CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
EXHIBIT 10.17
NON-EXCLUSIVE DISTRIBUTOR AGREEMENT
between
Computer 2000 AG (Holding)
and
BAY NETWORKS, INC.
Bay Agreement Number: E1322-97DSV Initial Term of Agreement:
Effective Date: 25 September, 1995 2 years from Effective Date
Computer 2000 AG (Holding) having a principal address at Wolfratahauser Strasse
84, 81379 Munich, Germany ("Holding") and Bay Networks, Inc., 8 Federal Street,
Billerica, MA 01821, U.S.A. ("Bay") agree that the following terms shall govern
the sale, licensing and discounting of Product (as defined in Exhibit 1 -
Distributor Purchase and License Terms). Bay and Holding agree that Holding
concludes this Agreement on behalf of its subsidiaries (hereinafter individually
and collectively, as the context requires, called "Distributor"), which are
entitled to purchase and market Bay Products under the terms of this Agreement.
Individual purchase orders will be placed by Distributor. Should
country-specific and/or legal needs require deviations from the terms of this
Agreement, then such deviations must be individually agreed between Distributor
and Bay and acknowledged through an addendum to this Agreement, Computer 2000 AG
(Holding) itself is not obligated by this Agreement. This Agreement renders all
other existing contracts between Holding, Distributor, and Bay invalid.
EXHIBITS CONTAINED IN THE AGREEMENT (Exhibit 4 applies only when activated in
accordance with Exhibit 6, paragraph 2(f)):
Exhibit 1 - Distributor Purchase and License Terms
Exhibit 2 - Distributor Discount and Special Pricing Terms
Exhibit 3 - Distributor Reseller terms and criteria
Exhibit 4 - Bay Networks Partners Support Program
Exhibit 5 - Distributor Inventory Terms
Exhibit 6 - Local Country/Local Region Reseller Activation Process
TERRITORY:
The assigned territory where Distributor is to concentrate its sales and
marketing activity is to be Implemented pursuant to the country activation
process, Exhibit 6.
NOTICES:
All notices under this Agreement shall be sent by prepaid registered mail return
receipt requested, telefax or courier service, to the following addresses:
DISTRIBUTOR SUBSIDIARY OF DISTRIBUTOR BAY COPY TO:
Computer 2000 AG (Holding) As appropriate Bay Networks, Inc. Bay Networks EMEA
Wolfratshauser Strasse 84 8 Federal Street 26 Allee Pierre
Ziller
81379 Munich, Germany Billerica, MA 01820, USA 06560 Valbonne, France
Attention: Contracts Attention: Contracts Attention: Contracts
HOLDING AND BAY ACKNOWLEDGE THAT EACH HAS READ THIS NON-EXCLUSIVE AGREEMENT AND
THE EXHIBITS INCLUDED WITH THIS AGREEMENT, UNDERSTANDS THEM AND AGREES THAT BAY
AND DISTRIBUTOR ARE BOUND BY THE TERMS AND CONDITIONS OF THIS AGREEMENT AND THE
EXHIBITS. THE PARTIES FURTHER AGREE THAT THIS AGREEMENT AND ITS EXHIBITS
CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO ITS SUBJECT
MATTER AND SUPERSEDE ALL PRIOR PROPOSALS, NEGOTIATIONS, AND COMMUNICATIONS, ORAL
OR WRITTEN BETWEEN THE PARTIES OR THEIR REPRESENTATIVES. DEVIATIONS TO THIS
AGREEMENT SHALL ONLY BE BINDING UPON WRITTEN MUTUAL AGREEMENT.
AGREED: AGREED:
COMPUTER 2000 AG (HOLDING) BAY NETWORKS, INC.
BY:_______________________________ BY:________________________________
(authorized signature) (authorized signature)
Bay Networks Agreement for C2000 (Rev. 9/27/95)
Name ___________________________ Name________________________________
(typed or printed) (typed or printed)
Title __________________________ Title ______________________________
Date ___________________________ Date _______________________________
Bay Networks Agreement for C2000 (Rev. 9/22/95)
EXHIBIT 1 - DISTRIBUTOR PURCHASE AND LICENSE TERMS
1. DEFINITIONS
"End Users" means the third party customers to which Distributor's Resellers
resell or relicense Products and which are intended as the ultimate users of the
Products.
"Hardware" means equipment sold to Distributor by Bay hereunder, as listed in
the Price List.
"Price List" means Bay's prevailing Price List for Products and/or Services as
the context requires.
"Product(s)" means Hardware and/or Software as the context requires.
"Services" means the second level support services purchased by Distributor and
provided by Bay in accordance with the Bay Networks Support Services Program,
Exhibit 4 attached.
"Software" means the software licensed by Bay to Distributor hereunder, as
listed in the Price List, and including the Software Documentation and any
revisions and updates to the software issued by Bay.
"Software Documentation" means the Software user manual and information provided
with each copy of the Software by Bay.
"Territory" means those and only those country(ies) or portion(s) of the
country(ies) as detailed on the front page of the Agreement and defined in the
country activation document where the Reseller may actively market and resell
the Products.
"Resellers" means third party value added reseller channels of distribution to
which Distributor resells or relicenses Products.
2. APPOINTMENT
2.1 Subject to Distributor's performance of its obligations and
responsibilities set out in this Agreement Bay appoints Distributor as
a non-exclusive distributor of Bay's Products and Services for resale
or relicense to Resellers that achieve the qualifying designation in
the Territory. It is the Resellers' role to furnish value added network
products and/or services to End Users and the Distributor's role to
qualify, appoint and manage its Reseller channels.
2.2 The Agreement is in effect for two (2) years from the Effective Date.
The Agreement may renew for an additional one (1) year term(s), but
only upon the prior written mutual agreement of the parties.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
3. DISTRIBUTOR CERTIFICATION
3.1 Distributor hereby certifies and agrees that for the duration of the
Agreement:
3.1.1 Distributor shall sell Products and Services only to Resellers
that meet minimum technical and quality criteria. These
generally shall accord with Exhibit 3 attached and with
Distributor's own Reseller agreements save that Product Groups
5A and 5B can only be resold to Enterprise Solution Partners
in accordance with the Bay Partner Alliance Program;
3.1.2 Distributor may resell or relicense Products to Resellers in
the applicable country or countries, or regions of such
countries that make up Distributor's authorized Territory as
set out in this Agreement, however unsolicited orders from
outside the Territory may be accepted by Distributor provided
that the Products will be supported and delivered outside the
Territory at the Distributor's expense;
3.2 Distributor's discounts as set out in Distributor Discount Terms,
Exhibit 2 attached, are conditional upon Distributor's continuing
compliance with its certification as per Section 3.1 above, and
Distributor's resale or relicensing of Products in material breach of
that certification may lead to suspension of shipments to Distributor
and may require Distributor's refund of the discount to Bay.
3.3 Distributor shall carry at all times an inventory of Products
sufficient to assure 'off-the-shelf' delivery commensurate with market
demand.
3.4 Distributor shall maintain a separate business entity to manage and
appoint Resellers, separate from any direct sales efforts of the
Distributor.
3.5 Distributor shall maintain a technical manager to assist Resellers with
networking information and Product information.
3.6 Distributor shall maintain a business manager to assure contract terms
are met, proposal information is available and other administrative
management efforts are satisfied, including liaison with Bay and
reporting to Bay on the status of Resellers, the market and competitive
activity.
3.7 Distributor acknowledges that Clause 3.1.1 above, Exhibit 3 and the Bay
Networks Partner Alliance Program categorize the Products and identify
specific requirements that qualify Distributor and Resellers to resell
and relicense each such category. Distributor agrees to abide by the
qualification process and criteria detailed in the Bay Networks Partner
Alliance Program and Exhibit 3. Distributor also acknowledges that the
qualification criteria are subject to change as the Products' technical
requirements evolve. The change(s) will be effective upon receipt of
notice from BAY.
3.8 Distributor shall disclose to Bay all products from competitive
manufacturers carried by Distributor and shall advise Bay of any new
competitive Products that it may add to its portfolio.
3.9 Upon Bay's request, Distributor shall furnish Bay with such reasonable
records and reports as shall allow Bay to conduct a review of
Distributor's activities under the Agreement and shall submit to Bay
forecasts of Distributor's projected purchases under the Agreement in a
format to be agreed between the parties.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
4. PURCHASES
4.1 Distributor may purchase Hardware, license Software, and purchase
Services listed in the qualified portion(s) of the Price List by
placing orders under the Agreement subject to acceptance by Bay.
Distributor and its Resellers may purchase and resell only those
categories of Products based on Distributor's and applicable Resellers
achieving the qualifying designation under the Bay Networks Partner
Alliance Program in each territory.
4.2 Bay may refuse to accept new orders or to furnish previously ordered
Products or Services due to Distributor's failure to comply with any
material term of the Agreement, including, but not limited to meeting
the credit requirements of Bay, and failure to furnish timely records,
reports or other information as required by the Agreement, subject to
Bay having first given the Distributor written notice detailing the
failure and requiring the Distributor to make the failure good within
the thirty days following
4.3 List prices can change at any time, provided Distributor is given
thirty (30) days written notice of any price increase. In the event of
a list price increase, Bay honors the list price in effect when the
Distributor's order is accepted by Bay. In the event of a list price
decrease for Products, the new decreased price applies to such Products
that are shipped by Bay to Distributor on or after the effective date
of the list price decrease.
4.4 Bay can add to or delete from the Price List Products and Services at
any time provided Distributor is given thirty (30) days' written notice
of any deletions.
5. ORDER PLACEMENT, ORDERS
5.1 Distributor agrees that each order placed with Bay is placed under the
terms of the Agreement. No order will be effective until accepted by
Bay's acknowledgment which shall be issued within five working days of
receipt by Bay of the order. The terms of the Agreement govern all
orders regardless of any varying terms in Distributor's order.
Distributor shall have the right to cancel an open order or individual
line items of an open order at any time before actual shipment if Bay
advises that it cannot meet its acknowledged delivery dates and
Distributor's Reseller in consequence cancels its order.
5.2 Orders, which may be submitted by telefax, must be signed by an
authorized official of Distributor and need to specify;
(a) The number of this Agreement;
(b) Distributor's Purchase Order number;
(c) Products and/or Services and descriptions;
(d) Quantities;
(e) Purchase price;
(f) Tax status, including exemption certificate number if tax
exempt;
(g) Requested delivery date(s);
(h) Preferred shipping method; and
(i) Exact "Bill to" and "Ship to" addresses.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
5.3 Orders for router and bridging products are to be sent to:
Bay Networks, Inc.
8 Federal Street
Billerica, M A 01821, U.S.A.
Attention: Order Administration
Telefax #: +1 508 436-3444
5.4 Orders for hub and switching products are to be sent to:
Bay Networks, Inc.
4401 Great America Parkway
P.O. Box 58185
Santa Clara, CA 95052-8185, U.S.A.
Telefax #: +1 408 988-8544
6. PRICES, TAXES, COSTS, PAYMENT
6.1 PURCHASE PRICE. The purchase price for the Products sold or licensed by
Bay to Distributor is determined by applying the discount percentages
specified in Distributor Discount Terms to the list price of the
Product or Service found in the Price List. All Product prices cover
delivery to a carrier at Bay's facilities, generally in the U.S.A..
Distributor has the right to determine the carrier.
Distributor shall at its own discretion establish the prices, terms and
conditions (incorporating appropriate software license terms) at which
it resells the products to its Resellers. Bay shall have no control
over Distributor's or its Resellers' prices.
6.2 TAXES. Prices, service charges and license fees do not include any
sales, use, value added, import and/or any other taxes or duties,
however designated, except for taxes on Bay's net income. All such
taxes or duties shall be for the account of Distributor and any such
taxes or duties required to be paid or collected by Bay shall be paid
by Distributor to Bay.
6.3 COSTS. Distributor agrees to pay transportation costs of shipment of
the Products.
6.4 PAYMENT. Subject to initial and continuing credit approval by Bay,
payment is due [*] from the date of Bay's invoice. Payment not received
by Bay when due may be subject to a late payment charge of [*] from the
original due date or the highest amount permitted by law, whichever is
less. Distributor agrees to complete and submit an Application for
Credit as required by Bay. Distributor agrees that the information
contained in the Application for Credit forms will be updated as
changes occur, or in response to a request from Bay.
7. SHIPMENT, CHANGES, TITLE, RISK OF LOSS
7.1 SHIPMENT. Bay ships Products by a method and carrier selected by Bay
unless otherwise instructed in Distributor's order. Bay will ship
freight collect if so instructed on Distributor's order.
7.2 CHANGES. Distributor cannot cancel or reschedule any order in whole or
in part fifteen (15) days or less prior to the acknowledged delivery
date or after delivery.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
7.3 RETURNS. Products with defects covered by the warranty may be returned
for repair under the warranty. Distributor agrees to first obtain from
Bay the appropriate return material authorization number ("RMA #") and
return the Product within ten (10) days after receiving the RMA #.
7.4 TITLE, RISK OF LOSS. Risk of loss or damage in all Products shall pass
to Distributor at the airport of entry to the country specified on
Distributor's order. Title to Hardware shall pass to Distributor upon
payment in full, Bay and its licensors retain all title and ownership
of the Software and documentation, including any revisions.
8. WARRANTIES
8.1 HARDWARE WARRANTY. For each specific Product, the warranty period will
be as set out in the Price List. Bay warrants to Distributor that the
Hardware will be free from defects in workmanship and materials for its
respective warranty period. Where the warranty period is shown in the
Price List as being [*], respectively, after the date of shipment from
Distributor to the End User. Distributor's exclusive remedy, and Bay's
sole obligation and liability, is that Bay will either (a) repair or
replace any item of Product that fails during the warranty period
because of a defect in workmanship or material, or (b) if Bay is unable
to repair or replace such Product within a reasonable period, refund to
Distributor the purchase price of the defective Product. All replaced
or refunded Product or parts shall become the property of Bay.
8.2 SOFTWARE WARRANTY. The warranty period may vary depending on the
Software licensed. For Software furnished under Bay's standard software
license terms, Bay warrants that each item of Software, as delivered or
updated by Bay and properly installed and operated on the Hardware or
other equipment it is licensed for, will function substantially as
described in its then-current Software Documentation for its respective
warranty period. If any item of Software fails so to perform during its
warranty period, as the sole remedy Bay will in its discretion provide
a suitable "fix", "patch" or "workaround" for the problem, which may be
included in a future revision or upgrade of the Software. The warranty
for software furnished with Other Licenses, as hereinafter defined, may
vary.
8.3 SERVICE WARRANTY. Bay warrants to Distributor that Services will be
performed in a professional and workmanlike manner.
8.4 LIMITATIONS. Bay does not warrant that any item of Software is
error-free or that its use will be uninterrupted. Bay is not obligated
to remedy any Software defect which cannot be reproduced in the latest
version of the Software, but notwithstanding this provision Bay will
ensure that the End User receives a free of charge "fix", "patch" or
"workaround" for any warranty problem encountered in the Software. The
warranty in this section titled WARRANTIES does not apply to any
Product which has been (i) altered, except by Bay or in accordance with
its written instructions, or (ii) used in conjunction with another's
product resulting in the defect, or (iii) damaged by improper
environment, abuse, misuse, accident or negligence. Replacement parts
furnished under this warranty may be refurbished or contain refurbished
components.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
THE FOREGOING WARRANTIES AND LIMITATIONS ARE EXCLUSIVE REMEDIES AND ARE IN LIEU
OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY LIMITATION
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ANY PRODUCT
THAT MAY BE FURNISHED BY BAY WHICH IS NOT LISTED IN THE PRICE LIST OR IS NOTED
IN THE PRICE LIST "AS IS" IS FURNISHED "AS IS".
9. SOFTWARE LICENSES
9.1 BAY'S STANDARD SOFTWARE LICENSE. Subject to the terms below, Bay grants
to Distributor a personal, nontransferable, nonexclusive license to use
one copy of the Software listed in Distributor's order, together with
its corresponding Software Documentation, provided that Distributor has
paid Bay the applicable license fee(s) for the Software.
9.2 OTHER SOFTWARE LICENSES. Other software license terms ("Other
Licenses") may apply for some Software products available from Bay. The
additional terms of the Other Licenses are set out in the Price List,
within the Software Documentation, or as a separate written license
included with the applicable Software.
9.3 LIMITATIONS. Distributor may modify Software (but not firmware), or
combine it with other software, but only to the extent permitted by the
Software Documentation and subject to the provision that those portions
of the resulting software which incorporate Software are subject to the
restrictions of this software license. Software that is modified by
Distributor, its Resellers or End Users is not covered by Bay's
warranty. Distributor, its Resellers or End Users may not permit any
item of Software, related modifications, or Software Documentation to
be disclosed to or used by any person other than Distributor's or its
End Users' employees or contractors, or with any equipment other than
Hardware or equipment for which it is licensed, without Bay's prior
written permission. Distributor, its Resellers or End Users may not
duplicate any portion of the Software except for archival purposes or
for installation purposes as expressly described by the Software
Documentation, and agrees to duplicate Bay's proprietary rights notices
on any such copy. Distributor shall not, and shall not allow its
Resellers and End Users to reverse assemble, reverse compile, or in any
way reverse engineer the Software except as specified in the Software
Directive enacted by the Council of European Communities Directive
dated 14 May 1991 for interoperability purposes. Distributor shall
notify Bay of any such intended examination of the Software and Bay may
provide support and assistance.
10. RIGHT TO DISTRIBUTE SOFTWARE LICENSES
10.1 Subject to the terms below, Bay grants to Distributor a
nontransferable, non-exclusive right to distribute Software Licenses to
its Resellers and further grants Distributor a nontransferable,
non-exclusive right to authorize its Resellers to distribute Software
Licenses to End Users.
10.2 The Software and Software Documentation are protected under copyright
laws. The Software Licenses granted by Bay are not a sale. Bay and its
licensors retain all title and ownership of the Software and
documentation, including any revisions. All copyright notices must be
reproduced and included with any copy of any portion of the Software or
Software Documentation. Distributor agrees not to translate, nor allow
its Resellers or End Users to translate any portion of the Software or
associated documentation into any other format or language without the
prior written consent of Bay. Except as specifically
Bay Networks Agreement for C2000 (Rev. 9/22/95)
provided elsewhere in the Agreement, Distributor may not grant its
right to distribute or transfer Software Licenses to any third party.
10.3 In connection with any proposals to and agreements with government
entities, Distributor shall take all appropriate steps to ensure that
Bay's proprietary rights receive the maximum protection available from
such government entity for commercial computer software developed at
private expense.
10.4 All copies of the Software distributed by Distributor or its Resellers
must be accompanied by the Bay Networks, Inc. Software License
Agreement. In all jurisdictions where an enforceable copyright covering
the computer programs of the Software does not exist, the Software must
be accompanied by a written software license agreement, signed by the
End User, that is no less restrictive than the terms of the Bay
Networks, Inc. Software License Agreement. Bay does not undertake to
inform Distributor of the jurisdictions where such enforceable
copyright exists.
10.5 Distributor may distribute Software Licenses through its
Resellers only under a written agreement on terms no less restrictive
than the terms of the SOFTWARE LICENSES and RIGHT TO DISTRIBUTE
SOFTWARE LICENSES provisions of the Agreement.
11. TRADEMARKS AND TRADE NAMES
11.1 In the advertising and promotion of the Products, Distributor agrees to
use Bay's regular trade names and trademarks (the "Trademarks"). For
this purpose, Bay grants Distributor a non-exclusive, royalty-free,
limited license to use Bay's Trademarks, provided that Distributor
displays the symbol "TM" or"(R)" adjacent to each use of a Trademark
the first time a Trademark is used in a particular context, or displays
such other symbols and notices as may be prescribed by Bay.
11.2 Distributor acknowledges and agrees that Bay and its suppliers are the
exclusive owners of the Trademarks. The use of the Trademarks by
Distributor does not convey to Distributor any right, title or interest
in or to the Trademarks. Distributor agrees that neither it nor its
affiliates will register any Trademark in any jurisdiction unless
expressly approved by Bay in advance and in writing, and at a minimum
such registration is made on behalf and for the benefit of Bay.
11.3 In order to assure proper use and protection of Bay's Trademarks,
Distributor agrees to provide written notification to Bay if
Distributor purchases, or is offered for purchase, any Products with a
Bay or Bay owned Trademark from a source other than Bay, its
subsidiaries, an authorized Reseller or another authorized Bay
distributor.
12. BAY NAMES AND LABELS
12.1 Distributor agrees not to make or permit alteration of the Products or
removal or modification of any tags, proprietary notices, labels, or
other identifying marks placed by Bay or its agents on the Products or
associated literature.
11.2 The parties agree not to use each other's corporate names, trademarks,
trade names and copyright legends, and shall not use them in any manner
which might result in confusion as to Bay and Distributor being
separate and distinct entities. In particular Distributor shall not use
the corporate name, trademarks, trade names or copyright legends of Bay
with respect to any products or materials not furnished by Bay.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
13. PROPERTY RIGHTS AND INFORMATION
13.1 USE OF PROPRIETARY INFORMATION. "Proprietary Information" includes,
without limitation, diagnostics, the Software, the Software
Documentation, other user manuals, as well as printed materials and
visually transmitted information disclosed by Distributor or Bay, such
as new product information, financial or technical data, that is marked
with a proprietary or confidential legend. Each party will hold the
Proprietary Information of the other in confidence and will use the
Proprietary Information only for the purposes expressly permitted under
the Agreement, and will disclose the Proprietary Information only to
its employees and contractors as authorized in the Agreement and then
only on a need-to-know basis. Each party agrees to maintain adequate
internal procedures, including appropriate agreements with employees
and authorized third parties, to protect the confidentiality of the
Proprietary Information as required by the Agreement. Each party shall
be entitled to appropriate injunctive relief in the event of any
unauthorized disclosure or use of its Proprietary Information by the
other party.
13.2 LIMITATIONS. Proprietary Information does not include information which
(i) is rightfully in the receiving party's possession in a complete and
tangible form before it is received from the disclosing party, (ii) is
or becomes a matter of public knowledge through no fault of the
receiving party, (iii) is rightfully furnished to the receiving party
by a third party without restriction on disclosure or use, or (iv) is
independently developed by the receiving party without use of or
reference to the disclosing party's Proprietary Information.
13.3 PROPRIETARY RIGHTS. Bay, on behalf of itself and its licensors,
reserves all proprietary rights in and to (i) all designs, engineering
details, and other data pertaining to the Products, (ii) all original
works, computer programs, fixes, updates (but not Distributor's, its
Resellers' or End Users' programs), discoveries, inventions, patents,
know-how and techniques arising out of work done wholly or in part by
Bay in connection with the Agreement, and (iii) any and all products
developed as a result of such work. The performance by Bay of
professional Services shall be not be deemed a work-for-hire but shall
instead be subject to this section.
14. CLAIMS OF INFRINGEMENT
14.1 INDEMNIFICATION. Bay agrees to defend at its own expense any action
brought against Distributor to the extent that it is based on a claim
that any Product infringes a United States or country of the European
Community or European Free Trade Association patent, copyright, trade
mark, trade secret or other valid intellectual property right, and will
pay any costs and damages finally awarded against Distributor in any
such action which are attributable to any such claim. Bay's obligation
under the preceding sentence is subject to the conditions that (i)
Distributor promptly notifies Bay in writing of any such claim, (ii)
Bay has sole control of such defense and all negotiations for any
settlement or compromise, and (iii) should any Product become, or in
Bay's opinion be likely to become, the subject of any such claim,
Distributor permits Bay, at Bay's option and expense, to procure for
Distributor the right to continue using such Product, to replace or
modify it so that it becomes non-infringing, or to grant Distributor a
credit for such Product equivalent to the original price paid, and
accept its return.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
14.2. LIMITATIONS. Bay has no liability to Distributor under this provision
entitled CLAIMS OF INFRINGEMENT with respect to any claim of
infringement which is based upon or results from (i) the combination of
any Product with any equipment, device, firmware or software not
furnished by Bay, or (ii) any modification of any Product by a party
other than Bay, or (iii) Distributor's failure to install changes,
revisions or updates as instructed by Bay, or (iv) Bay's compliance
with Distributor's specifications or designs or from the use of
equipment furnished by Distributor.
15. LIMITATION OF LIABILITY
15.1 LIABILITY AND INSURANCE. Bay agrees to indemnify Distributor against
any claim arising out of or resulting from the Products or the
Agreement, provided that any such claim (1) is in respect of bodily
injury, death, or of injury to or destruction of physical property
(other than the Products), and (2) is caused by the negligent act or
omission of Bay. This obligation on the part of Bay exists only if
Distributor (1) gives Bay prompt written notice of any such claim, (2)
grants Bay control of the defense and settlement of such claim, and (3)
assists fully in the defense so long as Bay pays Distributor's out-of
pocket costs. Bay has no liability for any settlement or compromise
made without its prior written consent.
15.2 Bay, at its expense, agrees to maintain adequate insurance coverage to
protect against its liabilities under the Agreement. This insurance
will include (1) worker's compensation insurance, (2) comprehensive
general liability insurance, including coverage for product liability,
bodily injury and property damage, and (3) automobile liability
insurance. Upon Distributor's written request, Bay will furnish the
applicable certificate of insurance.
15.3 IN NO EVENT WILL BAY OR ITS SUPPLIERS BE LIABLE FOR (1) THE COST OF
SUBSTITUTE PROCUREMENT, SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES, OR (2) ANY DAMAGES RESULTING FROM INACCURATE OR LOST DATA OR
LOSS OF USE OR PROFITS ARISING OUT OF OR IN CONNECTION WITH THE
AGREEMENT, THE FURNISHING OF SERVICES, OR THE USE OR PERFORMANCE OF
PRODUCTS, EVEN IF INFORMED OF SUCH DAMAGES. IN NO EVENT WELL BAY'S
TOTAL LIABILITY FOR (1) ANY DAMAGES IN ANY ACTION BASED ON OR ARISING
OUT OF OR IN CONNECTION WITH THE AGREEMENT EXCEED THE [*] TO BAY
PURSUANT TO THE AGREEMENT, OR (2) CLAIMS BASED UPON THE PARTIES'
OBLIGATIONS UNDER THE SECTION ENTITLED "SERVICES" EXCEED THE [*] TO BAY
FOR SUCH SERVICES.
16. TERMINATION
16.1 Either party may terminate this Agreement if:
(i) the other party becomes insolvent, files or has filed against
it a petition in bankruptcy, or ceases doing business; or
(ii) the other party fails to cure a material breach of the
Agreement within thirty (30) days after receipt of written
notice of such breach from the party not in default.
Upon termination of the Agreement by Bay for breach, Bay may cancel all
of Distributor's unfulfilled orders.
16.2 The Agreement may be terminated at any time without cause by either
party upon ninety (90) days written notice to the other party.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
16.3 Upon the expiration or earlier termination of the Agreement for any
reason, Distributor agrees to immediately discontinue all advertising
of, or making reference to, Bay or the Products.
16.4 Except as otherwise specifically stated in the Agreement, neither party
will be liable to the other for damages in any form by reason of the
expiration or earlier termination of the Agreement.
16.5 EFFECT OF TERMINATION. Any expiration or earlier termination of the
Agreement does not modify or alter any of the obligations of the
parties which accrued prior to such expiration or termination. The
sections of the Agreement which address Taxes; Payment; Security
Interest; Warranties; Services; Proprietary Rights and Information;
Foreign Reshipment; Limitations; Governing Law; and Termination shall
survive any expiration or termination of the Agreement. The section
entitled SOFTWARE LICENSES also survives any expiration or termination
provided Distributor, its Resellers and End Users continue to comply
with the provisions of the applicable software license terms. Except as
expressly agreed in writing between the parties, no party is liable to
the other for any dollar amounts, costs or damages by reason of the
expiration or earlier termination of the Agreement.
17. FAILURE, DELAY
Neither party is liable for any failure or delay in performance of its
obligations under the Agreement due to strikes, wars, revolutions, fires,
floods, explosions, earthquakes, shortages in labor, components or materials,
government regulations, or other causes beyond its control.
18. EXPORT AND REEXPORT
Distributor agrees not to export or reexport, directly or indirectly, any
Products or Technical Data or any portion thereof to any country for which an
export license or other governmental approval is required without first
obtaining such license or approval from the U.S. or other applicable government.
Bay may suspend its shipments or other performance if continuing performance
would be contrary to U.S. or other export regulations or laws.
Distributor shall be solely responsible, at its own expense, for obtaining all
necessary import and export permits and certificates (except for the initial
U.S.A. export license) and will use its best efforts to ensure that the Products
are imported into the Territory with a minimum of delay.
19. ASSIGNMENT
Neither party may assign the Agreement in whole or in part without the prior
written consent of the other party, save that Bay may in its absolute discretion
assign the benefit of any or all payments due from Distributor whether under the
Agreement or otherwise, effective after not less than thirty (30) days' written
notice to Distributor.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
20. WAIVER, AMENDMENT OR MODIFICATION
The waiver or failure of either party to exercise any right provided for in the
Agreement shall not be deemed a waiver of any further right hereunder nor shall
it be deemed to be a waiver of any future possible exercise of the same right.
Any waiver, amendment or modification of any right, remedy or other term under
the Agreement will not be effective unless in writing and signed by the party
against whom enforcement is sought. Neither party shall be bound by
typographical or clerical errors.
21. GENERAL
21.1 INDEPENDENT CONTRACTORS. The relationship of Bay and Distributor is
that of independent contractors. There is no relationship of agency,
partnership, joint venture, employment or franchise between the
parties. Neither party has the authority to bind the other or to incur
any obligation on the other's behalf.
21.2 SEVERABILITY. If any provision of the Agreement is held to be invalid
or unenforceable, the remainder of the provisions shall remain in full
force and effect.
21.3 COMPLIANCE WITH LAWS AND OTHER AGREEMENTS.
Distributor warrants that it has the right and authority to enter into
the Agreement and by entering into the Agreement Distributor is not
violating any agreement Distributor may have with any third party.
Distributor agrees to comply with all laws and regulations relating to
the import, re-export and use of Products by Distributor. Distributor
shall be solely responsible for complying with the laws and regulations
applicable in any nation, or political subdivision thereof, in which it
engages in business hereunder and shall hold Bay harmless against any
liability arising from the failure of Distributor or Distributor's
customers to comply with such regulations. This provision shall survive
any termination or expiration of this Agreement.
21.4 CHANGE. Bay reserves the right to change the Price List, Products
offered, discount and any other schedule, policy or program, whether
referred to in the Agreement or set forth in an Exhibit to the
Agreement. For changes to the Agreement which, in Bay's opinion, may
adversely affect Distributor, Bay will provide thirty (30) days notice,
or such longer period as Bay deems appropriate, prior to the effective
date of such change.
22. GOVERNING LAW AND ARBITRATION
This validity, interpretation, and performance of this Agreement shall be
controlled by and construed under the law of France. The parties expressly
exclude the application of the Convention on Contracts for the International
Sale of Goods to this Agreement or any order issued under this Agreement.
All disputes arising in connection with this Agreement or any of its Exhibits
which are not settled by negotiation between the parties shall be finally
settled under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in accordance with the
said Rules. The place of arbitration shall be London, England and the language
of the proceedings shall be English.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
CONFIDENTIAL TREATMENT REQUEST
*Portions devoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
EXHIBIT 2A - VOLUME DISTRIBUTOR DISCOUNTS
[*]
EXHIBIT 2B - VALUE ADDED DISTRIBUTOR DISCOUNTS
[*]
EXHIBIT 3 - DISTRIBUTOR RESELLER TERMS AND CRITERIA
This Exhibit defines a program which permits Distributor to select and authorize
quality and qualified value-added resellers to assist marketing Bay Products to
End Users.
Distributor and Bay appreciate the sophisticated nature of the Products, the
generally limited telecommunications experience of many potential buyers and the
need to maintain Distributor's and Bay's excellent reputation and integrity in
the market place. Bay and Distributor realize that neither has all the necessary
products and services to address all needs of the various customers and markets.
Bay appoints various resellers with communication products and system
integration capabilities to add this value to Bay Products and to resell and
sublicense the Products as part of an Integrated solution. Where the Distributor
appoints Resellers, an integrated solution would normally involve both a hub and
a router.
In order for Distributor to pursue the above reasonable business purpose, Bay
and Distributor agree to the following:
1. Reseller appointments
Distributor may appoint Resellers who meet Bay's technical and quality
criteria set forth in Attachment "A" hereto. For the purposes of this
Agreement such a reseller is called a Value Added Reseller
("Reseller").
2. Terms and Conditions to Resellers:
A. Distributor's agreements with Resellers will have software
terms and conditions protecting Bay software equivalent to
those terms between Distributor and Bay.
B. Distributor will assure Resellers have proper confidentiality
agreements in place to protect Bay confidential information
whenever such information is being transmitted to Resellers.
This confidentiality agreement should be with Bay unless
otherwise mutually agreed upon in writing.
3. Independent Contractors:
Resellers are not agents, partners, joint venturers or of any legal
status with Bay.
Distributor agrees that any Reseller that Distributor provides Product
to under this Agreement holds a privity of contract relationship
between the Reseller and the Distributor.
Neither Distributor or any of its Resellers have represented, and will
not represent, that they have any right or authority to act, or to
assume or create any obligation or responsibility (whether express or
implied), on behalf of or in the name of Bay.
4. Software Licensing and Sublicensing:
a. The "Bay Software License Agreement" in the Bay/Distributor
Agreement contains terms which must be part of the Reseller's
license terms to its customers.
b. Validly approved Resellers are authorized to grant software
sublicenses to their customers to use Bay Software on a
Product which was acquired from Distributor and that is or was
transferred directly to that customer by Distributor or the
Reseller.
5. Support to Distributor
Free of charge support will be provided to Distributor for the first
year of this Agreement, as follows: Bay will provide Technical Response
Center (TRC) support to Distributor from 09.00 to 17.00 CET Monday
through Friday from Valbonne, France, local holidays excluded. The TRC
is staffed by Bay network engineers to provide second-level support
intended to assist Distributor's technical support staff with Product
installation and configuration advice, network problem diagnostics, and
Software problem reporting and resolution. Product Groups 4 and 5 are
not included in this support coverage. Distributor will take second
priority in its TRC access to Bay's paying customers.
EXHIBIT 3
ATTACHMENT A
BAY QUALITY CRITERIA FOR RESELLERS
A. Added Value and Market Skills:
1. The Value Added Reseller ("Reseller") must have a professional
and competent sales force concentrated on the development and
support of one more integrated telecommunications solutions
markets.
a. Reseller must at all times have a qualified
salesperson who is able to demonstrate the integrated
solutions sold by the Reseller.
b. The salesperson must be capable of selling
telecommunications solutions consisting of hardware
and software.
c. The Reseller must be able to provide applications and
systems consultancy to customers.
d. The Reseller must have added value that is designed
for a specific telecommunication market and must
include a solution involving a hub and router.
2. The Reseller must have a proven track record in specific
application(s) sales and the sales of telecommunication or
network design equipment and/or services.
3. The Reseller must demonstrate Bay products and features to
potential customers (this generally requires at least one Bay
router acquired by Reseller).
For Resellers who are not yet fully established, the criteria
in this document are to be applied to the principal employees
and the Resellers business plan.
B. Administrative/Financial management:
1. Must have adequate financial standing to provide normal and
customary credit facilities to his customers.
2. Must have adequate financial standing to finance the business.
3. Must provide required Software licenses to its customers.
4. Must maintain a proven record of customer satisfaction
regarding performance of Resellers added value on Bay
Products. Reseller must have a high customer satisfaction
rating on its performance and its application products and its
system integration activities.
5. Must have ability to reproduce software problems on its
premise (generally requires a Bay hub and/or router as a
maintenance support device).
6. Must have ability to provide first line support to its
customers (the Bay support services program will provide
support directly to Distributor who provides direct support to
the Reseller and or its end customer). The Bay support program
requires that Distributor have adequate spares. Bay then
provides hardware support including spares replacement.
Reseller must be able to get spares and support directly from
the Distributor.
7. Must have at least one support person that has (or will)
complete the Bay certified training program.
C. Other requirements:
1. Reseller and/or its employees must not be listed on the U.S.
Table of Denial Orders.
2. Reseller must comply with U.S. and country export and import
laws and regulations as well as all other applicable laws and
regulations.
3. Reseller has terms and conditions that provide Software
Licensing protection and enforcement to Bay and protects Bay
from claims by Reseller's customers.
4. Reseller must have attended training on Bay products at
Reseller's or Distributor expense. The training will be
specified by Bay.
ADDITIONAL CRITERIA FOR RESELLERS TO RESELL SPECIFIC PRODUCTS ARE
CONTAINED IN THE BAY NETWORKS PARTNER ALLIANCE PROGRAM AS MAY BE
MODIFIED FROM TIME TO TIME.
CONFIDENTIAL TREATMENT REQUEST
*Portions devoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
EXHIBIT 4 - BAY NETWORKS PARTNERS SUPPORT PROGRAM
1. TERM OF EXHIBIT
The term of this Exhibit shall commence on the date of activation in
accordance with Exhibit 6 attached and shall continue for an initial twelve (12)
month term. Thereafter this Exhibit shall remain in effect until an authorized
representative of Distributor or Bay provides the other party with written
notification of its termination at least thirty (30) days in advance of the
termination. This Exhibit will survive termination of the Agreement unless
mutually agreed in writing by the parties.
2. SUPPORT TO DISTRIBUTOR BY BAY
Bay and Distributor agree that the following terms and conditions shall
govern Hardware and Software support services to be provided by Bay to and for
the use of the Distributor in support of its Resellers. The Services provided
hereunder are second tier back-up to the technical support staff of Distributor.
Distributor is responsible to provide direct support to Resellers.
3. DISTRIBUTOR RESPONSIBILITIES
3.1 Distributor shall install at its End Users' sites (If installation is
purchased by the Reseller) and maintain in good operating condition all
Products it has re- sold in the Territory. Installation, warranty,
maintenance, repair and after sales servicing related to Products shall
be the sole responsibility of Distributor.
3.2 Distributor shall assure that supported Products are installed and
operated by End Users according to Bay specifications. Distributor
agrees that Bay shall not be required to provide support for Equipment
or Software that has been modified in any way by the Distributor its
Reseller or End User. Distributor understands and agrees that time and
material charges apply for any support services requested by
Distributor that are known or later determined to be related to or the
result of Distributor or Reseller or End User modification of Equipment
or Software.
3.3 Distributor must maintain an unmodified copy of the latest revision of
Software, all Revisions provided hereunder and any additional
documentation or archival files necessary to reinstall reconfigure or
reconstruct any lost, altered or damaged Software.
3.4 Distributor must have available adequate test equipment for the
performance of its warranty and first-level support obligations to its
Resellers. This equipment shall include as a minimum a Token Ring
network analyzer equivalent in function to a Network General Sniffer.
Further LAN interfaces may be required, such as Ethernet or FDDI,
depending upon the equipment sold by Distributor to its Resellers, as
may an ATM analyzer.
3.5 Distributor shall purchase, maintain and replenish a stock of spare
parts adequate for the performance of its warranty and first-level
support obligations to its Resellers.
3.6 Distributor shall employ trained and experienced support staff
sufficient for the performance of its warranty and first-level support
obligations to its Resellers. All such staff must be certified in
accordance with the prevailing requirements of the Bay Networks Partner
Alliance Program.
4. 7 x 24 2nd LEVEL TELEPHONE ASSISTANCE
4.1 Bay will provide Technical Response Center (TRC) support to Distributor
from 08.00 to 20.00 CET Monday through Friday from Valbonne, France,
local
EXHIBIT 4 - BAY NETWORKS PARTNERS SUPPORT PROGRAM
holidays excluded, Calls outside of those hours will be rerouted
automatically to one of the two major Bay TRCs in North America. The
TRCs are staffed by Bay network engineers to provide second-level
support intended to assist Distributor's technical support staff with
Product Installation and configuration advice, network problem
diagnostics, and Software problem reporting and resolution. Distributor
will benefit from priority access to the TRCs, Distributor will
maintain complete account control of the Reseller and will be
responsible to provide the Reseller's direct support. Bay will accept
calls from all Distributor's product-certified personnel, without
limitation on numbers.
4.2 In addition to the telephone assistance outlined above, Bay will:
(a) Diligently duplicate problems that have been fully
characterized by Distributor with traces, memory dumps and
full description of the network configuration Including
Software release(s), protocols running, and circumstances
surrounding the problem;
(b) Provide Distributor with "Read Only" access to Bay's Clarify
system to view Distributor's open tickets, which will enable
Distributor to provide up to date status reports to its
Resellers;
(c) Send competent personnel on site if problems cannot be
duplicated by Bay.
5. SOFTWARE SUPPORT
5.1 Master Software Subscription Service: Bay will provide automatic
distribution of major update and maintenance Revisions to the Software
when such Revisions are formally released by Bay, Optivity Revisions
will be available in this subscription service from Summer 1996. Until
such time Optivity Revisions are purchaseable through Bay's LattisWorks
Support Program -see Price List for further details. Revisions are
provided for distribution by Distributor to its Resellers who have:
(i) executed a Bay Networks, Inc. Software License Agreement; and
(ii) are either under warranty or have entered Into a service
agreement with the Distributor.
Bay will supply one master set of each Software Revision. Distributor
is granted a license to sublicense and use (load, copy or transmit as
necessary for execution) the Revisions. Distributor shall not copy,
disclose, or transfer the Revisions to any third party other than to
its Resellers as detailed herein. Distributor must place any media
labels supplied by Bay on ail media containing Software and Software
Revisions that are delivered by Distributor to its Resellers.
Distributor shall use all reasonable efforts to maintain Software
installed at End Users at the most current revision level. For each
Software Revision, Bay will provide one copy of the updates to the
corresponding Software information,
EXHIBIT 4 - BAY NETWORKS PARTNERS SUPPORT PROGRAM
5.2 Software Problem Resolution: For problems with Software that are
reported by Distributor and can be verified and/or recreated by Bay on
the then current revision of the Software, Bay shall provide remedial
support and use reasonable efforts to resolve the reported problem. Bay
may provide:
(i) a suggested corrective action; or
(ii) a work around to the problem; or
(iii) a Revision intended to resolve the problem.
5.3 Technical Notices and Status Reports: Bay will provide automatic
distribution to Distributor of:
(i) Software Revision Notices or addenda to existing software
information
(ii) Software maintenance bulletins
(iii) Other Software information which may be released periodically
by Bay
(iv) Periodic status updates on all open software tickets reported
by Distributor.
6. NEXT BUSINESS DAY SHIPMENT OF REPLACEMENT PARTS
6.1 In order to fulfill its installation, warranty and service obligations
to its Resellers, Distributor will need to stock an adequate supply of
service parts and to maintain and replenish that stock; To assist
Distributor in that effort, Bay will advance exchange any faulty
field-replaceable part (excluding chassis) and make all reasonable
efforts to ship the replacement part DDU airport point of entry to the
Reseller's country (INCOTERMS 1990 applying) by no later than the
business day following Distributor's replacement request. Requests,
must be completed using the then standard Bay RMA form.
Exchange parts will, at Bay's option, be new or refurbished upgraded to
the latest revision. Distributor shall arrange and bear the cost of
freight and Insurance from Distributor's address to the point of
repair, Cost of labor for deinstallation will always be paid by
Distributor.
6.2 Faulty parts are to be returned within ten (10) days of request, Parts
not received within thirty (30) days of request will be Invoiced at
full value. Parts that show defects resulting from reasons other than
defects in material and workmanship will be replaced for the value of
new parts.
6.3 Field upgrades (parts which have new features such as but not limited
to added memory) are excluded from the scope of 6,1 and 6.2 above and
are chargeable at the rates specified in Bay's Price List.
6.4 Updates, Involving changes to parts that do not provide any additional
features, are within the scope of Bay's responsibilities hereunder. The
part to be updated must be returned to Bay's nominated factory at
Distributor's risk and expense and will be returned by Bay to
Distributor updated within the thirty (30) days following.
7. CLASS 1 ECO/FCO UPDATE INFORMATION
Bay will provide Distributor with Engineering Change Orders (ECOs) for
all affected Spare Parts in Distributor's spare parts inventory. Field
Installable kits where available will be shipped to End User upon request.
Emergency and safety ECOs as determined by Bay will be provided at no cost,
Distributor will Install ECOs to Its End Users at no cost to Bay.
EXHIBIT 4 - BAY NETWORKS PARTNERS SUPPORT PROGRAM
8. INVOICING TO DISTRIBUTOR
8.1 The Bay Support Service will be calculated in accordance with the
Pricing Appendix attached to this Exhibit. The charges will not be
calculated on the three months' period following shipment, If Product
is dismantled or shipped outside the country, adjustments will be made
based on written requests from the Distributor. Likewise if Product not
directly shipped by Bay to Distributor becomes the object of a service
agreement contracted with the Distributor, it will be included in the
above computation.
8.2 Invoicing will be quarterly in advance and payment is due [*] from
invoice date.
8.3 Distributor is responsible for taxes and customs duties that may be
added to the invoice if Bay is required to collect these charges.
9. WARRANTY AND LIMITATION OF LIABILITY
9.1 Bay warrants that the support services will be provided In a
professional workmanlike manner In accordance with Bay's
responsibilities as detailed in this Exhibit.
9.2 Bay does not warrant that all Software problems reported will be able
to be corrected.
9.3 BAY'S SOLE OBLIGATION UNDER THIS WARRANTY IS DESCRIBED IN THIS SECTION
9. EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS SECTION, BAY
DISCLAIMS ALL WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, WITH RESPECT
TO THE PRODUCTS AND SUPPORT PROVIDED UNDER THIS EXHIBIT, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR ARISING FROM A COURSE OF DEALING, USAGE OR
TRADE PRACTICE.
9.4 IN NO EVENT WILL THE LIABILITY OF BAY ARISING OUT OF THIS EXHIBIT,
WHETHER BASED UPON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE) OR
OTHERWISE, EXCEED THE ACTUAL AMOUNT PAID BY THE DISTRIBUTOR FOR THE
SERVICES PROVIDED UNDER THIS EXHIBIT DURING THE ANNUAL TERM IN WHICH
THE CAUSE OF ACTION OCCURRED.
9.5 BAY SHALL NOT BE LIABLE FOR ANY SPECIAL INDIRECT OR CONSEQUENTIAL
DAMAGES.
10. GENERAL PROVISIONS
10.1 In case of any conflict or inconsistency between the terms of this
Exhibit and the terms of the Agreement, the terms of this Exhibit shall
prevail.
10.2 Support services specified above are return to Bay of failed Equipment
items. Software Revisions and Bay technical support are provided as
second-tier back up support to the technical support staff of the
Distributor. Distributor support staff is responsible for providing
direct support to Resellers
10.3 Services, excluding training (see 10,4 below), provided by Bay directly
to Resellers or End Users on request of and under an order issued by
Distributor will benefit from a Fifteen Percent (15%) discount off the
then current Bay List Price. This discount does not apply to the
Optional On-Site Parts and Labor Program.
EXHIBIT 4 - BAY NETWORKS PARTNERS SUPPORT PROGRAM
10.4 Training provided either to Distributor or to Resellers or End Users at
the request of and under an order issued by Distributor will benefit
from a [*] discount off the then current Bay List Price, Training price
includes lunch and hand-outs but does not include lodging,
out-of-pocket expenses, transportation and other meals.
EXHIBIT 4 - BAY NETWORKS PARTNERS SUPPORT PROGRAM
PRICING APPENDIX
Support charges are calculated from the installed Base, as detailed below.
The Installed Base is the total of shipments to Distributor in the three (3)
year period preceding the date of Invoice, plus Products added in that period,
through, for example, the MAP program or shipments from another reseller or
shipments to an End User who is serviced by Distributor. The value used is the
nett price paid for the Products.
Support charges are reduced when Products are dismantled/de-installed or shipped
outside the Territory or are supported by another /reseller.
Installed Base Size
(U.S. $) Support Charge
-------- --------------
Under 3,000,000 [*]
(A minimum charge of $2,500 per quarter applies)
Under 6,000,000 [*]
Under 10,000,000 [*]
Under 25,000,000 [*]
Under 50,000,000 [*]
Under 100,000,000 [*]
100,000,000 and over [*]
EXHIBIT 5 - DISTRIBUTOR INVENTORY TERMS
A. REPORTS
A.1 By the tenth business day of each month, Distributor agrees to submit a
Point of Sale ("POS") shipment report to Bay covering the month just
ended. The POS report will be broken out by Product and by geographic
area, including for all countries outside the U.S.A. the first two
digits of the postal code where available, in a form acceptable to Bay.
POS reports are to be submitted to:
"Bay Networks, Inc.
Attn: POS/Inventory Administrator
4401 Great America Parkway
Santa Clara, CA 95052-8185
U.S.A."
A.2 By the tenth business day of each month, Distributor agrees to submit
to Bay an "Inventory Report" detailing all Products purchased from Bay
as of the end of the calendar month just ended that remain unsold in
Distributor's inventory. The Inventory Report is to be in a form
acceptable to Bay to include, at a minimum, the number of units and
Distributor's purchase price value of the inventory by Product model
number. Distributor's Inventory Reports are to be submitted to:
"Bay Networks, Inc.
Attn: POS/Inventory Administrator
4401 Great America Parkway
Santa Clara, CA 95052-8185
U.S.A."
Bay Networks Agreement for C2000 (Rev. 9/22/95)
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confident
treatment.
EXHIBIT 5 - DISTRIBUTOR INVENTORY TERMS
B. PRODUCT EXCHANGE PRIVILEGES
B.l Distributor may return previously purchased Products for replacement by
an equal or greater dollar's value worth of different Products, subject
to the following conditions:
a) Distributor may return Products only within the [*] period
following [*] of each year.
b) The total value of the returned Products shall not exceed [*]
of the Net Shipments Value, for Products only, invoiced by
Bay, reduced by any credits already granted, during the [*]
immediately preceding each of the above dates, "Net Shipments
Value" means the aggregate invoiced value of shipments of all
Products to Distributor, less any returns, credits and
allowances, taxes and freight associated with the purchase of
Products under the Agreement. Purchases of Services are also
included in Net Shipments. Inventory and reporting credits and
Coop Funds are not deducted in the calculation of Annual Net
Shipments, Bay's records are used for all calculations of Net
Shipments.
c) The replacement Products are not to be identical to the
returned Products, Distributor will be invoiced for the
replacement products at purchase prices in effect at the time
they are shipped, reduced by a credit for the face value of
the returned Products being replaced at the price actually
paid by Distributor, but reduced by any prior credits granted
by Bay.
d) The returned Products have been in Distributor's inventory for
less than [*] after shipment from Bay, as evidenced by
Distributor's monthly Inventory Reports submitted to Bay.
e) The returned Products are in their original shipping
containers and have not been used, altered or damaged.
B.2 Bay may, in its sole discretion, permit Distributor to exchange
additional Products in order to correct major Product mix imbalances in
Distributor's inventory. Any such additional Product exchange
privileges extended to Distributor will be subject to terms and
conditions acceptable to both Bay and Distributor prior to the time of
actual Product exchange.
B.3 If the orders placed by Distributor in the [*] after activation of a
subsidiary in accordance with Exhibit 6 following lead to Product mix
imbalances in Distributor's inventory, then the Distributor and Bay's
area management shall be able to agree extension for a limited period
of the [*] limitation per B.1 b) above,
Bay Networks Agreement for C2000 (Rev. 9/22/95)
EXHIBIT 5 - DISTRIBUTOR INVENTORY TERMS
C. PRICE PROTECTION
C.1 In the event of a list price decrease for Products, Distributor may be
eligible to apply for a credit on those units of Product in
Distributor's inventory that (i) have not been sold and (ii) were
shipped by Bay to Distributor no more than [ * ] prior to the effective
date of the list price decrease,
C.2 the amount of credit available to Distributor on any unit of affected
Product is equal to the difference between:
a) [ * ], and
b) [ * ].
C.3 In order to receive a credit, Distributor must have faithfully
submitted its monthly Inventory Report and POS reports to Bay according
to section A of this Exhibit. Distributor may claim its credit by
submitting to Bay a report of Distributor's inventory eligible for the
list price decrease credit within [ * ] of the effective date of the
list price decrease. Upon verification by Bay of the eligibility of
units claimed and calculation of the credit amount, Bay will issue a
credit against Distributor's account.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
EXHIBIT 5 - DISTRIBUTOR INVENTORY TERMS
D. REPURCHASE
D.1 If Bay terminates the Agreement without cause, Bay agrees to
repurchase from Distributor, at Distributor's option, all Products
furnished under the Agreement which Distributor has not sold and which
are in Distributor's inventory as at the effective date of termination.
Bay's agreement to repurchase such Products is conditioned on: (a) the
Products to be repurchased have been reflected on Distributor's monthly
Inventory Reports furnished to Bay under the Agreement section titled
Reports; (b) Bay is able to verify that the Products were shipped by
Bay to Distributor within the six (6) months preceding the effective
date of termination; and (c) the Products are in their original
shipping containers and have not been used, altered or damaged;
otherwise, Bay will be under no obligation to repurchase the Products.
The repurchase price is the price actually paid by Distributor minus
any prior credits and allowances. Upon Bay's repurchase, Distributor
agrees to ship the Products to Bay's designated location, freight and
insurance prepaid.
D.2 Upon the expiration of the Agreement, Bay may, at its option,
repurchase from Distributor any or all of the Products in Distributor's
inventory at prices to be agreed between the parties. However, the
repurchase prices will in no event be greater than the actual price
originally paid by Distributor to Bay, minus any prior credits or
allowances.
D.3 Any credit entitlement due to Distributor will be paid by Bay to
Distributor within [ * ] after the repurchases exercised in accordance
with D.l and D.2 above.
Bay Networks Agreement for C2000 (Rev. 9/22/95)
EXHIBIT 6 - LOCAL COUNTRY/LOCAL REGION DISTRIBUTOR
ACTIVATION PROCESS
Each Distributor entity has to meet the Bay quality and technical criteria prior
to resale activity by that entity in the country for which the Business and
Resource Plan is approved. Business/Resource Plans are to be reviewed and
approved annually. Development of local relationships between the Distributor
and Bay personnel is a key to success and both parties will use their best
endeavors to develop the local relationship.
1. COUNTRY ACTIVATION
A. Receipt and acceptance of a Business and Resource plan for each entity.
The business plan is to define the territory requested and describe the
following:
1. MARKET STRATEGY
- Market view (size, key vertical markets, growth)
- Distributor Segment targets
- Market development plans (PR, seminars, advertising)
2. SALES STRATEGY
- Channel strategy (in the territory)
- Reseller recruitment and management overview
- Reseller programs
- Reseller training requirements
- Target accounts (key initial targets for cooperation and support)
- Service and support strategy (Hardware-Software support, on-site service
levels, other professional services (training, consulting)
3. SALES GOALS
- Total revenue for Bay Networks (net$)
- Revenue mix by product group
- Service revenue plan (contract maintenance and other)
- RESOURCE PLAN
- Pre-sales technical headcount (by calendar quarter)
- Dedicated sales headcount (by calendar quarter)
- Training budget
Support investment (contract services, Hardware and Software)
B. INITIAL COUNTRY ENGAGEMENT COMMITMENT IN ADDITION TO ACCEPTED
BUSINESS/RESOURCE PLAN.
1. QUALIFICATION FOR HIGH TECHNOLOGY
- How Distributor will meet the Bay quality, technical, training
requirements
- How its resellers will meet the Bay requirements.
2. GENERAL
It is envisaged that the majority of the Distributor entities will qualify as
Volume Distributors and will benefit from the discount structure detailed in
Exhibit 2A herein.
In certain countries the Distributor may wish to qualify as a Value Added
Distributor and therefore to apply the discounts detailed in Exhibit 2B. The
following criteria are those that MUST be met by the Distributor entity in such
cases, in addition to the agreement with local Bay management on the business
plan for the region:-
Value Added Distributor Criteria:-
i. Distributor must demonstrate that:
(a) it has on staff a technical manager to assist resellers with networking
and Product information;
(b) it has on staff a business manager to assure contract terms are met,
proposal information is available and that other administrative management
efforts are achieved
(c) it can provide pre-sales technical assistance, installation services,
and technical telephone support to its value added resellers on the Products;
(d) it has on staff in each country of the Territory two pre-sales
engineers and two post-sales engineers who have earned the designation of Bay
Networks Expert under the Bay Networks Certification Program; and
(e) it has on staff in each country of the Territory at least two
salespeople who can demonstrate proficiency in the Products' connectivity and/or
router solutions for small to mid-range networks.
(f) it makes available a quality support capability to its Resellers and to
End Users. As a significant element of his obligation Distributor agrees to
purchase second-level support from Bay for the whole of the installed base in
the qualifying Territory in accordance with the Provisions of Exhibit 4 hereto.
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
AMENDMENT
BAY NETWORKS, INC.
NON-EXCLUSIVE DISTRIBUTOR AGREEMENT
This Amendment is entered into effective September 30, 1996 ("Amendment Date")
by and between Bay Networks, Inc. ("Bay"), acting on behalf of itself and its
affiliates, and Computer 2000 AG (Holding) ("Holding") acting on behalf of
itself and its subsidiaries.
Bay and Holding have previously entered into a Non-Exclusive Distributor
Agreement ("Agreement") with an Effective Date of September 25,1995. Under the
terms of the Agreement, Holding's subsidiaries ("Distributor(s)") which agree to
be bound by the terms of the Agreement and which continue to meet the
qualification requirements contained in the Agreement, may purchase for resale
Products manufactured and distributed by Bay.
Where indicated, this Amendment shall modify and supersede terms and conditions
contained in the Agreement and its Exhibits, but all other terms and conditions
of the Agreement shall remain in full force and effect between the contracting
parties. This Amendment applies to the purchase of Netgear products only. It
does not effect the purchase of Bay products.
The NETGEAR subsidiary of Bay ("NETGEAR") distributes products under its own
brand names ("NETGEAR Products") through separate channels of distribution from
those utilized by Bay.
Holding desires to have qualified Distributors authorized to purchase or license
NETGEAR Products under the Agreement for distribution through their reseller
outlets to end use customers.
Subject to receiving Holding's assurance that those Distributors authorized to
purchase and distribute both Products and NETGEAR Products will be bound by and
will comply with the terms of the Bay Agreement and this Amendment, Bay is
willing to grant qualified Distributors the non-exclusive right to purchase and
distribute NETGEAR Products as follows:
1. ORDERING NETGEAR PRODUCTS
A. Orders for NETGEAR Products must be placed separately from
those for Bay-Products and must be made out to NETGEAR.
B. Orders for NETGEAR Products must be transmitted to the
following address:
NETGEAR, Inc.
48105 Warm Springs Blvd.
Fremont, CA 94539
U.S.A.
510-490-4774
C. Orders may be sent by telefax or other electronic media
approved by NETGEAR. Fax orders should be sent to the
following number: 510-498-2650.
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D. Orders must include the following information:
(i) Distributor's Purchase Order number;
(ii) Product number and description for each item ordered;
(iii) Desired quantities;
(iv) Purchase price for each Product ordered;
(v) Requested ship date(s);
(vi) Preferred shipping method; and
(vii) Exact "Bill to" and "Ship to" address.
E. Orders for NETGEAR Products submitted with orders for
Bay-Products, made out to Bay Networks rather than NETGEAR or
submitted without the information listed above will not be
accepted.
2. PRICES & PAYMENT
A. Prices for NETGEAR Products are those set out in NETGEAR'S
Price List, less the applicable discount specified in Exhibit
1 to this Amendment.
B. Upon shipment, NETGEAR will invoice Distributor directly for
all NETGEAR Products shipped. Distributor will remit payment
of invoiced amounts directly to NETGEAR at the above address
or such other address as may be supplied by NETGEAR.
3. INVENTORY PRICE PROTECTION
Requests for inventory price protection on NETGEAR Products
must be made directly to NETGEAR at the above address. All
other terms and conditions relative to inventory price
protection for NETGEAR Products are the same as for Products.
4. PRODUCT EXCHANGE PRIVILEGES
Requests for exchange of NETGEAR Products must be made
directly to NETGEAR at the above address. All other terms and
conditions relative to exchange of NETGEAR Products are the
same as for Bay-Products.
5. DISTRIBUTOR'S RESPONSIBILITIES
A. Authorization as a NETGEAR Products Distributor extends only
to the sale or license of NETGEAR Products to companies which
will, in turn, supply them to end-use customers. Distributor
may not sell or license NETGEAR Products directly to end use
customers without the express written consent of NETGEAR.
B. Distributor must aggressively market, promote, sell, support,
and otherwise create and increase demand for the NETGEAR
Products by end-users in the Territory.
C. If Distributor supplies NETGEAR Products to or through retail
outlets, Distributor must use its best efforts to assure that
the NETGEAR Products are prominently displayed and that
shelves are adequately stocked at all times.
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6. REPORTS
A. Each month Distributor must prepare and submit directly to
NETGEAR:
(i) a Point of Sale (POS) shipments report covering the
preceding month, broken out by product.
(ii) a report showing inventory of the NETGEAR Products
purchased and licensed from NETGEAR as of the end of the
previous calendar month. The report must include, at a
minimum, the units of the inventory by product.
(iii) a non-binding six-month rolling forecast of sales by
NETGEAR Product.
B. All such reports must be submitted to: NETGEAR, Inc., 48105
Warm Springs Blvd., Fremont, CA 94539 U.S.A.
C. If Distributor does not submit the POS and inventory reports
each month, Distributor may not be eligible to receive
inventory price protection or stock rotation privileges.
7. MARKETING AND SUPPORT PROGRAMS
A. Distributor is not eligible to receive and shall not claim
reimbursement under Bay's cooperative advertising, marketing
assistance or other similar programs for purchase or resale of
NETGEAR Products. Marketing assistance, if any, regarding
NETGEAR Products will be provided by NETGEAR.
B. The support options and programs included in the Agreement are
not available for NETGEAR Products. All support for NETGEAR
Products is supplied by NETGEAR or its designated support
providers. Any request for support services on NETGEAR
Products should be directed to NETGEAR at the address listed
above.
The terms and conditions of this Amendment, shall amend and supersede any
conflicting terms of the original Agreement only as they relate to the purchase
or license of NETGEAR Products. All other terms of the original Agreement shall
remain unchanged.
IN WITNESS WHEREOF, the parties have executed this Amendment to be effective as
of the date first written above.
BAY: HOLDING:
BAY NETWORKS, INC. COMPUTER 2000 AG (HOLDING)
By: /s/ Joe Booker By: [ILLEGIBLE]
--------------------------- -----------------------------------
Name: Joe Booker Name: [ILLEGIBLE]
Title: Vice President General Manager Title: [ILLEGIBLE]
Commercial Business Unit
Date: 12/3/96 Date: [ILLEGIBLE]
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CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
EXHIBIT 1
DISCOUNT SCHEDULE
The initial Discount offered Distributor for purchase or license of NETGEAR
Products included on the NETGEAR Price List in effect on the Effective Date of
this Agreement is [ * ] off of the then current NETGEAR list price.
Distributor agrees that the foregoing Discount is only applicable to NETGEAR
Products included on the NETGEAR Price List on the Effective Date of this
Agreement. NETGEAR reserves the right to add Products to the Price List at its
sole discretion and any such additional Products shall be offered to Distributor
at discounts to be determined at that time.
Computer 2000 Amendment 101196
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