Rebate and Marketing Fund
Addendum to The 1994/1995 Microsoft
Channel Agreement
(July - December, 1994)
This Addendum ("Addendum") entered into as of the 1st day of July, 1994,
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 EGGHEAD
SOFTWARE ("CUSTOMER") having its principal place of business at 22011 SE
51st Street, Issaquah, WA 98027. The Agreement is hereby supplemented
as follows:
1. Purpose
The purpose of this Addendum is to set forth the framework by which
CUSTOMER may earn Rebates and Marketing Funds. For purposes of this
Addendum, capitalized terms not otherwise defined herein, shall have the
same definitions as set forth in the Agreement
2. Term and Termination
This Addendum shall be effective as of the date executed by MS below,
and shall expire on December 31, 1994. Either party may terminate this
Addendum, with or without cause, upon thirty (30) days prior written
notice. This Addendum is not valid unless both MS and CUSTOMER have
executed a Microsoft 1994/1995 Channel Agreement.
3. Definitions
All capitalized terms included in this Addendum are as defined in
Schedule A attached hereto.
4. Rebates
4.1 Rebate Program
CUSTOMER is eligible to receive up to a ----- percent (-----%) Rebate
during the Rebate and Marketing Fund Period. The Rebate shall be paid
provided CUSTOMER complies with the program guidelines outlined in
Schedule B. Notwithstanding such program guidelines, MS may, at its sole
discretion, ------------------------- of the Rebate prior to the end of
the Rebate and Marketing Fund Period. The Rebate so paid may be
adjusted subsequently based upon compliance with the program guidelines.
5. Marketing Funds
5.1 Base Level Funds
In partial consideration for CUSTOMER's Qualified ----------------, MS
hereby grants to CUSTOMER the use of Marketing Funds calculated --------
by the total --------- Product CUSTOMER purchased from MS multiplied
by each Product s respective Marketing Fund --------------- as outlined
in Schedule C attached hereto. MS reserves the right to modify Schedule
C at anytime without notice. Marketing Funds accrue ---- and shall
expire on -----------------.
Marketing Funds shall not begin accruing until both CUSTOMER and MS have
executed this Addendum. Should CUSTOMER fail to execute, or should MS
be unable to execute this Addendum by ----------------, for each full
month after --------------, in which this Addendum is not executed,
CUSTOMER shall not receive such month's Marketing Fund accrual.
5.2 Opportunity Funds
Periodically, MS may allow CUSTOMER to participate in other MS programs
in which CUSTOMER shall receive additional Marketing Funds.
5.3 Guidelines for Marketing Fund Use
MS shall provide CUSTOMER with a guideline of activities which MS sees
as a priority for spending the funds. The Microsoft Reseller Marketing
Fund Guidelines is attached hereto as Schedule D, and Section 5.4 below.
5.4 Street Date Program
From time to time, MS may announce new Product or new versions of
existing Product for which MS shall set a Street Date. MS shall ship
such Product to CUSTOMER provided that:
(a) CUSTOMER shall not display or sell the Product in any sales
office, retail store, or outlet prior to established Street Date; and
(b) CUSTOMER's distribution centers and warehouse shall not
distribute, for period of up to ----- (-----) months, Product to any
individual sales office, retail store or outlet which MS in its sole
discretion has determined in violation of the Street Date Program.
Should CUSTOMER violate the terms of this Section 4.2, CUSTOMER shall be
penalized ----- (-----) of the total Marketing Fund accrual for the ----
in which the violation occurred. Further, for a period of up to
- ----- (-----) months, MS reserves that right to withhold shipment to
CUSTOMER of future Product until the Street Date of such Product
6. Reporting Requirements
CUSTOMER shall submit reports to MS as outlined in CUSTOMER's Rebate
Guidelines, and in Schedule E attached hereto in accordance with the EDI
Reporting Guidelines attached hereto as Schedule F. Failure by CUSTOMER
to comply with the terms of the Guidelines will result in CUSTOMER's
loss of its ------------------------- total for each ----- reporting is
non-compliant. Further, CUSTOMER shall ----- (-----) of its Marketing
Fund accruals for each ----- reporting is non-compliant.
IN WITNESS WHEREOF, the parties have signed this Addendum on the date
indicated below. This Addendum is hereby made part of the Agreement.
All terms and conditions of the Agreement not supplemented herein shall
remain in full force and effect. This Addendum is not binding until
executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS"): EGGHEAD SOFTWARE
("CUSTOMER")
By By
Name (please print) Name (please print)
Title Title
6/30/94
Date Date
Schedule B
Rebate Program Guidelines
Rebate Program Overview
Programs The July/December, 1994, Rebate period offers two
rebate programs. Rebate percentages available are
listed in the table below. Details on each program
are also included in this document.
Maximum Percentage Outlined on
Rebate Incentive Available Page(s)
---------- Program -----% B-2/B-3
---------- Program -----% B-4
Total -----%
Rebate Rebates will be paid in the form of Microsoft purchase credits
Calculations ------- days after the end of each quarter rebate period
and Payments (i.e. ----- for July/September 1994 quarter). Rebates are
calculated by multiplying the achieved rebate
percentage by the total ----------- for the rebate
period. Note: ---------------------------------------
Compliance Provided that Egghead is compliant with all of the compliance
Rebate requirements, the compliance rebate will be paid in the form of
Payment a purchase credit for use toward Microsoft products each -----
to Egghead on the -------------------------------.
Any issues surrounding rebates should be sent in writing to
Kristin Weeber, Rebate Specialist, no later than 30 days
following receipt of rebate payment. If such written notice
is not provided within thirty (30) days, Egghead shall have no
further right to dispute rebate payment.
Compliance Rebate Program
Program The objective of the Compliance Rebate Program is to incent
Objectives Egghead to be compliant with Microsoft contractual requirements
for payments, Street Dates, and reporting.
Non- Failure to be compliant with any or all of the current compliance
compliance will result in the -----------------------------------.
1.Microsoft At all times during the Rebate Period, a minimum of -----------
Payment percent (-----%) of Egghead's total dollar amount due to MS shall
Requirements be ----- (net ----- days).
2.Microsoft Street Date Program requirements are as outlined in Section 5.4
Street Date of the Addendum.
Requirements
3.Microsoft All reports outlined below must be Timely, Accurate and
Reporting Complete. For purposes of this Schedule B, "Timely" is defined
Requirements as MS receipt of reporting by the due date and time indicated,
"Accurate" is defined as the correct population of all reporting
fields, and "Complete" is defined as the population of all
required reporting fields.
FAST TRACK REPORTING
Fast Track Reporting is defined as a weekly report via
Electronic Data Interchange format ("EDI") of weekly
--------------------. Egghead must report sales from
--------------------------. Egghead must make the EDI reports
available to MS' EDI mailbox each Monday by 8:00am (Pacific
time). These reports shall cover the seven-day period ending
the prior Friday night
Reporting Requirements
Each unit of single license Full Package Product should be
reported as one unit. This applies for both Microsoft products
and for competitive products. Any single Microsoft product that
includes multiple licenses should be reported as one unit.
Microsoft will then convert the quantity of multiple license
units sold to the number of licenses they represent. Examples
of these products include MMLP 20 Pack, MMLP 100 Pack, and
AED 10 Pack. Each competitive multiple license product should
be reported as the number of licenses represented. All volume
licensing agreements (such as MOLP, MVLP, and MELP) should be
reported as one unit for each license sold.
Example: If Egghead sold a quantity of five units of a Microsoft
20 user MMLP, Egghead would report a quantity of five units of
that SKU. However, if Egghead sold a quantity of five units of a
competitor's 20 user MMLP, Egghead would report a quantity of
100 licenses.
3. Microsoft
Reporting ------------------------- REPORTING
Requirements
The following table outlines the --------------- product
categories for EDI reporting. In addition, the table also
specifies the Microsoft products and the competitive products
that will be included in the aggregated ----------------
reporting for the Fast Track Rebate Program:
Category Microsoft product Competitive Products
Windows word Word for Windows* ------------------
processors ------------------
Windows Microsoft* Excel ------------------
spreadsheets for Windows* ------------------
Windows bundles Office for Windows* ------------------
Windows Databases Microsoft Access* ------------------
for Windows* ------------------
FoxPro* for Windows* ------------------
Mail Servers Microsoft* Mail ------------------
------------------
Network Operating WindowsNT* Advanced ------------------
Systems Server ------------------
LAN Manager ------------------
------------------
Accounts are required to report -------- (CTIA type "32") units
and ------------------ for each Microsoft SKU, but are required
only to report total license count for --------------------- (CTIA
type "32") for each category. All SKUs for these titles should be
counted, including full packaged product, upgrades, multiple
license packs, education, and government SKUs.
Example: If Egghead sold-through 50 units of ---------------------
for Windows in one week, then Egghead would report a total of 70
units sell-through of ------------------ products in the Windows
Spreadsheet category.
---------------------- REPORTING
Egghead must submit ----- or ----- reporting by the 10th of each
month for the prior month in the format outlined in Schedule D.
Reporting shall be transmitted in electronic format and sent via
modem to 1-800-831-6316, or on tape or diskette to MS at the
following address:
Microsoft Corporation
Reseller Reporting Group
One Microsoft Way
Redmond, WA 98052
Should Egghead provide on a compliant basis for three (3)
consecutive months both monthly ----- and ----- reporting, and
weekly Fast Track Reporting, MS may at its sole discretion grant a
written waiver of Egghead monthly ----- and ----- Reporting
requirements.
Total Sales-out Rebate Program
Program The objective of the Total Sales-out Rebate Program is to
Objective increase sales of Microsoft products.
Rebate The total possible rebate percentage achievable for Total Sales-
Percentages out Rebate Program is -----% of Qualified ------------- for
July/December 1994.
Goal The program goals are based upon the following:
Definitions -------------------------------------- of Microsoft products.
Microsoft's -------------------------------------.
Egghead's --------------------------------------.
Rebate Egghead's Total Sales-out Rebate Program goals are as follows:
Goals July - September, 1994: $----------
October - December, 1994: $----------
- ----------- Microsoft Product ----- is defined as those Microsoft product
Definitions/ units ---------------- Egghead outlet locations. Egghead's full
Measurement packaged product, MOLP, and upgrade ----------- units will be
measured from the --------- reported by Egghead to Microsoft
Revenue from licensing sales is captured and generated by
Microsoft's financial systems and included in total sales-out
used to measure product sales-out rebate performance.
License revenue (Select and Microsoft Maintenance) credit is
granted as Microsoft recognizes the revenue. This occurs when
Microsoft has received the customer's license reporting.
Following receipt of reporting, Microsoft bills the customer/
reseller and simultaneously recognizes the revenue.
Program Egghead must achieve -----% of the Microsoft dollar -----------
Requirements goal in order to receive their entire ------------ rebate for
July/December 1994. If Egghead achieves greater than -----% of
their ------------ goal, Egghead will receive the exact achieved
percentage of the sales-out rebate goal. If Egghead achieves
less than -----% of their rebate goal, they will not receive any
portion of the -------------- rebate. The purpose of this scale
is to offer an incentive for accounts to meet a portion of their
goal in the event they cannot achieve the full Microsoft ---------
goal.
Example: If Egghead has a quarterly -------------- goal ----------
and Egghead sells -----------over the quarter period, Egghead
will receive ---% of the eligible -----% -------- rebate
percentage, or -----%.