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
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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
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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
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".
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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.
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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.
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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".
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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
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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.
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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., "xxxx://xxx.xxxx.xxx".
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1.33 Certain other terms used herein are defined in the following
provisions:
Term Section
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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"
2. Concept of Operations and General Agreement.
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2.1 Concept of Operations. Intuit desires to make available the
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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
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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 xxxx 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
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CNC Network is described in Exhibit "A" attached hereto. CNC has established
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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
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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
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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 one million
dollars ($1,000,000), 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.
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3.1 System Development. In accordance with the Development Project
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Work Statement attached hereto as Exhibit "B", the parties shall perform their
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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
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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
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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.
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4.1 Introduction of Services. Once the development and testing of
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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,
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Second Contract Year, etc.
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4.2 Ongoing Operations and Customer Support. With respect to
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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,
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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
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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
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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
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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
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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 xxxxxxxx, 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
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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.
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4.2.5.1 CNC Network Performance. During the Term, the CNC Network
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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
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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
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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
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beginning of each Contract Year, Intuit shall prepare and deliver to CNC a non-
binding services
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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
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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
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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.
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4.3.1 Quarterly Usage Forecasts. Each month, Intuit shall provide
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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,
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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.
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4.3.2.1 Service Charges. The Service Charges are the fees
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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
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determine the Service Charges payable by Intuit. Any delinquent payments by
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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
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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
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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
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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"
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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
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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
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accurate books, records and accounts relating to the CNC Services and Internet
Services to support and document all charges, xxxxxxxx, xxxx-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
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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
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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
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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
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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.
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5. Related Covenants.
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5.1 Confidential Information.
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5.1.1 Confidential Nature. During the course of this relationship,
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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
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 xxxx 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 xxxxxxxx,
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.
--------------------
12
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
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
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
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
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/ Xxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxxx
------------------------------ ---------------------------------
Xxxxxxx Xxxxxx, Executive Vice Xxxxx Xxxxxxxx, President and CEO
President
Address: 0000 Xxxxxxxxx Xxxxx Address: 00000 X. Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000 Xxxxxxxxx, XX 00000
17
LIST OF EXHIBITS
----------------
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
18
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 000 xxxxxxxxxxxx xxxxx xx xxx xxxxxxxxxxx Xxxxxx Xxxxxx
(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
(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 xxxx-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
POP Ports Avg Busy
----- ----- --------
1 24 .035
2 36 .015
3 48 .025
4 10 .005
5 72 .010
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:
POP Ping Samples (in milliseconds) Average
----- --------------------------------------- -------
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
-----
----------------
[*] 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.
Overall Average 142.6
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 xxxx 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
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:
Day Calls Offered ASA Calls Offered x ASA
---- ------------- --- -------------------
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
------------
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.
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
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.
EXHIBIT "B"
-----------
DEVELOPMENT PROJECT WORK STATEMENT
1. Project Coordination
--------------------
Project Managers:
----------------
Intuit: Xxxxxxxx Xxxxx-Xxxx
CNC: Xxxx Xxxxxx
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: Xxx XxxXxxxxxx
CNC: Xxxx Xxxxxxx
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
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.
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.
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: Xxx Xxxxxx
CNC: Xxxxxx Xxxxxx
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 Xxxxxxxx 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 xxxxxxxx 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 xxxxxxxx. 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
C. Customer Credit Procedures. During the initial phase of operations, the
--------------------------
parties will handle Customer credits as follows:
1. Improper or Inaccurate Xxxxxxxx. 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 Xxxxxxxx. 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 xxxx 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 xxxx). 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
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.
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.
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:
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)
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:
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
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.
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
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
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/ Xxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxxx
------------------------- ----------------------------------
Xxxxxxx Xxxxxx, Executive Xxxxx Xxxxxxxx, President and CEO
Vice President
Address: 0000 Xxxxxxxxx Xxxxx Address: 00000 X. Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000 Xxxxxxxxx, XX 00000
37
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.
* 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.
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
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.
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.
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:
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)
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:
Estimated New Subscribers/month - Standard Plans (Restricted
Access, Full Access
accounts by type of plan),
Package Plans and Prepaid
6
Plans
Estimated Total # Base - (same breakdown as above)
Subscribers/month
Estimated Average Personal - Standard Plans Only
Usage/month
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/ XXXXXXX XXXXXX By: /s/ XXXXXXX XXXXXXXX
-------------------------- ------------------------
Xxxxxxx Xxxxxx Xxxxxxx Xxxxxxxx
Executive Vice President Chief Financial Officer
0000 Xxxxxxxxx Xxxxx 00000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000 Xxxxxxxxx, XX 00000
7
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.
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:
--------------------- ----------------------
0000 Xxxxxxxxx Xxxxx, Xxxxx 000 00000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000 Xxxxxxxxx, XX 00000
9
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
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achieve average successful connection rates at or above the following
Performance Standards for Intuit Customers attempting to access the CNC Network:
Target Performance Standard:
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[*] "successful connection" rate for VLA-type POP sites
[*] "successful connection" rate for physical-type POP sites
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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.
Minimum Performance Standard:
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[*] "successful connection" rate for VLA-type POP sites
[*] "successful connection" rate for physical-type POP sites
Comments:
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(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:
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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.
(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:
POP Total Adjusted Successful Successful
Test Total Connections Connection
Calls Test Rate
Calls
#1 30 29 27 93.1
#2 38 38 36 94.7
Totals 68 67 63 94.0
(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:
POP POP Port Weighting Weighted
Successful Count at Factor Average
Connection applicable (based on Successful
Rate POP number Connection
of ports) Rate
#1 93.1 48 .4 37.24
#2 94.7 72 .6 56.82
Totals 94.0 120 1.0 94.06%
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
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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/ XXXXXXX XXXXXX By: /s/ XXXXXXX XXXXXXXX
-------------------------- ---------------------------
Xxxxxxx Xxxxxx Xxxxxxx Xxxxxxxx
Executive Vice President Vice President and CFO
0000 Xxxxxxxxx Xxxxx 00000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000 Xxxxxxxxx, XX 00000
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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.
PRICING PLAN ADDENDUM NO. 1 PURSUANT
TO INTERNET ACCESS SERVICES AGREEMENT
Name of Plan: "Intuit 6 Month Prepaid Plan"
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(a) Usage and Customer Charges. Intuit will charge a new Customer
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(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,
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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
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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
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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/ XXXXXXX XXXXXX By: /s/ XXXXXXX X. XXXXXXXX
---------------------------- -----------------------------
Name: Xxxx Xxxxxx Name: Xxxxxxx X. Xxxxxxxx
-------------------------- ---------------------------
Title: Executive Vice President Title: VP & CFO
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0000 Xxxxxxxxx Xxxxx 00000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000 Xxxxxxxxx, XX 00000
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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.
