1
EXHIBIT 10.3(d)
REBATE AND MARKETING FUND
ADDENDUM TO THE 1995/1996 MICROSOFT
CHANNEL AGREEMENT
(JULY-DECEMBER, 1995)
This Addendum ("Addendum") entered into as of the 1st day of July, 1995,
supplements 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 hereby supplemented as follows:
1. PURPOSE
The purpose of this Addendum is to set forth the framework by which CUSTOMER
may earn Rebates and Marketing Funds.
2. TERM AND TERMINATION
This Addendum shall be effective as of the date indicated above, and shall
expire on December 31, 1995. Either party may terminate this Addendum, with or
without cause, upon thirty (30) days prior written notice. This Addendum is not
valid unless both MS and CUSTOMER have executed a Microsoft 1995/1996 Channel
Agreement, and the Addendum to The Microsoft 1995/1996 Channel Agreement
(Appointment As a Direct Reseller).
3. DEFINITIONS
For purposes of this Addendum, capitalized terms not otherwise defined herein,
shall have the same definitions as set forth in the Agreement. Additional
capitalized terms included in this Addendum are as defined in Schedule A
attached hereto.
4. REBATES
CUSTOMER is eligible to receive up to a * Rebate on its Qualified
Sales made during the Rebate and Marketing Fund Period. The Rebate shall be
paid provided CUSTOMER complies with the Rebate Program Guidelines outlined in
Schedule B. Notwithstanding such Rebate Program Guidelines, MS may, at its sole
discretion, pay all or any portion of the Rebate prior to the end of the Rebate
and Marketing Fund Period. The Rebate so paid may be adjusted subsequently
based upon compliance with the Rebate Program Guidelines.
5. MARKETING FUNDS
5.1 BASE LEVEL FUNDS
MS hereby grants to CUSTOMER the use of Marketing Funds calculated monthly by
the total number of each Product CUSTOMER purchased from MS multiplied by each
Product's respective Marketing Fund Accrual rate as outlined in Schedule C
attached hereto. MS reserves the right to modify Schedule C at anytime without
notice. Marketing Funds accrue monthly and shall expire on February 29, 1996.
Marketing Funds shall not begin accruing until both CUSTOMER and MS have
executed this Addendum. Should CUSTOMER fail to execute, or should MS be unable
to execute this Addendum by July l, 1995, for each full month after July 1,
1995, in which this Addendum is not executed, CUSTOMER shall not receive such
month's Marketing Fund accrual.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft Confidential - Disclosure Prohibited
2
5.2 OPPORTUNITY FUNDS
Periodically, MS may allow CUSTOMER to participate in other MS programs in
which CUSTOMER shall receive additional Marketing Funds.
5.3 GUIDELINES FOR MARKETING FUND USE
MS shall provide CUSTOMER with a guideline of activities which MS sees as a
priority for spending the funds. The Microsoft Reseller Marketing Fund
Guidelines is attached hereto as Schedule D.
5.4 MARKETING FUND AUDIT
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 verity CUSTOMER'S use of Base Level Marketing Funds and
Opportunity Funds. 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. Should such audit disclose material
discrepancies, audit expenses shall be paid by CUSTOMER. For purposes of this
Addendum, "material discrepancies" shall mean ten thousand U.S. dollars (US
$10,000) or more.
If the results of such audit show that CUSTOMER used Marketing Funds in any
manner other than is authorized under this Addendum, MS shall be entitled to
recover from CUSTOMER any and all Marketing Funds so used, in additional to any
other remedies available to MS under law or equity plus injunctive relief
and/or any other damages as may be permitted by law.
5.5 MARKETING FUND REIMBURSEMENT POLICY FOR MICROSOFT(R) WINDOWS(R) 95
CUSTOMER agrees to abide by the Marketing Fund Reimbursement Guidelines,
attached hereto as Schedule G, and as revised from time to time by MS.
6. REPORTING REQUIREMENTS
CUSTOMER shall submit reports to MS as outlined in CUSTOMER'S Rebate Program
Guidelines, and in Schedule F attached hereto in accordance with the EDI
Implementation Guide attached hereto as Schedule E. Failure by CUSTOMER to
comply with the terms of the Guidelines shall result in CUSTOMER's loss of its
monthly Compliance Rebate total for each month reporting is non-compliant.
IN WITNESS WHEREOF, the parties have signed this Addendum on the date indicated
below. This Addendum is hereby made part of the Agreement. All terms and
conditions of the Agreement not supplemented herein shall remain in full force
and effect. This Addendum is not binding until executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS"): 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, Inc. Page 2
July - December, 1995, Rebate and
Marketing Fund Addendum
3
SCHEDULE A
DEFINITIONS
"AMS REPORTING" (ACCOUNT MANAGEMENT SYSTEMS REPORTING) is defined as a
monthly report of CUSTOMER's monthly Sell To sales of all MS Product, reported
in the format Attached hereto as Schedule F.
"ELECTRONIC DATA INTERCHANGE" OR "EDI" is defined as the ANSI-ASCII
X.12 standard, adopted by CompTIA, by which CUSTOMER shall submit sales
reporting to MS.
"INVENTORY REPORTING" is defined as the reporting of Product specific
month end inventory. If CUSTOMER has multiple locations, inventory reporting
shall be by location, and shall include the name, street address, city, state
and zip code for each location.
"MARKETING FUNDS" is defined as the purchase credit amount accrued by
CUSTOMER as a percentage of Qualified Purchases, and used to find CUSTOMER's
pre-approved MS marketing activities.
"MARKETING FUND ACCRUAL" is defined as the dollar amount MS grants
CUSTOMER for each Product purchased from MS.
"MICROSOFT MARKETING FUNDS GUIDELINES" is defined as MS' then current
terms and conditions attached hereto as Attachment D, available from the
Microsoft Reseller Account Representative, for the use of Marketing Funds.
"QUALIFIED SALES" is defined as net sales, made during the Rebate and
Marketing Fund Period, to CUSTOMER's End User customers as reported to MS in
CUSTOMER's normal sales reporting.
"QUALIFIED PURCHASES" is defined as net purchases made during the
Rebate and Marketing Fund Period; provided, however, that Qualified Purchases
shall include only those purchases which are shipped to CUSTOMER during the
Rebate and Marketing Fund Period, less returns, and credits for which payment
in full has been received by MS from CUSTOMER within thirty (30) days after the
end of the Rebate and Marketing Fund Period, and shall not include Microsoft
Select.
"REBATE" is defined as the dollar amount paid to CUSTOMER by MS in the
form of a purchase credit for achieving of specific rebate program goals and
reporting requirements as set forth herein.
"REBATE AND MARKETING FUND PERIOD" is defined as the six (6) calendar
months, from July 1, 1995 through December 31, 1995, during which CUSTOMER
shall earn Rebates and Marketing Funds.
"SALESOUT" OR "SELL THROUGH REPORTING" is defined as the reporting of
the number of Product units that CUSTOMER location distributes to its
customers.
"SELL TO" is defined as Product specific (per MS SKU) sales to all End
Users.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page A1
July - December, 1955, Rebate and
Marketing Fund Addendum
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SCHEDULE B
REBATE PROGRAM GUIDELINES
- --------------------------------------------------------------------------------
REBATE PROGRAM OVERVIEW
- --------------------------------------------------------------------------------
PROGRAMS: Microsoft offers four rebate programs for the July - December,
1995 Rebate period. Rebate percentages available are listed in the table below.
Details on each program are also included in this document.
- -----------------------------------------------------------------------------------------------
MAXIMUM PERCENTAGE OUTLINED ON
REBATE INCENTIVE AVAILABLE PAGE(S)
===============================================================================================
Compliance Program B2-B4
- -----------------------------------------------------------------------------------------------
Total Sales-out Program B4-B5
- -----------------------------------------------------------------------------------------------
Business Systems Program * B5-B6
- -----------------------------------------------------------------------------------------------
Win Office and Mac Office Sales-out Program B7-B8
- -----------------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------------
REBATE CALCULATIONS AND PAYMENTS: Rebates will be paid in the form of a
Microsoft purchase credit forty-five (45) days after the end of each quarterly
rebate period (i.e. November 15th for July - September, 1995 quarter). Rebates
are calculated by multiplying the achieved rebate percentage by the total
Qualified Sales for the rebate period. Revenue generated from Microsoft Select
Enrollment Forms executed by MS on or after July 1, 1994, shall be included in
calculating CUSTOMER's achievement toward the Sales-out goal, but shall not be
included in CUSTOMER's final total Qualified Sales for purposes of Rebate
payment. Revenue generated from Microsoft Select Enrollment Forms executed by
MS prior to July 1, 1994 will be included in calculating CUSTOMER's achievement
towards the sales-out goal and will also be eligible for a Grandfathered rebate.
Rebate payment for such Select Enrollment Forms shall be in the form of a
purchase credit forty-five (45) days after the end of each quarterly rebate
period.
PURCHASES THROUGH DISTRIBUTION: CUSTOMER's purchases through distribution will
be subtracted from CUSTOMER's Qualified Sales for purposes of Rebate payment.
PRODUCT AVAILABILITY: If Microsoft is unable to ship a CURRENT VERSION of a
product for any ten (10) consecutive business days, CUSTOMER's purchases
through distribution of those SKUs will count toward CUSTOMER's Qualified Sales
for purchases of Rebate payment.
All copies of eligible purchase orders placed through distribution along with a
copy of the Microsoft Stock Out Report must be sent to Microsoft no later than
fifteen (15) days following the semester end. Please send purchase order copies
and the Microsoft Stock Out Report to the following address:
MICROSOFT CORPORATION
ONE MICROSOFT WAY
BLDG. 22/4051
REDMOND, WA 98052
ATTN: KRISTIN WEEBER, REBATE SPECIALIST
COMPLIANCE REBATE PAYMENT: The Microsoft Compliance Rebate will be calculated
on a monthly basis. If CUSTOMER has met all of the Compliance Rebate criteria
in a given month, CUSTOMER will be entitled to * of that month's
total Qualified Sales. The rebate payment will be made forty-five (45) days
after the end of each quarterly rebate period.
ANY ISSUES REGARDING REBATES SHOULD BE SENT IN WRITING TO KRISTIN WEEBER,
REBATE SPECIALIST, NO LATER THAN THIRTY (30) DAYS FOLLOWING RECEIPT OF REBATE
PAYMENT. If such written notice is not provided within thirty (30) days,
CUSTOMER shall have no further right to dispute rebate payment.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B1
July - December, 1955, Rebate and
Marketing Fund Addendum
5
- --------------------------------------------------------------------------------
COMPLIANCE REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVES: The objective of the Compliance Rebate Program is to
provide incentive for CUSTOMER to comply with Microsoft contractual
requirements for payments, Street Dates, reporting, and EDI ordering for Select
3.0.
NON-COMPLIANCE: During any given month, failure to comply with any or all of
the current compliance criteria will result in the forfeiture of the entire
compliance rebate for that month.
1. MICROSOFT PAYMENT REQUIREMENTS:
Microsoft requires its customers to pay its invoices within terms. In order
to maintain compliance, 100% of the gross invoice value for non-Select and
85% of the gross invoice value for Select must be current as of Microsoft's
fiscal month-end. Unapplied credits will be excluded from the calculation.
Failure to comply with this section will result in the loss of CUSTOMER's
Select Compliance Rebate.
2. MICROSOFT STREET DATE REQUIREMENTS:
From time to time, Microsoft may announce a new product or new versions of an
existing product for which Microsoft shall set a Street Date. In order to
comply with the Street Date requirements, CUSTOMER shall not:
o Ship or deliver the product to any end-user customer
prior to the Street Date.
o Accept any end user payment for the product prior to
the Street Date. Checks and/or credit card numbers
may be accepted by CUSTOMER, but can only be
processed when product is delivered to the end user
on or after the Street Date.
o Advertise, merchandise, or promote the product to end
user customers until it is officially announced by
Microsoft. Usually, the product announcement is on
the Street Date. If the product announcement is
earlier than the Street Date, Microsoft will clearly
communicate the announce date to the channel. If
product is announced by Microsoft before the Street
Date, the product can be advertised, merchandised
and/or promoted immediately after such announcement,
provided that all such promotions clearly state that
the product is not yet available for purchase.
o Allow its distribution centers and/or warehouses to
distribute, for a period of up to twelve months, a
Street Date product to any individual sales office,
retail store, or outlet which Microsoft in its sole
discretion has determined to be in violation of the
Street Date Requirements.
In the event CUSTOMER violates the Street Date for any special products
specified in a Microsoft Street Date letter (including, but not limited to
Microsoft(R) Windows(R) 95), CUSTOMER shall forfeit up to the entire Compliance
Rebate for the six month Rebate period in which the violation occurred.
Should CUSTOMER fail to comply with the Street Date Requirements, Microsoft may
also, for a period of up to twelve (12) months, withhold shipments to CUSTOMER
of future product until the Street Date of such product.
Should CUSTOMER wish to report a Street Date violation, CUSTOMER may fax a copy
of a dated sales receipt to STREET DATE VIOLATIONS AT MICROSOFT AT (206)
936-7329. Once a violation has been reported, Microsoft shall investigate the
violation, and take remedial action as appropriate. Please note, in order to
confirm a suspected violation, Microsoft must receive a dated sales receipt.
3. MICROSOFT TRANSACTION REQUIREMENTS
Electronic Data Interchange format ("EDI") transactions are defined as 850/855
EDI transactions. CUSTOMER must place EDI transaction orders at a minimum of
once per month per Enrollment Site if product is purchased during said month.
4. MICROSOFT REPORTING REQUIREMENTS
ALL REPORTS OUTLINED BELOW MUST BE TIMELY, ACCURATE, AND COMPLETE. FOR PURPOSES
OF THE MICROSOFT CHANNEL AGREEMENT, "TIMELY" IS DEFINED AS MS RECEIPT OF
REPORTING BY THE DUE DATE AND TIME INDICATED, "ACCURATE" IS DEFINED AS THE
CORRECT POPULATION OF ALL REPORTING FIELDS, AND "COMPLETE" IS DEFINED AS THE
POPULATION OF ALL REQUIRED REPORTING FIELDS.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B2
July - December, 1955, Rebate and
Marketing Fund Addendum
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FAST TRACK REPORTING
Fast Track Reporting is defined as a weekly report sent to Microsoft via
Electronic Data Interchange format ("EDI") of weekly Sales, Inventory, and
Internal Market Share. CUSTOMER must make the EDI reports available to MS' EDI
mailbox each Monday by 12:00 noon (Pacific time). These reports shall cover the
seven-day period ending the prior Friday night. Please refer to the EDI
Reporting Guidelines for details on reporting requirements.
Microsoft reserves the right to conduct audits on CUSTOMER's market share data
at any time. If the results of the audit show that CUSTOMER is reporting one or
more market share categories incorrectly, CUSTOMER must correct the specified
categories and provide the corrected back data through the beginning of July,
1994 before CUSTOMER is eligible to receive a compliance rebate.
REPORTING REQUIREMENTS
o Each unit of single license Full Package Product should be reported as
one unit. This applies for both Microsoft products and for competitive
products.
o Any single Microsoft product that includes multiple licenses should be
reported as one unit. Microsoft will then convert the quantity of
multiple license units sold to the number of licenses they represent.
Examples of these products include MMLP 20 Pack, MMLP 100 Pack, and AE
l0 Pack.
o All volume licensing agreements (such as MOLP, Variable Licenses, and
Enterprise Licenses) should be reported as one unit for each license
sold.
MARKET SHARE REPORTING
The following table outlines the Market Share product categories for EDI
reporting. The table also specifies the top competitive products that must be
included in the aggregated market share reporting for the Fast Track Rebate
Program. All competitive products within a given category must be reported.
The products listed below are just examples, not a comprehensive list.
- -----------------------------------------------------------------------------------------------------
Category Microsoft product Competitive products
=====================================================================================================
Windows word processors Microsoft(R) Word for WordPerfect(R) for Windows(R)
Windows(R) Ami Pro(R) for Windows(R)
- -----------------------------------------------------------------------------------------------------
Windows spreadsheets Microsoft(R) Excel for 1-2-3(R) for Windows(R)
Windows(R) Quattro Pro(R) for Windows(R)
- -----------------------------------------------------------------------------------------------------
Windows bundles Microsoft(R) Office for Lotus(R) Smartsuite
Windows(R) WordPerfect(R)/Borland(R) Office
Novell(R) Perfect Office
- -----------------------------------------------------------------------------------------------------
Windows Databases Microsoft Access(R) for Paradox(TM) for Windows(R)
Windows(R) dBase(R) for Windows(R)
FoxPro(R) for Windows(R) Approach
Superbase(R)
- -----------------------------------------------------------------------------------------------------
Mail Servers Microsoft(R) Mail Lotus(R) cc:Mail(TM)
Lotus Notes(R)
WordPerfect(R) Office
- -----------------------------------------------------------------------------------------------------
Network Operating Microsoft(R) Windows Novell(R) Netware(R) 4.x, 3.x, 2.x
Systems NT(TM) Server Novell(R) UnixWare
OS/Lan Server
Banyan(R)
SCO(R) Unix
- -----------------------------------------------------------------------------------------------------
Accounts are required to report sell-through units and inventory units for each
Microsoft SKU, but are required only to report the total license count for
competitive product sell-through for each category. All SKUs for these titles
should be counted, including full packaged product, upgrades, Microsoft license
packs, education, and government SKUs. Please refer to the EDI Reporting
Guidelines for details on reporting requirements.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B3
July - December, 1955, Rebate and
Marketing Fund Addendum
7
EXAMPLE: If CUSTOMER sold-through fifty (5O) units of Lotus(R) 1-2-3(R) for
Windows(R) and a 20 user MMLP of Quattro Pro(R) for Windows(R) in one week, then
CUSTOMER would report a total of seventy (70) licenses for sell-through of
competitor's products in the Windows Spreadsheet category.
MBS REPORTING
CUSTOMER must submit MBS reporting by the 10th of each month for the prior
month in the format outlined in Schedule D. Reporting shall be transmitted in
electronic format and sent via modem to 1-800-831-6316, or on tape or diskette
to MS at the following address:
MICROSOFT CORPORATION
RESELLER REPORTING GROUP
BLDG. 8N/2
ONE MICROSOFT WAY
REDMOND, WA 98052
Should CUSTOMER provide both monthly MBS reporting and weekly Fast Track
reporting on a compliant basis for three (3) consecutive months, MS may at its
sole discretion grant a written waiver of CUSTOMER monthly MBS reporting
requirements.
- --------------------------------------------------------------------------------
TOTAL SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of the Total Sales-out Rebate Program is to
increase the sales of Microsoft products. All license types (Select, Microsoft
Open License, Full Package Product, (MLPs) are included in measuring
performance against this goal.
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Total Sales-out Rebate Program is * of Qualified Sales for the July -
December, 1995 semester.
GOAL DEFINITIONS: The program goals are based upon the following:
o CUSTOMER's historical sales-out of Microsoft products by
Microsoft product division.
o Microsoft's United States total sales-out goals.
o CUSTOMER's contribution to Microsoft's historical sales.
REBATE GOALS: CUSTOMER has a first quarter sales-out goal and a total semester
sales-out goal. CUSTOMER's performance for the first three months of the July -
December, 1995 semester will be measured against the first quarter sales-out
goal At the end of the first quarter, CUSTOMER will receive the percentage of
the eligible rebate earned based on performance against the first quarter goal.
At the end of the semester, CUSTOMER will be measured on their six-month
performance against the total semester goal. Even if CUSTOMER does not meet
100% of the first quarter goal, CUSTOMER can still achieve 100% of the semester
goal provided that the semester goal is met at the end of the six-month period.
CUSTOMER'S Total Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (July - September, 1995): *
o Semester Goal (July - December, 1995): *
SALES-OUT DEFINITIONS/MEASUREMENT: Microsoft Product Sales-out is defined as
those Microsoft net product units sold through CUSTOMER's outlet locations.
CUSTOMER's full packaged product, Microsoft Open License, and upgrade sales-out
units will be measured from the sales-out reported by CUSTOMER to Microsoft.
Licensing sales (Select, Microsoft Maintenance) are captured and generated by
Microsoft's financial systems and included in total sales-out used to measure
product sales-out rebate performance.
Microsoft Select 2.x and 1.x and Microsoft Maintenance revenue credit is
granted as Microsoft recognizes the revenue. This occurs when Microsoft has
received the customer's license reporting. Following receipt of reporting,
Microsoft bills the customer/reseller and simultaneously recognizes the
revenue.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B4
July - December, 1955, Rebate and
Marketing Fund Addendum
8
PAYMENT: At the end of the semester, CUSTOMER will be paid a sales-out rebate
based on performance against the semester goal. If CUSTOMER achieves greater
than sixty percent (60%) of the semester sales-out goal, CUSTOMER will receive
the exact achieved percentage of the eligible sales-out rebate up to one
hundred percent (100%). If CUSTOMER achieves less than sixty percent (60%) of
the sales-out rebate goal, CUSTOMER will not have any portion of the sales-out
rebate. The purpose of this scale is to offer an incentive for accounts to meet
portion of their goal in the event they cannot achieve the full Microsoft
sales-out goal.
Although Microsoft pays the sales-out rebate ultimately based on performance
against the semester sales-out goal, Microsoft also pays a sales-out rebate at
the end of the first quarter based on performance against the first quarter
goal. Microsoft pays a portion of the rebate after the first quarter to provide
incentive for CUSTOMER to focus on sales-out throughout the entire semester.
The scale for the first quarter payment is the same as the scale for the
semester payment. The first quarter payment amount will be subtracted from the
final semester payment for the sales-out rebate.
Example: If CUSTOMER has a quarterly sales-out goal of $1,000,000 and a total
semester goal $2,500,000 and CUSTOMER sells $800,000 over the first quarter
period and $2,600,000 over the entire semester period, CUSTOMER will receive
the following rebate payments:
===========================================================================================================================
PERIOD GOAL SELL-THROUGH PAYMENT
ACHIEVED
- ---------------------------------------------------------------------------------------------------------------------------
First Quarter * eligible rebate = * of July - September Qualified Sales.
*
- ---------------------------------------------------------------------------------------------------------------------------
Semester * eligible rebate = * of July-December Qualified Sales
less first quarter payment. The maximum allowable rebate is *
===========================================================================================================================
- --------------------------------------------------------------------------------
BUSINESS SYSTEMS REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of the Microsoft Business Systems Rebate
Program is to increase the Microsoft Business Systems revenue as well as to
increase the ratio of Microsoft Windows NT Client to Server sales. The
Microsoft Business Systems products consist of any license type of the
following products: MICROSOFT(R) BACKOFFICE, MICROSOFT(R) EXCHANGE,
MICROSOFT(R) MAIL, MICROSOFT(R) SNA SERVER, MICROSOFT(R) SQL SERVER(R),
MICROSOFT(R) SYSTEMS MANAGEMENT SERVER, MICROSOFT(R) WINDOWS NT(TM) SERVER, AND
MICROSOFT(R) WINDOWS NT(TM) WORKSTATION.
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Business Systems Rebate Program is * of Qualified Sales for the July -
December, 1995 semester.
GOAL DEFINITIONS: The program goals are based upon the following:
o Existing Microsoft Business Systems revenue.
o Microsoft's Business Systems revenue goals.
o Microsoft's Windows NT Client to Server Ratio goals.
REBATE GOALS: CUSTOMER must meet a minimum Windows NT Client to Server Ratio of
* in order to receive any portion of the Business Systems rebate.
Performance against the Client to Server goal will be measured against all
license types of Microsoft Windows NT including full packaged product, MLPs,
MOLP, and Select license types. Provided that CUSTOMER meets the * Client
to Server Ratio, CUSTOMER's achievement against the Business Systems goal will
be based on CUSTOMER's performance against the Business Systems revenue goal.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B5
July - December, 1955, Rebate and
Marketing Fund Addendum
9
CUSTOMER has a first quarter rebate goal and a total semester rebate goal.
CUSTOMER's performance for the first three months of the July - December, 1995
semester will be measured against the first quarter rebate goal. At the end of
the first quarter, CUSTOMER will receive the percentage of the eligible rebate
earned based on performance against the first quarter goal. At the end of the
semester, CUSTOMER will be measured on their six-month performance against the
total semester goal. Even if CUSTOMER does not meet 100% of the first quarter
goal, CUSTOMER can still achieve 100% of the semester goal provided that the
semester goal is met at the end of the six-month period.
CUSTOMER's Business Systems Rebate Program goals are as follows:
o Minimum Windows NT Client to Server Ratio of *
o Quarter l Goal (July - September, 1995): *
o Semester Goal (July - December, 1995: *
PAYMENT: As stated earlier, CUSTOMER must attain a * Client to Server
ratio of Microsoft Windows NT in order to receive any portion of the Business
Systems Rebate. Provided CUSTOMER meets the Client to Server Ratio requirement,
CUSTOMER will be paid a Business Systems rebate based on performance against the
semester goal at the end of the semester. If CUSTOMER achieves greater than
sixty percent (60%) of the semester Business Systems revenue goal and attains a
minimum of 10:1 Windows NT Client to Server ratio, CUSTOMER will receive the
exact achieved percentage of the eligible Business Systems rebate up to one
hundred percent (100%). If CUSTOMER achieves less than sixty percent (60%) of
the Business Systems revenue goal, CUSTOMER will not receive any portion of the
Business Systems rebate. The purpose of this scale is to offer an incentive for
accounts to meet a portion of their goal in the event they cannot achieve the
full Microsoft Business Systems goal.
Although Microsoft pays the rebate ultimately based on performance against the
semester goal, Microsoft also pays a rebate at the end of the first quarter
based on performance against the first quarter goal. Microsoft pays a portion
of the rebate after the first quarter to provide incentive for CUSTOMER to
focus on the Business Systems rebate program throughout the entire semester.
The scale for the first quarter payment is the same as the scale for the
semester payment. The first quarter payment amount will be subtracted from the
final semester payment for the rebate.
Example:
Goals:
o Quarterly Business Systems revenue goal of $1,000,000
o Semester Business Systems revenue goal of $2,500,000
o Minimum Windows NT Client to Server Ratio of *
Performance:
o Windows NT Client to Server Ratio of *
o Actual Quarter Business Systems revenue is $ 800,000
o Actual Semester Business Systems revenue is $2,600,000
Because CUSTOMER attained the minimum Windows NT Client to Sever Ratio of * .
CUSTOMER's Business Systems Rebate payment would be as follows:
===============================================================================================================================
PERIOD GOAL SELL THROUGH PAYMENT
ACHIEVED
- -------------------------------------------------------------------------------------------------------------------------------
First Quarter * eligible rebate = * of July - September Qualified Sales.
- -------------------------------------------------------------------------------------------------------------------------------
*
Semester * eligible rebate = * of July - December Qualified Sales
less first quarter payment. The maximum allowable Business
Systems rebate is *
===============================================================================================================================
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B6
July - December, 1955, Rebate and
Marketing Fund Addendum
10
- --------------------------------------------------------------------------------
OFFICE SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of the Microsoft Office Sales-out Rebate
Program is to increase sales and support the efforts of Microsoft Office for
Windows Standard and Professional products and Microsoft Office for the
Macintosh products. All Microsoft Office license types (Select, Microsoft Open
License, Full Package Product, (MLPs) are included in measuring performance
against this goal.
REBATE PERCENTAGES: The total possible rebate percentage achievable for Office
Sales-out Rebate Program is * of net qualified purchases for July -
December, 1995.
GOAL DEFINITIONS: The program goals are based upon the following:
o CUSTOMER's historical Sales-out of Office.
o Microsoft's North America Office Sales-out goals.
o CUSTOMER's contribution to Microsoft's historical
Office sales.
REBATE GOALS: CUSTOMER has a first quarter sales-out goal and a total semester
sales-out goal. CUSTOMER's performance for the first three months of the July -
December, 1995 semester will be measured against the first quarter sales-out
goal. At the end of the first quarter, CUSTOMER will receive the percentage of
the eligible rebate earned based on performance against the first quarter goal.
At the end of the semester, CUSTOMER will be measured on their six-month
performance against the total semester goal. Even if CUSTOMER does not meet
100% of the first quarter goal, CUSTOMER can still achieve 100% of the semester
goal provided that the semester goal is met at the end of the six-month period.
CUSTOMER's Office Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (July - September, 1995): *
o Semester Goal (July - December, 1995): *
SALES-OUT DEFINITIONS/MEASUREMENT: Microsoft Office Product Sales-out is defined
as those Office net product units sold through reseller outlet locations.
CUSTOMER's full packaged product and upgrade sales-out units will measured from
the sales-out reported by CUSTOMER to Microsoft, which includes MOLP sales.
Licensing sales (Select, and Microsoft Maintenance) are captured and generated
by Microsoft's financial systems and included in total Sales-out used to
measure Office product sales-out rebate performance.
Microsoft Select 2.x and I.x and Microsoft Maintenance revenue credit is
granted as Microsoft recognizes the revenue. This occurs when Microsoft has
received the customer's license reporting. Following receipt of reporting,
Microsoft bills the customer/reseller and simultaneously recognizes the
revenue.
PAYMENT: At the end of the semester, CUSTOMER will be paid a sales-out rebate
based on performance against the semester goal. If CUSTOMER achieves greater
than sixty percent (60%) of the semester sales-out goal, CUSTOMER will receive
the exact achieved percentage of the eligible sales-out rebate up to one
hundred percent (100%) CUSTOMER achieves less than sixty percent (60%) of the
sales-out rebate goal, CUSTOMER will not receive any portion of the sales-out
rebate. The purpose of this scale is to offer an incentive for accounts to meet
a portion of their goal in the event they cannot achieve the full Microsoft
sales-out goal.
Although Microsoft pays the sales-out rebate ultimately based on performance
against the semester sales-out goal, Microsoft also pays a sales-out rebate at
the end of the first quarter based on performance against the first quarter
goal. The scale for the first quarter payment is the same as the scale for the
semester payment. The first quarter payment amount will be subtracted from the
final semester payment for the sales-out rebate.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B7
July - December, 1955, Rebate and
Marketing Fund Addendum
11
Example: If CUSTOMER has a quarterly sales-out goal of $1,000,000 and a total
semester goal $2,500,000 and CUSTOMER sells $800,000 over the first period and
$2,600,000 over the entire semester period, CUSTOMER will receive the following
rebate payments:
--------------------------------------------------------------------------
PERIOD GOAL SELL-THROUGH PAYMENT
ACHIEVED
First * eligible rebate = * of July -
Quarter September Qualified Purchases.
--------- * --------------------------------------
Semester * eligible rebate = * of July -
December Qualified Purchases less first
quarter payment. The maximum allowable
rebate is *.
--------------------------------------------------------------------------
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page B8
July-December, 1995, Rebate and
Marketing Fund Addendum
12
SCHDULE F
SALES REPORTING FORMATS
SALESOUT, SELL-THROUGH AND INVENTORY REPORT FORMAT
==========================================================================
FIELD FIELD DESCRIPTION MAX SIZE
- --------------------------------------------------------------------------
1 Distributor's Customer or Outlet Number X(20)
- --------------------------------------------------------------------------
2 Customer or Outlet Name X(40)
- --------------------------------------------------------------------------
3 Customer or Outlet Address 1 X(40)
- --------------------------------------------------------------------------
4 Customer or Outlet Address 2 X(40)
- --------------------------------------------------------------------------
5 Customer or Outlet City X(40)
- --------------------------------------------------------------------------
6 Customer or Outlet State X(02)
- --------------------------------------------------------------------------
7 Customer or Outlet Zip X(10)
- --------------------------------------------------------------------------
8 Customer or Outlet Phone X(14)
- --------------------------------------------------------------------------
9 Distributor Part Number X(20)
- --------------------------------------------------------------------------
10 Part Description X(50)
- --------------------------------------------------------------------------
11 Sell-Through Quantity 9(11)
- --------------------------------------------------------------------------
12 Sell-To Quantity 9(11)
- --------------------------------------------------------------------------
13 Ending Inventory Quantity 9(11)
- --------------------------------------------------------------------------
14 Unit Price 9(11).99
- --------------------------------------------------------------------------
15 Calendar Year Shipped X(02)
- --------------------------------------------------------------------------
16 Calendar Month Shipped X(02)
- --------------------------------------------------------------------------
Microsoft 1995/1996 Channel Agreement Software Specrum, Inc. Page F1
July-December, 1995, Rebate and
Marketing Fund Addendum
13
SCHDULE E
SALES REPORTING FORMATS
AMS REPORT FORMAT
=================================================================================================
FIELD FIELD NAME COMMENTS OPTIONAL?
- -------------------------------------------------------------------------------------------------
1 Reseller Outlet ID
- -------------------------------------------------------------------------------------------------
2 Outlet Name
- -------------------------------------------------------------------------------------------------
3 Outlet Address 1
- -------------------------------------------------------------------------------------------------
4 Outlet Address 2
- -------------------------------------------------------------------------------------------------
5 Outlet Phone Yes
- -------------------------------------------------------------------------------------------------
6 Outlet Fax Yes
- -------------------------------------------------------------------------------------------------
7 Outlet City
- -------------------------------------------------------------------------------------------------
8 Outlet State
- -------------------------------------------------------------------------------------------------
9 Outlet Zip Yes, if end user
- -------------------------------------------------------------------------------------------------
10 Bill-to Customer ID Yes, if end user
- -------------------------------------------------------------------------------------------------
11 Bill-to Name Yes, if end user
- -------------------------------------------------------------------------------------------------
12 Bill-to State Yes, if end user
- -------------------------------------------------------------------------------------------------
13 Bill-to Zip Yes, if end user
- -------------------------------------------------------------------------------------------------
14 Ship-to Customer ID Yes, if end user
- -------------------------------------------------------------------------------------------------
15 Ship-to Name Yes, if end user
- -------------------------------------------------------------------------------------------------
16 Ship-to State Yes, if end user
- -------------------------------------------------------------------------------------------------
17 Ship-to Zip If Null and end user, Outlet Zip will be used Yes, if end user
- -------------------------------------------------------------------------------------------------
18 Invoice Number Yes, if end user
- -------------------------------------------------------------------------------------------------
19 Invoice Date Yes, if end user
- -------------------------------------------------------------------------------------------------
20 Vendor Part Number One of Microsoft, Merisel, Ingram, Tech Data,
Handleman, NACSCORP, Microage, or Intelligent
Electronics
- -------------------------------------------------------------------------------------------------
21 Reseller Part Number
- -------------------------------------------------------------------------------------------------
22 Part Description
- -------------------------------------------------------------------------------------------------
23 Quantity Sold
- -------------------------------------------------------------------------------------------------
24 Agreement Number Number assigned to Agreement sales have been
made under
- -------------------------------------------------------------------------------------------------
25 Agreement Type "1" = MSM; "2" = Select; "3' = Express "4"
= Special Agreement; "5" = MOLP; "6" =
GSA; "7" = GSA Select; "8" = Desktop4
- -------------------------------------------------------------------------------------------------
26 Sales Type "E" for End User, "A" for Academic, "G" for
Government, "C" for Corporate Account.
- -------------------------------------------------------------------------------------------------
Microsoft 1995/1996 Channel Agreement Software Specrum, Inc. Page F2
July-December, 1995, Rebate and
Marketing Fund Addendum
14
SCHEDULE G
MARKETING FUND REIMBURSEMENT POLICY
FOR MICROSOFT(R) WINDOWS(R) 95 UPGRADE
OVERVIEW
For the period beginning July 1, 1995 and ended December 31, 1995, CUSTOMER
must comply with MS' Marketing Fund Reimbursement Policy for Microsoft(R)
Windows(R) 95 Upgrade in order to receive Marketing Funds from MS.
RULES
1. Program Scope. This Program affects only CUSTOMER's eligibility for MS
Marketing Funds, and CUSTOMER is always free to advertise and price all MS
products however CUSTOMER chooses.
2. Marketing Funds and Price Advertising. In order for CUSTOMER to be eligible
for Base Level Funds and Opportunity Funds, all advertisements of the
Windows 95 Upgrade made by CUSTOMER or on CUSTOMER's behalf must state
prices at or above the following net before tax price:
Alternatively, CUSTOMER's advertisements may state no price whatsoever.
The following specific requirement apply to advertisements in which
CUSTOMER is offering other services or products together with the Windows
95 Upgrade:
o CUSTOMER may advertise "free" end-user training or support in
connection with the Windows 95 upgrade.
o CUSTOMER may advertise a package of products offered for a single
price including the Windows 95 Upgrade, but only if the net package
price is at or above . Alternatively, CUSTOMER's
advertisements may state no price whatsoever.
o MS reserves the right to change the price upon notice to
CUSTOMER.
3. Loss of Marketing Funds. If CUSTOMER fails to comply with the rules of
this Program, then notwithstanding any other provisions of the Addendum to
which this Schedule is attached, CUSTOMER will be ineligible to receive
both Base Level Funds and Opportunity Funds for a period of six(6) months.
Marketing Funds ineligibility shall begin with the entire month in which
the failure to comply first occurred and shall continue for six(6) months
which may include CUSTOMER's ineligibility for Base Level Funds and
Opportunity Funds in a subsequent Rebate and Marketing Fund Period. MS'
sole judgment is final in determining CUSTOMER compliance with this
Program.
4. Products Covered. The "Windows 95 Upgrade" as covered by this Program
means:
Windows(R) 95 Upgrade (SKU: 050-042-950)
Windows (R) 95 Upgrade on CE-ROM (SKU; 050-052-950)
5. Advertisements. The term "advertisement" means any printed broadcast,
direct mail or transmitted advertisements for the Window 95 Upgrade,
including without limitation, all newspaper, television, radio and internet
or on-line advertisements.
Microsoft 1995/1996 Channel Agreement Software Spectrum Page G1
July-December, 1995, Rebate and
Marketing Fund Addendum
15
6. December 31, 1995.
7. Questions and Inquiries. If CUSTOMER has questions about whether
CUSTOMER's advertisements comply with this Program or if CUSTOMER has other
inquiries, CUSTOMER must direct these questions and inquiries to the
following MS contact:
Arlene Yanow
One Microsoft Way
Redmond, WA 98052
(206)882-8080
The above contact is CUSTOMER's ONLY authorized source of information at
MS about this Program, and CUSTOMER may not rely on any other source of
information, including other MS employees. No MS employee, including the
above contact, is authorized to communicate with CUSTOMER about any alleged
infractions of any other reseller.
8. Program Modifications/Termination: MS reserves the right to modify or
terminate this program at any time, in its sole discretion.
Microsoft 1995/1996 Channel Agreement Software Spectrum, Inc. Page G2
July-December, 1995, Rebate and
Marketing Fund Addendum
16
AMENDMENT NO.1 TO THE
REBATE AND MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT
This Amendment No. 1 ("Amendment"), dated the first day of January, 1996, amends
that certain Rebate and Marketing Fund Addendum to The Microsoft 1995/1996
Channel Agreement ("Addendum"), dated July 1, 1995, 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
Addendum is hereby amended as follows:
2. TERM AND TERMINATION
The first sentence of the section is replaced with the following:
"This Addendum shall be effective as of the date indicated above, and shall
expire on June 30, 1996."
4. REBATES
The section is replaced in its entirety with:
"4.1 PACKAGED PRODUCT REBATE
CUSTOMER is eligible to receive up to a * ) Rebate on its Qualified
Sales, excluding Open License sales, made during the Rebate and Marketing Fund
Period. The Rebate shall be paid provided CUSTOMER complies with the Rebate
Program Guidelines outlined in Schedule B.
4.2 OPEN LICENSE REBATE
CUSTOMER is eligible to receive up to a * Rebate on its Open License
sales made during the Rebate and Marketing Fund Period. The Rebate shall be
paid provided CUSTOMER complies with the those portions of the Packaged Product
Rebate Guidelines outlined in Schedule J.
4.3 PROVISION FOR EARLY PAYMENT OF REBATES
Notwithstanding such Rebate Program Guidelines, MS may, at its sole discretion,
pay all or any portion of the Rebate prior to the end of the Rebate and
Marketing Fund Period. The Rebate so paid may be adjusted subsequently based
upon compliance with the Rebate Program Guidelines."
5. MARKETING FUNDS
The section is replaced in its entirety with:
"5.1 OPPORTUNITY FUNDS
Periodically, MS at its discretion may allow CUSTOMER to participate in MS
programs which provide the opportunity to earn Opportunity Marketing Funds.
Customer's participation in such programs shall be governed by this Addendum.
Grant of Opportunity Marketing Funds is subject to prior approval by MS.
5.2 USE OF MARKETING FUNDS
Acquisition, use of, and proof of expenditures of Opportunity Marketing Funds
shall be in accordance with this Addendum, and the terms of each Opportunity
Fund Proposal approved by CUSTOMER'S MS Account Manager. Without limiting the
foregoing, CUSTOMER shall abide by the Spending Period dates as outlined in the
then-current Microsoft Marketing Fund Guidelines. Marketing Fund Claims
exceeding the then-current balance in CUSTOMER'S Marketing Fund account at MS'
Marketing Fund vendor, currently Pinpoint Marketing, Inc. ("PMI") or submitted
in excess of the pre-approved dollar amount shall not be granted to CUSTOMER.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Microsoft Confidential - Disclosure Prohibited
17
CUSTOMER must obtain MS approval from a MS representative prior to claiming
Marketing Funds. CUSTOMER agrees to report to PMI any suspected error or
discrepancy in the amount of Marketing Funds received by CUSTOMER within thirty
(30) days of receipt thereof. Failure to provide such notice within the
specified period shall mean that CUSTOMER forfeits the opportunity to request a
re-audit. MS reserves the right at any time to adjust CUSTOMER's Marketing Fund
balance should MS discover that an error or discrepancy has occurred.
5.3 MARKETING FUND AND REBATE AUDIT
During the term of this Addendum 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 verity CUSTOMER's compliance with the terms of this
Addendum. Additionally, MS may audit specific Opportunity Marketing Fund claims
submitted by CUSTOMER as outlined in CUSTOMER's then current Marketing Fund
Guidelines. Any audit shall be conducted during CUSTOMER'S normal business
hours in such a manner as not to unreasonably interfere with CUSTOMER's normal
business activities. Audit expenses shall be paid by MS unless material
discrepancies are disclosed by such audit, in which case audit expenses shall
be paid by CUSTOMER. For purposes of this Section, "material discrepancies"
shall mean ten thousand U.S. dollars (US $10,000) or more.
If the results of any audit show that CUSTOMER used Marketing Funds in any
manner other than as authorized under this Addendum, MS shall be entitled to
recover from CUSTOMER any and all Marketing Funds so used, in addition to any
other remedies available to MS under law or equity plus injunctive relief
and/or any other damages as may be permitted by law. Further, if any such
audits shows that CUSTOMER has submitted incorrect sales reporting, and such
reporting was the basis of any rebate payment, MS shall have the right to
recover any and all rebate paid."
5.4 MARKETING FUND REIMBURSEMENT POLICY
CUSTOMER agrees to abide by the Marketing Fund Reimbursement Guidelines,
attached hereto as Schedule G, and as revised from time to time by MS."
6. REPORTING REQUIREMENTS
The first sentence of the section is replaced with the following:
CUSTOMER shall submit reports to MS as outlined in CUSTOMER's Rebate Program
Guidelines in accordance with the then current EDI Implementation Guide
provided by MS.
SCHEDULE B
The Schedule is replaced in its entirety with the attached Schedule H.
SCHEDULE G
The Schedule is replaced in its entirety with the attached Schedule I.
IN WITNESS WHEREOF, the parties have signed this Amendment on the date
indicated below. This Amendment is hereby made part of the Addendum. All terms
and conditions of the Addendum not amended herein shall remain in full force
and effect. This Amendment is not binding until executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS"): 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
1/3/96 December 20, 1995
- ------------------------------ -----------------------------------
Date Date
Amendment No. 1 to The Rebate and Page 2
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
18
SCHEDULE H
JANUARY-JUNE, 1996
REBATE GUIDELINES
PROGRAMS: Microsoft offers four rebate programs for the January - June, 1996
Rebate period. The total available Rebate is divided as follows:
- ---------------------------------------------------------------------------------------------------
MAXIMUM PERCENTAGE
REBATE INCENTIVE AVAILABLE
===================================================================================================
Compliance Program
- ---------------------------------------------------------------------------------------------------
Total Sales-out Program
- ---------------------------------------------------------------------------------------------------
Business Systems Program *
- ---------------------------------------------------------------------------------------------------
Office Sales-out Program
- ---------------------------------------------------------------------------------------------------
TOTAL
- ---------------------------------------------------------------------------------------------------
REBATE CALCULATIONS AND PAYMENTS: Rebates will be paid in the form of a
Microsoft purchase credit forty-five (45) days after the end of each quarterly
rebate period (i.e. May 15th for January - March, 1996 quarter). Rebates are
calculated by multiplying the achieved rebate percentage by the total Qualified
Sales for the rebate period. Revenue generated from Microsoft Select Enrollment
Forms executed by MS on or after July 1, 1994, shall be included in calculating
CUSTOMER's achievement toward the Sales-out goal, but shall not be included in
CUSTOMER's final total Qualified Sales for purposes of Rebate payment. Revenue
generated from Microsoft Select Enrollment Forms executed by MS prior to July
1, 1994 will be included in calculating CUSTOMER's achievement towards the
sales-out goal and will also be eligible for a Grandfathered rebate. Rebate
payment for such Select Enrollment Forms shall be in the form of a purchase
credit forty-five (45) days after the end of each quarterly rebate period.
PURCHASES THROUGH DISTRIBUTION: CUSTOMER's full packaged product and MLP
purchases through distribution will be subtracted from CUSTOMER's Qualified
Sales for purposes of Rebate payment.
PRODUCT AVAILABILITY: If Microsoft is unable to ship a CURRENT VERSION of a
product for any ten (10) consecutive business days, CUSTOMER's purchases
through distribution of those SKUs will count toward CUSTOMER's Qualified Sales
for purchases of Rebate payment.
All copies of eligible purchase orders placed through distribution along with a
copy of the Microsoft Stock Out Report must be sent to Microsoft no later than
fifteen (15) days following the quarter end. Please send purchase order copies
and the Microsoft Stock Out Report to the following address:
MICROSOFT CORPORATION
ONE MICROSOFT WAY
BLDG. 22/4054
REDMOND, WA 98052
ATTN: KRISTIN WEEBER, MARKETING MANAGER
COMPLIANCE REBATE PAYMENT: The Microsoft Compliance Rebate will be calculated
on a monthly basis. If CUSTOMER has met all of the Compliance Rebate criteria
in a given month, CUSTOMER will be entitled to * of that month's total
Qualified Sales. The rebate payment will be made forty-five (45) days after the
end of each quarterly rebate period.
ANY ISSUES REGARDING REBATES SHOULD BE SENT IN WRITING TO KRISTIN WEEBER,
MARKETING MANAGER, NO LATER THAN THIRTY (30) DAYS FOLLOWING RECEIPT OF REBATE
PAYMENT. If such written notice is not provided within thirty (30) days,
CUSTOMER shall have no further right to dispute rebate payment.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Rebate and Page H1
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
19
- --------------------------------------------------------------------------------
COMPLIANCE REBATE PROGRAM
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVES: The objective of the Compliance Rebate Program is to
provide incentive for CUSTOMER to comply with Microsoft contractual
requirements for payments, Street Dates, reporting, and EDI ordering for Select
3.0.
NON-COMPLIANCE: During any given month, failure to comply with any or all of
the current compliance criteria will result in the forfeiture of the entire
compliance rebate for that month.
1. MICROSOFT PAYMENT REQUIREMENTS
Microsoft requires its customers to pay its invoices within terms. In order to
maintain compliance, 100% of the gross invoice value for non-Select and 85% of
the gross invoice value for Select must be current as of Microsoft's fiscal
month- end. Unapplied credits will be excluded from the calculation. Failure to
comply with this section will also result in the loss of CUSTOMER's Select
Compliance Rebate.
2. MICROSOFT STREET DATE REQUIREMENTS
From time to time, Microsoft may announce a new product or new versions of an
existing product for which Microsoft shall set a Street Date. In order to
comply with the Street Date requirements, CUSTOMER shall not:
o Ship or deliver the product to any end-user customer prior to
the Street Date.
o Accept any end user payment for the product prior to the
Street Date. Checks and/or credit card numbers may be accepted
by CUSTOMER, but can only be processed when product is
delivered to the end user on or after the Street Date.
o Advertise, merchandise, or promote the product to end user
customers until it is officially announced by Microsoft.
Usually, the product announcement is on the Street Date. If
the product announcement is earlier than the Street Date,
Microsoft will clearly communicate the announce date to the
channel. If product is announced by Microsoft before the
Street Date, the product can be advertised, merchandised
and/or promoted immediately after such announcement, provided
that all such promotions clearly state that the product is not
yet available for purchase.
o Allow it's distribution centers and/or warehouses to
distribute, for a period of up to twelve months, a Street Date
product to any individual sales office, retail store, or
outlet which Microsoft in its sole discretion has determined
to be in violation of the Street Date Requirements.
In the event CUSTOMER violates the Street Date for any special products
specified in a Microsoft Street Date letter, CUSTOMER shall forfeit up to the
entire Compliance Rebate for the six month Rebate period in which the violation
occurred.
Should CUSTOMER fail to comply with the Street Date Requirements, Microsoft may
also, for a period of up to twelve (12) months, withhold shipments to CUSTOMER
of future product until the Street Date of such product.
Should CUSTOMER wish to report a Street Date violation, CUSTOMER may fax a copy
of a dated sales receipt to STREET DATE VIOLATIONS AT MICROSOFT AT (206)
936-7329. Once a violation has been reported, Microsoft shall investigate the
violation, and take remedial action as appropriate. Please note, in order to
confirm a suspected violation, Microsoft must receive a dated sales receipt.
3. MICROSOFT TRANSACTION REQUIREMENTS
Electronic Data Interchange format ("EDI") transactions are defined as 850/855
EDI transactions. CUSTOMER must place EDI transaction orders at a minimum of
once per month per Enrollment Site if product is purchased during said month.
4. MICROSOFT REPORTING REQUIREMENTS
ALL REPORTS OUTLINED BELOW MUST BE TIMELY, ACCURATE, AND COMPETE. FOR PURPOSES
OF THIS AGREEMENT, "TIMELY" IS DEFINED AS MS RECEIPT OF REPORTING BY THE DUE
DATE AND TIME INDICATED, "ACCURATE" IS DEFINED AS THE CORRECT POPULATION OF ALL
REPORTING FIELDS, AND "COMPLETE" IS DEFINED AS THE POPULATION OF ALL REQUIRED
REPORTING FIELDS.
Amendment No. 1 to The Rebate and Page H2
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
20
Reporting is defined as a weekly report sent to Microsoft via Electronic Data
Interchange format ("EDP") of weekly Sales, Inventory, and Internal Market
Share. CUSTOMER must make the EDI reports available to MS' EDI mailbox each
Monday by 12:00 noon (Pacific time). These reports shall cover the seven-day
period ending the prior Sunday night. Please refer to the EDI Reporting
Guidelines for details on reporting requirements.
REPORTING REQUIREMENTS
o Each unit of single license Full Package Product should be reported as
one unit. This applies for both MS products and for competitive
products.
o Any single Microsoft product that includes multiple licenses should be
reported as one unit. MS will then convert the quantity of multiple
license units sold to the number of licenses they represent. Examples
of these products include MMLP 20 Pack, MMLP 100 Pack, and AE 10 Pack.
o All volume licensing agreements (such as MOLP, Variable Licenses, and
Enterprise Licenses) should be reported as one unit for each license
sold.
o Each competitive multiple license product should be reported as the
number of licenses represented.
Accounts are required to report sell-through units and inventory units for each
MS SKU, but are required only to report the total license count for competitive
product sell-through for each category. All SKUs for these titles should be
counted, including full packaged product, upgrades, license packs, education,
and government SKUs. Please refer to the EDI Reporting Guidelines for details
on reporting requirements.
MARKET SHARE REPORTING
The following table outlines the Market Share product categories for EDI
reporting. The table also specifies the top competitive products that must be
included in the aggregated market share reporting. All competitive products
within a given category must be reported. The products listed below are just
examples, not a comprehensive list.
- ----------------------------------------------------------------------------------------------------------------
CATEGORY MICROSOFT PRODUCT COMPETITIVE PRODUCTS
================================================================================================================
Windows word processors Microsoft(R) Word for WordPerfect(R) for Windows(R)
Windows(R) Lotus(R) WordPro(R) for Windows(R)
- ----------------------------------------------------------------------------------------------------------------
Windows spreadsheets Microsoft(R) Excel for 1-2-3(R) for Windows(R)
Windows(R) Quattro Pro(R) for Windows(R)
- ----------------------------------------------------------------------------------------------------------------
Windows bundles Microsoft(R) Office for Lotus(R) Smartsuite
Windows(R) WordPerfect(R)/Borland(R) Office
Novell(R) Perfect Office
- ----------------------------------------------------------------------------------------------------------------
Windows Databases Microsoft Access(R) for Paradox(TM) for Windows(R)
Windows(R) dBase(R) for Windows(R)
FoxPro(R) for Window(R) Approach
Superbase(R)
- ----------------------------------------------------------------------------------------------------------------
Mail Servers Microsoft(R) Mail Lotus(R) cc:Mail(TM)
Lotus Notes(R)
WordPerfect(R) Office
- ----------------------------------------------------------------------------------------------------------------
Network Operating Microsoft(R) Windows Novell(R) Netware(R) 4.x, 3.x, 2.x
Systems NT(TM) Server Novell(R) UnixWare
OS/Lan Server
Banyan(R)
SCO(R) Unix
- ----------------------------------------------------------------------------------------------------------------
Example: If CUSTOMER sold-through fifty (50) units of Lotus(R) 1-2-3(R) for
Windows(R) and a 20 user MMLP of Quattro Pro(R) for Windows(R) in one week, then
CUSTOMER would report a total of seventy (70) licenses for sell-through of
competitor's products in the Windows Spreadsheet category.
Amendment No. 1 to The Rebate and Page H3
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
21
- --------------------------------------------------------------------------------
SALES-OUT REBATE PROGRAMS
- --------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of all Sales-out Rebate Programs is to
increase the sales of Microsoft products. All license types (Select, Microsoft
Open License, Full Package Product, MLPs) are included in measuring performance
against this goal, however, the Rebate is paid on full packaged product and
MOLP sales only.
REBATE GOALS: CUSTOMER has first quarter sales-out goals and total semester
sales-out goals. CUSTOMER's performance for the first three months of the
January - June, 1996, semester will be measured against the first quarter
sales-out goals. At the end of the first quarter, CUSTOMER will receive the
percentage of the eligible rebates earned based on performance against the
first quarter goals. At the end of the semester, CUSTOMER will be measured on
their six-month performance against the total semester goals. Even if CUSTOMER
does not meet 100% the first quarter goals, CUSTOMER can still achieve 100%
of the semester goals provided that the semester goals are met at the end of
the six-month period.
SALES-OUT DEFINITIONS/MEASUREMENT: MS Product Sales-out is defined as those MS
net product units sold through CUSTOMER's outlet locations. CUSTOMER's full
packaged product, Microsoft Open License, and upgrade sales-out units will be
measured from the sales-out reported by CUSTOMER to MS. Licensing sales
(Select, Microsoft Maintenance) are captured and generated by MS' financial
systems and included in total sales-out used to measure product sales-out
rebate performance.
Any Microsoft Select 2.x and 1.x and Microsoft Maintenance revenue credit is
granted as MS recognizes the revenue. This occurs when MS has received the
customer's license reporting. Following receipt of reporting, MS bills the
customer/reseller and simultaneously recognizes the revenue.
PAYMENT: At the end of the semester, CUSTOMER will be paid sales-out rebates
based on performance against the semester goals. If CUSTOMER achieves greater
than sixty percent (60%) of each semester sales-out goal, CUSTOMER will receive
the exact achieved percentage of the eligible sales-out rebate up to one
hundred percent (100%). If CUSTOMER achieves less than sixty percent (60%) of
any sales-out rebate goal, CUSTOMER will not receive any portion of that
sales-out rebate.
Although MS pays the sales-out rebate ultimately based on performance against
the semester sales-out goal, Microsoft also pays a sales-out rebate at the end
of the first quarter based on performance against the first quarter goal.
Microsoft pays a portion of the rebate after the first quarter to provide
incentive for CUSTOMER to focus on sales-out throughout the entire semester.
The scale for the first quarter payment is the same as the scale for the
semester payment. The first quarter payment amount will be subtracted from the
final semester payment for the sales-out rebate.
Example: If CUSTOMER has a quarterly total sales out goal of $1,000,000 and a
semester total sales out goal $2,500,000 and CUSTOMER sells $800,000 over the
first quarter period and $2,600,000 over the entire semester period, CUSTOMER
will receive the following rebate payments:
================================================================================================================
PERIOD GOAL SELL-THROUGH PAYMENT
ACHIEVED
- ----------------------------------------------------------------------------------------------------------------
First Quarter * eligible rebate = * of January - March sales.
- ------------------- -----------------------------------------------------------------
*
Semester * eligible rebate = * of January - June sales less
first quarter payment. The maximum allowable total sales out
rebate is * .
================================================================================================================
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Rebate and Page H4
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
22
- --------------------------------------------------------------------------------
TOTAL SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Total Sales-out Rebate Program is * of Qualified Sales for the January -
June, 1996 semester.
CUSTOMER's Total Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
- --------------------------------------------------------------------------------
OFFICE SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Office Sales-out Rebate Program is * of Qualified Sales for the January -
June, 1996 semester.
CUSTOMER's Office Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
- --------------------------------------------------------------------------------
BUSINESS SYSTEMS SALES-OUT REBATE PROGRAM
- --------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible rebate percentage achievable for the
Business Systems Sales-out Rebate Program is * of Qualified Sales for the
January - June, 1996 semester.
REBATE GOALS: CUSTOMER must sell a minimum number Microsoft(R) BackOffice client
licenses in order to receive any portion of the Business Systems rebate.
Provided that CUSTOMER sells the minimum number of BackOffice client licenses,
CUSTOMER's achievement against the Business Systems goal will be based on
CUSTOMER's performance against the Business Systems revenue goal. -
CUSTOMER's BackOffice client license unit goals are as follows:
o Quarter 1 Goal (January - March, 1996) *
o Semester Goal (January - June, 1996) *
CUSTOMER's Business Systems Sales-out Rebate Program goals are as follows:
o Quarter 1 Goal (January - March, 1996): *
o Semester Goal (January - June, 1996): *
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Rebate and Page H5
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
23
SCHEDULE I
MARKETING FUND REIMBURSEMENT POLICY
OVERVIEW
As designated from time to time by MS, CUSTOMER must comply with MS' Marketing
Fund Reimbursement Policy in order to receive Marketing Funds from MS.
RULES
1. Program Scope. This Program affects only CUSTOMER's eligibility for MS
Marketing Funds, and CUSTOMER is always free to advertise and price
all MS products however CUSTOMER chooses.
Marketing Funds and Price Advertising. In order for CUSTOMER to be
eligible for Marketing Funds, all advertisements of such product made
by CUSTOMER or on CUSTOMER's behalf must state no less than the price
designated by MS exclusive of sales tax.
Alternatively, CUSTOMER's advertisements may state no price
whatsoever. The following specific requirements apply to
advertisements in which CUSTOMER is offering other services or
products together with the product:
o CUSTOMER may advertise "free" end-user training or
support in connection with the product.
o CUSTOMER may advertise a package of products offered
for a single price including the product, but only if
the net package price is at or above the price
designated by MS. Alternatively, CUSTOMER's
advertisements may state no price whatsoever.
o MS reserves the right to change the designated price
upon notice to CUSTOMER.
3. Loss of Marketing Funds. If CUSTOMER fails to comply with the rules of
this Program, then notwithstanding any other provisions of the
Addendum to which this Schedule is attached, CUSTOMER will be
ineligible to receive Opportunity Funds for a period of six (6)
months. Marketing Funds ineligibility shall begin with the entire
month in which the failure to comply first occurred and shall continue
for six (6) months which may include CUSTOMER's ineligibility for
Opportunity Funds in a subsequent Rebate and Marketing Fund Period.
MS' sole judgment is final in determining CUSTOMER compliance with
this Program.
4. Advertisements. The term "advertisement" means any printed, broadcast,
direct mail or transmitted advertisements for the product, including
without limitation, all newspaper, television, radio, and Internet or
on-line advertisements.
5. Questions and Inquiries. If CUSTOMER has questions about whether
CUSTOMER's advertisements comply with this Program or if CUSTOMER has
other inquiries, CUSTOMER must direct these questions and inquires to
the following MS contact:
Arlene Yanow
One Microsoft Way
Redmond, WA 98052
(206) 882-8080
The above contact is CUSTOMER's only authorized source of information
at MS about this Program, and CUSTOMER may not rely on any other
source of information, including other MS employees. No MS employee,
including the above contact, is authorized to communicate with
CUSTOMER about any alleged infractions of any other reseller.
8. Program Modifications/Termination: MS reserves the right to modify or
terminate this program at any time, in its sole discretion.
Amendment No. 1 to The Rebate and Page I1
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement
24
SCHEDULE J
JANUARY - JUNE, 1996
OPEN LICENSE
REBATE PROGRAMS
PROGRAMS: Microsoft offers three Open License rebate programs for the January -
June, 1996 Rebate period. The total available Rebate is divided as follows:
- --------------------------------------------------------------------------
MAXIMUM PERCENTAGE
REBATE INCENTIVE AVAILABLE
==========================================================================
Compliance Program
- --------------------------------------------------------------------------
Total Sales-out Program
- --------------------------------------------------------------------------
Business Systems Program *
- --------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------
All guidelines, including actual Rebate goals, shall be as outlined for the
Packaged Product Rebate.
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC.
Amendment No. 1 to The Rebate and Page J1
Marketing Fund Addendum to The
Microsoft 1995/1996 Channel Agreement