additional Intuit Compensation. Additionally, as a part of the
------------------------------
Monthly Reconciliation Process, CNC will pay Intuit a [*] "commission" for
each Customer who previously signed up for the Intuit Unlimited Plan and has
paid for at least two successive full months of service.
8
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
ATTACHMENT "D-2"
FORM OF PLAN AMENDMENT UNDER
INTERNET ACCESS SERVICES AGREEMENT DATED AUGUST 1, 1995
Name of Plan:
- -------------
Category of Plan (circle one): Standard Package Prepaid
- -----------------------------
Usage and Customer Charges: [TBD]
- --------------------------
Service Charges: As a part of the Monthly Reconciliation Process, CNC will
- ---------------
invoice Intuit for, and Intuit will pay CNC, $___ per each Intuit Plan Customer
who subscribed to such plan during the applicable month.
Additional Intuit Compensation. Additionally, as a part of the Monthly
- ------------------------------
Reconciliation Process, CNC will pay Intuit a $__ commission for each Customer
who previously subscribed for the Plan if such Customer has not canceled such
subscription during the first _____ full months of service under such plan. The
amount and timing of the payment of this commission will be reviewed, and if
mutually agreed upon, reset by CNC and Intuit every ___ months.
Cancellation Provisions: [TBD]
- -----------------------
Former Plan replaced by this Plan (if applicable): [TBD]
Other terms and conditions: [TBD]
- --------------------------
This Plan Amendment is effective as of ______________, 199_, and subject to all
of the terms and conditions of the Agreement.
INTUIT INC. CONCENTRIC NETWORK
CORPORATION
By: By:
--------------------------- ---------------------------
Officer: Officer:
------------------- --------------------
Title: Title:
--------------------- ----------------------
6256 Greenwich Drive, Suite 100 10590 North Tantau Avenue
San Diego, CA 92122 Cupertino, CA 95014
9
<PAGE>
AMENDMENT NO. 2 TO
INTERNET ACCESS SERVICES AGREEMENT
THIS AMENDMENT NO. 2 TO INTERNET ACCESS SERVICES AGREEMENT ("Amendment") is made
and effective as of October 31, 1996 (the "Effective Date"), by and between
--
Intuit Inc., a Delaware corporation ("Intuit"), and Concentric Network
Corporation, a Florida corporation ("Concentric" or "CNC"), with reference to
the following facts:
RECITALS
--------
A. Intuit and CNC are parties to that certain Internet Access Services
Agreement effective as of August 1, 1995, as amended by that certain
Amendment No. 1 to Internet Access Services Agreement dated August 15,
1996, and as the meaning of certain of its provisions were confirmed
pursuant to that certain Acknowledgment and Limited Waiver dated August
20, 1996 (collectively, the "Agreement").
B. Intuit and CNC desire to amend the Agreement to incorporate an additional
network performance standard regarding network accessibility.
NOW, THEREFORE, for valuable consideration, the parties hereto agree as
follows:
1. Except as otherwise defined herein, capitalized terms shall have the meaning
given them in the Agreement.
2. Exhibit "A", Section C, sub-sections 2b and 2c entitled "Network Processing
Capacity Performance Standards (Latency)" and "Customer Service/Support
Performance Standards," respectively, are hereby re-labeled as sub-sections
2c and 2d, respectively.
3. Exhibit "A", Section C, sub-section 2 entitled "Performance Standards" is
hereby amended to include the following sub-section 2b:
"b. Network Connection Success Performance Standard. The CNC Network shall
-----------------------------------------------
achieve average successful connection rates at or above the following
Performance Standards for Intuit Customers attempting to access the CNC Network:
Target Performance Standard:
---------------------------
[*] "successful connection" rate for VLA-type POP sites
[*] "successful connection" rate for physical-type POP sites
1
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
Minimum Performance Standard:
----------------------------
[*] "successful connection" rate for VLA-type POP sites
[*] "successful connection" rate for physical-type POP sites
Comments:
- --------
(1) CNC shall employ a PC-based dial/connection-tool software acceptable to
Intuit to measure the successful connection rates of the CNC Network.
(2) CNC shall conduct testing of the successful connection rates for the
CNC Network on a regularly scheduled basis, but no less often than once per
calendar month. During the monthly test period, each POP site in the CNC Network
shall be tested at least once as specified in Comment (3) below.
(3) The duration of the test period shall be at least a continuous 24 hour
period to satisfy the parties' intention of testing the CNC Network during both
daily peak and off-peak hours. CNC shall use a PC based dial/connection tool
similar to the Gage Access ISP poll software using a Windows 95 PC
configuration, with a standard TCP/IP stack/dialer and a mutually acceptable
consumer modem. The network will be tested by accessing at least [*] of the CNC
local access phone numbers in the continental United States and Canada during
the testing period.
(4) A "successful connection" is defined as a test call in which the
dial/connection-tool software calls into a designated CNC Network POP site,
negotiates a connection session, logs into the CNC Network, accesses a www html
test page or pings a designated web site, and disconnects from the CNC Network.
Further, CNC shall use commercially reasonable efforts to ensure that the test
sessions are structured so that the dial/connection-tool software accurately
recreates the Intuit customer experience, e.g., by incorporating variables in
connection rates for different modem types, dialers, times of day, POP types
(VLA and physical), modem speed and Intuit-specific login procedures. Although
Modem incompatibility problems will be excluded from the final test results, CNC
will implement a mutually acceptable action plan to correct modem
incompatibility problems that occur with the modem types that account for the
top [*] of all units sold in the United States and Canada, as applicable.
(5) The test call shall be excluded from the calculation of overall test
results if the dial/connection-tool software establishes a connection but
experiences an error condition. By way of example, a call in which a Windows95
remote access Service error condition is logged would not be counted as an
attempted call in the tabulation of test results.
(6) The successful connection rates shall be calculated as follows:
2
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
(a) First, the overall "successful connection" rate for each physical
and VLA-type POP sites shall be determined on a POP-by-POP basis by (A)
tabulating the total number of test calls initiated by the dial/connection-tool
software and the corresponding number of successful connections reported by the
dial/connection-tool software, (B) adjusting the total number of test calls
downward for any dial/connection tool software error conditions, and (C)
dividing the number of test calls that achieved successful connections by the
total number of test calls. By way of example, assume the CNC Network had only
2 physical-type POPs and the dial/connection-tool software tests yielded the
following results:
<TABLE>
<CAPTION>
POP Total Adjusted Successful Successful
Test Total Connections Connection
Calls Test Rate
Calls
<S> <C> <C> <C> <C>
#1 30 29 27 93.1
#2 38 38 36 94.7
Totals 68 67 63 94.0
</TABLE>
(b) Second, the weighted average of the "successful connection" rate
shall be calculated for all POPs of one type in the CNC Network. This weighted
average shall be calculated based on the number of ports at each POP. By way of
example, assuming the CNC Network only had 2 physical-type POPs with the
following number of ports and achieved the successful connection rates as
calculated in Comment (6)(a) above, the weighted average for this 120 port
physical POP network as a whole would be 0.9406 (or 94.06%) as indicated in the
following table:
<TABLE>
<CAPTION>
POP POP Port Weighting Weighted
Successful Count at Factor Average
Connection applicable (based on Successful
Rate POP number Connection
of ports) Rate
<S> <C> <C> <C> <C>
#1 93.1 48 .4 37.24
#2 94.7 72 .6 56.82
Totals 94.0 120 1.0 94.06%
</TABLE>
A separate weighted average calculation would be performed for VLA-type POPs in
the CNC Network.
(c) Finally, the overall weighted average successful connection rate
for the CNC Network as calculated above would be compared to the applicable
3
<PAGE>
Performance Standard to determine whether or not CNC had achieved its Network
Connection Success performance goal for the applicable calendar month. By way of
example, a comparison of the weighted average successful connection rate of
[*] for the above physical POPs to the physical-type POP Target Performance
Standard of [*] and the Minimum Performance Standard of [*] reflects that CNC
has satisfied both performance standards in this performance metric.
(7) The monthly CNC Network successful connection test results will be
reported to Intuit as required pursuant to the Agreement. Each POP-type category
(i.e., VLA and physical) must satisfy its respective performance standard for
the CNC Network to satisfy this performance standard.
(8) CNC will develop within one week and execute a corrective action plan
acceptable to Intuit to bring into conformance with the applicable Performance
Standard any Point of Presence that falls below a [*] successful connection
rate. If CNC's corrective action plan requires that it obtain network services
from third parties, then the timetable for the execution of such plan will take
into consideration the delivery dates for such third party services. CNC's
failure or inability to execute the corrective action plan to remedy the problem
shall be deemed to be a failure to satisfy the applicable Performance Standard
for this measure.
(9) From time to time, the parties shall evaluate the level of this
performance standard compared to the network successful connection rates
achieved by other high quality Internet service providers as provided in Exhibit
"A", Section C.1."
4. Except as otherwise provided in this Amendment, the terms and conditions of
the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the Effective Date and it shall be deemed accepted and made in San Diego,
California.
INTUIT INC. CONCENTRIC NETWORK
CORPORATION
By: /s/ WILLIAM HARRIS By: /s/ MICHAEL ANTHOFER
-------------------------- ---------------------------
William Harris Michael Anthofer
Executive Vice President Vice President and CFO
6220 Greenwich Drive 10590 North Tantau Avenue
San Diego, CA 92122 Cupertino, CA 95014
4
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
PRICING PLAN ADDENDUM NO. 1 PURSUANT
TO INTERNET ACCESS SERVICES AGREEMENT
Name of Plan: "Intuit 6 Month Prepaid Plan"
---------------------------
(a) Usage and Customer Charges. Intuit will charge a new Customer
--------------------------
(i.e., one who is not currently registered with Intuit for full Internet access)
[*] in advance for [*] months of unlimited network usage, apportionable to one
free month of full Internet access followed by 6 months of full Internet access
at the rate of [*]/month. Existing full Internet access Customers switching
from another Intuit plan to this Prepaid Plan will be charged [*] in advance
for 6 months of full Internet access, apportionable at the rate of [*]/month.
(b) Service Charges. As a part of the Monthly Reconciliation Process,
---------------
CNC will invoice Intuit for, and Intuit will pay CNC, [*] for each Intuit
Customer that subscribes to this Prepaid Plan during the applicable month.
(c) Additional Intuit Compensation. Additionally, as a part of the
------------------------------
Monthly Reconciliation Process, CNC will pay Intuit an [*] "commission" for
each Customer who previously signed up for this Prepaid Plan and has been active
on the service for at least three successive full months of service. Customers
who have converted from a Package Plan to this Prepaid Plan after 60 days of
active paid service will not be included in the calculation of the foregoing
commission payable by CNC for this Prepaid Plan.
(d) Cancellation. If a Customer under this Prepaid Plan cancels before
------------
the completion of the full six month "paid" term, then they will be treated as
an Intuit Unlimited Package Plan customer (i.e., [*]/month for unlimited use)
and refunded accordingly. By way of example, an existing Customer who canceled
on or before the third anniversary date would be refunded [*]. A new Customer
will receive credit for the first free month, so if they canceled on or before
the third anniversary date they would be refunded [*] for the four remaining
months that were not used.
(e) Continuation of Services. When customers sign up for this Prepaid
------------------------
plan they will be notified that they will revert to Intuit's Unlimited Package
Plan at the end of the subscription period (i.e., currently [*]/month for
unlimited use).
Effective Date: October 15, 1996
INTUIT INC. CONCENTRIC NETWORK
CORPORATION
By: /s/ WILLIAM HARRIS By: /s/ MICHAEL F. ANTHOFER
---------------------------- -----------------------------
Name: Bill Harris Name: Michael F. Anthofer
-------------------------- ---------------------------
Title: Executive Vice President Title: VP & CFO
------------------------- --------------------------
6220 Greenwich Drive 10590 North Tantau Avenue
San Diego, CA 92122 Cupertino, CA 95014
- ------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.33
SUPPORT SERVICES AGREEMENT
THIS AGREEMENT is entered into as of this 31st day of March, 1997 by and
---- -----
between CONCENTRIC NETWORK CORPORATION, located at 10590 N. TANTAU AVENUE,
CUPERTINO, CALIFORNIA 95014 (hereinafter referred to as "Customer") and MCI
TELECOMMUNICATIONS CORPORATION, located at 1801 PENNSYLVANIA AVENUE, N.W.,
WASHINGTON, D.C. 20006 (hereinafter referred to as "MCI") and sets forth the
terms and conditions under which Customer will provide MCI with certain
Equipment under bailment and MCI will provide certain support services to
Customer on specified MCI premises (hereinafter referred to as the "MCI Network
Location(s)").
WHEREAS, MCI is desirous and capable of providing support services for certain
Customer-Provided Equipment which interconnects to MCI transmission services;
and
WHEREAS, Customer desires to have the Equipment supported by MCI in a designated
portion of certain MCI Network Location(s), as set forth in Exhibit A of this
agreement (hereinafter referred to as the "Location and Equipment Summary"),
which is attached hereto and made a part hereof; and
WHEREAS, Customer and MCI (hereinafter referred to cumulatively as the "Parties"
and singularly as the "Party") have agreed on the terms which shall govern the
bailment and support of the Equipment as set forth in Exhibit B of this
agreement (hereinafter referred to as the "Statement of Work"), which is
attached hereto and made a part hereof, and as set forth in Exhibit C of this
agreement (hereinafter referred to as the "Non-Recurring and Monthly Recurring
Pricing Summary"), which is attached hereto and made a part hereof;
NOW, THEREFORE, in consideration of the mutual agreements and promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:
A. UNDERTAKINGS
1. Customer will provide for the inside delivery of the Equipment at the MCI
Network Location(s) as specified in the Location and Equipment Summary with
proper and timely notification as specified in the Statement of Work.
2. Customer will install the Equipment at the MCI Network Location(s) as
specified in the Location and Equipment Summary in accordance with MCI and
Industry standards and practices as specified in the Statement of Work.
3. MCI will connect the Equipment to MCI services at the MCI Network
Location(s) as specified in the Location and Equipment Summary in accordance
with MCI standards and practices as specified in the Statement of Work.
MCI Confidential
1
<PAGE>
4. MCI will hold the Equipment in bailment for use only at the MCI Network
Location(s) as specified in the Location and Equipment Summary and only for the
purposes contemplated herein.
5. During the term of the bailment, MCI shall provide space, power, testing,
environment and other support services for the Equipment as set forth in the
Statement of Work and MCI shall have no other responsibility for the Equipment.
6. Customer shall cooperate fully with MCI in the provision of these support
services and agrees to perform those activities identified as Customer
Responsibilities in the Statement of Work.
B. TERM AND TERMINATION
1. The initial term of this Agreement shall commence on the first (1st) day of
January, 1997, shall continue for a period of five (5) years, and then shall
terminate on the thirty first (31st) day of December, 2002.
2. This Agreement is binding when executed by Customer and subsequently
accepted by MCI and once accepted by MCI, the rates and charges provided in this
Agreement will be effective from the first day of the next billing cycle
following Customer's signature date (the "Effective Date").
3. As of the Effective Date, that certain Support Services Agreement, between
MCI and Sattel Communications L.L.C. governing the bailment of equipment and
support services at the MCI premises located at One Wilshire Building, 624 South
Grand Avenue, Suite 600, Los Angeles, California 90017, which was assigned to
Customer on August 7, 1996, shall be canceled without Customer incurring any
liabilities other than the payment of any amounts due and owing from that
certain Support Services Agreement after December 31st, 1996.
4. Either Party may terminate this Agreement following the giving of ninety
(90) calendar days prior written notice of termination to the other Party.
5. If Customer terminates this Agreement prior to the expiration of the initial
five (5) year term, Customer will pay MCI, in addition to all other charges
due, [*] per MCI Network Location, which amount shall represent liquidated
damages that Customer agrees are reasonable.
6. Customer shall remove its Equipment from the MCI Network Location(s) within
ten (10) calendar days of the termination of this Agreement and, if Customer
fails to do so, MCI may itself remove the Equipment and store the same at
Customer's expense and at Customer's sole risk. Any expenditure by MCI for the
removal and storage of the Equipment shall bear interest at the lesser of
Fifteen percent (15%) per annum or the maximum rate permitted by law.
MCI Confidential
- ----------
[*]Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
2
<PAGE>
7. The rights and duties in Article D, "Warranty and Liability" shall survive
the termination of this Agreement.
C. FINANCIAL PROVISIONS
1. Customer shall pay MCI a non-recurring fee for Site Preparation, Additional
AC or DC Power Circuits and Circuit Interconnection at each of the MCI Network
Location(s) as set forth in the Non-Recurring and Monthly Recurring Pricing
Summary.
2. Customer shall pay MCI on a monthly recurring basis for Location Management
Fee(s), an Uninterruptable Power Supply (UPS) for 115V AC Power Circuits and for
MCI First-Level Maintenance Support at each of the MCI Network Location(s) as
set forth in the Non-Recurring and Monthly Recurring Pricing Summary.
3. Customer shall pay MCI a one time charge of [*] per circuit when, at the
Customer's request, MCI provided cabling is added, moved or changed after the
initial Site Preparation work listed in the Equipment and Location Summary is
completed by MCI. This charge is in addition to any other charges specified in
the applicable tariff or contract from the entity from which the facility or
service is obtained.
4. For equipment moves made pursuant to Customer's request, Customer shall pay
[*] for each unit of Equipment this is moved to a different location within the
same MCI Network Location after the initial Site Preparation work listed in the
Equipment and Location Summary is completed by MCI.
5. Customer shall pay directly or reimburse MCI, as applicable, for all taxes,
duties, and similar liabilities which may result from this Agreement, or any
support services specified hereunder, exclusive of taxes based on MCI's net
income.
6. All invoices shall be due and payable in U.S. dollars within thirty (30)
calendar days upon receipt as set forth in the Non-Recurring and Monthly
Recurring Pricing Summary.
D. WARRANTY AND LIABILITY
1. MCI warrants that its undertakings hereunder shall be performed in a
professional and workmanlike manner and that it will provide Support Services in
accordance with this Agreement.
MCI Confidential
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[*]Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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NO OTHER WARRANTIES ARE EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
2. Customer warrants that it has the unrestricted right to place the Equipment
at MCI's Location(s) listed in the Location and Equipment Summary for the term
of this Agreement.
3. Except as otherwise set forth herein, neither Party shall be deemed
negligent, at fault or liable in any respect to the other for any delay,
interruption or failure in performance hereunder resulting from fire, flood,
water, the elements, explosions, acts of God, war, accidents, labor disputes,
strikes, shortages of equipment or suppliers, unavailability of transportation
or other cause beyond the reasonable control of the Party delayed or prevented
from performing.
4. Except to the extent the same is caused solely by the gross negligence or
willful misconduct of MCI, its authorized agents or employees, Customer shall
indemnify and hold harmless MCI, its agents, contractors and employees from and
against any and all claims, liability, damage, loss, or expense (including
attorney's fees) including injury or death to persons, or damages to property,
both real and personal, which may arise out of: (a) the presence of Customer's
unit(s) of Equipment, employees, contractors or agents on MCI's premises; (b)
the installation, operation, maintenance or removal of the Customer's unit(s) of
Equipment from MCI's premises; (c) any inherent defects in the Customer's
unit(s) of Equipment.
5. Customer shall indemnify and hold harmless MCI, its agents, contractors and
employees from and against any and all claims, liability, damage, loss, or
expense (including attorney's fees) including injury or death to persons, or
damages to property, both real and personal, which may arise out of the
negligent or intentional acts or omissions of Customer, its agents, employees or
contractors.
6. MCI shall not be liable for any damages to the Equipment for any reason,
except to the extent the same is caused solely by the gross negligence or
willful misconduct of MCI, its authorized agents or employees; provided,
however, that in the event the Equipment while in the possession and control of
MCI is either lost or so damaged as the result of MCI's gross negligence or
willful misconduct, the maximum liability of MCI for said Equipment shall not
exceed the replacement value of the Equipment in a dismantled state, if repairs
are impracticable, or, in the event said Equipment is repairable, the costs to
repair damage thereto.
7. In no event shall either Party be liable to the other for any indirect,
incidental, special or consequential damages, including loss of revenue and
profits, even if aware of the possibility thereof.
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8. Notwithstanding anything to the contrary in this Agreement, MCI's liability
to Customer for any reason and upon any cause of action or claim in contract or
tort, including without limitation breach of this Agreement or any warranty
hereunder, regardless of form of action, shall not exceed the lesser of direct
damages proved or One (1) month's Location Management Fee.
9. THE LIMITATIONS SET FORTH IN THIS ARTICLE D APPLY TO ALL CAUSES OF ACTIONS
OR CLAIMS IN THE AGGREGATE INCLUDING WITHOUT LIMITATION, BREACH OF CONTRACT,
BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, MISREPRESENTATION AND OTHER
TORTS. FURTHER, NO CAUSE OF ACTION WHICH ACCRUED MORE THAN TWO (2) YEARS PRIOR
TO THE FILING OF A SUIT ALLEGING SUCH CAUSE OF ACTION MAY BE ASSERTED AGAINST
MCI. CUSTOMER AND MCI EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE LIMITATIONS AND
EXCLUSIONS CONTAINED HEREIN REPRESENT THE PARTIES' AGREEMENT AS TO THE
ALLOCATION OF RISK BETWEEN THE PARTIES IN CONNECTION WITH MCI'S OBLIGATIONS
UNDER THIS AGREEMENT. THE PAYMENTS PAYABLE TO MCI IN CONNECTION HEREWITH REFLECT
THIS ALLOCATION OF RISK AND THE EXCLUSION OF CONSEQUENTIAL DAMAGES IN THIS
AGREEMENT.
E. ACCESS, TITLE AND INSURANCE
1. Customer, its agents, employees and contractors who, in MCI's discretion, do
not pose a security risk to MCI personnel or property, shall be permitted access
to MCI Location(s) listed in the Location and Equipment Summary, to be
accompanied at all times by an MCI escort, during normal business hours for the
purpose of installing, operating, maintaining, repairing or removing the unit(s)
of Equipment, after giving a reasonable advance notice to MCI, provided,
however, that Customer agrees to comply with MCI's security regulations and
other local site operating policies and procedures while on the MCI Network
Location for these express purposes. A reasonable advance notice as referenced
above shall be provided as follows: (a) a minimum of no less than seven (7)
calendar days notice for the purpose of installing, preparing or removing the
Equipment; (b) a minimum of twenty-four (24) hours advance notice for routine
preventive maintenance on the Equipment; (c) as soon as possible for the
reporting of a network malfunction causing loss of service or a degraded
operating condition in the Equipment.
2. The Parties agree that Customer is making the Equipment available hereunder
as a bailment and that title to the Equipment will remain with Customer or
Customer's lessor and that MCI shall have no right, title or interest therein,
except as expressly provided in this Agreement. MCI will not impose liens,
security interests or encumbrances on the Equipment.
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3. The Parties agree not to move the Equipment to any other location prior to
the expiration of this Agreement without the other Party's prior written consent
nor to make alterations in or affix attachments to the Equipment, except that
Customer may make those alterations or affix attachments to the Equipment as
necessary for Customer's networking requirements, provided Customer gives MCI
advance notice of no less than seven (7) days before making such changes to the
Equipment, and that MCI may relocate the Equipment to another MCI Location for
its convenience due to MCI's networking requirements.
4. In the event of such Equipment relocation for MCI's convenience, MCI agrees
to pay all costs associated with the removal, moving, installation and
demarcation of such equipment, other than any direct or indirect costs, of any
kind or nature, incurred by Customer for its vendors or technicians (whether
employees or independent contractors), including without limitation, travel and
lodging expenses (if any) and salary or other payments for services rendered.
Customer understands that during such an Equipment relocation Customer will
experience a communications service outage while the Equipment is being
relocated.
5. Throughout the term of this Agreement, Customer shall obtain, maintain and
pay for: (i) all risk property insurance covering the Equipment; (ii)
comprehensive general liability (including products and completed operations
liability and broad form property damage) insurance covering the Equipment and
the contractual liability of Customer under this Agreement in form and with
insurers reasonably satisfactory to MCI and with a minimum limit of Two Million
Dollars ($2,000,000) per occurrence for personal injury, bodily injury and
property damage; (iii) Worker's Compensation with statutory benefits; (iv)
Employees Liability with a minimum limit of Five Hundred Thousand Dollars
($500,000) per occurrence; and (v) automobile liability insurance with a minimum
limit of One Million Dollars ($1,000,000) per occurrence for bodily injury and
property damage. All insurance policies required to be maintained by Customer
under this Agreement shall be with insurance companies licensed to do business
in the states where the Equipment is located, reasonably satisfactory to MCI,
and shall name MCI as an additional insured. Certificates of such insurance
(showing payment of current premiums thereon) shall be delivered to MCI a
minimum of ten (10) days prior to Equipment delivery with renewals thereof
delivered to MCI a minimum of ten (10) days prior to the expiration of any such
policies. Each policy shall contain an agreement by the insurer that such policy
shall not be canceled without ten (10) days prior notice to MCI.
Certificates of insurance should be mailed to:
MCI Telecommunications Corporation
Attn: Risk Management
1801 Pennsylvania Avenue, N.W.
Washington, DC 20006
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F. CANCELLATION FOR CAUSE
1. In addition to any other rights of termination specified herein, either
Party may terminate this Agreement upon three (3) days prior written notice to
the other in the event of:
A. the other's failure to pay any amounts due hereunder and not duly
contested in good faith within ten (10) days after the receipt of the
terminating Party's written notice of default concerning the same; or
B. the other's failure to cure a material breach within thirty (30) days
after receipt of the terminating Party's written notice of default concerning
the same.
G. NOT A LEASE OR LICENSE
Customer understands and agrees that this Agreement is not intended to and shall
not be deemed to grant Customer any property rights in any of the MCI Network
Location(s) listed in the Location and Equipment Summary. In the event, however,
that this Agreement is construed by an MCI landlord to be such a grant for any
of the MCI Network Location(s) listed in the Location and Equipment Summary,
Customer agrees to either enter into an agreement approved by MCI's landlord, or
immediately remove its Equipment upon request of MCI.
H. GENERAL
1. During the term of this Agreement, Customer shall employ MCI transmission
service(s) exclusively in connection with Customer Equipment located on MCI
premises except as follows: (i) local access lines; and (ii) interconnection of
Customer Equipment located on MCI premises with other interexchange carriers
will be permitted solely to achieve route diversity, redundancy for disaster
recovery, or to accommodate Customer's need for a particular service not
provided by MCI. Route diversity will be allowed for a maximum of two (2)
circuits per diversely routed city pair. Customer shall have three hundred and
sixty five (365) calendar days to migrate service from other interexchange
carriers to MCI service once comparable service is available from MCI. In all
instances where Customer believes it necessary to acquire transmission
service(s) from another carrier or carriers for termination in Customer's
Equipment located on MCI premises, Customer shall advise MCI in advance prior to
implementing such service(s). Nothing contained in this paragraph shall be
interpreted to prevent MCI from exercising any of its termination rights under
this Agreement. It is further understood that MCI reserves the right to cancel
this Agreement should Customer cease to interconnect the Equipment to MCI
transmission service(s).
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2. It is understood that this Agreement is not intended to cover the terms
under which MCI provides any of its communications services to Customer.
3. This Agreement sets forth the entire understanding between the Parties with
regard to the subject matter hereof and supersedes any prior discussions or
representations between them with respect thereto. All amendments to this
Agreement shall be in writing and signed by both Parties.
4. Neither Party may use the name, trademark, service mark or Logo of the other
Party in any advertising, news releases or in any other manner without the
written consent of such Party.
5. Customer may not assign this Agreement or any of its rights hereunder
without written consent by MCI, which shall not be unreasonably withheld.
6. All Equipment provided for MCI by Customer hereunder for use in connection
with MCI's communications services shall be deemed to be "Customer-Provided
Terminal Equipment" within the meaning of MCI's Tariff.
7. The relevant rights and obligations of the parties shall survive the
termination of this Agreement.
8. All notices, requests, demands or communications required or permitted
hereunder shall be in writing, delivered personally or by telex, telegram, MCI
Mail, or certified, registered, or express mail at the respective addresses set
forth below (or at such other addresses as shall be given in writing by either
Party to the other). All notices, requests, demands or communications shall be
deemed effective upon personal delivery or on the calendar day following the
date of the telex, telegram, or MCI Mail, or when received if sent by registered
certified or express mail.
If to MCI: MCI Telecommunications Corporation
201 Spear Street
San Francisco, California 94105
FAX:
Attn: Law and Public Policy
With a copy to: MCI Telecommunications Corporation
6601 Centre Drive West
Suite 200
Los Angeles, California 90045
FAX:
Attn: Branch Sales Manager
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If to Customer: Concentric Network Corporation
10590 N. Tantau Avenue
Cupertino, California 95014
FAX: (408) 342-2810
Attn: Chief Financial Officer
9. This Agreement shall be governed and interpreted in accordance with the
domestic laws of the State of New York. Any dispute arising out of or related to
this Agreement, which cannot be resolved by negotiation, shall be settled by
binding arbitration in accordance with the J.A.M.S./ENDISPUTE Arbitration Rules
and Procedures ("Endispute Rules"), as amended by this Agreement. The costs of
arbitration, including the fees and expenses of the arbitrator, shall be shared
equally by the parties unless the arbitration award provides otherwise. Each
party shall bear the cost of preparing and presenting its case. The parties
agree that his provision and the arbitrator's authority to grant relief shall be
subject to the United States Arbitration Act, 9 U.S.C. 1-16 et seq. ("USAA"),
the provisions of this Agreement and the ABA-AAA Code of Ethics for Arbitrators
in Commercial Disputes. The parties agree that the arbitrator shall have no
power or authority to make awards or issue orders of any kind except as
expressly permitted by this Agreement, and in no event shall the arbitrator have
the authority to make any award that provides for punitive or exemplary damages.
The arbitrator's decision shall follow the plain meaning of the relevant
documents, and shall be final and binding. The award may be confirmed and
enforced in any court of competent jurisdiction. All post-award proceedings
shall be governed by the USAA.
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ACCEPTED AND AGREED TO:
CONCENTRIC NETWORK MCI TELECOMMUNICATIONS
CORPORATION CORPORATION
By: /s/ John Peters By: /s/ Edward W. Smith
--------------------- -----------------------
Name: JOHN PETERS Name: EDWARD W. SMITH
--------------------- -----------------------
Title: EVP Title: EXECUTIVE DIRECTOR/
-------------------- CONTROLLER, FINANCE
-----------------------
Date: 3/31/97 Date: 04/24/97
-------------------- -----------------------
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Page 1 of 30
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EXHIBIT A
LOCATION AND EQUIPMENT SUMMARY
[*]
[*] Certain information in this exhibit has been omitted and filed separately
with the Securities and Exchange Commission. A total of 30 pages containing
such information has been omitted from this exhibit. Confidential treatment has
been requested with respect to the omitted portions.
<PAGE>
Page 1 of 3
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EXHIBIT B
STATEMENT OF WORK
MCI RESPONSIBILITIES:
Furnish and install, as part of the Site Preparation, such equipment rack(s),
signal cabling, demarcation panel(s). AC power and DC power as requested by the
Customer to support the installation of the Equipment at the MCI Network
Location(s) specified in Exhibit A.
Upon completion of Site Preparation, perform testing as MCI deems appropriate to
verify proper operation of MCI provided signal cabling, associated demarcation
panel(s) and AC power and DC power at the MCI Network Location(s) specified in
Exhibit A.
Provide a central telephone number of the MCI Network Management Center (MNMC)
to be used by Customer to report all troubles, schedule routine maintenance
visits, request First Level Maintenance and to request MCI technical support,
should the MCI Network Location be unmanned at time of Customer's request.
MCI will perform "First Level Maintenance" on the Equipment only at the
direction of Customer or its designated vendor at the MCI Network Location(s)
specified in Exhibit A.
MCI performed "First Level Maintenance" on the Equipment is defined as follows:
a. At the direction of the Customer or its designated vendor report any
visual or audio alarms on the Equipment at the MCI Network Location(s)
specified in Exhibit A.
b. At the direction of the Customer or its designated vendor, rebooting
and/or restarting the Equipment at the MCI Network Location(s) specified in
Exhibit A by pressing of readily accessible buttons or switches.
c. At the direction of the Customer or its designated vendor, replace
Equipment modules and/or cards with on site Customer provided spare modules
and/or cards at the MCI Network Location(s) specified in Exhibit A.
Order, maintain and provide routine and emergency maintenance on MCI services up
to the designated MCI demarcation point located in the Equipment at the MCI
Network Location(s) specified in Exhibit A.
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Page 2 of 3
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EXHIBIT B
STATEMENT OF WORK
MCI RESPONSIBILITIES: (CONTINUED)
Provide the necessary facilities to provide Customer with the proper
transmission quality as stated in the MCI Tariff and/or other agreements by and
between the Parties at the MCI Network Location(s) specified in Exhibit A.
CUSTOMER RESPONSIBILITIES:
Properly stage all Equipment prior to shipment to the MCI Network Location(s)
specified in Exhibit A.
Arrange for inside delivery of Equipment with all labor, tools, and test
equipment necessary to completely install and test the Equipment at the MCI
Network Location(s) specified in Exhibit A.
Provide MCI with one (1) week prior notice of Equipment delivery at the MCI
Network Location(s) specified in Exhibit A.
Install, cable, power up, and test Equipment during such hours as determined by
the Site Manager of the MCI Network Location(s) specified in Exhibit A to
determine proper operating performance before the acceptance of MCI transmission
services at the MCI provided demarcation in the Equipment and ensure that the
Equipment provides the proper transmission quality to MCI.
Provide overall network management and monitoring of the Equipment at the MCI
Network Location(s) specified in Exhibit A.
Report all troubles, schedule routine maintenance visits, request First Level
Maintenance and request MCI technical support, should the MCI Network Location
be unmanned at time of Customer's request, through the MCI Network Management
Center (MNMC) for the Equipment at the MCI Network Location(s) specified in
Exhibit A.
Provide routine preventive and emergency maintenance for the Equipment at the
MCI Network Location(s) specified in Exhibit A.
Retain spares as Customer or its designated vendor deem necessary within the
Equipment at the MCI Network Location(s) specified in Exhibit A.
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Page 3 of 3
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EXHIBIT B
STATEMENT OF WORK
CUSTOMER RESPONSIBILITIES: (CONTINUED)
Maintain an accurate accounting of Equipment installed and spares at the MCI
Network Location(s) specified in Exhibit A.
Provide a receipt to MCI for all spares or Equipment removed from any of the MCI
Network Location(s) specified in Exhibit A.
Provide an accurate accounting all circuits installed to the Equipment at the
MCI Network Location(s) specified in Exhibit A. including circuit type, city
pairs and signaling levels for each circuit installed.
Provide MCI with a Customer contact list including names, home and office phone
numbers and pager numbers of key contacts and designated vendor(s) for the
routine maintenance and emergency repair of the Equipment at the MCI Network
Location(s) specified in Exhibit A.
Make necessary arrangements to work cooperatively with MCI in the isolation of
troubles, including but not limited to, the provisioning of loopbacks and
cooperative bit error rate testing at the Equipment at the MCI Network
Location(s) specified in Exhibit A.
Customer or its designated vendor shall not rearrange, disconnect, relocate,
remove, modify or attempt to repair the signal cabling, demarcation panel(s), AC
power and DC power provided by MCI, or permit others to do so, without prior
approval of MCI at the MCI Network Location(s) specified in Exhibit A.
If MCI or Customer detects any noise or interference above the thresholds or
limits for EMI/RFI that are established by the FCC by the Equipment placed at
the MCI Network Location(s) specified in Exhibit A, then it will be Customer's
responsibility to correct that interference to MCI's satisfaction immediately
upon notification or detection.
Bear all costs associated with third party vendor efforts in disaster recovery
of the Equipment at the MCI Network Location(s) specified in Exhibit A.
Provide MCI with any necessary agency authorization as may be required for MCI
to fulfill its obligations under this Support Services Agreement and the
Exhibits attached hereto and made a part hereof this Agreement.
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Page 1 of 13
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EXHIBIT C
NON-RECURRING AND MONTHLY RECURRING PRICING SUMMARY
PREPARED FOR CONCENTRIC NETWORK CORPORATION
[*]
MCI Confidential
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[*]Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. A total of 13 pages containing such
information has been omitted from this exhibit. Confidential treatment has been
requested with respect to the omitted portions.
1
