Exhibit 10-8
Amendment To The
Microsoft 1993/1994
Channel Agreement
(Appointment As a Major Chain Reseller)
This amendment ("Amendment") entered into as of the 10th day of November,
1993, modifies that certain Microsoft 1993/1994 Channel Agreement
("Agreement") between MICROSOFT CORPORATION ("MS") having its principal place
of business at One Microsoft Way Redmond, WA 98052 and DJ&J SOFTWARE
CORPORATION d.b.a. EGGHEAD SOFTWARE ("CUSTOMER") having its principal place of
business at 22011 SE 51st Street, Issaquah, WA 98027. The Agreement is
amended as follows:
1. Purpose
The purpose of this Amendment is to set forth the framework by which MS
appoints CUSTOMER as a non-exclusive major chain reseller in the United States
of America for the MS Products listed on the MS Price List attached hereto as
Schedule B. For purposes of this Amendment, capitalized terms not otherwise
defined herein, shall have the same definition as set forth in the Agreement.
2. CUSTOMER Obligations
2.1 Distribution to End Users Only
Products distributed pursuant to this Amendment shall be distributed solely to
end users, and not to resellers of any kind.
2.2 Licensing Provisions
CUSTOMER acknowledges that the Products are distributed to end users subject
to the terms of the applicable end user license agreement. CUSTOMER shall
make commercially reasonable efforts to prevent distribution of Products to
end users who intend to copy or reproduce the Products in violation of the end
user license agreement.
2.3 Product Purchases
Products acquired by CUSTOMER shall be purchased only from MS or MS authorized
distributors and franchisers.
2.4 ----- Reporting
CUSTOMER shall provide MS month ----------------------------------------------
- - --------- reporting as outlined in CUSTOMER's current Microsoft Rebate and
Marketing Fund Agreement. CUSTOMER shall submit all required reports to MS
within ----- (-----) days after the end of each calendar month.
3. CUSTOMER and MS Obligations
3.1 Prices and Discount Schedule
CUSTOMER discounts are set forth on the CUSTOMER Discount Schedule attached
hereto as Schedule A. The United States Suggested Retail Price ("SRP") for all
Products are set forth in the MS Price List, Schedule B. MS may modify the MS
Price List or CUSTOMER Discount Schedule at any time upon ----- (-----) days
written notice to CUSTOMER. MS may offer, without prior notice, temporary
"special" prices on any or all Products.
3.2 Delivery and Product Distribution
Products shall be invoiced and shipped Free On Board ("FOB") Bothell,
Washington. CUSTOMER shall have the right to specify its own carrier on
condition that delivery shall then be "freight collect."
In any month CUSTOMER participates in the MS Rate Based Distribution Program,
for all CUSTOMER warehouses that receive a minimum of $----- of Products in MS
Master Carton quantities calculated on the basis of CUSTOMER's net prices from
MS, and MS chooses the carrier, the freight costs of delivery of Products to
those CUSTOMER warehouses for that month will be paid by MS. In any month
CUSTOMER's Rate Based Distribution Program participation exceeds ----- percent
(-----%) of eligible product shipments, CUSTOMER will be allowed to adjust
CUSTOMER's forecast of ----- (-----) MS Product SKU's. Such adjustments to
the forecast shall not exceed ----- (-----%) upward or ----- percent (-----%)
downward from the final forecast, ----- weeks prior to the first ship date.
3.3 Product Authorization Category Procedures
From time to time, MS may classify certain of its Products by Product
Authorization Category, which Products may only be obtained and distributed by
CUSTOMER upon written authorization from MS. Such written authorization from
MS may be specific to the particular CUSTOMER outlet location. CUSTOMER may
apply for such authorization by completing the applicable Reseller
Authorization Application and/or Agreement process required by MS. MS may by
prior written notification terminate CUSTOMER's authorization to obtain and
distribute Product Authorization Category Products with respect to one or more
CUSTOMER outlets. For each Product Authorization Category Product
distributed, CUSTOMER shall complete and return to MS all requested customer
registration documents.
3.4 Inventory Balancing
To reduce inventory risk, CUSTOMER shall be entitled to balance its inventory
of Products ---- (-----) times each calendar year provided such Products are
still on the then-current MS Price List. Products may be returned to MS and a
Purchase Credit will be issued for the returned units, based on the average
price CUSTOMER paid for the Products in the ----- (-----) months prior to the
return. Only current versions of MS Product titles will be excepted for
return pursuant to this section. CUSTOMER returns shall be limited to -----
percent (-----%) of net dollar shipments for the ----- (-----) month period
immediately preceding the stock balancing request month.
CUSTOMER may submit a written request for authorization to return Products for
the purpose of inventory balancing ----- and ----- summarizing the quantities
of each Product to be returned. Upon verification that CUSTOMER is meeting
its inventory balancing terms, MS shall issue a return authorization, which
will expire ----- (-----) days from the date of issue. CUSTOMER is limited to
- - ----- (-----) inventory balancing returns per year.
All Products returned for inventory balancing must be in fit condition, shrink
wrap intact, to be distributed to other MS customers. Any Products returned
that are not in fit condition for resale shall be returned to CUSTOMER and
CUSTOMER shall be subject to a ----- percent (-----%) inspection fee and the
cost of freight for returning such Products. Such inspection fee will be
assessed at CUSTOMER's cost, and shall be waived for those Products destroyed
pursuant to the terms of MS' current onsite destruction return policy.
Promotional merchandise may not be returned for inventory balancing under this
provision. No cash refunds shall be given for exchanges, replacements, or
returned merchandise under this or any other provision of this Agreement. All
Products returned to MS under this section shall be shipped freight prepaid by
- - ----- in cartons clearly marked with the return authorization number and a
packing slip attached to the outside. ----- shall pay freight costs for
shipment of all replacement Products from MS to CUSTOMER.
3.5 Prior Version Returns
When MS ships a new version of a Product, CUSTOMER may return prior versions.
CUSTOMER Purchase Credit for such returns shall be ----- percent (-----%) of
the Product value when Product is returned within ----- (-----) days of the
date the new version is first shipped from MS, and ----- percent (-----%) for
Product returned between ----- (-----) and ----- (-----) days after the new
version is first shipped from MS. The Product value will be equal to the ----
- - - by CUSTOMER during the ----- (-----) months prior to the return for the
quantity of Product returned by CUSTOMER. Prior versions returned after one
hundred eighty (180) days after the new version is first shipped from MS will
not be eligible for credit. All Products returned to MS under this section
shall be shipped freight prepaid by ----- in cartons clearly marked with the
return authorization number and a packing slip attached to the outside. ----
shall pay freight costs for shipment of all replacement Products from MS to
CUSTOMER.
Discontinued products, defined as Product that MS has stopped manufacturing
and discontinued from the MS Price List, shall be considered prior versions
pursuant to this section. MS shall provide CUSTOMER with thirty (30) days
written notice of any discontinued Product.
3.6 Customer Satisfaction Product Returns
MS shall provide CUSTOMER with a Purchase Credit or replacement for Product
returned to MS pursuant to CUSTOMER's customer service return policy.
Customer Satisfaction Product returns shall be limited to ----- percent (-----
%) of CUSTOMER's average monthly net purchases for the ----- (-----) months
prior to the return. CUSTOMER shall submit a request for authorization to
return Product summarizing the quantities of each Product to be returned.
Upon receipt, MS shall issue a Return Authorization Number, which shall expire
- - --- (----) days from the date of issue. Only current versions of MS Product
shall be eligible for return under this section. All Product returned to MS
shall be shipped freight prepaid by ----- in cartons clearly marked with the
Return Authorization Number and a packing slip affixed to the carton. -----
shall pay freight costs for shipment of replacement Products from MS to
CUSTOMER.
IN WITNESS WHEREOF, the parties have signed this Amendment on the dates
indicated below. All terms and conditions of the Microsoft 1993/1994 Channel
Agreement not amended herein shall remain in full force and effect. This
Amendment is not binding until executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS") DJ&J SOFTWARE CORPORATION d.b.a.
EGGHEAD SOFTWARE ("CUSTOMER")
By: By:
Name (please print) Name (please print)
Title Title
Date Date
Schedule A
CUSTOMER Discount Schedule
For the period of the Amendment CUSTOMER shall receive the following discounts
from the Product SRI listed on MS' then current Price List MS may change
CUSTOMER's Discount Schedule at any time by providing ----- (-----) days
written notice to CUSTOMER.
Full Packaged Product Software -----%
Upgrade Software -----%
Microsoft Select -----%
Hardware -----%
Schedule B
MS Price List