Exhibit 10.22
PREFERRED PROVIDER AGREEMENT
This Preferred Provider Agreement (this "Agreement") is entered into as of
March 4, 1999 ("Effective Date") by and between WAM!NET Inc., a Minnesota
corporation having a place of business at 6100 West 110th Street, Minneapolis,
MN 55438 ("WNI"), and Silicon Graphics, Inc. a Delaware corporation having a
place of business at 2011 North Shoreline Blvd., Mountain View, CA 94043
("SGI").
RECITALS
WHEREAS, WNI and SGI desire to establish a strategic relationship, pursuant
to which SGI will invest in WNI pursuant to the terms of that certain Preferred
Stock Purchase Agreement (together with all agreements, instruments and
documents contemplated thereby and set forth as Exhibits thereto) of even date
herewith, WNI will purchase products, support and services from SGI, and SGI
will promote the services of WNI to SGI's customers;
WHEREAS, WNI desires to purchase certain products (whether or not
originally manufactured by SGI), support and services of SGI, including, without
limitation, computer hardware, storage, peripheral devices, network devices,
integrated products, software, technical and maintenance support, and custom
engineering and professional services (collectively, "SGI Products"); and
WHEREAS, WNI desires that SGI promote the sale of certain services of WNI,
including, without limitation, WAM!NET, WAM!BASE and entertainment specific
services ("WNI Services").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, SGI and WNI, for themselves, their
successors and permitted assigns, hereby agree as follows:
ARTICLE I.
SGI PRODUCTS
1.1. General. WNI will, over a four (4) year period commencing January 1,
1999 and ending December 31, 2002 (the "Purchase Period"), purchase SGI Products
as provided in Sections 1.2 through 1.5 below. The parties agree that with
respect to purchases of SGI Products, and subject to the terms and conditions of
this Agreement, WNI will treat SGI as the preferred provider of such goods and
services and SGI will treat WNI as a preferred customer for such goods and
services.
1.2. Firm Commitment. WNI shall have a firm and unconditional obligation to
purchase from SGI not less than $35 million of SGI Products during the period
commencing December 1, 1998 and ending December 31, 2000 (the "Firm
Commitment"). If WNI fails to satisfy its purchase commitment during such
period, as evidenced by its issuance to SGI of confirmed, irrevocable,
noncancellable purchase orders for an aggregate amount at least equal to the
Firm Commitment, then WNI shall pay to SGI a sum equal to 10% of the remaining
outstanding balance of the Firm Commitment.
1.3. Computer Hardware and Software Product Pricing; Preferred Provider.
1.3.1. Standard Product Pricing. With respect to SGI's standard
hardware and software products, and the associated standard customer
support programs, listed in SGI's published Price Book
(the "Standard Products"), the pricing models SGI offers to WNI during the
Purchase Period will be based upon SGI's most favored pricing models (by
product) applicable to resellers (excluding US government, educational
institutions and associated agencies) with aggregate purchases at least
equal to the Firm Commitment.
1.3.2. Modified Product Pricing. With respect to Standard Products and
the associated customer support offerings that SGI agrees to modify or
build in accordance with WNI's stated requirements (the "Modified
Products"), the pricing that SGI offers to WNI during the Purchase Period
will be ** .
1.3.3. Limited Exclusive Provider. WNI agrees to purchase computer
hardware, software and support products of the type included within the
Standard Products and Modified Products, other than SGI Services (as
defined below), solely from SGI during the Purchase Period, subject to the
following terms and conditions: (a) the Standard and Modified Products then
being offered by SGI shall be suitable for WNI's requirements (a product is
suitable if it conforms to the specifications set by WNI for the specific
product); and (b) SGI's pricing to WNI for Standard and Modified Products
shall be at Competitive Prices (as defined below); provided however, that,
if SGI's pricing is not at Competitive Prices with regard to the applicable
Standard and Modified Products, SGI shall then have a period of seven (7)
business days in its sole discretion to reduce its pricing to Competitive
Prices and notify WNI of such price reduction.
1.3.3.1. Standard Products. For the purposes of this Section
1.3.3, "Competitive Prices" as it relates to Standard Products means
(i) with regard to servers, supercomputers, workstations and related
software, pricing over a six-month period that is not more than ** of
the price offered by a third-party vendor for products substantially
similar to the applicable Standard Products, and (ii) with regard to
storage, personal computers and related software, pricing over a
six-month period that is not more than ** of the price offered by a
third-party vendor for products substantially similar to the
applicable Standard Products.
1.3.3.2. Modified Products. For the purposes of this Section
1.3.3, "Competitive Prices" as it relates to Modified Products means
pricing and other material terms and conditions that are **.
1.4. SGI Services. With respect to technical consulting, application
development, hardware design, product development, custom manufacturing,
integration, custom product support and related professional and custom
engineering services as they pertain to Standard and/or Modified Products
offered by SGI (the "SGI Services"), WNI agrees that it will treat SGI as a
preferred provider and shall provide SGI with the opportunity to bid on any WNI
requirements or specifications for services similar to the SGI Services. **
1.5. Terms and Conditions. The terms and conditions governing the purchase
of the SGI Products by WNI will be set forth in the following agreements, as the
same may be amended, modified and supplemented from time to time: (a) the Master
Purchase Agreement , a general form of which is attached hereto as Exhibit A and
the specific terms of which shall be negotiated in good faith by the parties;
(b) with respect to Standard Products installed at WNI's facilities only, a
Customer Support Agreement, a general form of which is attached hereto as
Exhibit B and the specific terms of which shall be negotiated in good faith by
the parties; (c) a Master Services Agreement, the general terms of which
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** Confidential information omitted and filed separately with the Securities
and Exchange Commission.
are described in Exhibit C and the specific terms of which shall be negotiated
in good faith by the parties; and (d) with respect to Modified Products,
hardware and software products developed in connection with the Services and
which are installed at WNI's customers' facilities, a Field Support Agreement,
the general terms of which are described in Exhibit D and the specific terms of
which shall be negotiated in good faith by the parties.
1.6. SGI Indemnity for Third Party Suppliers. In the event that SGI engages
third parties in order to provide the SGI Products, SGI agrees to indemnify and
hold harmless WNI and any of its employees, directors, officers, agents or other
representatives in connection with any loss, damage or expense (including
reasonable attorneys' fees) resulting from any claim of a third party related to
the foregoing to the extent such claim arises as a result of SGI's negligence or
willful misconduct.
ARTICLE II.
WNI SERVICES
2.1. General. SGI and WNI have developed a list of existing SGI customers
in the entertainment industry which the parties believe in good faith represent
a sales revenue opportunity for WNI ** (based upon WNI list prices) over the
three (3) year period commencing on January 1, 1999 (the "Joint Customers"). WNI
and SGI will jointly develop a marketing, sales and implementation plan to
address these accounts, including field resource commitments, compensation to
SGI for field activities and professional services, and such other matters
applicable to the sale of WNI Services to such Joint Customers. In addition, SGI
and WNI will explore a broader strategic relationship that is intended to enable
WNI to obtain the benefit of SGI's presence in the entertainment industry, other
selected commercial accounts and the U.S federal government sector. Such
relationship will be embodied in one or more further agreements to be negotiated
in good faith between the parties.
ARTICLE III.
RESPONSIBLE EXECUTIVES AND MEETINGS
3.1. Responsible Executives. Upon execution of this Agreement, and from
time to time as appropriate, each party shall designate in a writing to the
other its executives responsible for managing the Preferred Provider
relationship described in this Agreement, as well as for discussing any emerging
issues concerning the relationship (the "Responsible Executives"). SGI's
Responsible Executives initially shall include a Senior Vice President from its
Server and Supercomputing Business; a Senior Vice President or Vice President
from its Customer and Professional Services Division; and a Senior Vice
President or Vice President from its Worldwide Sales and Marketing Division.
WNI's Responsible Executives initially shall include its Chief Executive
Officer, Chief Operating Officer and Chief Technical Officer. In addition, each
party shall designate one Responsible Executive who shall serve as the primary
point of contact for the other party with respect to the relationship described
in this Agreement.
3.2. Quarterly Management Meetings. During the Purchase Period, the
Responsible Executives of WNI and SGI shall meet on a quarterly basis, at times
and places to be agreed upon, to review the status of the relationship between
the parties, including forecasts for and analysis of sales of WNI Services and
purchases of SGI Products for each of the next four quarters and the remainder
of the Purchase Period. At least five (5) business days prior to a meeting, each
party shall submit an agenda of issues proposed to be discussed at the meeting.
Twice yearly at such meetings, the parties shall review
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** Confidential information omitted and filed separately with the Securities
and Exchange Commission.
SGI's pricing with respect to Standard and Modified Products as set forth in
Section 1.3.3 above. The parties shall bear their respective costs and expenses
in connection with attending and participating at all such meetings.
ARTICLE IV.
CONFIDENTIALITY AND PUBLICITY
4.1. Confidentiality.
(a) "Confidential Information" means (i) any information relating to either
party's products, designs, schematics, diagrams, drawings, costs, prices,
finances, marketing or business plans, business opportunities, customers,
partners, research, development, know-how or trade secrets; (ii) all information
that, by the nature of the circumstances surrounding the disclosure, ought in
good faith to be treated as confidential; and (iii) the terms and conditions of
this Agreement. Confidential Information may include confidential, proprietary
and/or trade secret information that is owned by third parties, which have
granted sufficient rights to a party to permit that party to provide information
to the other party hereunder.
(b) Disclosure of Confidential Information. Each party agrees that it may
be desirable to disclose to the other party Confidential Information.
Confidential Information is provided hereunder solely for the purpose of
facilitating the relationship described in this Agreement and the parties agree
to maintain the Confidential Information in confidence; not to use any
Confidential Information for any purpose except as contemplated by this
Agreement; and not to disclose, or permit the disclosure of, the Confidential
Information to any third party. The use and access to Confidential Information
shall be limited by the parties to their respective directors, officers,
employees, counsel, accountants and agents who need to know such Confidential
Information, provided that the party so disclosing such information shall advise
each such recipient of the confidentiality obligations under this Article IV.
The party receiving any Confidential Information (the "Recipient") shall
reproduce and include in all copies of Confidential Information prepared by
Recipient the copyright notices and proprietary legends of the party disclosing
such information (the "Discloser") as they appear therein as furnished to
Recipient by Discloser. Recipient shall not remove any proprietary, copyright,
mask work, trademarks or other legend from any form of Confidential Information.
The parties acknowledge and agree that harm not adequately compensable might
result from unauthorized disclosure of Confidential Information. Either party
may seek injunctive relief, without posting a bond, if the other party breaches
its obligations of confidentiality as set forth in this Article 4.
(c) Exclusions to Obligations of Confidentiality. Recipient shall have no
obligation to maintain the confidentiality of information provided by the other
party that: (a) is known to Recipient at the time of disclosure; (b) is
independently developed by Recipient provided Recipient can show by written
evidence to Discloser's reasonable satisfaction that such development was
accomplished by or on behalf of Recipient without the use of or any reference to
Confidential Information supplied by the other party; (c) becomes rightfully
known to Recipient from a source other than the other party without restriction
on subsequent disclosure or use; (d) is or becomes a part of the public domain
through no wrongful act of Recipient; or, (e) is rightfully received by the
Recipient from a third party without any duty of confidentiality. Further,
Recipient may disclose Confidential Information if it is advised by counsel that
such disclosure is required, pursuant to law, regulation, judicial or government
request, requirement or order, provided that Recipient gives the other party
prompt and sufficient prior notice to contest, or to seek a protective order
restricting further disclosure of Confidential Information provided in response
to, such request, requirement or order.
(d) No Ownership Interest Transferred. Recipient acknowledges that it is
granted only the limited right to use Confidential Information provided pursuant
to this Agreement. Neither party transfers to the other any right of ownership
in or title to any Confidential Information or other intellectual property
hereunder, either expressly, by implication, estoppel or otherwise.
4.2. Publicity. Unless otherwise agreed by the parties in writing, no press
releases, conferences, interviews or other public announcements, in whatever
form, shall be made or given by either party regarding the subject matter of
this Agreement. The parties agree to cooperate with each other in promoting the
existence of this strategic relationship and in otherwise supporting each
other's marketing and public relations efforts. Each party also agrees that,
upon the reasonable request of the other party, it will provide customer
satisfaction references with respect to the other party provided such references
can be made in good faith.
ARTICLE V.
MISCELLANEOUS
5.1. No Agency. Nothing in this Agreement shall constitute or be deemed to
constitute a partnership or joint venture between the parties hereto or
constitute or be deemed to constitute any party the agent or employee of the
other party for any purpose whatsoever and neither party shall have authority or
power to bind the other or to contract in the name of, or to create a liability
against, the other in any way or for any purpose.
5.2. Entire Agreement. This Agreement and any other writing signed by the
parties that specifically references this Agreement constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof. This
Agreement is not intended to confer upon any person other than the parties
hereto and their successors and permitted assigns any rights or remedies
hereunder.
5.3. Termination. After the end of the Purchase Period, either party may
terminate this Agreement upon thirty (30) days prior written notice to the
other.
5.4. Information. Subject to applicable law and privileges, each party
hereto covenants and agrees to provide the other party with all information
regarding itself and transactions under this Agreement that the other party
reasonably believes are required to comply with all applicable federal, state,
county and local laws, ordinances, regulations and codes, including, but not
limited to, securities laws and regulations.
5.5. Mediation. SGI and WNI agree to negotiate in good faith in an effort
to resolve any dispute related to this Agreement that may arise between the
parties, prior to the institution of litigation. If the dispute cannot be
resolved promptly by negotiation, then the Responsible Executives shall meet at
a time and place they mutually agree to negotiate in good faith to resolve the
dispute. If the dispute is not resolved by such negotiation among the
Responsible Executives, either party may give the other party written notice
that the dispute should be submitted to mediation. The mediation shall include
the Responsible Executives and also at least one other executive from each
party. Promptly thereafter, a mutually acceptable mediator shall be chose by the
parties, who shall share the cost of mediation services equally. If the dispute
has not been resolved by mediation within 60 days after the date of written
notice requesting mediation, then either party may initiate litigation and
pursue all and any remedies at law or at equity that such party is entitled to.
Nothing contained in this paragraph shall prohibit a party, in the case of
irreparable harm, from seeking an immediate injunction or other provisional
remedy.
5.6. Notices. Any notice, instruction, direction or demand under the terms
of this Agreement required to be in writing will be duly given upon delivery, if
delivered by hand, facsimile transmission, or US mail, to the following
addresses:
(a) If to WNI, to:
WAM!NET INC.
6100 West 110th Street
Minneapolis, MN 55438
Attention: President
Telephone: 612-886-5100
Telefax: 612-887-2165
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
Attention: Daniel D. Rubino
Telephone: 212-728-8000
Facsimile: 212-728-8111
(b) If to SGI, to:
Silicon Graphics, Inc.
2011 North Shoreline Blvd.
Mountain View, CA 94043
Attention: Neil McGowan
Telephone: 650-933-3799
Telefax: 650-932-0208
With a copy to: SGI Legal Services
or to such other addresses or telecopy numbers as
may be specified by like notice to the other parties.
5.7. Governing Law. This Agreement shall be construed in accordance with
and governed by the substantive internal laws of the State of Minnesota, without
regard to its choice of law rules.
5.8. Severability. If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not render the entire
Agreement invalid. Rather, the Agreement shall be construed as if not containing
the particular invalid or unenforceable provision, and the rights and
obligations of each party shall be construed and enforced accordingly.
5.9. Survival. The parties' obligations under Articles IV and V shall
survive any termination and/or expiration of this Agreement.
5.10. Amendment. This Agreement may only be amended by a written agreement
executed by both parties hereto.
5.11. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one agreement.
5.12. Assignment. No assignment of rights or delegation of duties arising
under this Agreement may be made by any party without the prior written consent
of the other party, which consent may not be unreasonably withheld or delayed.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized representatives.
WAM!NET Inc.
By: /s/ Allen Witters
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Name: Allen Witters
Title: Chief Technology Officer
Silicon Graphics, Inc.
By: /s/ William M. Kelley
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Name: William M. Kelley
Title: Senior Vice President