AMENDED AND RESTATED
EMPLOYEE SERVICES AND STAFFING AGREEMENT
This Amended and Restated Employee Services and Staffing Agreement
("Agreement") dated as of June 19, 1997 by and between Concentric Network
Corporation ("CNC"), a Florida corporation with principal offices at 10590 N.
Tantau Avenue, Cupertino, California 95014 and Critical Technologies
Incorporated ("CTI"), a Delaware corporation with principal offices at 944
Anglum, Hazelwood, Missouri 63042.
WITNESSETH
----------
WHEREAS, CTI currently assists CNC with planning and implementation of
Points of Presences, network operations, implementation of network improvements
and the opening of "Virtual Local Access" calling areas in accordance with the
terms and conditions of the Employee Services and Staffing Agreement, as
amended, between the parties dated as of November 1, 1995 ("1995
Agreement");
WHEREAS, the needs of CNC and the capabilities of CTI have evolved since
November 1, 1995;
WHEREAS, CTI was acquired by Williams Communications Group, Inc. ("WCG"), a
Delaware corporation on March 6, 1997;
WHEREAS, WCG has agreed to invest an aggregate of $17 million as further
described and subject to the conditions set forth in that certain Memorandum of
Understanding dated May 30, 1997, between CNC and WCG; and
WHEREAS, CNC has agreed to modify the 1995 Agreement in recognition of its
current business requirements, CTI's current capabilities and the $3 million
loan.
NOW, THEREFORE, in consideration of the respective covenants and agreements
of the parties contained herein, the parties hereto agree as follows.
1. Definitions
-----------
For purposes of this agreement, certain words and phrases are defined as
follows.
(a) POP: "Point of Presence" is a local access network node on a
network.
(b) Staff Month: One calendar month of staff time including sick
time, weekends, holidays and vacation time. There are 12 such periods in each
calendar year.
(c) Loaned Employee: An employee of CTI, the services of which are
utilized by CNC to facilitate the goals and purposes of this Agreement.
(d) "Local Access Network Engineering and Design Services" and "Local
Access Network Design and Analysis": The modeling of traffic patterns and
expenses to determine the most effective method for expanding and modifying a
network's dial-in access nodes.
(e) Network Expansion Plan and Network Operations Plan: A series of
mutually agreed upon objectives and goals that are exhibits to this
Agreement.
(f) Existing POP Site Contract: The existing location management
contract between CNC and CTI, titled Collocations Services Agreement, dated
November 1, 1994, as amended, and attached as an exhibit to this contract.
(g) Reasonably Attainable: Tasks that could be completed by a group
of similar size and experienced individuals with the same capital flexibility
allowed by CNC. Additionally, the sum total of activities must also be able to
be completed by the group.
(h) Provisioning: The process of contracting for the physical
facility where a POP will be located and coordinating the telephone and other
equipment orders necessary to bring this site live or into production use by the
network.
(i) Co-locate: The ability of CTI to place equipment on a POP site
which is owned by CNC. The concept being that both organizations can utilize the
space which is owned or leased by CNC.
(j) Confidential Information: All information marked as
"Confidential" shall be considered "Confidential Information." It shall be the
responsibility of the originator of the Confidential Information (the
"Originator") to clearly mark the information as confidential to be received by
the Recipient ("Recipient"). When information deemed to be Confidential is
provided orally, the Originator shall, at the time of disclosure, identify the
information as Confidential and provide the Recipient a dated written summary of
the Confidential Information so disclosed promptly after such oral disclosure.
Confidential Information shall not include (a) information previously known by
the Recipient, (b) information that is publicly available or becomes publicly
available other than through unauthorized disclosure by the Recipient, (c)
information that is received from a third party whose disclosure does not
violate any confidentiality obligation to the Originator, (d) information
developed by or on behalf of the Recipient independent of the Confidential
Information received from the Originator or information required to be disclosed
pursuant to the Federal securities disclosure laws.
(k) Financing Event: An initial public offering by CNC or, in the
alternative, some other private financing in either event totaling no less than
$40 million (including for such purposes an aggregate of $15 million to be
invested in CNC by WCG as further described in this sentence) to be completed no
later than October 31, 1997 in which WCG agrees to purchase at least $12 million
of CNC common stock and, if requested by CNC, to convert the $3 million loan in
accordance with the Convertible Promissory Note of even date herewith. In the
event that an initial public offering is not consummated, but a private
Financing Event occurs, WCG will, subject to the satisfactory completion of due
diligence and the receipt of necessary corporate and other approvals,
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invest $12 million and, if requested by CNC, convert the $3 million loan, if the
terms and conditions as set by the lead investor of the private Financing Event
are acceptable to WCG. WCG's investment participation in the Financing Event is
expressly contingent upon CNC's satisfaction of all the conditions set forth in
Sections 3, 4, 5, and 6 of the Memorandum of Understanding between CNC and WCG
dated May 30, 1997.
(l) Best Efforts: A "best efforts" obligation shall mean the
highest level of commercial effort without requiring a party to incur a loss or
an extraordinary expense in performing such efforts.
2. CTI's Responsibilities and Objectives
-------------------------------------
Loaned Employees - Additional Responsibilities
2.1 CTI hereby agrees to use its best efforts to provide certain key
employees of CTI, whose names are set forth on Exhibit A hereto (the "Loaned
Employees"), to perform functions for CNC.
Although each Loaned Employee shall at all times remain an employee of CTI,
he or she will perform duties and be under the general direction of CNC for the
term of this Agreement, or until such Loaned Employee's assignment is otherwise
terminated as provided in Section 4 hereof. The Loaned Employees hereunder
shall be located in St. Louis, Missouri, unless noted in Exhibit A.
The parties hereto agree that the position and title with respect to each
Loaned Employee are as set forth on Exhibit A hereto. Exhibit A hereto may be
amended in writing from time to time by the parties hereto to add Loaned
Employees to fill positions provided for under the Network Expansion Plan and
Network Operations Plan previously submitted by CTI to CNC, and any other plans
submitted by CTI and agreed to by CNC. Copies of said Network Expansion Plan
and Network Operations Plan, marked Exhibits B and C respectively, are attached
hereto and incorporated by reference as if fully set out herein. Exhibit A may
also be amended to reflect the termination of a Loaned Employee's assignment
pursuant to Sections 4.1 and 4.3 hereof, to replace a Loaned Employee whose
assignment is terminated pursuant to Section 4.1 of this Agreement, or to alter,
amend or revise the title, salary and duties of any Loaned Employee.
2.2 CTI and CNC acknowledge that it is important for CNC to have long term
control and ownership of the Network Operations function being performed, in
part, by loaned CTI employees under this Agreement. CTI and CNC further
acknowledge that CTI has current and prospective customers for which a 24x7x365
day network operations infrastructure is required. The parties further
acknowledge that in order to meet CNC's timetable for implementation of its new
Network Operations function, CTI was utilized to hire staff and implement the
technology necessary to provide CNC with a 24x7x365 day network operations
function. To accomplish this objective, CTI recruited a number of people who
had been identified as being members of the planned CTI network operations
center.
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In recognition of the facts that a) CTI had intended to build its own
network operations center around some of the core staff hired by CTI to support
CNC's requirements, b) CNC funded virtually all of the build out expense for the
Network Operations Center in St. Louis as well as the monthly operating expense
for this center, c) CNC requires the flexibility of controlling this function as
a core asset of CNC, and d) CTI desires the ability to service non-CNC customers
with its own dedicated staff plus some portion of the CNC staff, equipment,
software, and other resources funded by CNC on an "as available" basis, the
parties agree that the following terms will apply with respect to the Network
Operations staff as identified on Exhibit A and with respect to the resources
that are covered by this Agreement.
A) CTI will reimburse CNC for a proportionate share of the costs of a)
Loaned Employees, b) CNC employees who have been converted from CTI-to-CNC
employment, and c) supporting resources that have been or are being paid for by
CNC when these people or supporting resources are used to support non-CNC
customer networks. The amount of reimbursement will be computed as TCxAC1 /
(AC1+C2):
NOTE: A negative result, product, or sum will not result in payment to
CTI.
TC= Monthly expense paid to CTI for Network Operations Loaned
Employees, plus Monthly expenses of any/all CNC hired Network
Operations employees, plus Monthly amortization/depreciation (48
months) of the Network Operations capital equipment, software,
and site preparation expenses paid for by CNC, plus any other
expenses associated with Network Operations paid for by CNC.
C1= Total number of help/trouble calls taken by Network Operations
from Non-CNC customers.
C2= Total number of help/trouble calls taken by Network Operations
from CNC customers.
CP= Calls per employee (Total calls divided by total of Network
Operations personnel paid for by CTI and CNC).
NR= Number of CTI Network employees not reimbursed by CNC.
AC1= C1-(NRxCP).
2.3 Loaned Employees, who will be made available to CNC, will be
available only after they have executed Letters of Agreement in the form
attached hereto as Exhibit D, which form the parties hereto expressly
approve.
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2.4 CTI agrees to exercise due diligence in overseeing those with access
to the Confidential Information. CTI agrees to limit the number of its
associates, officers, or employees, who are exposed to the Confidential
Information. The standard of care to be used in preventing disclosure of the
Confidential Information shall be at least as great as that care CTI would take
in preserving the confidentiality of its own trade secrets and proprietary
information.
2.5 The parties hereby acknowledge and agree that Intellectual Property
Rights, as defined in Exhibit B, created, written, developed or made by each
Loaned Employee while performing services for CNC pursuant to this Agreement
shall be subject to the addendum to the Loaned Employee Letter of Agreement
(Exhibit D).
2.6 In addition to the other terms and conditions of this Agreement, CTI
and CNC agree and stipulate, as further consideration for the promises made by
each party hereunder, that CTI will use its best efforts to ensure that a
properly trained network control center is developed in St. Louis, Missouri.
This will include developing the staffing requirements, interviewing and hiring
the staff, and training the staff as required.
3. Agreement Scope and Term
------------------------
The term of this Agreement shall be for a period commencing June 19, 1997,
and terminating on December 31, 2000. The parties agree that this Agreement may
be terminated prior to December 31, 2000 by the mutual, written consent of both
parties. Such contract period referred to herein shall be referred to as the
"Agreement Term". This Agreement shall automatically renew for an additional
two-year period unless either party shall give one-hundred twenty (120) days
notice prior to the expiration of this Agreement to the other party that said
party does not wish to extend the terms of this Agreement. Notwithstanding the
foregoing, if WCG elects not to participate in the Financing Event, even though
CNC has satisfied all conditions set forth in the definition of Financing Event,
this Agreement may be terminated by CNC on October 31, 1999, if CNC provides CTI
ninety (90) days prior written notice.
4. Termination of Assignments
--------------------------
A Loaned Employee's assignment to CNC may be terminated by CTI for the
following reasons:
4.1 Termination of Employment with CTI. In the event a Loaned Employee's
----------------------------------
employment with CTI terminates for any reason, the Loaned Employee's assignment
to CNC hereunder shall also terminate. Subject to Section 9, nothing in this
Agreement shall require CTI to retain the Loaned Employee in its employment for
any period of time, and CTI shall be free to terminate any Loaned Employee at
any time during the term of this Agreement.
4.2 Payments Due Upon Termination of Loaned Employee's Assignment. Upon
-------------------------------------------------------------
the termination of the assignment of a Loaned Employee, CNC shall reimburse CTI
for any amount which had accrued and remains unpaid as of the date such
assignment terminated and for which CTI is
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entitled to reimbursement under Section 5 below. CNC shall make any payments due
under this Subsection in accordance with said Subsection 5.6.
4.3 Replacement of Loaned Employees. In the event a Loaned Employee's
-------------------------------
assignment is terminated pursuant to Subsection 4.1 above, unless the position
held by the Loaned Employee has been eliminated, CTI shall select a replacement
employee mutually satisfactory to CNC who will become a Loaned Employee for
purposes of this Agreement.
5. CNC's Obligations - Compensation, Benefits and Other Human Resource Plans
-------------------------------------------------------------------------
and Programs and Reimbursement of Expenses
------------------------------------------
5.1 Loaned Employees Generally. Except as otherwise set forth below in
--------------------------
Subsection 5.4, there shall be no change, from the date of this Agreement, in
the amount, terms and conditions of CTI's compensation, benefit and other Human
Resource ("HR") plans and programs (currently [*] of Base Salary Rate as
defined below) as they relate to the Loaned Employees during the term of this
Agreement without consultation with and the written consent of CNC, except such
changes as may be made in the ordinary course of business consistent with WCG's
past practices. CNC recognizes that CTI Loaned Employees participate in plans
and programs sponsored by WCG.
5.2 Base Salary. CTI shall continue to compensate each of the Loaned
-----------
Employees for his or her services to CNC under the terms of this Agreement at
the rate per annum as set forth in the monthly CTI invoices paid by CNC and as
adjusted annually in accordance with the next sentence, plus overtime and
bonuses, if any, ("Base Salary Rate"), less appropriate deductions (including
withholding taxes and deductions for participation in benefit programs), and in
accordance with CTI's general payroll practices. Any increase in such Base
Salary Rate may only be implemented with the approval of CNC.
5.3 Benefits and Perquisites. Each Loaned Employee shall be eligible to
------------------------
continue in, or receive benefits under the benefits plans, arrangements,
practices, and programs made available from time to time to similarly situated
employees of CTI, subject to, and on a basis consistent with, the terms of such
plans, arrangements, practices, and programs.
5.4 Incentive Compensation. Each Loaned Employee may be considered for
----------------------
participation in any incentive compensation, deferred compensation or bonus
arrangement, plan, policy and practice of CTI during the Agreement Term in the
sole discretion of CTI, subject (1) to and on a basis consistent with the terms
of any such arrangement, plan, policy, and practice and (2) to the prior written
approval of CNC which shall be given in CNC's sole discretion.
5.5 Reimbursement of Loaned Employee Expenses. During the Agreement
-----------------------------------------
Term, CNC shall reimburse CTI on a monthly basis for all reasonable ordinary and
necessary out-of-pocket employment related expenses of all Loaned Employees,
including, but not limited to travel, meals, lodging, mileage, moving expenses,
telephone calls, out-of-pocket advances made by the Loaned Employee on behalf of
CNC, and any other reasonable employment related expense, including any personal
income tax liability that is a direct result of relocating. This provision shall
also include all network operations employees hired in St. Louis, Missouri.
[*] 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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5.6 Reimbursement of Direct Costs of Network Operation. CNC shall also
--------------------------------------------------
reimburse CTI for the direct costs of Network Operation. CNC shall reimburse
CTI, on a monthly basis, for office rent, electricity, telephone service,
including base service and long distance, necessary office furniture and
equipment, ongoing network communications cost, software, insurance, and any
other direct, reasonably necessary expense.
5.7 Reimbursement of CTI
--------------------
A) During the Agreement Term, CTI shall invoice CNC monthly for one-
twelfth (1/12) of the annual compensation, benefits and administrative costs
incurred by CTI with respect to the Loaned Employees, as referenced in
Subsections 5.1, 5.2, 5.3 and 5.4 and as determined by CTI, and CNC shall pay
such amount to CTI in accordance with its normal payment practices, but in no
event later than thirty (30) days following receipt of such invoice for such
amount. Any discrepancies between amounts billed and paid and actual costs
incurred by CTI shall be reconciled and paid within thirty (30) days following
CTI's submission to CNC after the end of the relevant calendar year of a Year
End Reconciliation. CNC shall be responsible for reimbursement of the items set
forth in this Section including the following: Loaned Employees' salaries, FICA,
state and federal unemployment tax, worker's compensation insurance premiums and
deductibles, medical/health insurance premiums and dental insurance premiums,
including coverage for spouses and family, long-term disability insurance
premiums, life insurance premiums, seminars and training costs related to
Network Operations, local and long distance travel expenses, pagers. CNC shall
be responsible for reimbursement of other costs or expenses which CNC deems
reasonable and necessary.
B) CNC shall also pay to CTI, as reimbursement, an amount equal to
[*] of the base salary for those Loaned Employees who were working for CNC as
of November 1, 1995, and an amount equal to [*] of the base salary for those
Loaned Employees who began working for CNC after November 1, 1995. These rates
reflect a [*] and [*] mark-up, respectively, of the base salaries of the
Loaned Employees, plus an imputed benefits rate of [*].
C) CNC shall have the right to audit, at CNC's expense, CTI's
expenses, costs and billings under the Section 5 within sixty (60) days of the
date of the Year End Reconciliation. If CNC does not contest the Year End
Reconciliation within ninety (90) days of the date of the Year End
Reconciliation, then CNC will be deemed to have agreed with the Year End
Reconciliation and shall waive any right to contest or challenge any cost,
expense, payment, markup or other charge incurred or calculated by CTI for the
period covered by the Year End Reconciliation.
6. Agreement Transition
--------------------
In order to provide an orderly transition at the end of the Agreement, CTI
agrees that, prior to the Agreement's termination, to locate all personnel and
resources used to support CNC to a new subsidiary and transfer that entity to
CNC according to the following plan:
A. CTI will create a wholly-owned subsidiary. CTI will transfer all Loaned
Employees to this entity.
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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B. CTI will transfer the lease (including leasehold improvements) to 3324
Hollenberg Drive to this new subsidiary. Said lease to have at least five
(5) years remaining at the termination of this Agreement at a cost not to
exceed $12 per square foot (triple net). Any office equipment currently
owned by CTI and used exclusively by the subsidiary employees will also be
transferred. Additional office equipment for current or future employees of
the subsidiary will be paid for by CNC and remain their assets.
C. CTI will transfer a nonexclusive, nontransferable, non revocable license to
its proprietary software for network modeling, site management, and telco
reconciliation to this new entity. Such license will restrict the use of
the software to CNC internal business needs and the licensed software shall
not be sublicensed or used in a "service bureau" capacity.
D. CNC shall acquire title to this new subsidiary at the end of this Agreement
and CTI will vacate the premise on 3324 Hollenberg Drive. Both parties
agree to execute such documents as may be necessary to minimize the tax
effect to both entities.
E. CNC shall pay CTI [*] for relocation expenses and the assets of the
new subsidiary. This amount will be paid to CTI as needed to reimburse CTI
for its costs in relocating its other business to other facilities. CTI
will provide to CNC on at least a quarterly basis their projected needs for
the next six months. All of these funds could be paid in advance of the
completion of this Agreement. Any funds not so advanced will be paid at the
point where ownership of the subsidiary transfers to CNC.
F. CTI agrees to reimburse CNC an amount equal to 35% of the annual salary of
any CNC employee (acquired through the acquisition of the subsidiary) that
returns to WCG, CTI or their affiliates within one year of said
acquisition.
G. CTI agrees to use its best efforts to ensure that all employees of the
subsidiary stay with the entity when the transfer to CNC occurs.
7. Consulting Services
-------------------
CTI agrees to provide other consulting services to CNC as requested by CNC
at a rate not to exceed the lowest offered by CTI to other unaffiliated
customers requiring similar services (including duration or quantity of such
services). Both parties agree to work in good faith to negotiate and agree to
the other material terms and conditions of the consulting services
provided.
8. Mutual Recommendation
---------------------
Each party agrees to recommend the other party as business opportunities
arise. In this regard, CNC will recommend CTI services, as appropriate, to
STET/TMI.
9. Agency and Authority
--------------------
[*] 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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The Loaned Employees shall remain, and shall be advised by the parties that
they will at all times during the Agreement Term, continue as employees of CTI;
provided, that notwithstanding anything to the contrary contained in this
Agreement, CTI may, at any time, with cause, terminate employment of such Loaned
Employee with CTI. If a Loaned Employee is to be terminated without cause, such
termination shall be approved by CNC prior to CTI's termination of such
employee. CNC shall be responsible for directing the Loaned Employees'
performance of duties associated with the position titles set forth on Exhibit A
hereto. The parties hereto agree that until further agreement, the Loaned
Employees are not, nor will they become, employees of CNC for tax purposes or
any other purpose whatsoever. The Loaned Employees have no authority to make
commitments or enter into contracts on behalf of, or to bind or otherwise
obligate CNC in any matter whatsoever, except as expressly provided herein.
10. Indemnification
---------------
10.1 In the event of any liability, claim or cause of action of any kind
against CNC arising out of any action or inaction (or alleged action or
inaction) of a Loaned Employee, which is outside the scope of such employee's
services for CNC or as contemplated hereunder, or arising out of any action or
inaction (or alleged action or inaction) of a Loaned Employee which is outside
of the scope of such employee's services for CTI, CTI shall indemnify CNC from
and against any and all losses, damages, claims, penalties, liabilities or
expenses (including reasonable attorneys' fees and expenses) ("Losses") incurred
by CNC. CTI shall be informed immediately by CNC of any alleged action or
inaction by any CTI employee which might give rise to a claim for losses by
CNC.
10.2 In the event of any claim or cause of action of any kind against CTI
by any Loaned Employee for violation of any employment law, the Americans with
Disabilities Act, the Family and Medical Leave Act, or any act or law designed
to protect the rights of employees, arising out of any action or inaction (or
alleged action or inaction of CNC or any of its employees, principals, agents,
or representatives), CNC shall indemnify CTI from and against any and all losses
or costs, damages, claims, penalties, liabilities, or expenses (including
reasonable attorneys' fees and expenses).
10.3 CTI shall indemnify and hold harmless CNC from and against any and
all Losses incurred by CNC arising out of, or resulting from or relating to any
action by CTI relating to termination, salary continuation, indemnity, notice
pay or severance pay or benefits payable by reason of termination of employment
of any Loaned Employee with CTI or termination of the assignment of any Loaned
Employee with CNC, unless said claim or loss is the result of a reduction in
force for employees specifically hired at the request of CNC, or results from
termination because such employee is hired by CNC.
11. Successors and Assigns
----------------------
This Agreement and all rights hereunder shall inure to the benefit of and
be enforceable by each party's successors and permitted assigns. No party may
assign or transfer this Agreement or transfer its rights or obligations
hereunder without the prior written consent of the other party (which consent
shall not be unreasonably withheld) except to an affiliate.
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12. Governing Law and Jurisdiction
------------------------------
This Agreement shall be governed by, and construed in accordance with, the
laws of California, without regard to the principles of conflicts of laws
thereof.
13. Notices
-------
For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given or delivered upon receipt after personal delivery or mailing by
registered mail, return receipt requested, postage prepaid, address as
follows:
(a) If to CTI:
Critical Technologies Incorporated
Attn: Gordon Martin
111 East First Street
Tulsa, OK 74103-2808
Phone:
with a copy to:
General Counsel
Williams Telecommunications Group, Inc.
One Williams Center
Suite 4000
Tulsa, OK 74172
Phone:
Facsimile:
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(b) If to CNC:
Concentric Network Corporation
10590 N. Tantau Avenue
Cupertino, CA 95014
Attention: Chief Financial Officer
Phone: (408) 342-2800
Facsimile: (408) 342-2810
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: David J. Segre
Facsimile: (415) 493-6811
or to such other address as any party may have furnished to the other in writing
in accordance herewith.
14. Amendment
---------
No amendment or modification of this Agreement or any of its provisions
shall be binding upon any party unless made in writing and signed by all of the
parties hereto.
15. Validity
--------
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
16. Waiver
------
The performance of any condition or obligation imposed hereunder upon any
party hereto may be waived only upon the written consent of the parties hereto.
Such waiver shall be limited to the terms thereof and shall not constitute a
waiver of any condition or obligation of the other party under this Agreement.
Any failure by any party to this Agreement to enforce any provision shall not
constitute a waiver of that or any other provision of this Agreement.
17. Third Party Rights
------------------
This Agreement shall not inure to the benefit of any third party other than
CTI and CNC and valid successors or assigns of a party hereto or thereto.
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18. Remedies Upon Default
---------------------
The parties agree that they will attempt to resolve disputes arising in
connection with this Agreement through good faith consultation. In the event of
a default by either party, the other party shall notify the defaulting party, in
writing, of the default, setting forth the nature thereof. Said notice shall be
mailed to the company at the designated address for notices as provided in
Section 13 above. The defaulting party shall have thirty (30) days from the
date of the notice to cure said defect or default. In the event said defect or
default is not cured within thirty (30) days as provided herein, the non-
defaulting party may declare this contract in breach and may pursue any legal or
equitable remedy, including specific performance, provided that, except as
expressly and specifically set forth in another paragraph to this Agreement,
neither party shall be liable to the other party for any lost profits; any loss
of business; any cost of replacement services; or any indirect, consequential,
incidental or special losses or damages of any kind or nature whatsoever, due to
such default or defect. The parties agree that in the event of such a breach of
contract action, the losing party shall be responsible for the payment of all
costs, including the reasonable attorney's fees of the prevailing party.
19. Headings
--------
The heading references are for convenience purposes only and do not have
any meaning with respect to the terms and conditions of this Agreement.
20. Force Majeure
-------------
Neither CNC or CTI shall be considered in default in performance of their
obligations hereunder (except the payment of monetary obligations) if
performance of such obligations is prevented or delayed by acts of God or
government, labor disputes, failure or delay of transportation, or by vendors or
subcontractors, or any other similar cause or causes beyond the reasonable
control of either party. Time of performance of either party's obligations
hereunder shall be extended by the time period reasonably necessary to overcome
the effects of such force majeure occurrences.
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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of June __, 1997.
CONCENTRIC NETWORK CRITICAL TECHNOLOGIES
CORPORATION INCORPORATED
By: /s/ (Signature Appears Here) By: /s/
-------------------------- --------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
----------------------- -----------------------
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LIST OF EXHIBITS AND SCHEDULES TO EMPLOYEE
------------------------------------------
SERVICES AND STAFFING AGREEMENT
-------------------------------
EXHIBITS
--------
A. List of Loaned Employees
A(1). Stock Grant Recipients and Amounts
B. Employee Letter of Agreement
B.(addendum) Confidentiality Agreement
C. Network Expansion Plan
D. Performance (Stretch) Objectives
E. Network Operations Plan
F. Form for Notice of Election of Exercise of Grant Option
G. Form of Option Agreement
H. Collocations Services Agreement
I. Software Development Plan
SCHEDULES
---------
1. Additional Covenants and Agreements regarding the grant and exercise
of Option Shares.
2. Disclosure by CNC of grants of other options, warrants or other rights
to acquire shares of CNC stock or other equity securities of CNC.
[***] EXHIBIT A
-------------------------
[***]Certain information in this exhibit has been omitted and filed
separately with the Securities and Exchange Commission. A total of 3 pages
containing such information has been omitted from this exhibit. Confidential
treatment has been requested with respect to the omitted portions.
"EXHIBIT B (ADDENDUM)"
CONFIDENTIALITY, NON-COMPETITION, AND COPYRIGHT AGREEMENT
THIS AGREEMENT is made as of the _____ day of __________, 1995, between
CONCENTRIC RESEARCH CORPORATION, a Florida corporation (hereinafter referred to
as "CRC"), and __________________________ (hereinafter referred to as
"Employee").
WITNESSETH:
WHEREAS, CRC owns and operates the Concentric Research Information System
("CRIS"), a computerized, on-line interactive network that provides information,
entertainment and telecommunication services; and
WHEREAS, in connection therewith CRC develops proprietary computer software
and uses proprietary know-how in such business, and now has and expects to
develop confidential information relating thereto and in connection with other
software products or services CRC develops or offers in the future; and
WHEREAS, the parties hereto desire to set forth certain agreements and
understandings regarding ownership of intellectual property by CRC and
confidentiality and non-competition on the party of Employee, which agreements
and understandings are for the benefit of both CRC and Employee.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
herein contained, and of other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
1. Confidential Information.
------------------------
a. The term "Confidential Information" shall refer to any
information, not generally known in the relevant trade or industry, which was
obtained from CRC, or which was learned, discovered, developed, conceived,
originated or prepared during or as a result of the performance hereunder on
behalf of CRC and which falls within the following general categories:
i. information relating to trade secrets of CRC;
ii. information relating to existing or contemplated products,
services, technology, designs, processes, formulae; computer
systems, computer software, algorithms and research or
developments of CRC;
iii. information relating to business plans, sale or marketing methods,
methods of doing business, customer lists, customer usages and/or
requirements, names of sales representatives, and vendor and
supplier information or CRC;
iv. information relating to proprietary computer software not
generally known to the public and related unpublished
documentation of proprietary computer programs;
v. information relating to new developments;
vi. any other information that CRC may wish to protect by patent,
copyright or by keeping it secret and confidential.
b. Employee agrees not to divulge to anyone, at any time during or
after the termination of his employment by CRC, any Confidential Information or
any other trade secrets of CRC. Upon the termination of his employment by CRC,
Employee agrees to deliver up to CRC all notebooks, computer files and any other
data in any tangible form whatsoever in relation thereto, containing, embodying
or evidencing any of the Confidential Information described herein.
2. Non-Competition Covenant.
------------------------
a. The term "Competitor" shall refer to any person, firm,
corporation, partnership or other business entity of any type whatsoever engaged
in or about to become engaged in the production, licensing, sale or marketing of
any product or service:
i. which is similar to or competitive with CRIS or CRC's proprietary
computer software or any product or service of CRC with which
Employee has been directly concerned through his work with CRC
during the preceding two (2) years;
ii. with respect to which the Employee has acquired Confidential
Information.
b. As material inducement to CRC's willingness to employ Employee,
Employee covenants and agrees that, for a period of two years following the
termination of his employment, whether such termination be with or without
cause, he shall not enter the employ of any Competitor, nor himself engage
during such period, directly or indirectly as principal, agent, officer,
employee or otherwise, in any such business in competition with CRC, within any
area in which CRC is itself carrying on business at the time of such
termination. Employee also covenants and agrees that for a period of two years
following termination of his employment, he shall not recruit or attempt to
recruit any of CRC's other employees, or to contact either directly or
indirectly, any client of CRC for the purpose of soliciting such client from
CRC.
3. Copyright Assignment. Employee hereby acknowledges that all works,
--------------------
including all program code and supporting documentation and all other
copyrightable materials, written in whole
-2-
or in part by Employee, shall be deemed to be works made for hire. To the extent
that any such writing may not, by operation of law, be works make for hire,
Employee hereby assigns to CRC the ownership of copyright in such works, whether
published or unpublished. Employee agrees to give CRC or its designees all
assistance reasonably required to perfect such rights, including but not limited
to, the identification of the works and supporting documentation and the
execution of any instruments required to register copyrights.
4. Remedies. The parties hereto recognize that the services to be
--------
performed hereunder by Employee are special and unique. It is understood and
agreed that Employee's disclosure of Confidential Information, breach of the
Non-Competition Covenant, and/or breach of the Copyright Assignment, may give
rise to irreparable injury to CRC, which may not be adequately compensated by
damages. Accordingly, in the event of Employee's breach or threatened breach of
this Agreement, CRC shall be entitled to preliminary and permanent injunctive
relief, without bond, restraining Employee from disclosing, in whole or in part,
the Confidential Information protected by this Agreement, or from rendering any
services to any person, firm, corporation, association, or other entity to whom
such Confidential Information, in whole or in part, has been disclosed or is
threatened to be disclosed, or from marketing, selling, or otherwise exercising
proprietary rights to copyrightable material referenced in this Agreement.
Nothing herein shall be construed as prohibiting CRC from pursing any other
recovery of damages. These undertakings shall survive the termination or
cancellation of this Agreement or of Employee's employment with CRC.
5. Miscellaneous Provisions.
------------------------
a. Employee acknowledges that he has no employment agreement of any
type whatsoever, whether oral, written, expressed, or implied, that would alter
the "at will" status of Employee's employment with CRC. Both CRC and Employee
therefore have the right to terminate this employment relationship at any time
for any reason, with no obligation to provide advance notice of such termination
to the other party. Employee hereby acknowledges receipt of the CRC employment
manual and agrees that CRC shall have the unilateral right to modify its
employment policies therein described at any time. Employee further agrees and
acknowledges that these employment policies or other similar provisions are
reasonable and agrees not to contest them by way of unjust dismissal proceedings
otherwise. By signing this Agreement, however, Employee is not agreeing to forgo
or waive any rights that he has or may have under federal, state and local
employment laws or regulation.
b. Employee represents to CRC, which relies on this representation,
that Employee is free to enter into this Agreement in that he is not under any
restrictions from a former employer or business that would preclude him from
making these arrangements. Employee acknowledges that CRC does not want him to
disclose to it any confidential information that he may have obtained from a
former employer.
c. This Agreement will be binding upon, shall inure to the benefit
of, CRC and Employee, and their respective heirs, personal and legal
representatives, successors and assigns.
-3-
d. This Agreement contains the entire agreement and understanding
between the parties hereto, and no modification hereof shall be binding unless
in writing and signed by the parties hereto.
e. The provisions of this Agreement shall be deemed severable, and
the invalidity or unenforceability of any provision shall not effect the
validity or enforceability of the other provisions hereof.
f. This Agreement is executed in, and it is the intention of the
parties hereto that it shall be governed by the law of the State of Michigan.
IN WITNESS WHEREOF, CRC has caused this Agreement to be executed by a duly
authorized officer and Employee has duly executed this Agreement on the date and
year above written.
CONCENTRIC RESEARCH CORPORATION, EMPLOYEE/CONTRACTOR:
a Florida Corporation
By:____________________________ ___________________________
Witness:_______________________
Witness:_______________________
-4-
EXHIBIT B
Loaned Employee Letter of Agreement
Concentric Network Corporation
Critical Technologies Incorporated
c/o CNC
Re: Conditions of Employment While Performing Services
Concentric Network Corporation
Dear __________:
I have agreed, as of ____________, 1995, to accept an assignment to
Concentric Network Corporation ("CNC") to perform services for the Concentric
Network Corporation in the capacity of ____________. I understand that during
the period in which I am performing services for CNC, I will still be an active
full-time employee of Critical Technologies Incorporated ("CTI"). As such, I
will be entitled to receive and be subject to the CTI compensation, benefits,
and other Human Resources plans and programs. I will not be considered an
employee of CNC and I further agree that I will not make any claim of
entitlement to any compensation, benefits or other Human Resources plans and
programs of CNC, if any.
I further agree that any intellectual property rights as defined in the
addendum to this employee loan letter of agreement, created, written, developed
or made by me while performing services for CNC shall be and shall continue to
be the property of CTI, as set forth in the addendum to this letter.
I understand and agree that neither the provisions of my assignment to CNC
nor this Letter of Agreement constitute a contract of employment or set forth
employment terms between me and CTI. I understand that my employment
relationship with CTI is by mutual consent (employment at will) and that I have
the right at any time to terminate my employment for any reason. I also
understand that CTI reserves the right to terminate my employment on the same
basis.
Sincerely,
________________________________________
-5-
EXHIBIT C
CONCENTRIC RESEARCH CORPORATION
CRC 1995 EXPANSION PLAN
SCOPE - EXPANSION PLAN
--------------------------------------------------------------------------------
MANAGE THE SUCCESSFUL IMPLEMENTATION OF THE 1995 NETWORK EXPANSION UPGRADES.
PROVIDE THE BASIS FOR MANAGEMENT OF FUTURE NETWORK EXPANSION.
. Implement Xylogics terminal server technology
. Install V.34 technology
. Immediately bring all T1 facilities to full utilization
. Implement CMS diagnostic upgrade
. Create basic statistics document
. Ongoing capacity requirement (i.e. Affinity Programs)
. Create change control procedures
OBJECTIVES - EXPANSION PLAN
--------------------------------------------------------------------------------
. Formulate all current and future (1995) capacity data
. Model capacity data against current network provisioning
. Develop budget requirements
. Procure all hardware, software and services
. Manage the implementation and capacity upgrades
. Quality assurance testing
. Document process and solutions
METHODOLOGY - EXPANSION PLAN
--------------------------------------------------------------------------------
The Rapid Expansion of existing network facilities is possible due to the
immediate availability of all required components.
. AT&T Frame-Relay services have been expanded to 600% of last
year's capacity. This allows for rapid acquisition of additional
resources.
. Frame Ports
. Frame Circuits
. Frame Committed Information Rates
. Racal-Datacom product availability is excellent for the specific
networking components required in the expansion plan.
. Networking Engineering and Operations personnel are well versed
in the coordination of the required LEC facilities. POP
locations are all currently provisioned with T1 facilities
capable of immediate expansion.
METHODOLOGY - EXPANSION PLAN
--------------------------------------------------------------------------------
. CRC and Vendor(s) Organizational Chart
Functional Responsibilities
. Existing Statistics/Hardware
. Future Documentation Implementation
Plan
. Network diagrams Define
. Budget approval Requirements
. Define management requirements Define
. Document process and findings Change Control
. Quality Assurance review
[This page intentionally left blank]
METHODOLOGY - EXPANSION PLAN
. Deliver Requirements to Vendors Hardware
Procurement Procedures
Document
. Project Management Begin Phased
Installation
Close Project
. Quality Assurance Review Network
Testing
. As Built Network Documentation Network
Documentation
METHODOLOGY - EXPANSION PLAN
DEVELOP & DRIVE THE CAPACITY PLANNING METHODOLOGY AND PERFORM THE FOLLOWING
ACTIVITIES TO ENSURE NETWORK PERFORMANCE.
. Define the hardware/ statistics report formatting
. Coordinating all activities with associated vendors
. Create change control procedures
. Define and document the detailed requirements
. Develop working design document
. Create detailed port cost contribution
. Manage to predictable implementation plan
. Provide detailed progress updates to management and the board as required
. Overall project management
This approach will ensure that ongoing requirements be handled in a timely,
cost effective manner insuring superior customer support.
SCOPE - NETWORK EVOLUTION PLAN
. FINALIZE THE NETWORK RFP PROCESS AND WORKING NETWORK DESIGN. THIS
EFFORT WILL ENSURE COMPETITIVE COST STRUCTURES EXIST FOR THE NETWORK.
WHILE ENSURING HIGH CAPACITY, LOW LATENCY NETWORK PERFORMANCE
. Methodology and approach
. Vendor(s) selection
. Working network design
. Manage the implementation and migration
. Document process and solutions
OBJECTIVES - NETWORK EVOLUTION PLAN
. Rapid completion of RFP process
. Provide a working network design that meets tactical and strategic
requirements
. Facilitate vendor "Proof Of Concept" against network design
. Define and analyze vendor pilot program(s)
. Implement final solution
[This page intentionally left blank]
METHODOLOGY - PHASE 1 NETWORK EVOLUTION PLAN
. Complete Requires
Document
. Complete Solicit
Vendors
Select Finalists
. Complete Vendor
Responses
. Define scoring criteria
. Determine selection committee Vendor
. Evaluate vendors Scoring
. Document process and findings
. Quality assurance review
. Management update
METHODOLOGY - PHASE 2 NETWORK EVOLUTION PLAN
. Develop design vision Finalists
. Update detailed requirements Requirements Develop
. Present requirements to vendors Pilot Plan
. Joint working design Conceptual
Designs Pilot
Solution(s)
. Vendor(s) proof of concept
. Vendor(s) presentations Vendor Proof
of Concept
Evaluate
Pilots
. Define scoring criteria
. Evaluate vendors Vendor
. Document process and findings Scoring
. Quality assurance review
. Management update
METHODOLOGY - NETWORK EVOLUTION PLAN
FINAL WORKING DESIGNS AND PROOF OF CONCEPT WILL ENCOMPASS DETAILS RELATED TO:
. Cost
. Functionality
. Reliability
. Performance
. Management Capabilities
This approach ensures that a working design can be implemented for a "Leading
Edge" network solution prior to large financial commitments.
METHODOLOGY - NETWORK EVOLUTION PLAN
MANAGE THE METHODOLOGY AND PERFORM THE FOLLOWING ACTIVITIES TO ENSURE ITS
SUCCESS.
. Define the scoring matrix
. Manage the selection committee
. Document phased results
. Define and document the detailed requirements
. Develop working design document
. Define the pilot and facilitate vendor implementation
. Overall project management
EXHIBIT "D"
Concentric Network Corporation and Critical Technologies, Inc.
PERFORMANCE OBJECTIVES
1. Develop and establish the network control center in Critical's St. Louis
facility.
2. Design, build and implement the seven (7) Canadian POP sites.
3. Rapidly harden the Bay City POP site.
4. Rapidly bring live seventy-one (71) local markets utilizing the LA (Virtual
Local Access) techniques.
5. Develop and implement a plan to segregate the CNC host systems.
6. Rapidly develop the Intuit Registration Server.
7. Deploy a total of [*] local and virtual access ports at a
targeted average cost/port of [*].
8. Successfully demonstrate the new network architecture. Included in this
demonstration will be the attainment of the following objectives:
a) A latency factor of not more than _______. (to be determined by
2/10/96)
b) A through-put purport of _________. (to be determined by 2/10/96)
c) The ability to reconfigure inbound port on a call-by-call basis.
d) The ability to provide best-fit routing on the back bone network.
9. Develop a field trial of a BRI ISDN connectivity.
10. Develop a monthly network management report.
11. Develop and implement on-line credit card authorization.
12. Implement the Portal Back Office System or an equivalent next generation
"back office system".
13. Implement a proactive capacity management system that ensures we maintain a
mutually agreeable target grade-of-service.
-----------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
EXHIBIT E
CONCENTRIC RESEARCH CORPORATION
PLAN FOR
NETWORK OPERATIONS
NETWORK OPERATIONS
MISSION STATEMENT
Provide convenient and cost effective
operations of customer networks while
controlling the rising and hidden costs
of network management and support
[LOGO APPEARS HERE]
[LOGO APPEARS HERE]
OBJECTIVE
Pro-actively monitor and resolve network
conditions before they negatively affect
network users
NETWORK OPERATIONS
SCOPE
DEVICE MANAGEMENT PHYSICAL MANAGEMENT
. Logical & Physical . Moves/Adds/Changes
. LAN & WAN
. Routers, Hubs, Servers
. Threshold Monitoring
TROUBLESHOOTING ADMINISTRATION
. Fault Detection . Problem Management
. Event to Alarm . Trouble Tickets
. Correlation . Thresholds
. Impact Analysis . Security
. Corrective Action . Agents
. Backup
ASSET MANAGEMENT
. Equipment Assignments
. Configuration Information
. Firmware & Software
NETWORK OPERATIONS
SERVICES
. Continuous 7x24x365 day proactive network monitoring
. Problem determination, tracking and resolution
. Problem impact analysis
. Vendor dispatch and service performance monitoring
. System performance and availability reporting
. Equipment configuration and database management
. Coordination of network adds, deletes and changes
NETWORK OPERATIONS
STAFF EXPERIENCE
. 2-5 years experience in data communications
. Operations training on all network management systems
. Operations training on communications equipment
. Network troubleshooting and restoration procedural training
. General operation training to include; trouble ticketing, escalation
procedures, vendor dispatch, report generation
[LOGO APPEARS HERE]
NETWORK OPERATIONS
SENIOR SUPPORT STAFF
. Consists of trained and experienced technical specialists who assist
network operators with problem diagnosis on an exception basis.
. These specialists become involved in those problems requiring
engineering investigation or software reconfiguration
NETWORK OPERATIONS
SENIOR SUPPORT EXPERIENCE
. 5-15 years experience in data communications
. Broad experience in data communication concepts and curriculum
. Emphasis on product and system specialization
[LOGO APPEARS HERE]
NETWORK OPERATIONS
[LOGO APPEARS HERE]
MONTHLY REPORTING:
. Network performance and availability
. Trouble tickets processed
. Network adds, changes and deletes
. Network failure trend analysis
. Vendor maintenance call performance
ORGANIZATION OVERVIEW
[FLOWCHART APPEARS HERE]
EXHIBIT I
SCOPE
. SOFTWARE DEVELOPMENT MANAGEMENT
. Manage registration server development effort for Intuit
. Manage host system software upgrades required for escalating
subscriber base
-Business requirements
-Technical requirements
-General analysis and design
-Detailed analysis and design
-Coding
-Integration and QA testing
-Beta testing
-Implementation / Certification
14. Implement a proactive network management process that achieves an average
time-to-response of less than ______ hours on urgent trouble tickets and
less than ______ hours on priority trouble tickets.
-2-
EXHIBIT F
[not included]
EXHIBIT G
---------
CONCENTRIC NETWORK CORPORATION
------------------------------
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT is entered into effective ____________, 19__, between
CONCENTRIC NETWORK CORPORATION, a Florida corporation (the "Company"), and
_________________________ (the "Optionee").
WHEREAS, the Company and CRITICAL TECHNOLOGIES INCORPORATED ("CTI") are
parties to an Employee Services and Staffing Agreement (the "Employee
Agreement") pursuant to which, among other things, CTI has leased certain
employees to the Company and the Company has agreed to issue options to purchase
an aggregate of 900,000 shares of Common Stock of the Company ("Option Shares")
to certain employees of CTI which, pursuant to the Employee Agreement, will be
leased to the Company, and to certain other principals and employees of CTI and
to CTI; and
WHEREAS, an aggregate of ________ of the Option Shares (the "Performance
Option Shares") are subject to forfeit in the event certain performance
objectives set forth in an exhibit to the Employee Agreement are not timely
achieved (the balance of an aggregate of ________ Option Shares are referred to
herein as "Regular Option Shares"); and
WHEREAS, the Optionee is one of the persons selected by CTI to receive an
option pursuant to the Employee Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties hereto do hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the
---------------
right and option (the "Option") to purchase all or any part of the number of
Option Shares set forth below, at a purchase price of $.25 per share and on the
other terms and conditions herein set forth.
Total number of Regular Option Shares: _________
Total number of Performance Option Shares: _________
2. Dates When Option Exercisable.
-----------------------------
a. Except as otherwise provided in paragraph 2(d), Options for
each of the Regular Option Shares and the Performance Option Shares (if any)
will vest and become exercisable ratably over twelve (12) months, at the end of
each month after the date hereof, with Options for one-twelfth (1/12) of the
shares subject to Option (rounded to the nearest whole share) becoming
exercisable at the end of each such month.
b. Except as otherwise provided in paragraph 2(e) and paragraph
8, the Option shall expire, to the extent it has not already been exercised, at
the close of business on ____________, 2005 (the tenth (10th) anniversary of the
Employee Agreement) (the "Expiration Date").
c. Except as otherwise provided in paragraph 2(e), the Option
with respect to all Regular and Performance Option Shares not then vested will
automatically be assigned to CTI if the Optionee ceases to be an employee of CTI
prior to the time all Option Shares are vested hereunder. It is expressly
understood and agreed that nothing herein is intended or shall be construed as
an employment contract or as implying any obligation on the part of CTI or the
Company to continue the Optionee's employment for any period of time after the
date hereof.
d. Notwithstanding paragraph 2(a), the Option shall immediately
become exercisable in full upon the effective date of any merger or
consolidation of the Company with or into any other entity, at which time the
Option shall automatically become an Option on exercise to purchase, with
respect to each Option Share purchasable hereunder (whether vested or not)
immediately before the consolidation or merger becomes effective, the securities
or other consideration to which a holder of one share of Common Stock is
entitled in the consolidation or merger without any change in or payment in
addition to the Exercise Price in effect immediately prior to the merger or
consolidation. The Company shall take any necessary steps in connection with a
consolidation or merger to assure that the provisions of this Option shall
thereafter be applicable, as nearly as reasonably may be, to any securities or
other consideration so deliverable on exercise of this Option. The Company shall
not consolidate or merge unless, prior to consummation, the successor entity (if
other than the Company) assumes the obligations of this paragraph by written
instrument executed and mailed to the Optionee at the address of the Optionee on
the books of the Company.
e. Notwithstanding paragraphs 2(b) and 2(c), in the event of
(i) the death of the Optionee, or (ii) termination of the Optionee's employment
by reason of his or her disability or incapacity, then in any of such events the
Option may be exercised (but only to the extent it was exercisable by the
Optionee on the date of his or her death or of such termination of employment),
by the Optionee, or the Optionee's personal representative, conservator (if any)
or guardian (if any), respectively, in the manner set forth below, for a period
of twelve (12) months (but not later than the Expiration Date) after the date of
the Optionee's death or of such termination of employment.
3. Method of Exercising Option. The Optionee (or representative as
---------------------------
provided above) may exercise the Option hereby granted on one or more occasions
at his or her discretion, on each occasion for all or any part of the Option
Shares for which the Option is then exercisable, by each time delivering to the
main business office of the Company, addressed to the attention of its Chief
Executive Officer or Secretary, (i) a written notice stating his or her election
to exercise the Option and the number of Regular and Performance (if any) Option
Shares to be purchased, together with (ii) cash or check in full payment of the
purchase price of the Option Shares to be purchased plus the amount of any
Federal and state withholding taxes payable by the Company as a result of such
exercise. The Option shall be deemed to be exercised only upon receipt of such
notice and payment
-2-
by the Chief Executive Officer or Secretary. The Company will advise the
Optionee, upon the Optionee's reasonable prior request, of the required amount
of such taxes.
4. Non-Transferability of Option. The Option may be exercised only
-----------------------------
by the Optionee or as otherwise provided above or by the Employee Agreement. The
rights granted by this Option may not be assigned, transferred, pledged or
hypothecated in any way, other than by will or by operation of law, and except
for automatic transfer to CTI pursuant to Section 2(c), above, and further
assignment by CTI, pursuant to the terms of the Employee Agreement. Such rights
shall not be subject to execution, attachment or similar process. In the event
of the bankruptcy of the Optionee, or in the event of any prohibited assignment,
transfer, pledge, hypothecation or other disposition of the Option, or the levy
of any execution, attachment or similar process upon the Option, the Option
shall automatically expire and shall be null and void. Notwithstanding the
foregoing, however, with prior notice to the Company the rights granted by this
Option may be transferred between the Optionee in his or her personal capacity
and the Optionee as trustee of a trust (A) of which the Optionee is both sole
trustee and sole beneficiary during his or her lifetime, and (B) all of which is
treated under subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of
the Internal Revenue Code of 1986, as amended, as owned by the Optionee.
5. Share Adjustments. In the event of any stock dividend on,
-----------------
reclassification, split-up or combination of, or other change in, the Company's
Common Stock, then the number or kind of Option Shares shall be correspondingly
added to, reclassified, increased, diminished or changed proportionately,
without increase or decrease in the aggregate purchase price of all Option
Shares.
6. No Rights of Optionee as Shareholder. The Optionee shall have no
------------------------------------
rights respecting this Option or the Option Shares except as expressly set forth
herein or in the Employee Agreement; and the Optionee shall have no rights as a
shareholder with respect to any Option Shares until this Option has been duly
exercised as to such Option Shares in accordance with the terms hereof. The
grant of this Option shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its common stock or its capital or business structure, or to merge or to
consolidate, or to dissolve or liquidate, or to sell or transfer any or all of
its business or assets.
7. Securities Laws. Neither this Option nor any of the Option Shares
---------------
have been registered under the Securities Act of 1933, as amended, or the
securities laws of any state, in reliance on exemptions from the registration
provisions thereof. By acceptance hereof, the Optionee acknowledges such fact
and agrees that, unless the Option Shares are so registered prior to exercise
hereof, this Option and any Option Shares will be held for investment and not
with a view to distribution or resale, and may not be made subject to a security
interest, pledged, hypothecated, or otherwise transferred without either an
effective registration statement under such Act and compliance with applicable
state securities laws, which may not be possible, or an opinion of legal counsel
satisfactory to the attorneys for the Company that such registration is not
required under such Act and that applicable state securities laws will not be
violated by such action; and the Optionee further agrees that the certificates
for such Option Shares shall bear a legend substantially to such effect.
-3-
8. Performance Option Termination and Repurchase Provisions. If
--------------------------------------------------------
performance objectives set forth in Exhibit E to the Employee Agreement have not
been achieved within twelve (12) months after the date of the Employee
Agreement, the Option for Performance Option Shares shall automatically
terminate and no longer be exercisable and the Company shall repurchase from the
Optionee at the purchase price of $.25 per share all Performance Option Shares
theretofore purchased by the Optionee upon partial exercise of this Option.
9. General. The Company shall at all times during the term of the
-------
Option reserve and keep available a number of shares of common stock equal to
the number of Option Shares, and shall pay all original issue and transfer taxes
with respect to the issue of Option Shares pursuant hereto and all other fees
and expenses necessarily incurred by the Company incurred in connection
therewith.
IN WITNESS WHEREOF, the Company and the Optionee have executed this Option
Agreement as of the date first above written.
Company: CONCENTRIC NETWORK CORPORATION
By:___________________________________
President
Optionee: ______________________________________
-4-
EXHIBIT H
Colocation Services Agreement
This Colocation Services Agreement between Critical Technologies, a Missouri
corporation with principal offices at 1300 Baur Blvd., St. Louis, Missouri 83132
(hereinafter referred to as "Critical"), and Concentric Research Corporation
(hereinafter referred to as "CRC") with offices located 400 Forty first Street,
Bay City, Michigan 48708, is entered into this 1st day of November, 1994.
WHEREAS, Critical is a provider of colocation services; and
WHEREAS, CRC desires to engage Critical to provide colocation services as
described herein; and
WHEREAS, Critical desires to accept such engagement upon the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, CRC and Critical agree as follows:
I. DEFINITIONS
-----------
a. Colocation sites ("Sites")
Physical space which shall have the characteristics specified on
Appendix A, and shall be fit for the purposes of containing the Racks
and Equipment, as hereinafter defined, in an environment that will
enable the Racks and Equipment to operate according to Racal-Data Com,
Inc. specifications.
b. Optimum Locations
Optimum Locations shall be geographic locations (within which a Site
may be selected) which locations shall be identified by Critical as
most closely matching the criteria provided by CRC from time to time
for purposes of Modeling and in the Optimum Location Requests, as
provided in Article V of this Agreement. In identifying Optimum
Locations, Critical shall consider:
1. which metropolitan areas have the greatest potential customer
base
2. the determination of which physical location provides the
greatest number of callers with a local dial-access number
3. conclusions or indications from Modeling based upon CRC's
expressed criteria.
Critical shall provide a mathematical justification for each Optimum
Location to CRC, which mathematical justification shall be approved by
CRC.
c. Modeling services ("Modeling")
The creation of a mathematical model built and maintained by Critical
which shall enable Critical to recommend to CRC and CRC to select
Optimum Locations pursuant to the criteria submitted by CRC. The Model
shall incorporate data, including but not limited to; CRC's research
in the desired markets and/or market places, the existing 800 number
service network traffic data ordered geographically, and existing
point of presence Site network traffic data.
d. Colocation services ("Services")
The services being offered to CRC by Critical shall consist of
Modeling, locating, qualifying and providing Optimum Locations and
Sites, pursuant to Optimum Location Requests and Site Orders as
described in Article V of this Agreement, providing supervision for
any and all construction necessary at the Sites, accommodating
installation of Equipment and Racks as hereinafter defined, insuring
compliance with all codes, ordinances, rules and regulations,
providing consolidated billing for the Sites. Critical shall provide
communication with respect to the Services with the TM as hereinafter
defined.
e. Industrial Telecommunications Racks ("Racks")
The industrial telecommunication Racks which contain the Equipment, as
hereinafter defined, including but not limited to:
Excal Rackmounts
ALM 2332 Rackmounts
INX Rackmount Shelves
f. Colocation equipment ("Equipment")
All of the Equipment, other than Racks, owned by Racal and leased to
CRC which are located at the Sites, which Equipment includes but is
not limited to that type described on Appendix B.
g. Racal-Data Com, Inc. ("Racal")
A Florida corporation with principal offices located at 1601 North
Harrison Parkway, Sunrise, Florida 33323-2899, which is the owner of
all or part of the Equipment and Racks and leases those Equipment and
Racks to CRC.
-2-
h. Primary Entity
Any entity through which Critical leases or otherwise holds an estate
in the Site.
i. CRC Telecommunications Manager (the "TM")
CRC shall designate a single employee as its telecommunication manager
for purposes of this Agreement and as a primary CRC contact for
Critical with respect to this Agreement. The TM shall be designated by
CRC, in writing, upon execution of this Agreement and Critical shall
be notified, in writing within 48 hours, in the event that CRC
appoints a new TM.
II. AFFIRMATION
-----------
Critical shall provide Services, Optimum Locations and Sites pursuant to
Orders (as defined in Article V) to CRC.
III. TERM OF AGREEMENT
-----------------
This Agreement shall be effective upon the date first written above
("Effective Date") and shall continue for a period of twenty-four (24)
months from the Effective Date. Thereafter, this Agreement shall
automatically renew itself in twelve (12) month increments unless either
party notifies the other of its decision to terminate this Agreement by
providing the other party with sixty (60) days written notice prior to the
expiration of the period then in effect ("Renewal Period"). This Agreement
shall govern all Orders for Services which are received by Critical within
twenty-four (24) months from the Effective Date or any Renewal Period.
Notwithstanding anything contained herein, in the event that CRC shall fail
to renew after the first twenty-four (24) months of the Agreement, and in
the further event CRC shall have ordered more than 100 Sites which are
subject to this Agreement ("Additional Sites"), CRC shall pay the sum of
[*] for each Additional Site for each month less than twenty-four (24)
months which has expired from the time the Additional Site was ordered to
the date of termination of the Agreement under this paragraph.
IV. PAYMENT FOR SERVICES AND COMMENCEMENT
-------------------------------------
CRC shall pay to Critical the sum of [*] per Site per month, for the first
Rack, and [*] for each additional Rack at each Site, per month, up to a
total of three (3) Racks. With respect to the first Order, billing shall
commence on October 15, 1994. In addition, with respect to the first order,
CRC shall pay the sum of [*] upon execution of this Agreement. Thereafter,
---------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commisssion. Confidential treatment has been
requested with respect to the omitted portions.
-3-
commencement of billing for each Site shall begin upon execution of the
Site Order as provided in Article V of this Agreement (hereinafter referred
to as the "Commencement Date"). Payments are due monthly, on the first day
of each calendar month. If the Commencement Date of each Site or additional
Rack is other than the first day of each month, the first payment due
hereunder shall be equal to one-thirtieth (1/30) of the monthly rate set
forth for each day from and including the Commencement Date through and
including the last day of the month prior to the beginning of the term and
the monthly rate for the full initial month. Certain of the Sites shall be
located at Racal property or leaseholds ("Racal Sites") and CRC may elect
to obtain Sites. Notwithstanding anything else contained within this
Article IV, CRC shall only be required to pay the sum of [*] per month
per site for Racal Sites or where the site is obtained by CRC. In the event
that number of Sites subject to this Agreement shall drop below 90 Sites,
then CRC shall be required to pay the sum of [*] per month per Site for
Racal Sites or where the Site is obtained by CRC.
V. ORDERING PROCEDURE
------------------
a. Optimum Location Request
CRC, acting through the TM, shall make a written request to Critical
to identify Optimum Locations from time to time in order to enable CRC
and Critical to select new Sites or move existing Sites.
1. The TM shall identify the number of Optimum Locations which it
desires Critical to identify.
2. The TM shall further specify the number of days, but not less
than 30 days, within which CRC expects Critical to provide a
written response ("Identification Period").
(i) In the event that Critical is unable to respond within the
Identification Period, it shall notify the TM, before the
expiration of 75 percent of the respective Identification
Period, that it will be unable to comply within the
Identification Period. CRC may then elect to cancel the
Optimum Location Request or issue an amendment to the
Request to provide a new Identification Period.
b. Site Order
The TM shall, from time to time, direct Critical, in writing, to
identify a Site within an Optimum Location. The TM shall further
specify the number of days, but not less than thirty days unless
agreed in writing between the parties, within which CRC expects
Critical to provide a Site Order ("Order Period").
-4-
------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
1. In the event that Critical is unable to respond within the Order
Period it shall notify the TM, before the expiration of 75% of
the respective Order Period, that it will be unable to comply
with the Order Period. CRC may then elect to cancel the Site
Order or issue an amendment to the Site Order to provide a new
Order Period.
2. Upon identification of a Site by Critical, Critical shall prepare
a Site Order with the address of the Site and deliver the Site
Order to the TM. The TM shall execute the Site Order on behalf of
CRC, confirming the Site Order.
(i) Subsequent to the execution of a Site Order, Critical
shall deliver to the TM, in electronic form, a list of all
exchanges which are a local call to the exchange from the
Site.
(ii) Subsequent to the execution of the Site Order by the TM,
if CRC ships Racks or Equipment to the address on the Site
Order or incurs any charges, including AT&T or local
exchange carrier charges, and the address on the Site
Order is incorrect or the Site cannot be used, for any
reason which is not the fault of CRC or Racal, Critical
shall be liable for all expenses incurred or related to
the Site address being incorrect or the Site not being
available for use by CRC, including Equipment and Cabinet
shipment charges.
c. Replacement Site
In the event that a Site Order is made, and after not less than 120
days subsequent thereto, CRC determines that the Site does not meet
its marketing criteria ("Nonconforming Site"), CRC may terminate the
Nonconforming Site and order a Replacement Site unless the Site is
selected by CRC without Critical's advice.
1. The Replacement Site must be leased for the balance of the term
of the Nonconforming Site.
2. The Replacement Order procedure shall be as follows:
(i) The TM shall, in writing, request a Replacement Site,
identifying the Nonconforming Site, and specifying a new
Optimum Location. The TM shall further specify the Order
Period. The term of this Order Period in such event shall
not be less than 30 days.
(ii) In the event that Critical is unable to respond within the
Order Period it shall notify the TM before the expiration
of 75% of the respective Order Period, that it will be
unable to comply with the Order Period.
-5-
CRC may then elect to cancel the Replacement Order or
issue an amendment to the Replacement Order to provide a
new Order Period.
(iii) Upon indemnification of a Replacement Site by Critical,
Critical shall prepare a Replacement Order with the
address of the Replacement Site and deliver the
Replacement Site Order to the TM. The TM shall execute the
Replacement Site Order on behalf of CRC confirming the
Replacement Site Order.
1) Subsequent to the execution of a Replacement Site
Order, Critical shall deliver to the TM, in electronic
form, a list of all exchanges which are a local call
to the exchange of the Site.
2) Subsequent to the execution of the Replacement Site
Order by the TM, if CRC ships Racks or Equipment to
the address on the Replacement Site Order or incurs
any charges, including AT&T or local exchange carrier
charges, and the address on the Replacement Site Order
is incorrect or the Site cannot be used, for any
reason which is not the fault of CRC or Racal,
Critical shall be liable for all expenses incurred or
related to the Site address being incorrect or the
Site not being available for use by CRC, including
Equipment and Cabinet shipment charges.
VI. WARRANTY
--------
Critical warrants that the Services shall be provided to the best of its
ability, skill and knowledge. Critical further warrants that the Sites will
meet the requirements set forth on Appendix A and that the Services will be
of the kind and quality and fulfill the purposes defined in Article I of
this Agreement and will be performed by qualified personnel. Critical
warrants to CRC peaceful possession of all of the Sites. THE FOREGOING
WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES EXPRESS, IMPLIED, OR STATUTORY,
INCLUDING WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
AND NO REPRESENTATIVE OF CRITICAL IS AUTHORIZED TO ALTER OR ENLARGE THIS
WARRANTY.
VII. INSURANCE
---------
Critical shall maintain in force during the term of this Agreement a policy
of insurance issued by a company authorized to engage in the insurance
business in all of the states in which the Sites are located. The policy
shall insure the Racks and Equipment against the perils of fire, extended
coverage, vandalism, malicious mischief, special extended coverage ("All
Risk"), and sprinkler coverage. Further, Critical shall provide a
comprehensive general liability insurance policy insuring CRC against any
liability arising out of the use, occupancy or maintenance of the Site and
all access areas appurtenant thereto. Each policy shall be on an occurrence
basis
-6-
and shall insure not less than Three Million Dollars ($3,000,000.00) per
occurrence. The insurance policy shall insure the hazards of the Site and
operations conducted in and on the Site, independent contractors,
contractual liability, and shall name CRC and Racal as insured parties.
CRC shall be furnished with a copy of the certificate of insurance.
VIII. FORCE MAJEURE
-------------
Neither Critical or CRC shall be considered in default in performance of
their obligations hereunder if performance of such obligations is
prevented or delayed by acts of God or government, labor disputes, failure
or delay of transportation, or by vendors or subcontractors, or any other
similar cause or causes beyond the reasonable control of either party.
Time of performance of either party's obligations hereunder shall be
extended by the time period reasonably necessary to overcome the effects
of such force majeure occurrences.
IX. CASUALTY
--------
In the event that a Site shall be destroyed or rendered unusable by fire
or other casualty, Critical shall have 30 days to relocate the Site.
X. TITLE AND LOCATION
------------------
Nothing contained herein shall give or convey to Critical any right, title
or interest in or to any of the Racks or Equipment, and Critical
represents and agrees that it shall furnish to CRC such documentation as
CRC requires to confirm said title in CRC or Racal.
Critical shall notify all Primary Entities of the interest of Racal and
CRC in the Racks and Equipment. Further, Critical shall file, on behalf of
CRC and Racal, a UCC financing statement in each respective state where a
Site is being provided pursuant to this Agreement, Critical shall provide
to CRC the names and addresses of the Primary Entities and CRC shall
prepare the UCC financing statements, Critical shall obtain the signatures
of the Primary Entities and file the UCC financing statements in the
appropriate state offices. CRC shall pay all filing fees. Each UCC
financing statement shall identify the Primary Entity with respect to the
Site, address of the Primary Entity, the identity of Racal and/or CRC as
the owners of the Racks or Equipment. The UCC shall be in a form which CRC
deems advisable to secure the interests of CRC and Racal. Without limiting
the foregoing, Critical shall obtain the signature of each of the Primary
entities on one or more financing statements in a form and substance
satisfactory to CRC covering all of the Racks and Equipment to be located
at the Sites pursuant to this Agreement.
XI. OWNERSHIP RIGHTS
----------------
a. Racks and Equipment
-7-
The Racks and Equipment shall at all times remain the property of CRC
and/or Racal. Critical agrees that it shall allow the Equipment and
Rack to be labeled as property of CRC and Racal. Critical shall
replace any such stenciling tag or plate which may be removed or
destroyed or become illegible. Critical shall keep all Racks and
Equipment free from any marking or labeling which might be interpreted
as a claim of ownership thereof by Critical or any Primary Entity, or
might be interpreted as a claim of anyone so claiming through Critical
or any Primary Entity.
1. Upon termination or expiration of this Agreement, Critical shall
provide immediate access to the Sites to remove all Equipment and
Racks.
b. Modeling
With respect to the Modeling, Critical shall retain ownership of the
analytical process. CRC shall retain ownership of all data provided
for the Modeling and all results of the application of the analytical
process to the data. Critical shall not, without prior written
permission of CRC, transfer, disclose or otherwise provide the data or
results of the Modeling to any person outside of Critical. Critical
agrees that it shall thoroughly safeguard the confidentiality of the
data in the Modeling results, and in no event shall it be to a lesser
extent than Critical safeguards its own proprietary information.
Critical agrees that access to such data and the Modeling results will
be given only to employees of Critical who require access in the
course of Critical's business, and such employees will be informed of
the confidential nature thereof and shall be required to observe
provisions of confidence as set forth herein.
1. Within seven days following termination or expiration of this
Agreement, Critical shall return all data provided by CRC for the
Modeling and all Modeling results. Thereafter, within said seven
day period, Critical shall destroy all copies of the Modeling
Data provided by CRC and the Modeling results which Critical has
in its possession.
XII. DEFAULT
-------
a. By CRC:
-------
1. An Event of Default by CRC shall occur hereunder if: (i) CRC
fails to make payments as defined herein or to perform any other
condition of this Agreement, which shall continue for a period
thirty (30) business days following written notice thereof, (ii)
CRC fails within forty-five (45) days after the commencement of
any proceeding against CRC seeking any reorganization
arrangement, composition, readjustment, liquidation, dissolution,
or similar relief under any present or future statute, law,
regulation, to obtain the dismissal of such proceeding or (iii)
if a trustee or receiver is appointed or liquidation proceedings
are initiated with respect to all or a substantial portion
-8-
of the properties of CRC, without the consent of Critical, and
CRC is unable to vacate such appointment within forty-five (45)
days.
b. By Critical:
------------
1. An Event of Default by Critical shall occur hereunder if: (i)
Critical fails to provide Services as defined in Article I or
Sites as set forth in Appendix A for reasons other than force
majeure, or the acts or omission of CRC, or fails to perform any
other covenant or condition of this Agreement, and Critical is
unable to cure or remedy any such deficiency within thirty (30)
business days following receipt of written notice of such
deficiency by CRC, (ii) Critical fails within forty-five (45)
days after the commencement of any proceeding against Critical
seeking any reorganization arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under
any present or future statute, law, regulation, to obtain the
dismissal of such proceeding or, (iii) if a trustee or receiver
is appointed or liquidation proceedings are initiated with
respect to all or a substantial portion of the properties of
Critical, without the consent of CRC, and Critical is unable to
vacate such appointment within forty-five (45) days.
XIII. SITE CASUALTY
-------------
CRC shall use its best efforts to maintain a minimum of 80 sites subject
to this Agreement.
XIV. REMEDY IN THE EVENT OF DEFAULT
------------------------------
a. By CRC:
-------
Upon the occurrence of an Event of Default or in case of breach by
CRC, Critical may cancel this Agreement, declare the entire amount of
any unpaid balance due under this Agreement due and payable, and use
all available remedies to remove CRC and its Racks and Equipment from
possession of the Sites by ejectment or otherwise. This remedy of
Critical is in addition to all other remedies at law or in equity.
b. By Critical:
------------
Upon the occurrence of an Event of Default by Critical, CRC may:
1. Terminate this Agreement without further liability; and
(i) exercise any other right or remedy which may be available
at law or in equity;
-9-
(ii) elect, in its sole discretion, to retain possession of all
or a part of the Sites, on the condition that it assumes
Critical's lease obligations with the Primary Entity for
each respective Site that CRC retains possession of.
Critical may seek compensation in a court of law for any
leases not assumed by CRC.
XV. ASSIGNMENT
----------
a. By Critical:
------------
Any assignment of this Agreement by Critical without the written
consent of CRC shall be void, such consent shall not be unnecessarily
withheld.
b. By CRC:
-------
CRC shall not assign this Agreement, except to Racal, without first
obtaining the written consent of Critical, which consent will not be
unreasonably withheld, conditioned, or delayed. Critical's consent
shall be conditioned on Critical's approval of the economic viability
of the proposed assignee.
Notwithstanding anything to the contrary contained herein, any
transfer of this Agreement from CRC by merger, consolidation or
liquidation or any change in the ownership or power to both the
majority of the outstanding stock of CRC shall not constitute an
assignment for the purposes of this section.
XVI. GOVERNING LAW: FORM
-------------------
This Agreement shall be governed and construed in accordance with the
laws of the State of Michigan. The parties hereby consent and submit the
exclusive jurisdiction of the appropriate state or federal court serving
Bay County, Michigan, as to any dispute or controversy arising either
directly or indirectly, under or in connection with this Agreement.
XVII. WAIVER
------
No waiver by either party of any default shall operate as a waiver of any
other default or of the same default on a future occasion. No delay,
course of dealing or omission on the part of either party in exercising
any right or remedy shall operate as a waiver thereof, and no single or
partial exercise by either party of any right or remedy shall preclude
any other or further exercise thereof or the exercise of any other right
or remedy.
XVIII. SEVERABILITY
------------
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in
-10-
any way be affected or impaired thereby, provided such provision still
expresses the intent of the parties. If the intent of the parties cannot be
preserved, the Agreement shall either be renegotiated or rendered null and
void.
XIX. NOTICES
-------
Any notices or communications given or required under this Agreement shall
be sufficiently given if delivered personally, in writing or sent by telex
or facsimile, federal express, registered or certified mail, postage
prepaid, to the other party at the following address:
TO: Critical Technologies
---------------------
St. Louis, MO
-------
Attn:
Timothy R. Huff
131 Jefferson Street
Charleston, MO 63301
TO: Concentric Research Corporation
400 Forty First Street
Bay City, MI 48708
Attn: President
With a copy to:
Susan M. Cook
Lambert, Leser, Cook, Schmidt & Giunta, P.C.
309 Davidson Building, P.O. Box 835
Bay City, MI 48707-0835
Such notice or other communications shall be deemed received (a) on the
date delivered, if delivered personally; or (b) upon receipt, if sent by telex
or facsimile, federal express or (c) three (3) business days after being sent,
if sent registered or certified mail.
XX. ENTIRE AGREEMENT
----------------
The terms and conditions contained in this Agreement, and the referenced
------------------
Addendums which are hereby incorporated herein, shall be applicable to all
----------------------------------------------
Optimum Location Requests and Site Orders during the effectiveness of this
Agreement whether referenced in same or not. This Agreement expresses the
entire understanding and agreement of the parties with reference to the
subject matter hereof, and is a complete and exclusive statement of the
terms of this Agreement, and no representations or agreements modifying or
supplementing the terms of
-11-
this Agreement shall be valid unless in writing, signed by persons
authorized to sign agreements on behalf of both parties.
-12-
IN WITNESS THEREOF, this Agreement was entered into as of the day and year
first written above.
CRITICAL TECHNOLOGIES
BY: /s/ James F. Crowe
-------------------------------
ITS: President, as President
------------------------------
DATE: November 1, 1994
-----------------------------
CONCENTRIC RESEARCH CORPORATION
BY: /s/ Donald I. Schutt
-------------------------------
ITS: Chief Operating Officer
------------------------------
DATE: November 1, 1994
-----------------------------
-13-
APPENDIX
A. Electrical
1. One 30 Amp 120 Volt Single phase dedicated circuit with MEMA space LB-
30R for each communication equipment rack. Additional circuits required for
an independent air conditioning unit should the site's air conditioning be
turned off for any amount of time.
2. The service must by 24 hours per day, seven days a week, every day of
the year without interruption.
B. Physical space
1. Each telecommunications rack needs 24" width, 26" depth, 6' height.
2. Each telecommunications rack shall have 2' front and rear access at
all times.
3. Each telecommunications rack requires at least 1' clearance between
the interior ceiling and the top of the rack.
4. Each closet shall have a 4' x 4'3/4" plywood backboard (or equivalent
as per the Local Exchange Carrier's specifications) painted black to be
within 5' of the telecommunications rack(s).
C. Environment
1. Air conditioning is a requirement for all telecommunications racks and
should be on at all times.
2. The operating environment shall comply with all environmental
specifications as published in Racal's technical documentation.
3. There shall be suitable electrical lighting as required for service.
4. There shall be a key entry lock on the cabinet door to restrict access
to the cabinet.
D. Access
1. Access to the telecommunications closet shall be provided on a 7 day a
week 24 hour a day basis all days of the year.
2. Access to the telecommunications closet shall be provided to (a) CRC
authorized personnel (b) Racal authorized personnel and (c) Local Exchange
Carrier personnel within 4 hours of notification.
ANY CHANGES REQUIRING OR PERTAINING TO INSIDE WIRING, WHETHER REQUESTED OR
DIRECTED BY A LOCAL EXCHANGE CARRIER OR OTHERWISE, SHALL BE THE
RESPONSIBILITY OF CRITICAL TECHNOLOGIES.
-2-
EXHIBIT I
Scope
------
. Software Development Management
. Manage registration development for Intrust
. Manage host system software upgrade required for escalating subscriber base
- Business requirements
- Technical requirements
- General Analysis and design
- Coding
- Integration and testing
- Beta testing
- Implementation testing
SCHEDULE 1
to Employee Services and Staffing Agreement
Dated as of the _____ day of _____________, 1995
by and between Concentric Network Corporation ("CNC") and
Critical Technologies Incorporated ("CTI") (the "Agreement")
The following provisions dealing with Share Options (as defined in the
Agreement) shall be deemed part of the Agreement as if fully set forth therein.
1. Compliance with SEC Rule 504. CNC agrees that it will take all
----------------------------
reasonable steps to comply with Rule 504 of Regulation D ("Regulation D")
promulgated by the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933 (the "Act") so long as CNC is not subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"). These steps will include, but not be limited to:
a. CNC will timely file a notice on Form D with the SEC.
b. CNC will, on an ongoing basis, provide to holders of Options
financial and other information concerning CNC reasonably necessary to
enable holders of Options to make fully informed decisions concerning
exercise of their Options and investment in shares of CNC Common Stock
("Shares").
2. At such time as CNC becomes subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, CNC shall:
a. Register with the SEC on Form S-8 those Options and Shares
subject to Options held by leased employees hereunder or other principals
or employees of CTI who are advisors or consultants to CNC;
b. take all steps reasonably necessary to comply with Rule 505 of
Regulation D with respect to Options and Shares subject to Options held by
persons who are not leased employees hereunder or otherwise advisors or
consultants to CNC. Such compliance will include providing to such Option
holders on a timely basis copies of all reports and proxy materials filed
by CNC with the SEC, all Annual Reports and other materials provided by CNC
generally to its shareholders, and any other information reasonably
necessary to comply with the information requirements of Rules 502 and 505
of Regulation D.
3. "Piggy-Back" Registration Rights. If, prior to the second anniversary
--------------------------------
of the date on which CNC becomes subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, CNC files with the SEC a Registration
Statement to register Shares under the Act (other than a Registration Statement
on Form S-4 or S-8), holders of Shares purchased upon exercise of Options which
Shares have, at the time of filing of such Registration Statement, been held for
less than two years and are "restricted securities" (as defined in Rule 144
promulgated by the SEC), shall be given the right to include such Shares in
CNC's Registration Statement and sell such Shares in the offering made pursuant
to such Registration Statement ("Registration Rights") on substantially the
following terms:
a. CNC will bear the expenses of registration of such Shares other
than underwriters' discounts and commissions with respect thereto, and fees
and expenses of counsel to the selling shareholders.
b. Such selling shareholders will execute the Underwriting Agreement
pursuant to which Shares are sold in the registered offering, which
Underwriting Agreement may contain indemnification and other provisions in
substantially the form normally contained in such agreements.
-2-
c. The Registration Rights will be available only with respect to
the number of Shares the underwriters indicate, in their judgment, will not
adversely impact the registered offering.
-3-
September 30, 1996
Mr. Mike Anthofer
Vice President & CFO
Concentric Network Corp.
10590 N. Tantau
Cupertino, California 95014
C R I T I C A L
TECHNOLOGIES
Fax No. 408-342-2876 I N C O R P O R A T E D
Dear Mike:
Below I have outlined the changes to our agreement. Please indicate your
concurrence with these modifications by signing below. The specific changes for
our "Employee Service and Staffing Agreement" are:
1) Delete paragraph 1d, subsections 4 and 5.
2) Waive the notice of an extension in paragraph 2.0 and extend the agreement
for an additional two (2) years (October 31, 1999).
3) Change section 4f (second paragraph) so that the upcharge Is changed to
[*] instead of [*] for staff positions currently on board as of the
signing of the agreement (see attached listing). Change the upcharge to be
only on base salaries, payroll taxes and benefits. Other expenses
associated with hiring will be passed through at cost. Said taxes and
benefits are currently billed at [*] of base salaries; therefore, the
total markup over base salaries is [*]. Additional hiring over those
positions noted on the attached list will be at a [*] upcharge or
currently [*] over base salaries. Additionally, CNC commits to a
minimum level of staffing equal to the staffing level as of the date of
signing of this document.
4) Delete paragraph 6(a).
5) Delete 8(a)(4) and change 8(a)(3) so that said fees are no longer due
unless sites are added after Installation of the super POPs currently
scheduled.
6) As a consideration of this agreement, the CNC board must agree that all
"performance shares" or options have been earned (see attached
"Performance Summary"). Said options and all other
--------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
options under the original agreement to be granted and delivered within 10
days of the first board meeting following the signing of this agreement.
Additionally, CNC shall provide an option agreement acceptable to CTI with
which an option holder may execute such options. Said option agreement to
be provided within 10 days of the board meeting following the signing of
this agreement. Failure of the CNC board to approve these two items will
nullify this agreement.
7) It is agreed that paragraph 10 of the existing contract shall provide that
CTI shall have the right to assign or transfer their duties, obligations
and all benefits under the contract to a merger or acquiring entity so
long as that entity is not Netcom, PSI, UUNET, ANS, ATT Worldcom, MFB,
GTE, Ameritech, PAC Bell, SBC, US West, NYNEX, BellSouth, Bell Atlantic,
Sprint Internet/Intranet Services, MCI Internet/Intranet Services, and
CompuServe Network Services. Should CTI be acquired by one of the named
competitors, CNC may at Its option exercise the "buy out option" and pay
CTI a cash payment equal to [*] of the remaining value (an a present
value basis at prime) of its profit and any unpaid relocation expenses
(see "e" below). Said option to be exercised with ninety (90) days of
notice by CTI of intention to merge with a competitor of CNC.
8) CTI further agrees to limit access to CNC proprietary information to only
those CTI employees who have a need to know.
9) In order to provide an orderly transition at the end of the agreement, CTI
agrees to locate all personnel and resources used to support CNC to a new
subsidiary and transfer that entity to CNC according to the following
plan:
a. CTI will create a wholly owned subsidiary. CTI will transfer all
existing CNC staff to this entity. Additionally, all new CNC related
staff will be hired by this subsidiary for those CNC operations
housed in St. Louis, Missouri.
b. CTI will transfer its rights (including leasehold improvements)
under Its lease to 3324 Hollenberg Drive to this new subsidiary.
Said lease to have at least five (5 years remaining at the
termination of this agreement at a cost not to exceed [*] per
square foot (triple net). Any office equipment currently owned by
CTI and used exclusively by the subsidiary employees will also be
transferred. Additional office equipment for current or future
employees of the subsidiary will be paid for by CNC and remain their
assets.
c. CTI will transfer a nonexclusive license to its software for network
modeling, site management. and telco reconciliation to this new
entity.
-------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
d. CNC shall acquire title to this new subsidiary at the and of this
agreement and CTI will vacate the promise on 3324 Hollenberg Drive.
Both parties agree to execute such documents as may be necessary to
minimize the tax effect to both entities.
e. CNC shall pay CTI [*] for relocation expense and the assets of
the new subsidiary. This amount will be paid for costs as needed by
CTI to relocate its other business to other facilities. CTI will
provide to CNC on at least a quarterly basis their projected needs
for the next six months. All of these funds could be paid in advance
of the completion of this agreement. Any funds not so advanced will
be paid at the point where ownership of the subsidiary transfers to
CNC.
f. CTI agrees to reimburse CNC an amount equal to 35% of the annual
salary of any CNC employee (acquired through the acquisition of the
subside") that returns to CTI or its other subsidiaries within one
year of said acquisition.
g. CTI agrees to use its best efforts to ensure that all employees of
the subsidiary stay with the entity when the transfer to CNC occurs.
10) Sections 4 and 7 shall be modified to require joint agreement by both CTI
and CNC on all matters relating to the hiring and compensation of the
employees employed by the subsidiary.
11) In the event CNC determines that it requires additional local access POP
locations, before CNC executes an agreement with any other person to
provide such locations to CNC, CTI will negotiate for a period of thirty
(30) days with CNC for CTI to provide such locations. In the event that
CTI and CNC are unable to reach agreement within such 30 days, CNC shall
thereafter be free to execute an agreement with any other person to
provide such locations to CNC so long as the terms of such agreement when
considered in the aggregate (including such matters as price, facilities,
response times and other relevant factors bearing on the overall value of
such an arrangement to CNC), are no more favorable to such other person
that the most favorable terms offered by CNC in writing to CTI during such
30 days of negotiation.
12) CTI agrees to provide other consulting services to CNC at a rate not to
exceed the lowest offered by CTI to other customers requiring similar
services (including duration or quantity of such services).
-------------------------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
13) CNC and CTI agree to mutually recommend each other as business
opportunities arise. Specifically, CNC will recommend CT1 services, as
appropriate, to STET/TMI.
14) Effective upon the closing of any Acquisition of CTI, CTI shall pay, or
cause the person acquiring CTI to pay, to CNC the sum of [**] Such
sum shall be paid in cash unless the consideration paid to CTI or the
shareholders of CTI in the Acquisition consist solely or partly of
securities of the acquirer which can be traded on the NASDAQ National
Market, the New York Stock Exchange or the American Stock Exchange, in
which case the acquirer shall have the right to pay such amount to CNC in
a combination of cash and such securities in the same proportion and
manner that such cash and securities is paid to CTI or the shareholders of
CTI. Such securities shall be valued for the purposes of this agreement at
the average of the closing sale price of such securities for the 30
trading days preceding the closing of such Acquisition. In the event that
the total consideration for the Acquisition is paid in two or more
increments, the [*] to be paid to CNC shall be paid concurrently with
each such increment. The proportion of the [*] paid at each Increment
shall be the same proportion as the consideration paid at such increment
represents as a portion of the total consideration paid in all increments.
For purposes of this Agreement, an "Acquisition" shall mean any of
transactions or series of transactions in which all or substantially all
the business of CTI is transferred to another person, whether the form of
such transaction is a stock sale by the shareholders of CTI, a merger, a
consolidation or a transfer of assets.
-------------------------
[*]Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
If you agree with these changes, please note your acceptance below. If I can
clarify any of the items notes, please contact me.
Accepted and Agreed: Accepted and Agreed:
Critical Technologies, Inc. Concentric Network Corporation
By: /s/ Matthew W. Bross By: /s/ Michael Anthofer
---------------------------- ----------------------------
Matthew W. Bross Michael Anthofer
Vice President & CEO Vice President & CFO
Date: 9-30-96 Date: 9-30-96
-------------------------- --------------------------
cc: James A. Wootten
Michael Fallon
Paul W. Noblett
John Peters
-26-
EMPLOYEE SERVICES AND STAFFING AGREEMENT
SECOND AMENDMENT
WHEREAS: Concentric Network Corporation, a Florida corporation ("CNC"), and
Critical Technologies Incorporated, a Missouri corporation ("CTI"), are parties
to that certain Employee Services and Staffing Agreement (the "Staffing
Agreement dated as of November 1, 1995, and
WHEREAS: CNC and CTI entered into an Extension and Amendment of the Staffing
Agreement on September 30, 1996 (the "Extension and Amendment"), which provides,
among other things, that the CNC Board of Directors must agree that all
"performance shares" or options to be granted under the Staffing Agreement have
been earned, and CNC must grant and deliver all option agreements under the
Staffing Agreement within 10 days of the first Board meeting following the
signing of the Extension and Amendment, which Board meeting was held on October
4,1996, and
WHEREAS: The Extension and Agreement further provides that failure of the CNC
Board to approve said two items will nullify the Extension and Amendment, and
WHEREAS: CTI and CNC agree that said option agreements should not be issued or
delivered until CNC has obtained from the State of Missouri appropriate waiver,
exemption, clearance or qualification for such options, the obtaining of which
will require more time than 10 days from October 4, 1996, and wish to amend the
Staffing Agreement, as amended, to enable CNC to obtain the appropriate Blue Sky
clearance without adverse effect on the Extension and Amendment,
NOW THEREFORE, CTI and CNC hereby agree as follows:
1. The Extension and Amendment is hereby amended to provide that CNC will
promptly apply for the necessary Missouri waiver, exemption, clearance or
qualification for the options and the 900,000 shares of Class A Common Stock
issuable upon exercise of such options, and will promptly issue option
agreements with respect to such options within five business days of receipt of
such waiver, exemption, clearance or qualification from the State of Missouri;
provided that the vesting of such shares over the 12-month period provided in
the Staffing Agreement shall not be postponed on account of the Missouri
application but shall continue as provided for in the Staffing Agreement.
2. As amended by the foregoing, the Staffing Agreement and the Extension and
Amendment shall remain in full force and effect and shall not be nullified on
account of delays related to obtaining Missouri Blue Sky approval; provided,
however, that if such options are not issued on or before December 21, 1996,
this Second Amendment to the Staffing Agreement shall terminate and the rights
of the parties shall be determined in accordance with the terms of the Employee
Servicing and Staffing Agreement and the First Amendment thereto, as if this
Second Amendment had not been executed.
IN WITNESS WHEREOF, the parties have executed this Second Amendment by
their duly authorized representatives as of the date set forth below.
CONCENTRIC NETWORK CRITICAL TECHNOLOGIES
CORPORATION INCORPORATED
By: /s/ Mike Anthofer By: /s/ Matthew W. Bross
-------------------------------- -------------------------------
Name: Mike Anthofer Name: Matthew W. Bross
------------------------------ -----------------------------
Title: Vice President & CFO Title: Vice President
----------------------------- ----------------------------
Date: 10-23-96 Date: 10-21-96
------------------------------ -----------------------------
AMENDMENT No. 1 TO THE COLOCATION SERVICES AGREEMENT DATED NOVEMBER 1, 1994
BETWEEN CONCENTRIC RESEARCH CORPORATION AND CRITICAL TECHNOLOGIES, INC.
This Amendment No.1 ("Amendment") dated as of June ___, 1997 by and between
Concentric Network Corporation ("CNC"), a Florida corporation with principal
offices at 10590 N. Tantau Avenue, Cupertino, California 95014 and Critical
Technologies Incorporated ("CTI"), a Delaware corporation with principal offices
at 944 Anglum, Hazelwood, Missouri 63042.
WITNESSETH
----------
WHEREAS, On November 1, 1994, CTI entered into the Colocation Services
Agreement (the "Agreement") with Concentric Research Corporation, now known as
Concentric Network Corporation;
WHEREAS, the Agreement has been modified by the parties in the past and
needs to be modified to reflect the May 30, 1997 Memorandum of Understanding
("MOU") between CNC and Williams Communications Group, Inc. ("WCG"), the parent
company of CTI;
WHEREAS, the parties have agreed to incorporate all prior modifications and
the modifications contemplated in the MOU in this Amendment.
NOW, THEREFORE, in consideration of the respective covenants and agreements
of the parties contained herein, the parties hereto agree as follows.
1. Prior Modifications and Amendments
----------------------------------
CTI and CNC agree that this Amendment shall supersede and replace any prior
amendments or modifications to the Agreement in their entirety. Such prior
modifications and amendments shall be of no further force or effect.
2. Amendments
----------
2.1 The term of the Agreement shall be extended until December 31, 2000.
The Agreement may be terminated prior to December 31, 2000 by the mutual,
written consent of both parties. The Agreement shall automatically renew for an
additional two-year period unless either party shall give one-hundred twenty
(120) days notice prior to the expiration of this Agreement to the other party
that said party does not wish to extend the terms of this Agreement.
Notwithstanding the foregoing, if WCG elects not to participate in the
"Financing Event", even though CNC has satisfied all conditions set forth in the
definition of "Financing Event", the Agreement may be terminated by CNC on
October 31, 1999, if CNC provides CTI ninety (90) days prior written notice.
The term "Financing Event" shall have the meaning set forth in the Amended and
Restated Employee Staffing and Services Agreement of even date herewith.
2.2 At the termination of the Agreement, CTI will assign its rights to the
POPs under the Agreement to CNC. The assignment shall be subject to CTI's right
to colocate equipment.
2.3 CNC may close any POP or, with the mutual agreement of CTI, migrate
any POP to a new location (i) not owned by WCG or its subsidiaries or (ii) not
managed by CTI during the term of the Agreement by paying to CTI the net present
value (at prime) of the remaining CTI profit on such POPs and by reimbursing CTI
for any out-of-pocket costs associated with leaving the former POP location
prior to the end of the term of the Agreement. Notwithstanding the foregoing,
if CNC and CTI agree to migrate a CNC POP to a new location either (i) owned by
WCG or its subsidiaries or (ii) managed by CTI during the term of the Agreement,
then CNC shall only be required to reimburse CTI for any out-of-pocket costs
associated with leaving the former POP location prior to the end of the term of
the Agreement. In this regard, CTI and CNC will work together to migrate a POP
or POPs, as identified by CNC, to new central office quality colocate space
under the Agreement as soon as commercially reasonable. Further, CTI agrees
that the new central office quality colocate space shall be charged to CNC at
commercially competitive rates.
2.4 CNC will pay the amounts set forth in the Agreement based upon a
minimum of one hundred (100) POP sites at all times during the term of the
Agreement.
2.5 CTI will continue to be responsible for provisioning new POP sites for
CNC. CTI will be paid [*] for each installation. All direct costs of any new
POP shall be paid by CNC.
2.6 CTI shall be allowed to colocate equipment in the CNC POPs controlled
by CNC based upon a percentage of floor space utilized. Such cost to CTI to be
that percentage of the Colocate cost plus twenty percent [*] of the fees paid
by CNC to the party leasing the colocate space for square footage in the POP
locations.
2.7 In the event that CNC determines that it requires additional local
access POP locations, before CNC executes an agreement with any other person to
provide such locations to CNC, CTI will negotiate for a period of thirty (30)
days with CNC for CTI to provide such locations. In the event that CTI and CNC
are unable to reach agreement within such 30 day period, CNC shall thereafter be
free to execute an agreement with any other person to provide such locations to
CNC so long as the terms of such agreement, when considered in the aggregate
(including such matters as price, facilities, response times and other relevant
factors bearing on the overall value of such an arrangement to CNC), are no more
favorable to such other person than the most favorable terms offered by CNC in
writing to CTI during such 30 days of negotiation.
2.8 New paragraphs c. and d. shall be added to Article XIV of the
Agreement. These paragraphs shall read as follows:
c. Procedure:
---------
[*] Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
An Event of Default by either party shall not have occurred until the
non-defaulting party shall notify the defaulting party, in writing, of the
default, setting forth the nature thereof. Said notice shall be mailed to
the company at the designated address for notices as provided in Section 4
of the Amendment. The defaulting party shall have thirty (30) days from the
date of the notice to cure said defect or default.
d. Limitation of Liability:
-----------------------
Except as expressly and specifically set forth in another paragraph to this
Agreement, neither party shall be liable to the other party for any lost
profits; any loss of business; any cost of replacement services; or any
indirect, consequential, incidental or special losses or damages of any
kind or nature whatsoever, due to an Event of Default.
3. Successors and Assigns
----------------------
The Agreement, as amended, and all rights hereunder shall inure to the
benefit of and be enforceable by each party's successors and permitted assigns.
No party may assign or transfer this Agreement or transfer its rights or
obligations hereunder without the prior written consent of the other party
(which shall not be unreasonably withheld) except to an affiliate.
4. Notices
-------
For the purposes of this Agreement and the Amendment, notices and all other
communications provided for in the Agreement and Amendment shall be in writing
and shall be deemed to have been duly given or delivered upon receipt after
personal delivery or mailing by registered mail, return receipt requested,
postage prepaid, address as follows:
(a) If to CTI:
Critical Technologies Incorporated
Attn: Gordon Martin
111 East First Street
Tulsa, OK 74103-2808
Phone:
with a copy to:
General Counsel
Williams Telecommunications Group, Inc.
One Williams Center
Suite 4000
Tulsa, OK 74172
Phone:
Facsimile:
-3-
(b) If to CNC:
Concentric Network Corporation
10590 N. Tantau Avenue
Cupertino, CA 95014
Attention: Chief Financial Officer
Phone: (408) 342-2800
Facsimile: (408) 342-2810
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: David Segre
Facsimile:
or to such other address as any party may have furnished to the other in writing
in accordance herewith.
5. Amendment
---------
No amendment or modification of this Agreement, as amended, or any of its
provisions shall be binding upon any party unless made in writing and signed by
all of the parties hereto.
6. Waiver
------
The performance of any condition or obligation imposed hereunder upon any
party hereto may be waived only upon the written consent of the parties hereto.
Such waiver shall be limited to the terms thereof and shall not constitute a
waiver of any condition or obligation of the other party under this Amendment.
Any failure by any party to this Amendment to enforce any provision shall not
constitute a waiver of that or any other provision of this Amendment.
7. Third Party Rights
------------------
This Amendment shall not inure to the benefit of any third party other than
CTI and CNC and valid successors or assigns of a party hereto or thereto.
-4-
IN WITNESS WHEREOF, the parties have executed this Amendment by their duly
authorized representatives as of June 19, 1997.
CONCENTRIC NETWORK CRITICAL TECHNOLOGIES
CORPORATION INCORPORATED
By: /s/ By: /s/
------------------------------- -------------------------------
Name: Name:
----------------------------- -----------------------------
Title: Title:
---------------------------- ----------------------------
-5-