EXHIBIT 10.42
AMENDMENT TO VIRTUAL PRIVATE NETWORK SERVICES AGREEMENT
This Amendment is made as of November 1, 1997 by and between Concentric
Network Corporation ("CNC") and WebTV Networks, Inc. ("WNI"), for the purpose of
amending the Revised Virtual Private Network Services Agreement dated February
1, 1997 between the parties ("Agreement").
WHEREAS, the parties have entered into the Agreement to provide WNI and its
customers with Internet access through CNC points of presence; and
WHEREAS, the Agreement contained pricing and other terms for such services
intended to be effective through December 1997, [*]
WHEREAS, the parties wish to come to agreement as to pricing and terms for the
period January 1998 through December 1998; and
WHEREAS, the parties have agreed upon a new [*] pricing model for the period
commencing February 1998.
NOW, THEREFORE, the parties agree as follows:
THE FOLLOWING NEW SECTION WILL BE ADDED:
1.20 "Subscriber Traffic" shall mean Subscriber calls for Virtual Network
Services that are routed to the CNC's Virtual Private Network Services by WNI.
SECTION 1.8 (PROJECT MANAGER) WILL BE DELETED.
SECTION 2.2 (USENET) WILL BE REPLACED WITH THE FOLLOWING:
2.2. UseNet. CNC will provide WNI with a UseNet newsfeed without charge.
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SECTION 2.4 (PROJECT MANAGER) WILL BE DELETED.
SECTION 2.6 (GENERAL NETWORK OPERATION) WILL BE REPLACED WITH THE FOLLOWING:
2.6. Network Operation.
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2.6.1 General. CNC shall use commercially reasonable efforts to
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operate the Virtual Private Network Services seven (7) days per week, twenty
four (24) hours per day, three hundred sixty-five (365) days per year. CNC shall
provide services under this Agreement that meet the [*],
[*] 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.
including without limitation with respect to accessibility, latency, packet loss
and throughput. CNC will respond to any network outages pursuant to the
escalation procedures set forth in Exhibit C and, as part of such responses, CNC
will use all [*] to implement such actions as are appropriate so as to maintain
the services under the terms of this Agreement. Virtual Private Network Services
will include 56,000 baud access for Subscribers, where available, at no
surcharge.
2.6.2 "As Available" Connections. WNI shall have the right to use CNC
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points-of-presence for more simultaneous connections than the current Virtual
Port Commitment on an "As Available" basis. Charges for use of Virtual Ports on
an [*] will be determined by the rates in Section 5.1 using the calculation
method in Section 5.1.3. CNC may elect to terminate new connection requests at
the time they are received from WNI subscribers if:
(a) CNC is delivering to WNI simultaneous connections across
all CNC Points of Presence equal to or in excess of the current Virtual Port
Commitment level, and
(b) The Point of Presence (defined for WNI by CNC a list of
area code/prefix pairs) receiving the call and connection request has [*] or
more of its operational ports in use at or about the time the request is
received.
If the WNI connection request is denied by CNC, a status code will be sent to
WNI indicating that CNC has refused the connection (and identifying the
requesting WNI account/ID, if available). It is understood that these
connection refusals, which will occur after the telephone call from the WNI
customer is completed, a PPP session is established with the CNC dial in access
server, and before establishment of a TCP connection between the WNI
Subscriber's terminal and the WNI Network, will not be counted as connection
failures for the performance measurement provided for in Section 2.6.3(a). WNI
and CNC shall, during the 90 day period commencing February, 1998, evaluate the
terms in this Section 2.6.2 and renegotiate such terms if the parties so agree.
2.6.3 Performance Standards.
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2.6.3(a) CNC. CNC shall maintain at least an [*] connection
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success rate averaged during the peak hour as measured by [*]. If CNC fails to
meet this connection success standard, then notwithstanding Section 6.2.2, CNC
will immediately prepare a mutually agreed upon action plan and CNC will have
[*] to cure. The action plan will include the right for WNI to [*] until CNC
achieves the connection success performance standard. Once CNC achieves the
connection success performance standard WNI will ramp up to the Virtual Port
Commitment level in effect prior to any reduction; commensurate with CNC's
capacity. During the months of [*] this connection success performance standard
is waived by WNI and CNC shall have not liability for any failure to achieve it.
2.6.3(b) CNC. CNC agrees to provide the Virtual Port capacity
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as measured by the CNC simultaneous port tool to satisfy the current Virtual
Port Commitment level. CNC will
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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ensure that its network will accommodate the number of simultaneous connections,
as measured by the CNC simultaneous port tool, equal to the current Virtual Port
Commitment. In any given calendar month, [*].
2.6.3(c) Failure of Performance Standards. If, for a period of
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[*] during any [*], CNC fails to service Subscriber Traffic equivalent to the
current Virtual Port Commitment in accordance with Section 2.6.3(a) then a
"Performance Failure" will have occurred. Notwithstanding the above, no such
Performance Failure will be deemed to have occurred if, during the [*] (i) WNI
does not deliver Subscriber Traffic to CNC to generate sufficient simultaneous
port demand to meet the current Virtual Port Commitment, or (ii) the average
hours per day that Subscribers use the Virtual Private Network Services has
dropped more than [*] from the daily average in the prior month. If either party
disputes whether a Performance Failure has occurred, the parties shall, within
[*] after such party notifies the other of the dispute, appoint a mutually
acceptable third party to determine whether a Performance Failure has occurred;
instruct such third party to deliver an opinion on whether a Performance Failure
has occurred within [*] of such third party's appointment; and abide by the
decision of such third party. WNI and CNC shall each pay one half the cost of
the third party fees for service to render the decision.
2.6.3(d) Reduction of Fees due to Failure of Performance
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Standards. If a Performance Failure occurs for a given month, then Virtual
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Port Fees for such month [*]: Virtual Port Fees for the month will equal the
Virtual Port Fee in Section 5.1.4 multiplied by the sum of:
(i) the average of the [*] Subscriber connections during days
of Performance Failure, multiplied by the number of days of Performance Failure,
divided by the total days in the month.
(ii) the average of actual peak simultaneous Subscriber
connections for the [*] when that Performance Failure did not occur, multiplied
by [*].
If the Performance Failure period spans [*], the reduction in fees will be
allocated across both months and calculated for each as in 2.6.3 (d) (i) and
(ii), above, based on the number days performance was deficient in each of the
months.
[*]
SECTION 2.9 (800 SERVICE) WILL BE DELETED.
SECTION 3.4 (STATISTICAL INFORMATION) WILL BE REPLACED WITH THE FOLLOWING:
3.4. Statistical Information. WNI and CNC will disclose to each other, to the
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extent that it is reasonably available, statistical information [*]. No less
frequently than once per month, CNC will provide WNI with a report of excess
capacity existing in each of CNC's Points of Presence, and a
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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report of any call connection failures, covering the period since the last such
report, to help WNI determine where and how to direct Subscriber Traffic to each
CNC Point of Presence. Information reported under this Section 3.4 will be
subject to the terms of Sections 8.2 and 8.3.
SECTION 4.1 (ROLLING FORECASTS) WILL BE REPLACED WITH THE FOLLOWING:
4.1. Rolling Forecasts. Each calendar month, WNI shall provide CNC a non-
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binding rolling forecast of the Virtual Ports it anticipates it will use, along
with expected usage by Point of Presence, during the ensuing [*]. Each [*], CNC
will provide WNI with a forecast of capacity in each of CNC's Points of Presence
for the upcoming month. CNC and WNI shall meet and discuss these forecasts and
the statistical information outlined in Section 3.4 on a monthly basis.
SECTION 4.2 (VIRTUAL PORT COMMITMENT) WILL BE REPLACED WITH THE FOLLOWING:
4.2. Virtual Port Commitment.
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4.2.1 Commitments by Time Period. Virtual Port Commitments will be as
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in the table below. WNI will exercise best efforts during the months of [*] to
direct sufficient subscribers to CNC as preferred provider to make use of an
average of [*] Virtual Ports [*], with best effort to use at least [*] Virtual
Ports in [*]. WNI's best effort commitment for November and December, 1997 will
be reduced to the extent that CNC Virtual Ports are unavailable due to busy
levels and the charges reduced to reflect the actual ports delivered.
[*]
The parties shall negotiate in good faith to determine the Virtual Port
Commitment for the period after December 31, 1998. CNC and WNI mutually
acknowledge that they have each satisfied the foregoing commitments through
October 1997.
4.2.2 Increase in Virtual Port Commitment. WNI may increase its
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Virtual Port Commitment at any time, subject to the approval of CNC, which will
not be unreasonably withheld. Any Virtual Port Commitment increase must be in
effect a minimum of [*], which ever comes first. CNC shall provide WNI a non-
binding schedule to expand its network capacity to accommodate any increased
Virtual Port Commitments of WNI. For purposes of determining Virtual Port Fees,
any increased Virtual Port Commitment will not become effective until CNC
provides WNI with notice that such additional capacity is available.
4.2.3 Increase in Virtual Port Commitment During [*]. Notwithstanding
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Section 4.2.2 and Section 5.1.2 WNI may at any time during the period for [*]
increase its Virtual Port Commitment for the remainder of 1998 up to [*].
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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SECTION 5.1 WILL BE REPLACED WITH THE FOLLOWING:
5.1. Virtual Port and Hourly Fees.
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5.1.1. Virtual Port Commitment. WNI shall pay CNC Virtual Port Fees
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based on the current Virtual Port Commitment and actual "As Available" Virtual
Port usage, as follows:
MONTHLY FEE FOR VIRTUAL MONTHLY FEE FOR
TIME PERIOD PORT COMMITMENT ADDITIONAL VIRTUAL PORTS
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[*] [*] [*]
MONTHLY FEE FOR VIRTUAL MONTHLY FEE FOR "AS
TIME PERIOD PORT COMMITMENT AVAILABLE" VIRTUAL PORTS
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[*] [*] [*]
5.1.2. Increases in Virtual Port Commitment. If WNI increases its
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Virtual Port Commitment, as described in Section 4.2.2., Virtual Port Fees for
any additional Virtual Port Commitments will be as set forth in the table below.
The class of each Point of Presence will be as described in Exhibit E. CNC
reserves the right to modify Exhibit E on 30 days advance written notice. To
compute Virtual Port Fees, CNC shall monitor WNI usage statistics by Class of
Point of Presence during each month, and compute the percentage of Subscriber
Traffic accessing Class 1, 2, and 3 Points of Presence.
POINT OF PRESENCE TYPE PRICE PER VIRTUAL PORT
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Class 1 [*]
Class 2 [*]
Class 3 [*]
5.1.3. Increases in Virtual Port Commitment During [*]. Notwithstanding
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Section 5.1.2, If WNI increases its Virtual Port Commitment, as described in
Section 4.2.3., Virtual Port Fees for any such additional Virtual Port
Commitments will be priced at [*] per month.
5.1.4. Calculating Actual Usage. For [*], WNI will pay CNC for the
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Virtual Port Commitment or the actual number of peak simultaneous Subscriber
connections, whichever is higher. For the months of April 1997 through October
1997, WNI will pay CNC for either the Virtual Port Commitment or "Average Peak
Use", (which will mean the average of the [*] actual number of peak simultaneous
Subscriber connections for the month) whichever is higher. During the
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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period [*] and thereafter, notwithstanding the above, if the average of the [*]
than the [*], Average Peak Use will be the actual number of peak simultaneous
Subscriber connections for the [*].
5.1.5. Hourly Pricing. CNC will provide Virtual Private Network Services
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at the following hourly usage rates for Subscriber Traffic that WNI elects to
deliver to CNC and identify by mutually agreed upon accounting identification.
POINT OF PRESENCE TYPE HOURLY RATE
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Class 1 [*]
Class 2 [*]
Class 3 [*]
5.1.6. Limitation. The Virtual Port Fees in this Section 5.1 apply only
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to Virtual Private Network Services for Subscribers. Pricing for vertical
markets (e.g., commercial organizations such as hotels, hospital, educational
institutions, government) will be separately negotiated on a case-by-case basis.
SECTION 5.2 (RENEGOTIATION) WILL BE REPLACED WITH THE FOLLOWING:
5.2. Renegotiation. WNI and CNC agree to negotiate in good faith new pricing,
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terms, and conditions by [*] to be effective commencing [*]. If the parties
cannot agree on new pricing, terms and conditions by [*], then beginning no
earlier than [*], either party may, at its sole option anytime thereafter,
terminate this Agreement. Upon termination a 12 month minimum ramp-down period
will begin. During such ramp-down period, either the terminating party or the
other party (but not both) may reduce the Virtual Port Commitment by no more
then [*] Virtual Ports per month. Once such a ramp-down period begins, the
following Virtual Port Fees will apply in lieu of those set forth in Section
5.1:
MONTHLY FEES FOR MONTHLY FEES FOR
VIRTUAL PORT VIRTUAL "AS
COMMITMENT PORT COMMITMENT AVAILABLE" PORTS
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[*] [*] per Virtual Port [*] per Virtual Port
[*] [*] per Virtual Port [*] per Virtual Port
[*] [*] per Virtual Port [*] per Virtual Port
SECTION 5.6 (DEDICATED ACCESS FACILITIES) WILL BE REPLACED WITH THE FOLLOWING:
5.6. Dedicated Access Facilities. [*]
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SECTION 6.1 (TERM) WILL BE REPLACED WITH THE FOLLOWING:
6.1. Term. The term of this Agreement ("Term") shall commence on the Effective
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Date and continue unless and until terminated in accordance with this Section 6
or Section 5.2.
[*] 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.
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SECTION 6.2.1 (TERMINATION AT WILL) WILL BE REPLACED WITH THE FOLLOWING:
6.2.1. Termination At Will. At any time on or after October 1, 1999, either
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party may terminate this Agreement, for any reason or no reason, upon one
hundred and twenty (120) days' notice.
EXHIBIT E
Exhibit E of this Amendment will become Exhibit E of the Agreement.
Agreed to and Accepted:
CONCENTRIC NETWORK WEB TV NETWORKS, INC.
By: /s/ By: /s/
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Printed Name: Printed Name:
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Title: Title:
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[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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EXHIBIT E
PRELIMINARY
POINT OF PRESENCE CLASS DEFINITIONS
WEBTV POP LIST - AUG 1997
8/21/97
CLASS 1 180 54%
CLASS 2 115 34%
CLASS 3 41 12%
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TOTAL 336
[*]
[*] Certain information in this exhibit has been omitted and filed separately
with the Securities and Exchange Commission. A total of nine (9) pages has
been omitted. Confidential treatment has been requested with respect to the
omitted portions.
