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EXHIBIT 10.3A
MICROSOFT CORPORATION
1995/1996 CHANNEL
AGREEMENT
This Microsoft Corporation 1995/1996 Channel Agreement ("Agreement") is entered
into as of the 1st day of July, 1995 between MICROSOFT CORPORATION ("MS")
having its principal place of business at One Microsoft Way, Redmond, WA
98052-6399 and SOFTWARE SPECTRUM, INC. ("CUSTOMER") having its principal place
of business at 2140 Merritt Drive, Garland, TX 75041.
1. DEFINITIONS
All capitalized terms included in this Agreement are as defined in Schedule A
attached hereto.
2. TERM OF AGREEMENT
2.1 TERM
This Agreement shall take effect on the date indicated above and shall continue
until June 30, 1996.
2.2 TERMINATION
Either MS or CUSTOMER may terminate this Agreement and/or any amendment hereto
at any time, with or without cause, upon thirty (30) days prior written notice.
Neither party shall be responsible to the other for any costs or damages
resulting from the termination of this Agreement. Rights to payment of money
which have accrued prior to termination shall survive termination. Any Product
acquired by CUSTOMER pursuant to this Agreement which is in its Possession as
of the termination of this Agreement shall be distributed by CUSTOMER subject
to the restrictions in this Agreement, or may be returned to MS only within
sixty (60) days of termination as authorized herein. CUSTOMER shall make a
final report to MS within ninety (90) days of termination of this Agreement.
Termination of this Agreement shall automatically terminate any amendments
hereto.
3. CUSTOMER OBLIGATIONS
3.1 FINANCIAL STATEMENT
CUSTOMER will provide to MS' credit management, quarterly Financial Statements
within forty-five (45) days after the end of each calendar quarter. CUSTOMER
Financial Statements will be used by MS' credit department solely for the
purpose of establishing and reviewing CUSTOMER's credit. Financial Statements
should be forwarded to attn. Credit Manager, Finance, Microsoft, One Microsoft
Way, Redmond, WA 98052-6399.
3.2 NO OTHER PRODUCT WARRANTIES BY CUSTOMER
Neither CUSTOMER nor any of its employees or agents shall have any right to
make any other warranties or promises for the use of Product which are not
contained in the written warranty document accompanying the Product. CUSTOMER
may, however, make representations and give instructions for the use of the
Product which are contained on the Product label or container, or End User
documentation provided with the manual or MS product literature denoted by a MS
part number or authorized in writing by MS.
3.3 NO ALTERATIONS OF PRODUCT
CUSTOMER shall not alter the Product or Product packaging, and shall have no
authority to make copies of MS diskettes or documentation. CUSTOMER shall
distribute Product to its customers in unopened packages as shipped by MS.
Microsoft Confidential - Disclosure Prohibited
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3.4 USE OF TRADEMARKS
The appropriate trademark symbol (either "(TM)" or "(R)" in a superscript
following the Product name) shall be used whenever a Product name is first
mentioned in any advertisement, brochure, or other material circulated or
displayed by CUSTOMER. MS' current trademark list is available upon requested.
3.5 AUTHORIZED DISTRIBUTION
Product acquired under this Agreement shall be distributed only within the
Territory. CUSTOMER shall not, without the prior written consent of MS,
distribute Product to any Reseller or End User whom they have reason to believe
may re-distribute such Product outside of the Territory.
3.6 TAXES
CUSTOMER shall be liable for all sales, use, value added, duties, tariffs or
other similar taxes of any nature whatsoever associated with the distribution
of the Product, and shall indemnify and hold MS harmless from any such taxes or
expenses.
4. MS OBLIGATIONS
4.1 ASSISTANCE WITH REPORTING
Upon request, MS shall use best efforts to assist CUSTOMER in data reporting,
and will work with CUSTOMER's MIS department to facilitate the data reporting
process.
4.2 NO WARRANTIES FOR PRODUCT NOT MANUFACTURED BY MS
MS makes no warranties as to items distributed under a third party name,
copyright, trademark or trade name which may be included within the retail
package of a Product sold hereunder.
4.3 AUDITS
During the term of this Agreement and for a period of two (2) years following
its termination, MS may audit the applicable records and operations of CUSTOMER
as is reasonable to verify CUSTOMER's compliance with the terms of this
Agreement. CUSTOMER shall promptly correct any errors and omissions disclosed
by such audit. Any audit will be conducted during CUSTOMER's normal business
hours in such a manner as not to unreasonably interfere with CUSTOMER's normal
business activities.
5. CUSTOMER AND MS OBLIGATIONS
5.1 PRODUCT WARRANTY; LIMITATION OF LIABILITY
(a) MS warrants its software and hardware
Product to End Users as defined in the written limited warranty document
accompanying each Product. All replacement Product is delivered subject to the
terms of the MS limited Product warranty. THE ABOVE LIMITED WARRANTIES ARE IN
LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, OR STATUTORY, INCLUDING
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND
OF ALL OTHER OBLIGATIONS OR LIABILITIES ON MS' PART.
(b) NEITHER MS NOR ANYONE ELSE WHO HAS BEEN
INVOLVED IN THE CREATION, PRODUCTION, OR DELIVERY OF ANY PRODUCT WHICH ARE THE
SUBJECT OF THIS AGREEMENT SHALL BE LIABLE FOR ANY DIRECT, INDIRECT,
CONSEQUENTIAL, OR INCIDENTAL DAMAGES (INCLUDING DAMAGES FOR LOSS OF BUSINESS
PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, AND THE LIKE)
ARISING OUT OF THE USE OR INABILITY TO USE ANY PRODUCT EVEN IF MS HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 2
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(c) IN ANY CASE, THE LIABILITY OF MS (i)
UNDER ANY PROVISION OF THIS AGREEMENT; (ii) FOR ANY DAMAGES CAUSED BY A PROGRAM
DEFECT OR FAILURE IN ANY PRODUCT OR (iii) ARISING FROM A COURT OF PROPER
JURISDICTION HOLDING ANY OF THE ABOVE WARRANTIES OR DISCLAIMERS OF WARRANTIES
INADEQUATE OR INVALID SHALL BE LIMITED TO THE AMOUNT ACTUALLY PAID BY CUSTOMER
TO MS UNDER THIS AGREEMENT. MS' LIMITATION OF LIABILITY IS CUMULATIVE WITH ALL
OF MS' EXPENDITURES BEING AGGREGATED TO DETERMINE SATISFACTION OF THE LIMIT.
THE EXISTENCE OF CLAIMS OR SUITS AGAINST MORE THAN ONE PRODUCT LICENSED UNDER
THIS AGREEMENT WILL NOT ENLARGE OR EXTEND THE LIMIT. CUSTOMER RELEASES MS FROM
ALL OBLIGATIONS, LIABILITY, CLAIMS OR DEMANDS IN EXCESS OF THE LIMITATION.
5.2 SEMESTER PROGRAMS
(A) MARKETING FUNDS
Each Semester, MS may allow CUSTOMER to participate in programs which provide
the opportunity to earn marketing funds. CUSTOMER's participation in such
programs shall be governed by CUSTOMER's then current Microsoft Rebate and
Marketing Fund Addendum to this Agreement, and Microsoft's Marketing Fund
Guidelines, as such may be promulgated and modified by MS, in its sole
discretion, from time to time.
(B) REBATES
Each Semester, MS may allow CUSTOMER to participate in programs which provide
the opportunity to earn rebates as described in CUSTOMER's current Microsoft
Rebate and Marketing Fund Addendum to this Agreement, and CUSTOMER's Rebate
Program Guidelines, as such may be promulgated and modified by MS, in its sole
discretion, from time to time.
(C) ELECTRONIC DATA INTERCHANGE
MS shall require CUSTOMER to provide weekly and monthly sales reporting during
the term of this Agreement. Such sales reporting shall be submitted to MS in
accordance with the Electronic Data Interchange (EDI) Guidelines as provided to
CUSTOMER by MS, from time to time.
6. PATENT, COPYRIGHT AND TRADEMARK INFRINGEMENT
MS shall defend and pay the amount of any final adverse judgement against
CUSTOMER, or settlement to which MS has consented, resulting from claims of
infringement of any United States patent, copyright, trademark and/or service
mark with respect to a Product, provided that the Product has not been altered,
and provided further that MS is notified promptly in writing of such a claim
and has sole control over its defense or settlement, and CUSTOMER provides
reasonable assistance in the defense of the same.
7. DELAY IN PERFORMANCE
Neither party shall be liable for failure or delay in the performance of any of
its obligations under this Agreement, except obligations for the payment of
money, if such delay or failure is caused by circumstances beyond the control
of the party affected. Strikes or other labor difficulties which are not
capable of being terminated on terms acceptable to the party affected shall not
be considered circumstances within the control of such party. In the event of
Product shortages, MS shall have the right to allocate available supplies of
the Product in its sole discretion.
8. NO WAIVER
None of the provisions of this Agreement shall be deemed to have been waived by
any act or acquiescence on the part of MS, CUSTOMER or their respective agents
or employees, but may be waived only by an instrument in writing signed by an
authorized officer of the waiving party. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision or of the same
provision on another occasion.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 3
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9. NO PARTNERSHIP OR AGENCY
Nothing in this Agreement shall be deemed to create or constitute a
partnership, joint venture, franchise, agency, or contract of employment
between MS and CUSTOMER
10. ATTORNEY'S FEES; GOVERNING LAW
In the event an action is commenced to enforce a party's rights under this
Agreement, the prevailing party in such action shall be entitled to recover its
costs and attorneys' fees. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Washington. CUSTOMER consents to
non~exclusive jurisdiction and venue in King County, Washington.
11. ENTIRE AGREEMENT
This Agreement and all attached Amendments, Addenda and Schedules constitute
the entire agreement between MS and CUSTOMER, and supersedes and terminates any
and all prior agreements or contracts, written or oral, entered into between
the parties relating to the subject matter hereof. Any representations,
promises, or conditions in connection therewith not in writing signed by both
parties shall not be binding upon either party. This Agreement shall control
any provisions in purchase orders which are inconsistent with this Agreement.
12. U.S. GOVERNMENT RESTRICTED RIGHTS
Any Product which CUSTOMER distributes or licenses to or on behalf of the
United States of America, its agencies and/or instrumentalities (the
"Government"), are provided to CUSTOMER with RESTRICTED RIGHTS. Use,
duplication or disclosure by the Government is subject to restriction as set
forth in subparagraph (c)(1)(ii) of the rights in Technical Data and Computer
Software clause at DFAR 252.227-7013, or as set forth in the particular
department or agency regulations or rules which provide MS protection
equivalent to or greater than the above-cited clause. CUSTOMER shall comply
with any requirements of the Government to obtain such RESTRICTED RIGHTS
protection, including without limitation, the placement of any restrictive
legends on the Product software, Product documentation, and any license
agreement used in connection with the distribution of the Product. Manufacturer
is Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052-6399.
Under no circumstances shall MS be obligated to comply with any Governmental
requirements regarding the submission of or the request for exemption from
submission of cost or pricing data or cost accounting requirements. For any
distribution or license of the Product that would require compliance by MS with
Governmental requirements relating to cost or pricing data or cost accounting
requirements, CUSTOMER must obtain an appropriate waiver or exemption from such
requirements for the benefit of MS from the appropriate Governmental authority
before the distribution and/or license of the Product to the Government.
13. CONFIDENTIALITY
CUSTOMER expressly undertakes to retain in confidence the terms and conditions
of this Agreement, and all information and know-how transmitted to it by MS and
make no use of such information and know-how except under the terms and during
the existence of this Agreement. CUSTOMER shall guarantee and ensure its
employees' compliance with this paragraph. CUSTOMER's obligations under this
paragraph shall survive any termination of this Agreement and shall extend to
the earlier of such time as the information is public domain or five (5) years
following the termination of this Agreement.
14. NO ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, provided that CUSTOMER may
not assign its rights or obligations under this Agreement in any way without
the prior written consent of MS.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 4
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15. NOTICES
All notices sent by MS or CUSTOMER alleging, regarding, responding to, or in
any way connected with any claim of breach of this Agreement or any other legal
obligation related hereto, shall be sent via U.S. certified mail (return
receipt requested), or via overnight courier (e.g., Federal Express, or DHL),
and addressed as follows:
If to MS: Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Attn: Sr. Vice President, Microsoft North
America
With cc to: Law and Corporate Affairs
If to CUSTOMER:
Software Spectrum, Inc.
2140 Merritt Drive
Garland, Texas 75041
Attn: Vice President of Operations
16. SURVIVAL
Sections 2.2, 3.2, 3.3, 3.4, 3.5, 3.6, 4.2, 4.3, 5.1, 5.2(c), 11, 12, 13, 14
and 16 shall survive any termination of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement on the dates
indicated below. This Agreement is not binding until executed by MS.
MICROSOFT CORPORATION ("MS") SOFTWARE SPECTRUM, INC.
("CUSTOMER")
By: /s/ JOHN LIEDGREN By: /s/ KEITH R. COOGAN
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John Liedgren Keith R. Coogan
- - ------------------------------ -------------------------------
Name (please print) Name (please print)
Director, Channel Policies Vice President of Operations
- - ------------------------------ -------------------------------
Title Title
6/27/95 June 19, 1995
- - ------------------------------ -------------------------------
Date Date
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 5
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SCHEDULE A
DEFINED TERMS
"DISTRIBUTOR" is defined as any MS customer which purchases MS
Product directly from MS, and distributes said Product to Resellers.
"END USER" is defined as the ultimate consumer of Product.
"FINANCIAL STATEMENT" is defined as a Balance Sheet as of the
last day of the calendar quarter, and an Income Statement and Statement of Cash
Flows for the quarter and year-to-date, prepared in accordance with Generally
Accepted Accounting Principles ("GAAP"). Any deviation from GAAP in the
quarterly statements shall be clearly noted. These statements must be signed
by an officer of CUSTOMER as being representative of the books and accounts of
CUSTOMER.
"PRODUCT" is defined as any MS Stock Keeping Unit ("SKU") listed
on CUSTOMER's then current Price List.
"PURCHASE CREDIT" is defined as a dollar amount credited to
CUSTOMER's account with MS, which amount may only be used by CUSTOMER in the
manner set forth in this Agreement.
"RESELLER" is defined as any software retailer which purchases
Product from MS or a MS authorized Distributor.
"SEMESTER" is defined as a six month period. There are two (2)
Semesters during the term of this Agreement, January 1 through June 30, and
July 1 through December 31.
"TERRITORY" is defined as the geographic boundaries of the United
States of America, excluding all United States territories, possessions, or
protectorates.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page A1
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ADDENDUM TO THE
MICROSOFT 1995/1996
CHANNEL AGREEMENT
(APPOINTMENT AS A DIRECT RESELLER)
This Addendum ("Addendum") entered into as of the 1st day of July, 1995,
modifies that certain Microsoft 1995/1996 Channel Agreement ("Agreement")
between MICROSOFT CORPORATION ("MS") having its principal place of business at
One Microsoft Way Redmond, WA 98052 and SOFTWARE SPECTRUM, INC. ("CUSTOMER")
having its principal place of business at 2140 Merritt Drive, Garland, TX
75041. The Agreement is supplemented as follows:
1. PURPOSE
The purpose of this Addendum is to set forth the framework by which MS appoints
CUSTOMER as a non-exclusive Direct Reseller in the United States of America for
the MS Product listed on the CUSTOMER Price List attached hereto as Schedule B.
For purposes of this Addendum, capitalized terms not otherwise defined herein,
shall have the same definition as set forth in the Agreement.
2. DEFINITIONS
For purposes of this Addendum, capitalized terms are as defined in Schedule A
attached hereto.
3. CUSTOMER OBLIGATIONS
3.1 DISTRIBUTION TO END USERS ONLY
Product distributed pursuant to this Addendum shall be distributed solely to
End Users located in the Territory, and not to Resellers of any kind.
3.2 LICENSING PROVISIONS
CUSTOMER acknowledges that the Product are distributed to End Users subject to
the terms of the applicable Microsoft End User License Agreement. CUSTOMER
shall make commercially reasonable efforts to prevent distribution of Product
to End Users who intend to copy or reproduce the Product in violation of the
Microsoft End User License Agreement.
3.3 PRODUCT PURCHASES
Product acquired by CUSTOMER shall be purchased only from MS or MS authorized
Distributors.
3.4 PAYMENT TERMS
Payment terms are net thirty (30) days from the date of MS' invoice, subject to
approval of open terms by MS. All invoices outstanding over thirty (30) days
may be assessed a finance charge of the then current prime rate plus two
percent (2%) per month of the legal maximum, whichever is less. Failure by
CUSTOMER to meet payment terms may result in a hold by MS of all pending
CUSTOMER orders.
Microsoft Confidential - Disclosure Prohibited
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All payments to MS by CUSTOMER pursuant to this Addendum shall be in the form of
a bank wire transfer, sent to the following:
First Interstate Bank of Washington
Seattle Main Branch
ABA: #125 000 286
Beneficiary: Microsoft Corporation
Account No. 001 025865
3.5 SHIPMENT SHORTAGE CLAIMS
CUSTOMER shall submit all claims for shortages and/or variances in shipments to
MS in writing within fifteen (15) days of CUSTOMER's receipt of the shipment.
All such claims not submitted in writing to MS within the fifteen (15) day
period shall be deemed waived by CUSTOMER. CUSTOMER shall be responsible for
all such claims made with respect to freight collect shipments, and shall not
withhold payment to MS a result of such claims.
3.6 PRODUCT FORECASTING
From time to time, MS may require Product forecasting for CUSTOMER. CUSTOMER
shall comply with all Product forecasting requirements designated by MS from
time to time.
4. MS OBLIGATIONS
4.1 NEW PRODUCTS; PROMOTIONAL PRODUCTS
MS may elect at any time during the term of this Addendum to announce new or
Promotional Product to which the terms and conditions of this Addendum do not
apply. In the event MS elects to announce Promotional Product, MS shall provide
CUSTOMER with thirty (30) days prior written notice of such announcement.
4.2 INVENTORY PRICE PROTECTION
During the term of this Addendum, MS shall grant CUSTOMER a price adjustment
against Product price reductions made by MS, which price reductions are made on
an indefinite basis, on all CUSTOMER's inventory which CUSTOMER reports as in
its inventory as of the day of the reduction. Such price adjustment shall be in
the form of a Purchase Credit equal to the difference between the lowest price
paid by CUSTOMER during the six (6) months prior to the price reduction and the
reduced price, and shall be paid no later than thirty (30) days after CUSTOMER
provides proof of inventory. Special temporary prices and promotional
offerings, which may include price reductions or free goods, shall not be
considered a price reduction to which this Section applies.
5. CUSTOMER AND MS OBLIGATIONS
5.1 PRICE SCHEDULE
CUSTOMER prices are set forth on the CUSTOMER Price List attached hereto as
Schedule B. MS may modify the CUSTOMER Price List at any time upon thirty (30)
days written notice to CUSTOMER. MS may offer, without prior notice, temporary
"special" prices on any or all Product.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 2
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5.2 DELIVERY AND PRODUCT DISTRIBUTION
Product shall be invoiced and shipped Free On Board ("FOB") Bothell, Washington,
and CUSTOMER shall be responsible for freight charges. Should CUSTOMER desire to
specify its own carrier, 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 $200,000 of Product 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 Product to
those CUSTOMER warehouses for that month will be paid by MS.
In any month CUSTOMER's Rate Based Distribution Program participation exceeds *
of eligible product shipments, CUSTOMER will be allowed to adjust CUSTOMER's
forecast of two (2) MS Product SKU's. Such adjustments to the forecast shall
not exceed * upward or * downward from the final forecast, four weeks prior to
the first ship date.
5.3 ORDER PROCESSING
CUSTOMER shall order Product from MS by written or electronically transmitted
purchase order. All orders by CUSTOMER shall be in Master Pack quantities only.
MS shall have ten (10) days from receipt to reject any purchase order. MS shall
fulfill unconditional written or electronic purchase orders from CUSTOMER
subject to CUSTOMER's credit limits, current payment status, and approved
Average Payment Days ("APD") guidelines as determined by MS.
Except as provided herein, CUSTOMER shall have the right to change or cancel
any purchase order, provided that CUSTOMER notifies MS of the change or
cancellation no later than twenty-four (24) hours prior to the order shipment
to CUSTOMER by MS. Should CUSTOMER choose to change any purchase order line
item, CUSTOMER shall be required to submit a new purchase order to MS, clearly
indicating which line item(s) are changed. Line item changes shall not affect
the remaining items on CUSTOMER's purchase order. Should CUSTOMER choose to
cancel a purchase order, CUSTOMER must provide MS with a written cancellation
request.
MS may elect, during the term of this Agreement, to require CUSTOMER to
implement order management via EDI. Should MS require such order management
change, MS shall provide CUSTOMER with no less than one hundred twenty (120)
days prior written notice.
Notwithstanding the foregoing, MS reserves the right to limit order quantities.
5.4 DEFECTIVE PRODUCT CREDIT
At MS' sole discretion, MS may determine that a Product or Product shipment is
Defective. Should MS determine that a Product or Product shipment is Defective,
MS shall provide CUSTOMER with a replacement for all Defective Product
destroyed at CUSTOMER's location. MS shall pay freight costs for shipment of
replacement Product from MS to CUSTOMER.
5.5 INVENTORY BALANCING
To reduce its inventory risk CUSTOMER shall be entitled to balance its Product
inventory in accordance with the following:
(a) Product inventory may be balanced only during the
Months of March, July, and November, and within thirty (30) days of the date of
issue of the Return Authorization;
(b) Product may be balanced only if, at the time of
balancing, it is listed on the then current MS Price List;
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 3
Direct Purchasing Reseller Addendum
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
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(c) Product may be balanced only if CUSTOMER's Product
return is accompanied by a new Product order in an aggregate dollar amount equal
to or greater than the aggregate dollar amount of the Product return;
(d) The aggregate quantity of Product that may be returned
shall be limited to; (i) in the case of Product classified by MS as "Consumer
Product" (excluding, however, the Microsoft Mouse Product), ten percent (10%) of
net dollar shipment of such Consumer Product for the four full Months
immediately preceding the inventory balancing request, (ii) in the case of
Microsoft(R) Windows(R) 95, two and five tenths percent (2.5%) of net dollar
shipments of Microsoft(R) Windows(R) 95, (iii) in the case of Microsoft(R)
Office for Windows(R) 95, two and five tenths percent (2.5%) of Microsoft(R)
Office for Windows(R) 95, and (iv) in the case of all Product other than that
referred to in clauses (i) through (iv) above, to two and five tenths percent
(2.5%) of net dollar shipments of all other Product for the four full Months
immediately preceding the inventory balancing request, where net shipments shall
not include any Microsoft Variable Licenses, Microsoft Enterprise Licenses, or
Microsoft Maintenance;
(e) Promotional Product may not be balanced;
(f) Product to be balanced may only include Product
purchase by CUSTOMER from MS;
(g) Unresaleable Product may not be balanced; and
(h) Product is subject to inspection by MS or an MS
authorized agent prior to return by CUSTOMER to MS pursuant to the terms of MS'
then current Return Processing Guidelines.
CUSTOMER must submit a written or electronic MS Return Authorization to return
Product for the purpose of inventory balancing, summarizing the quantities of
each Product to be returned. Upon verification that CUSTOMER has met its
inventory balancing terms, MS shall issue a Return Authorization Number, which
shall expire thirty (30) days from the date of issue.
If the foregoing conditions have been met, CUSTOMER shall return Product to MS
freight prepaid in cartons clearly marked with the Return Authorization Number
and a packing slip attached to the outside. Any Product returned to MS which
does not comply with the provisions of this Section may, at MS' sole discretion,
be returned by MS to CUSTOMER subject to a five percent (5%) inspection fee and
the freight costs incurred by MS in returning such Product, which shall be paid
immediately by CUSTOMER to MS upon receipt of an invoice therefor.
Upon receipt of Product which complies with the conditions set forth in this
Section, MS shall issue a Purchase Credit for the returned Product in an amount
equal to the lowest price CUSTOMER paid for the Product in the six (6) Months
prior to the return. In no event will cash refunds be given for exchanges,
replacements, or returned merchandise hereunder. CUSTOMER shall pay all freight
and other costs of replacement Product in the same manner and on the dame terms
as new Product purchased by CUSTOMER under this Addendum.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 4
Direct Purchasing Reseller Addendum
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5.6 PRIOR VERSION CREDIT
When MS ships a new version of a Product or a Discontinued Product to CUSTOMER,
CUSTOMER shall receive a Purchase Credit for prior version of the Product,
provided CUSTOMER complies with all of the following:
(a) Product shall be destroyed at CUSTOMER's location
once every other Month;
(b) Product for which CUSTOMER receives a Purchase Credit
must be offset by a new Product order in an aggregate dollar amount equal to or
greater than the aggregate dollar amount of the Purchase Credit, and is solely
for the new version of the Product for which CUSTOMER has received such
Purchase Credit;
(c) CUSTOMER shall be eligible to receive a Purchase
Credit for up to one hundred eighty (180) days from the date the new version of
such Product first ships from MS to CUSTOMER;
(d) Promotional Product is not eligible for credit
pursuant to this Section;
(e) Product must only include Product purchased by
CUSTOMER from MS;
(f) Unresaleable Product is not eligible for credit
pursuant to this Section; and
(g) Product shall be limited to the version number
immediately prior to the new Product version.
MS shall use its best efforts to notify CUSTOMER within thirty (30) days prior
to the shipment of any new Product version, or the existence of a Discontinued
Product which would be subject to this Section.
It the foregoing conditions have been met, Product shall be destroyed at
CUSTOMER's locations pursuant to the terms of MS' then current Return
Processing Guidelines.
5.7 UNRESALEABLE PRODUCT ALLOWANCE
CUSTOMER shall be eligible to receive a Purchase Credit of up to one percent
(1%) of CUSTOMER's net purchases, excluding Microsoft Variable Licenses,
Microsoft Enterprise Licenses, and Microsoft Maintenance, for the previous two
(2) Months. Such Purchase Credit shall be to compensate CUSTOMER for Product
held in CUSTOMER's inventory which is no longer resaleable, provided that
CUSTOMER agrees to destroy or recycle all such Product, and provide MS with a
full report of all Unresaleable Product. Unresaleable Product may not be resold
or donated.
5.8 PRODUCT AUTHORIZATION CATEGORY PROCEDURES
From time to time, MS may classify certain of its Product by Product
Authorization Category, which Product 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 Product 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.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 5
Direct Purchasing Reseller Addendum
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6.0 SURVIVAL
Sections 3.1, 3.2, and 3.4 shall survive any termination of this Addendum.
IN WITNESS WHEREOF, the parties have signed this Addendum on the dates
indicated below. All terms and conditions of the Agreement not amended 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") SOFTWARE SPECTRUM, INC.
("CUSTOMER")
By: /s/ JOHAN LIEDGREN By: /s/ KEITH R. COOGAN
---------------------------- ----------------------------
Johan Liedgren Keith R. Coogan
- - ------------------------------- -------------------------------
Name (please print) Name (please print)
Director, Channel Policies Vice President of Operations
- - ------------------------------- -------------------------------
Title Title
6/27/95 June 19, 1995
- - ------------------------------- -------------------------------
Date Date
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 6
Direct Purchasing Reseller Addendum
13
SCHEDULE A
DEFINITIONS
"DEFECTIVE PRODUCT" is defined as a manufacturer's defect in materials
or media.
"DISCONTINUED PRODUCT" is defined as Product that MS has stopped
manufacturing and discontinued from the CUSTOMER Price List.
"INVENTORY BALANCING" is defined as the return of eligible MS Product
for the purpose of reducing CUSTOMER's stock of such Product.
"MONTH" is defined as a MS fiscal month as outlined in the calendar
attached hereto as Schedule C.
"PROMOTIONAL PRODUCT" is defined as a special Product SKU which is
available to CUSTOMER for resale for a limited time. Free Product promotions
are not considered Promotional Product.
"RETURN AUTHORIZATION NUMBER" is defined as the unique number assigned
to CUSTOMER by MS for the purpose of Product returns for CUSTOMER to MS.
"UNRESALEABLE PRODUCT" is defined as any Product held in CUSTOMER's
inventory, including damaged Product and Product returned by CUSTOMER's
customers. which is no longer fit for resale, and is ineligible for return to
MS. for purposes of this Addendum, UnresaIeable Product shall not include that
Product which has sustained solely shrink wrap damage.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page A1
Direct Purchasing Reseller Addendum
14
ADDENDUM TO THE MICROSOFT
1995/1996 CHANNEL AGREEMENT
(APPOINTMENT AS A LARGE ACCOUNT RESELLER)
This Addendum ("Addendum") entered into this 1st day of July, 1995, supplements
that certain 1995/1996 Channel Agreement ("Agreement") between MICROSOFT
CORPORATION ("MS") having its principal place of business at One Microsoft Way,
Redmond, WA 98052 and SOFTWARE SPECTRUM, INC. ("CUSTOMER") having its principal
place of business at 2140 Merritt Drive, Garland, TX 75041. The Agreement is
hereby supplemented as follows:
1. PURPOSE
The purpose of this Addendum is to set forth the framework by which MS appoints
CUSTOMER as a non-exclusive Large Account Reseller in the Territory and Canada
with the right to acquire Microsoft Select Software Products from MS and to
distribute such Select Software Products and their associated license rights to
Select Customers which have designated CUSTOMER in their Enrollment Form as
their Large Account Reseller.
2. DEFINITIONS
For purposes of this Addendum, capitalized terms are as defined in Schedule A
attached hereto.
3. CUSTOMER OBLIGATIONS
3.1 DISTRIBUTION OF SELECT SOFTWARE PRODUCTS
CUSTOMER may only distribute Select Software Products to Select Customers
located in the Territory and Canada, and at the direction of its Select
Customer's, outside of the Territory and Canada. Select Customers are entitled
to distribute the rights associated with their Select Software Products outside
of the Territory if they so elect, in accordance with the Master Agreement and
all applicable laws. However, in the event a Select Customer wants to initiate
an Enrollment Form in a country outside of the Territory, the Select Customer
is required by the terms of the Microsoft Select Program to locate a Large
Account Reseller in the desired country and acquire Select Software Products
from that Large Account Reseller.
3.2 DOCUMENTATION
CUSTOMER shall be authorized to purchase documentation SKUs from Microsoft Easy
Fulfillment (MEF) and to resell these documentation SKUs directly to CUSTOMER's
Select Customers.
3.3 DISTRIBUTION RESTRICTIONS
MS's authorization of the Large Account Reseller to acquire and distribute
Select Software Products as set forth herein shall not include the
authorization for the Large Account Reseller to use Select Software Products
internally or to distribute or otherwise transfer Select Software Products to
any entity which owns, controls, is owned or controlled by, or under common
ownership or control with the Large Account Reseller ("Large Account Reseller
Affiliates") without the prior written consent of MS. For the purposes of this
Addendum, an entity is "controlled" by another if that other company or legal
entity, either directly or through its control of another company or legal
entity: (i) holds the majority of voting rights in it; (ii) is a member of it
and has the right to appoint or remove a majority of its board of directors; or
(iii) is a member of it and controls alone or under an agreement with other
shareholders or members, the majority of the voting rights in it.
Microsoft Confidential - Disclosure Prohibited
15
3.4 CUSTOMER ACCEPTANCE OF ENROLLMENT FORMS
Upon execution by MS of a Select Customer's Enrollment Form naming CUSTOMER as
the Large Account Reseller, MS shall deliver to CUSTOMER's designated Select
Program Administrator a copy of such Enrollment Form. CUSTOMER shall have
fifteen (15) days from the date of receipt of the Enrollment Form to decline to
acquire and distribute Select Software Products associated with such Enrollment
Form by notifying MS in writing of such election. All other Enrollment Forms
delivered to CUSTOMER by MS shall be deemed as accepted by CUSTOMER fifteen
(15) days after receipt by CUSTOMER, and shall constitute CUSTOMER's agreement
to pay MS as set forth in Section 3.6 below for all copies of Select Software
Products made by the Select Customer pursuant to the Enrollment Form and its
associated Master Agreement.
3.5 CUSTOMER SELECT PRICE SCHEDULE
CUSTOMER's prices are set forth on the CUSTOMER Select Price Schedule attached
hereto as Schedule B. MS may modify the CUSTOMER Select Price Schedule at any
time by providing thirty (30) days written notice to CUSTOMER
3.6 CUSTOMER'S REPORTING AND/OR ORDERING AND PAYMENT TO MS
(a) MICROSOFT SELECT I.X AND 2.X ENROLLMENT AGREEMENT
REPORTING
For each executed Microsoft Select version 1.x or version 2.x Enrollment
Agreement, the Select Customer is obligated by the terms of the Microsoft
Select Program to deliver to MS within fifteen (15) days of the end of each
calendar quarter, a written verified report for each Select Software Product
acquired from CUSTOMER pursuant to the terms of this Agreement. Following
receipt of a report from a given Select Customer, MS shall invoice CUSTOMER and
CUSTOMER shall be obligated to pay MS the fees set forth on Schedule B for each
unit reported by the Select Customer.
Should the Select Customer elect to submit reports to MS in addition to the
Select Customer's regular quarterly report, MS shall invoice CUSTOMER
immediately following receipt of such report, and CUSTOMER shall be obligated
to pay MS pursuant to the terms of this Section 3.6.
In the event CUSTOMER wants to receive copies of its Select Customers'
quarterly reports, CUSTOMER shall negotiate with its Select Customers for the
right to receive such copies.
(b) MICROSOFT SELECT 3.0 ENROLLMENT FORM ORDERING
For each of its executed Microsoft Select version 3.0 Enrollment Forms,
CUSTOMER shall deliver to MS via Electronic Data Interchange ("EDI") no later
than the fifteenth (15th) day of each calendar month, a purchase order for each
Select Software Product ordered and acquired from CUSTOMER by the Select
Customer or Enrollment site pursuant to the terms of this Agreement during the
previous month. Following receipt of such purchase order, MS shall invoice
CUSTOMER and CUSTOMER shall be obligated to pay MS the fees set forth on
Schedule B for each unit indicated on the purchase order, along with any
applicable quarterly Maintenance fees.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 2
Large Account Reseller Addendum
16
(c) PAYMENT TERMS
All amounts are due and owing net thirty (30) days of date of invoice. All
payments not received by MS from CUSTOMER within the required time frame may be
assessed a finance charge of the then-current prime rate plus two percent (2%)
per month or the legal maximum, which ever is less. CUSTOMER shall be obligated
to pay MS regardless of whether CUSTOMER has received payment from the Select
Customer. All payments shall be in the form of bank wire transfer, sent to the
following:
First Interstate Bank of WA
Seattle Main Branch
ABA: #125-000-286
Beneficiary: Microsoft Corporation
Account No. 001-025865
3.7 TAXES
(a) SALES TAX
CUSTOMER shall either provide MS with a bona fide resale certificate for all
Select Software Products delivered to CUSTOMER by MS pursuant to the terms of
this Addendum, or shall pay to MS all applicable sales, use or other excise
taxes due on such Select Software Products.
(b) WITHHOLDING TAXES
In the event taxes are required to be withheld by any government on payments
required hereunder, CUSTOMER may deduct such taxes from the amount owed and pay
such taxes to the appropriate tax authority; provided, however, that CUSTOMER
shall promptly secure and deliver to MS an official receipt for any such taxes
withheld or other documents necessary to enable MS to claim a foreign tax
credit. CUSTOMER shall make certain that any taxes withheld are minimized to
the extent possible under the applicable law.
3.8 AGREEMENTS BETWEEN CUSTOMER AND ITS SELECT CUSTOMERS
With the exception of the terms contained in this Addendum and the terms
relating to the exercise of the intellectual property rights set forth in the
applicable Select Software Products, the applicable License Agreement for such
Select Software Products, Master Agreement and Enrollment Form, CUSTOMER shall
have complete discretion to establish with each Select Customer the pricing and
all other terms and conditions regarding CUSTOMER's provision of Select
Software Products and their associated license rights to CUSTOMER's Select
Customers. The negotiation of these terms between CUSTOMER and its Select
Customers shall not be subject to approval or review by MS in any way.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 3
Large Account Reseller Addendum
17
3.9 ROLE OF THE SELECT PROGRAM ADMINISTRATOR
CUSTOMER agrees to appoint a representative to serve as CUSTOMER's Select
Program Administrator. CUSTOMER agrees to promptly make that individual, as
well as CUSTOMER's other sales employees, available for training on the
Microsoft Select Program and on the licensing policies related to such products
at such times and places as MS reasonably requests. The individual appointed by
CUSTOMER as its Select Program Administrator shall be an individual generally
knowledgeable on MS products and in regard to Microsoft's Select program. The
Select Program Administrator shall be responsible for administering all of
CUSTOMER's Select Customer billings, for general administration of CUSTOMER's
Select Customers and for working with the Microsoft Select Account Manager (or
local MS Contact) in regard to any problems relevant to a given Select
Customer. CUSTOMER's Select Program Administrator shall be:
Steve Lytle
2140 Merritt Drive
Garland, Texas 75041
214-840-6600
CUSTOMER shall provide MS with at least ten (10) days advance written notice of
any change in the individual serving as its Select Program Administrator.
3.10 ENROLLMENT OF NEW SELECT CUSTOMERS
CUSTOMER's solicitation of new customers shall be on such terms and conditions
as MS specifies from time to time. MS reserves the right to accept or reject in
its sole discretion any proposed customer.
3.11 CUSTOMER'S REPRESENTATIONS AND WARRANTIES
CUSTOMER hereby represents and warrants that:
(a) It will use its best efforts to service and support
its Select Customers and will promptly inform the appropriate Microsoft Select
contact of any difficulties it encounters in servicing its Select Customers;
(b) It will not alter in any way or form the Select
Software Products or theft packaging;
(c) It will only deliver the Select Software Products to
the Select Customer specified on the outside of the Select Software Product
packaging and will only deliver CD-ROMs and program materials and information
to the Select Customer named on each such CD-ROM or materials; and
(d) lt will promptly inform MS of any known or suspected
violations by a Select Customer of the terms and conditions of the Master
Agreement, Enrollment Form, its Select Software Products and/or the applicable
License Agreement.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 4
Large Account Reseller Addendum
18
3.12 CONFIDENTIALITY
CUSTOMER expressly undertakes to retain in confidence the terms and conditions
of this Addendum, and the terms and conditions of all executed Select Master
Agreements and Select Enrollment Forms which are made available to CUSTOMER.
Should CUSTOMER disclose the terms and conditions of any executed Select Master
Agreement or Select Enrollment Form, this Addendum shall immediately terminate.
CUSTOMER shall guarantee and ensure its employees' compliance with this
paragraph. CUSTOMER's obligations under this paragraph shall survive any
termination of this Agreement and shall extend to the earlier of such time as
the information is in the public domain or five (5) years following the
termination of this Agreement.
4. CUSTOMER AND MS OBLIGATIONS
4.1 DELIVERY OF SELECT SOFTWARE PRODUCTS AND SELECT CD-ROMS
Within fifteen (15) days of MS's approval of a given Enrollment Form, MS agrees
to deliver to CUSTOMER the Select Software Products identified on the
Enrollment Form. Each Select Software Product delivered to CUSTOMER will be a
custom package specific to the named Select Customer and will set forth the
Customer's Select Agreement Number and any special conditions relevant to the
named Select Customer. Select Software Products are provided in order that
CUSTOMER may provide the Select Software Products and their associated license
rights to the named Select Customer on such pricing and payment terms and
conditions as CUSTOMER and the Select Customer agree. CUSTOMER agrees to pay MS
for Select Software Products as set forth in Section 3.6 above. From time to
time during the term of this Addendum, MS will provide CUSTOMER with CD-ROMs
containing upgraded copies of the Select Software Products covered by a Select
Customer's Select Agreement. CUSTOMER agrees to immediately deliver all CD-ROMs
and any additional MS supplied program information and materials to the named
Select Customer.
4.2 RESERVATION OF RIGHTS
MS expressly reserves the right at any time during the term of this Addendum to
terminate any Select Customer's status as a Select Customer in the event the
Select Customer fails to comply with the terms of either the Master Agreement,
the Enrollment Form or the applicable License Agreement. MS agrees to promptly
notify CUSTOMER of the termination of any Select Customer to whom CUSTOMER has
distributed Select Software Products. Following such a notice, CUSTOMER shall
thereafter not deliver to the terminated Select Customer any additional Select
Software Products, licenses, CD-ROMs or any additional program information and
materials. Termination shall not, however, affect the Select Customer's
obligation to file the next due order/report and MS's right to invoice CUSTOMER
in regard to such order. If MS terminates a given Select Customer, CUSTOMER
shall not have any claim against MS or the Select Customer for damages or lost
profits resulting from such termination. CUSTOMER shall, however, be entitled
to invoice the Select Customer for copies of Select Software Products
reproduced by the Select Customer as set forth in the Customer's final order,
such invoice to be on the terms and conditions previously agreed to between
CUSTOMER and the Select Customer.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 5
Large Account Reseller Addendum
19
4.3 OBLIGATIONS ON TERMINATION
Promptly following termination of this Addendum, MS shall inform each of
CUSTOMER's Select Customers that CUSTOMER is no longer a Large Account Reseller
and shall request that each Select Customer appoint a new Large Account
Reseller. In the event this Addendum is terminated without cause or expires of
its own accord, each Select Customer shall be obligated to file its next due
order/report and to pay CUSTOMER any and all amounts due for such order as
agreed to between CUSTOMER and the Select Customer. CUSTOMER shall in turn be
obligated to pay to MS in accordance with the terms of this Addendum any and
all amounts due MS as a result of the Select Customer's above-referenced order.
Thereafter, any and all future payments by CUSTOMER's Select Customers shall be
made to each Select Customer's newly designated Large Account Reseller (if any)
or to MS as the case may be and CUSTOMER shall not be entitled to any portion
of, or any compensation for its Select Customers' future orders and payments.
In the event this Addendum is terminated for cause, MS shall be entitled to
direct all of CUSTOMER's Select Customers to report/order and pay to MS or to
the Select Customer's newly designated Select Large Account Reseller any and
all payments due after termination. In such an event, CUSTOMER shall not under
any circumstances be entitled to any portion of, or any compensation for, the
Select Customers' next orders and payments or any future orders and payments.
4.4 ESSENTIAL ELEMENT
Both CUSTOMER and MS acknowledge that this Addendum is essential to any
agreement it enters into with a Select Customer. Except as is specifically
provided in Section 4.3 related to CUSTOMER's right to collect any outstanding
payment following termination of this Addendum, CUSTOMER's rights to acquire
and/or distribute Select Software Products, Select CD-ROMs and/or any
additional program information and materials, and to collect payment from its
Select Customers are conditional upon this Addendum being in fill force and
effect. CUSTOMER acknowledges further that, if and when it is the subject of a
bankruptcy filing (under any Chapter of 11 United States Code Section 101 et
seq. including any future amendments), then assumption of any contract with a
Select Customer is conditional upon the assumption of this Addendum.
5. SURVIVAL
Sections 3.6, 3.7, 3.12, 4.3, and 4.4 shall survive any termination of this
Addendum.
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 fill force
and effect. This Addendum is not binding until executed by MS.
MICROSOFT CORPORATION ("MS") SOFTWARE SPECTRUM, INC.
("CUSTOMER")
By: /s/ JOHAN LIEDGREN By: /s/ KEITH R. COOGAN
- - ----------------------------------- -----------------------------------
Johan Liedgren Keith R. Coogan
- - ----------------------------------- -----------------------------------
Name (please print) Name (please print)
Director, Channel Policies Vice President of Operations
- - ----------------------------------- -----------------------------------
Title Title
6/27/95 June 19, 1995
- - ----------------------------------- -----------------------------------
Date Date
Microsoft 1995/1996 Channel Agreement Software Spectrum Page 6
Large Account Reseller Addendum
20
SCHEDULE A
DEFINITIONS
"ENROLLMENT AGREEMENT" is defined as the Microsoft Select Enrollment
Agreement in the form provided by MS to be signed by each Select Customer and
CUSTOMER, and approved by MS.
"ENROLLMENT FORM" is defined as the Microsoft Select Enrollment Form
in the form provided by MS to be signed by each Select Customer and approved by
MS.
"LARGE ACCOUNT RESELLER" is defined as any reseller which MS has
authorized to distribute licenses to Select Customers.
"LEAD CUSTOMER" is defined as the company or entity signing a Master
Agreement.
"LEAD CUSTOMER AFFILIATE" is defined as a company or legal entity
which owns and controls, is owned or controlled by, or is under common
ownership and control with, the Lead Customer.
"LICENSE AGREEMENT(S)" is defined as the license agreement attached to
the Enrollment Form.
"MASTER AGREEMENT" is defined as the Microsoft Select Master Agreement
in the form provided by MS to be signed by a given Select Customer or an entity
acting on behalf of the Select Customer.
"MASTER AGREEMENT NUMBER" is defined as the number assigned by MS to a
given Master Agreement.
"SELECT CUSTOMER" is defined as the Lead Customer, any Lead Customer
Affiliate and/or identifiable division, business unit or office location of
the foregoing identified as the Select Customer on an Enrollment Form.
"SELECT PROGRAM ADMINISTRATOR" is defined as the individual appointed
by CUSTOMER to act as CUSTOMER's primary contact with respect to the Microsoft
Select Program.
"SELECT SOFTWARE PRODUCT" is defined as the MS software as designated
from time to time by Microsoft which may be reproduced pursuant to an
Enrollment Form.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page A1
Large Account Reseller Addendum