MICROSOFT CORPORATION
CHANNEL AGREEMENT
This Microsoft Corporation Channel Agreement ("Agreement") is entered into as of
the 1st day of July, 1997 (the "Effective Date") between MICROSOFT CORPORATION
("MS"), having its principal place of business at One Microsoft Way, Redmond, WA
98052-6399 and SOFTWARE SPECTRUM, INC. ("COMPANY"), having its principal place
of business at 2140 Merritt Drive, Garland, TX 75041.
1. DEFINITIONS
Except as set forth above, all capitalized terms included in this Agreement are
as defined in Schedule A, attached hereto and incorporated herein by reference.
2. ADDENDUM TO THE AGREEMENT
COMPANY's rights and obligations with respect to the distribution of Product
under this Agreement are subject to the terms of any Addendum which the parties
have signed. Each Addendum is incorporated into and made a part of this
Agreement. In the event of inconsistency, the terms of any applicable Addendum
shall prevail over this Agreement. The terms of this Agreement, including any
Addenda, shall prevail over any provisions in purchase orders or set-up forms.
3. TERM AND TERMINATION
3.1 TERM
This Agreement shall take effect on the Effective Date and shall continue until
June 30, 1998.
3.2 TERMINATION
Either MS or COMPANY may terminate this Agreement in its entirety and/or any
individual Addendum at any time, with or without cause, upon thirty (30)
calendar days prior written notice. If this Agreement is terminated without
cause, neither party shall be responsible to the other for any costs or damages
resulting from such termination.
3.3 RIGHTS UPON EXPIRATION OR TERMINATION
Any amounts which have accrued prior to termination or expiration shall become
immediately due and payable. Any Product acquired by COMPANY pursuant to this
Agreement as of the termination of this Agreement may be distributed in
accordance with the terms of this Agreement until fully liquidated. All orders
received from COMPANY but not shipped by MS prior to the effective date of any
expiration or termination, at MS' option, may be shipped or canceled. COMPANY
shall make a final report to MS within ninety (90) days of termination of this
Agreement.
4. COMPANY RIGHTS AND OBLIGATIONS
4.1 FINANCIAL STATEMENT
COMPANY will provide to MS' credit management, quarterly Financial Statements
within forty-five (45) days after the end of each calendar quarter. COMPANY
Financial Statements will be used by MS' credit department solely for the
purpose of establishing and reviewing COMPANY's credit. Financial Statements
should be forwarded to Microsoft, Attn. Senior Credit Analyst, Worldwide Credit
Services, Building 8, at the address set forth in Section 17 below.
4.2 NO OTHER PRODUCT WARRANTIES BY COMPANY
Neither COMPANY nor any of its employees or agents shall have any right to make
any other warranties or promises for the use of Product which are not contained
in the written warranty document accompanying the Product. COMPANY may, however,
give instructions for the use of the Product which are contained on the Product
label or container, or End User documentation provided with the manual or MS
product literature denoted by a MS part number or authorized in writing by MS.
4.3 NO ALTERATIONS OF PRODUCT
COMPANY shall not alter the Product or Product packaging, and shall have no
authority to make copies of MS diskettes or documentation without the prior
written consent of MS. COMPANY shall distribute Product to its customers in
unopened packages.
4.4 USE OF TRADEMARKS
COMPANY shall use the appropriate trademark symbol "-TM-" or "-Registered
Trademark-" in a superscript and clearly indicate MS' ownership of the
trademark(s) whenever the Product name is first mentioned in any
advertisement, brochure, or other manner in connection with the Product. MS'
current trademark list is available upon request.
4.5 AUTHORIZED DISTRIBUTION
Product acquired under this Agreement shall be distributed within the Territory
only and only in accordance with the terms of this Agreement and any applicable
Addendum. COMPANY shall not, without the prior written consent of MS, distribute
Product to any Reseller or End User whom they have reason to believe may
re-distribute such Product outside of the Territory.
4.6 TAXES
4.6(a) COMPANY TAXES
All amounts to be paid by COMPANY to MS herein are exclusive of any federal,
state, municipal or other governmental taxes, including income, franchise,
excise, sales, use, gross receipts, value added, goods and services, property or
similar tax, now or hereafter imposed on COMPANY. Such charges shall be the
responsibility of COMPANY and may not be passed on to MS, unless they are owed
solely as a result of entering into this Agreement and are required to be
collected from MS under applicable law.
4.6(b) BILLING AND COLLECTION
COMPANY will bill, collect and remit sales, use, value added, and other
comparable taxes determined by COMPANY to be due with respect to the
distribution of the Product. MS is not liable for any taxes, including without
limitation, income taxes, withholding taxes, value added, franchise, gross
receipt, sales, use, property or similar taxes, duties, levies, fees, excises or
tariffs incurred in connection with or related to the distribution of the
Product. COMPANY takes full responsibility for all such taxes, including
penalties, interest and other additions thereon.
4.6(c) WITHHELD TAXES
If, after a determination by foreign tax authorities, any taxes are required to
be withheld, on payments made by COMPANY to MS, COMPANY may deduct such taxes
from the amount owed MS and pay them to the appropriate taxing authority,
provided however, that COMPANY shall promptly secure and deliver to MS an
official receipt for any such taxes withheld or other documents necessary to
enable MS to claim a U.S. Foreign Tax Credit. COMPANY will make certain that any
taxes withheld are minimized to the extent possible under applicable law.
COMPANY shall indemnify, defend and hold MS harmless from any claims or
liabilities arising from or related to any failure by COMPANY to comply with
Subsection 4.6.
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4.7 ANTI-PIRACY
COMPANY shall take all commercially reasonable steps to prevent unauthorized
distribution, duplication or pirating of the Product.
4.8 COMPLIANCE WITH APPLICABLE LAWS
COMPANY shall ensure that its distribution of Product complies with any and all
applicable laws and regulations in the Territory.
5. MS OBLIGATIONS
5.1 ASSISTANCE WITH REPORTING
Upon COMPANY'S written request, MS shall use reasonable efforts to assist
COMPANY in data reporting, and will work with COMPANY's Information Management
department to facilitate the data reporting process.
5.2 NO WARRANTIES FOR PRODUCT NOT MANUFACTURED BY MS
MS makes no warranties as to items distributed under a third party name,
copyright, trademark or tradename which may be included within the retail
package of a Product sold hereunder.
5.3 AUDITS
During the term of this Agreement and for a period of two (2) years following
its termination or expiration, MS or its designated representative, at its own
cost, may audit the applicable books, records and operations of COMPANY as is
reasonable to verify COMPANY's compliance with the terms of this Agreement.
COMPANY shall promptly correct any errors and omissions disclosed by such audit.
Any audit will be conducted during COMPANY's normal business hours in such a
manner as not to unreasonably interfere with COMPANY's normal business
activities. If any complete financial audit uncovers material discrepancies
COMPANY shall bear the out of pocket costs for the audit. For purposes of this
Section, "material discrepancies" shall mean a fraudulent discrepancy of one
hundred thousand U.S. dollars (US$100,000) or more in monthly revenue or sales
reporting. Additionally, MS or its designated representative, at its own cost,
may audit any portion of COMPANY's books, records, and operations as is
reasonable to verify COMPANY's compliance with the specific terms, policies and
procedures of any addenda to this Agreement.
6. COMPANY AND MS OBLIGATIONS
6.1 PRODUCT WARRANTY; LIMITATION OF LIABILITY
(a) MS warrants its software and hardware Product to End Users as
defined in the written limited warranty document accompanying each Product. All
replacement Product is delivered subject to the terms of the MS limited Product
warranty. THE ABOVE LIMITED WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, OR STATUTORY, INCLUDING IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER OBLIGATIONS OR
LIABILITIES ON MS' PART.
(b) NEITHER MS NOR ANY THIRD PARTIES WHO HAVE BEEN INVOLVED IN THE
CREATION, PRODUCTION, OR DELIVERY TO THE COMPANY OF ANY MICROSOFT PRODUCT WHICH
IS THE SUBJECT OF THIS AGREEMENT SHALL BE LIABLE FOR ANY DIRECT, INDIRECT,
CONSEQUENTIAL, OR INCIDENTAL DAMAGES (INCLUDING DAMAGES FOR LOSS OF BUSINESS
PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, AND THE LIKE)
ARISING OUT OF THE USE OR INABILITY TO USE ANY PRODUCT EVEN IF MS HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
PAGE 3
(c) IN ANY CASE, THE LIABILITY OF MS (i) UNDER ANY PROVISION OF THIS
AGREEMENT; (ii) FOR ANY DAMAGES CAUSED BY A PROGRAM DEFECT OR FAILURE IN ANY
PRODUCT OR (iii) ARISING FROM A COURT OF PROPER JURISDICTION HOLDING ANY OF THE
ABOVE WARRANTIES OR DISCLAIMERS OF WARRANTIES INADEQUATE OR INVALID SHALL BE
LIMITED TO THE AMOUNT ACTUALLY PAID BY COMPANY TO MS UNDER THIS AGREEMENT. MS'
LIMITATION OF LIABILITY IS CUMULATIVE WITH ALL OF MS' EXPENDITURES BEING
AGGREGATED TO DETERMINE SATISFACTION OF THE LIMIT. THE EXISTENCE OF CLAIMS OR
SUITS AGAINST MORE THAN ONE PRODUCT DISTRIBUTED UNDER THIS AGREEMENT WILL NOT
ENLARGE OR EXTEND THE LIMIT. COMPANY RELEASES MS FROM ALL OBLIGATIONS,
LIABILITY, CLAIMS OR DEMANDS IN EXCESS OF THE LIMITATION.
6.2 SEMESTER PROGRAMS
(a) MARKETING FUNDS
Each Semester, MS may allow COMPANY to participate in programs which provide the
opportunity to earn marketing funds. COMPANY's participation in such programs
shall be governed by COMPANY's then current Microsoft Rebate and Marketing Fund
Addendum to this Agreement or other Rebate and Marketing Fund Agreement, and
Microsoft's Marketing Fund Guidelines, as such may be promulgated and modified
by MS, in its sole discretion, from time to time.
(b) REBATES
Each Semester, MS may allow COMPANY to participate in programs which provide the
opportunity to earn rebates as described in COMPANY's current Microsoft Rebate
and Marketing Fund Addendum to this Agreement or other Rebate and Marketing Fund
Agreement, and COMPANY's Rebate Program Guidelines, as such may be promulgated
and modified by MS, in its sole discretion, from time to time.
(c) ELECTRONIC DATA INTERCHANGE
MS shall require COMPANY to provide weekly and monthly sales reporting during
the term of this Agreement. Such sales reporting shall be submitted to MS in
accordance with the Electronic Data Interchange (EDI) Guidelines as provided to
COMPANY by MS, from time to time.
7. INDEMNIFICATION
7.1 BY MS
MS shall indemnify and defend COMPANY its subsidiaries and affiliated companies
from and against any claims, losses, and damages relating to any (i) claims of
infringement of any United States patent, copyright, trademark and/or service
mark with respect to a Product, provided that the Product has not been altered,
or (ii) any default or breach of MS' obligations, promises, representations,
warranties or agreement hereunder. MS' obligation to indemnify and defend
COMPANY shall only apply provided that MS is notified promptly in writing of
such a claim and COMPANY tenders sole control over its defense or settlement to
MS. COMPANY shall provide reasonable assistance in the defense of any claim.
7.2 BY COMPANY
COMPANY shall indemnify and defend MS, its subsidiaries, and affiliated
companies from and against any claims, losses, and damages relating to any
default or breach of COMPANY's obligations, promises, representations,
warranties or agreements hereunder. COMPANY's obligation to indemnify and
defend MS shall only apply provided that COMPANY is immediately notified in
writing of any such claim. MS shall provide reasonable assistance in the
defense of any claim.
PAGE 4
8. INSURANCE
8.1 COMPANY
Throughout the Term and for thirty (30) days thereafter, COMPANY shall maintain,
at its sole expense, Commercial General Liability Insurance written on an
Occurrence Form, with policy limits of not less than three million dollars
(US$3,000,000) combined single limit each occurrence for personal injury
(including bodily injury and death) and property damage which may arise from or
in connection with the performance of COMPANY's obligations hereunder or out of
any negligent act or omission of COMPANY, its officers, directors, agents, or
employees. Upon MS' request, COMPANY shall provide proof of its compliance with
this section. Notwithstanding the foregoing, COMPANY shall have the right to
self-insure.
8.2 MS
Throughout the Term and for thirty (30) days thereafter, MS shall maintain, at
its sole expense, Commercial General Liability Insurance written on an
Occurrence Form, with policy limits of not less thin three million dollars
(US$3,000,000) combined single limit each occurrence for personal injury
(including bodily injury and death) and property damage which may arise from or
in connection with the performance of MS's obligations hereunder or out of any
negligent act or omission of MS, its officers, directors, agents, or employees.
Upon COMPANY's request, MS shall provide proof of its compliance with this
section. Notwithstanding the foregoing, MS shall have the right to self-insure.
9. DELAY IN PERFORMANCE
If as a result of fire, casualty, act of God, riot, war, labor dispute,
government regulation, or decree of any court or any other event beyond the
control of COMPANY or MS, either of the parties shall be unable to perform its
obligations hereunder, such inability shall not constitute a breach of this
agreement, and such obligations shall be performed as soon as the cause of the
inability ceases or is removed. Strikes or other labor difficulties which are
not capable of being terminated on terms acceptable to the party affected shall
not be considered circumstances within the control of such party. In the event
of Product shortages, MS shall have the right to allocate available supplies of
the Product in its sole discretion.
10. NO WAIVER
None of the provisions of this Agreement shall be deemed to have been waived by
any act or acquiescence on the part of MS, COMPANY or their respective agents or
employees, but may be waived only by an instrument in writing signed by an
authorized officer of the waiving party. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision or of the same
provision on another occasion.
11. NO PARTNERSHIP OR AGENCY
Nothing in this Agreement shall be deemed to create or constitute a partnership,
joint venture, franchise, agency, or contract of employment between MS and
COMPANY.
12. ATTORNEY'S FEES; GOVERNING LAW
In the event an action is commenced to enforce a party's rights under this
Agreement, the prevailing party in such action shall be entitled to recover its
costs and attorneys' fees. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Washington. COMPANY consents to
jurisdiction and venue in King County, Washington.
PAGE 5
13. ENTIRE AGREEMENT
This Agreement and all attached Amendments and Addenda constitute the entire
agreement between MS and COMPANY, and supersedes and terminates any and all
prior agreements or contracts, written or oral, entered into between the parties
relating to the subject matter hereof. Any representations, promises, or
conditions in connection therewith not in writing signed by both parties shall
not be binding upon either party. This Agreement shall control any provisions in
purchase orders which are inconsistent with this Agreement.
14. U.S. GOVERNMENT RESTRICTED RIGHTS
All Products delivered to the U.S. Government other than the Department of
Defense on solicitations issued on or after December 1, 1995, shall be delivered
with commercial license rights only. All Products delivered to the Department
of Defense on solicitations issued on or after September 29, 1995, shall be
delivered with commercial license rights only. COMPANY shall be responsible for
ensuring that all Products delivered to the U.S. Government other than the
Department of Defense on solicitations issued prior to December 1, 1995, are
marked with the "Restrictive Rights" legend as set forth in FAR, 48 C.F.R.
52.227-14 (June 1987). COMPANY shall be responsible for ensuring that all
Products delivered to the Department of Defense on solicitations issued prior to
September 29, 1995, are marked with the "Restrictive Rights" legend as set forth
in FAR, 48 C.F.R. 252.227-7013 (October 1998).
15. CONFIDENTIALITY
COMPANY expressly undertakes to retain in confidence the terms and conditions of
this Agreement and any applicable Addenda and all information and know-how
transmitted to it by MS and make no use of such information and know-how except
under the terms and during the existence of this Agreement. COMPANY shall
guarantee and ensure its employees' compliance with this paragraph. COMPANY's
obligations under this paragraph shall survive any termination of this Agreement
and shall extend to the earlier of such time as the information is public domain
or five (5) years following the termination of this Agreement. This Section
shall not prohibit the parties from disclosing such information as is
specifically required by any Federal or state authorities. Notwithstanding the
foregoing, COMPANY may disclose confidential information in accordance with any
judicial or other governmental order or request, provided that COMPANY shall
immediately notify MS in writing upon its receipt of such order or request and
shall assist MS as is reasonable in seeking any protective order or its
equivalent or in limiting the scope of disclosure of any Confidential
Information.
16. NO ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, provided that COMPANY may
not assign its rights or obligations under this Agreement in any way without the
prior written consent of MS.
17. NOTICES
All notices required or contemplated by this Agreement shall be in writing,
delivered by U.S. certified mail (return receipt requested), or via overnight
courier (e.g., Federal Express, or DHL), and addressed as follows:
If to MS: Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Attn.: Director, Channel Policies
With cc to: Law and Corporate Affairs
PAGE 6
If to COMPANY:
Software Spectrum, Inc.
2140 Merritt Drive
Garland, TX 75041
Attn.: Robert D. Graham
Such notices shall be deemed given three (3) business days after being deposited
in the United States mail or one business day after being delivered with an
overnight carrier.
18. SURVIVAL
Sections 3.3, 4.6, 5.3, 6.1, 8.1, 8.2, 14, 15 and 18 shall survive any
termination of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement on the dates
indicated below. This Agreement is not binding until executed by MS.
MICROSOFT CORPORATION ("MS") SOFTWARE SPECTRUM, INC.
("COMPANY")
By: /s/ Lori Moore By: /s/ Robert D. Graham
--------------------------- --------------------------------
Lori Moore Robert D. Graham
- ------------------------------ -----------------------------------
Name (please print) Name (please print)
Director Field Strategy &
Sales Ops V.P. and General Counsel
- ------------------------------ -----------------------------------
Title Title
9/22/97 September 16, 1997
- ------------------------------ -----------------------------------
Date Date
PAGE 7
SCHEDULE A
DEFINED TERMS
"DISTRIBUTOR" shall mean any business entity which purchases MS Product
directly from MS, and is authorized by MS to distribute said Product to
Resellers.
"ELECTRONIC DATA INTERCHANGE" or "EDI" shall mean the ANSI-ASCII X.12
standard, adopted by CompTIA, by which COMPANY shall submit sales reporting to
MS.
"END USER" shall mean the ultimate consumer of Product.
"FINANCIAL STATEMENT" shall mean a Balance Sheet as of the last day of the
calendar quarter, and an Income Statement and Statement of Cash Flows for the
quarter and year-to-date, prepared in accordance with Generally Accepted
Accounting Principles ("GAAP"). Any deviation from GAAP in the quarterly
statements shall be clearly noted. These statements must be signed by an officer
of COMPANY as being representative of the books and accounts of COMPANY.
"PRODUCT" shall mean any MS Stock Keeping Unit ("SKU") listed on COMPANY's
then current Price List.
"PURCHASE CREDIT" shall mean a dollar amount credited to COMPANY's account
with MS, which amount may only be used by COMPANY in the manner set forth in
this Agreement.
"RESELLER" shall mean any software retailer which purchases Product from MS
or a MS authorized Distributor.
"SEMESTER" shall mean a six month period. During the Term there shall be
two (2) Semesters, one running from July 1 through December 31, and the second
Semester running from January 1 through June 30.
"TERM" shall mean the term of this Agreement which shall run from the
Effective Date to and including June 30, 1998.
"TERRITORY" shall mean the geographic boundaries of the United States of
America, excluding all United States territories, possessions, or protectorates.
PAGE A-1
LARGE ACCOUNT RESELLER
ADDENDUM TO THE MICROSOFT
CHANNEL AGREEMENT
This Addendum ("Addendum") entered into this 1st day of July, 1997 supplements
that certain Channel Agreement ("Agreement") between MICROSOFT CORPORATION
("MS") having its principal place of business at One Microsoft Way, Redmond, WA
98052 and SOFTWARE SPECTRUM, INC. ("COMPANY") having its principal place of
business at 2140 Merritt Drive, Garland, TX 75041. The Agreement is hereby
supplemented as follows:
1. PURPOSE
The purpose of this Addendum is to set forth the framework by which MS appoints
COMPANY as a non-exclusive Large Account Reseller in the Territory and Canada
with the right to acquire Microsoft Select Software Products from MS and to
distribute such Select Software Products and their associated license rights to
Select Customers which have designated COMPANY in their Enrollment Form as their
Large Account Reseller
2. DEFINITIONS
For purposes of this Addendum, capitalized terms are as defined in Schedule A
attached hereto and incorporated herein by reference. Any capitalized terms not
otherwise defined herein, shall have the same meaning as set forth in the
Agreement.
3. COMPANY RIGHTS AND OBLIGATIONS
3.1 DISTRIBUTION OF SELECT SOFTWARE PRODUCTS
COMPANY may only distribute Select Software Products to Select Customers located
in the Territory and Canada, and, in accordance with Subsection 3.1(a) below at
the direction of its Select Customer's, outside of the Territory. However,
should a Select Customer desire to initiate an Enrollment Form in a country
outside of the Territory and Canada, the Select Customer is required by the
terms of the Microsoft Select Program to locate a Large Account Reseller in the
desired country and acquire Select Software Products from that Large Account
Reseller.
3.1 (a): If the Select Customer is a business entity established
under the laws of the United States or Canada and existing in the Territory, it
may designate the COMPANY on an Enrollment Form as its Large Account Reseller
for itself and other related companies which may exist outside of the Territory.
COMPANY shall distribute Select Software Products outside the Territory in
accordance with the terms and conditions of this Agreement and in accordance
with applicable laws.
3.1(b): If the Select Customer is a business entity established under
the laws of a foreign country and existing outside of the Territory, then it
must designate a Large Account Reseller in the same country on an Enrollment
Form. In this case, COMPANY is not authorized to distribute Select Software
Products for such Select Customer. Select Customers are entitled to distribute
the rights associated with their Select Software Products outside of the
Territory if they so elect, in accordance with the Master Agreement and all
applicable laws. However, in the event a Select Customer wants to initiate an
Enrollment Form in a country outside of the Territory, the Select Customer is
required by the terms of the Microsoft Select Program to locate a Large Account
Reseller in the desired country and acquire Select Software Products from that
Large Account Reseller.
3.2 DOCUMENTATION
COMPANY shall be authorized to purchase Documentation Products from MS World
Wide Fulfillment for resale to MS licensing customers only. A validation process
must be implemented by COMPANY to ensure that only MS licensing customers
receive Documentation Products. Price protection is not available for
Documentation Products purchased from MS World Wide Fulfillment.
COMPANY may request authorization to return Documentation Products purchased
from MS World Wide Fulfillment within * calendar days from the date of
invoice. Returns requested after * calendar days of invoice shall not be
accepted. Upon request, MS will provide COMPANY with a Return Authorization
Form. COMPANY must complete the Return Authorization Form and send it to MS. MS
will issues a return authorization number for Documentation Product meeting
return criteria. Documentation Products must be returned within thirty (30)
calendar days of the issuance of the return authorization number. MS shall issue
COMPANY a purchase credit in the amount of the authorized return.
3.3 DISTRIBUTION RESTRICTIONS
MS's authorization of the Large Account Reseller to acquire and distribute
Select Software Products as set forth herein shall not include the authorization
for the Large Account Reseller to use Select Software Products internally or to
distribute or otherwise transfer Select Software Products to any entity which
owns, controls, is owned or controlled by, or under common ownership or control
with the Large Account Reseller ("Large Account Reseller Affiliates") without
the prior written consent of MS.
3.4 COMPANY ACCEPTANCE OF ENROLLMENT AGREEMENTS
In order to remain authorized to purchase Select Licenses and Documentation
Product from MS for resale to a given Select Customer, an authorized
representative of COMPANY must review and acknowledge the Select Customer's
Enrollment Agreement. COMPANY's signature on the Enrollment Agreement shall
constitute COMPANY's agreement to pay MS as set forth in Section 3.6 below for
all copies of Select Software Products made by the Select Customer pursuant to
the Select License Agreement.
3.5 COMPANY SELECT PRICE SCHEDULE
COMPANY's prices are set forth on the COMPANY Select Price Schedule attached
hereto and incorporated herein by reference as Schedule B. MS may modify the
COMPANY Select Price Schedule at any time by providing thirty (30) days written
notice to COMPANY.
* Information omitted pursuant to a request for confidential treatment.
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3.6 COMPANY'S REPORTING AND/OR ORDERING AND PAYMENT TO MS
(a) MICROSOFT SELECT 1.x AND 2.x ENROLLMENT AGREEMENT REPORTING
For each executed Microsoft Select version 1.x or version 2.x Enrollment
Agreement, the Select Customer is obligated by the terms of the Microsoft Select
Program to deliver to MS within fifteen (15) days of the end of each calendar
quarter, a written verified report for each Select Software Product acquired
from COMPANY pursuant to the terms of this Agreement. Following receipt of a
report from a given Select Customer, MS shall invoice COMPANY and COMPANY shall
be obligated to pay MS the fees set forth on Schedule B for each unit reported
by the Select Customer. If the Select Customer delivers written verified reports
at intervals shorter than the quarterly requirement, MS shall invoice COMPANY
immediately following receipt of such report, and COMPANY shall be obligated to
pay MS pursuant to the terms of this Section 3.6. In the event COMPANY wants to
receive copies of its Select Customers' quarterly reports, COMPANY shall
negotiate with its Select Customers for the right to receive such copies.
(b) MICROSOFT SELECT 3.0 AND 4.0 SELECT CONSUMPTION REPORTING
For each of its executed Microsoft Select version 3.0 and 4.0 Enrollment
Agreements, COMPANY shall deliver to MS via Electronic Data Interchange ("EDI")
no later than the fifteenth (15th) day of each calendar month, a purchase order
for each Select Software Product ordered and acquired in the previous month from
COMPANY by the Select Customer pursuant to the terms of this Agreement.
Following receipt of such purchase order, MS shall invoice COMPANY and COMPANY
shall be obligated to pay MS the fees set forth on Schedule B for each MS part
number and quantity indicated on the purchase order, along with any applicable
quarterly Maintenance fees. If the Select Customer elects to pre-pay any or all
of its Maintenance commitment, COMPANY shall immediately report such pre-payment
to MS, and MS shall invoice COMPANY immediately following receipt of such
report, and COMPANY shall be obligated to pay MS pursuant to the terms of this
Section 3.6.
(c) PAYMENT TERMS
All amounts are due and owing net thirty (30) days of date of invoice. All
payments not received by MS from COMPANY within the required time frame may be
assessed a finance charge of two percent (2%) of the invoice amount per month or
the legal maximum, which ever is less. COMPANY shall be obligated to pay MS any
and all amounts due regardless of whether COMPANY has received payment from the
Select Customer. All payments shall be in the form of bank wire transfer or
electronic funds transfer through an Automated Clearinghouse ("ACH") with
electronic remittance detail attached. Payments shall be remitted to:
Microsoft North American Collections #844505
Account #3750771767
ABA: #11100001-2
NationsBank of Texas, N.A.
Remittance detail must be received by NationsBank by 10:00AM Central time/8:00AM
Pacific time to ensure same-day credit to COMPANY's account.
Effective January 1, 1998, all payments must be sent to NationsBank at the
address indicated above using the 820 Remittance EDI transaction set or other
form of ACH payment with electronic remittance detail attached.
Page 3
(d) REPORT REVISIONS
COMPANY shall use its best efforts to process all returns of Microsoft Select
License within sixty (60) days from the original invoice date. All revised
reports must provide detailed back-up as required by MS. MS reserves the right
to assess up to a five percent (5%) service charge for credit granted after
ninety (90) days from the original MS invoice date. In no case shall MS impose
such service charge when the late reporting is the result of MS error. MS
reserves the right to review the circumstance of all claims submitted more than
one hundred eighty (180) days from the original invoice date, and may determine
that such revised report is not eligible for credit.
(e) EDI TRANSACTION SETS
COMPANY shall utilize EDI transaction sets 855 - Purchase Order Acknowledgment,
856 - Advance Ship Notice, 832 - Price Catalog, and 810 - Invoices. MS may
elect, during the term of this Addendum, to require COMPANY to implement EDI
transaction set 870 - Backorder Report and/or other EDI transaction sets or
forms of electronic commerce. Should MS require such transaction sets, MS shall
provide COMPANY with no less than one hundred twenty (120) days prior written
notice. All required EDI transaction shall be submitted in accordance with the
EDI Guidelines as provided to COMPANY by MS.
3.7 SALES TAXES
COMPANY shall either provide MS with a bona fide resale certificate for all
Select Software Products delivered to COMPANY by MS pursuant to the terms of
this Addendum, or shall pay to MS all applicable sales, use or other excise
taxes due on such Select Software Products. COMPANY shall indemnify, defend and
hold harmless MS from any tax liabilities arising from or related to any failure
by COMPANY to comply with this Section 3.7 to the Addendum.
3.8 AGREEMENTS BETWEEN COMPANY AND ITS SELECT CUSTOMERS
With the exception of the terms contained in this Addendum and the terms
relating to the exercise of the intellectual property rights set forth in the
applicable Select Software Products, the applicable License Agreement for such
Select Software Products, Master Agreement and Enrollment Form, COMPANY shall
have complete discretion to establish with each Select Customer the pricing and
all other terms and conditions regarding COMPANY's provision of Select Software
Products and their associated license rights to COMPANY's Select Customers. The
negotiation of these terms between COMPANY and its Select Customers shall not be
subject to approval or review by MS in any way.
Page 4
3.9 ROLE OF THE SELECT PROGRAM ADMINISTRATOR
COMPANY agrees to appoint a representative to serve as COMPANY's Select
Program Administrator. COMPANY agrees to promptly make that individual, as
well as COMPANY's other sales employees, available for training on the
Microsoft Select Program and on the licensing policies related to such
products at such times and places as MS reasonably requests. The individual
appointed by COMPANY as its Select Program Administrator shall be an
individual generally knowledgeable of MS products and of Microsoft's Select
Program. The Select Program Administrator shall be responsible for
administering all of COMPANY's Select Customer billings, for general
administration of COMPANY's Select Customers, disseminating all program
information as necessary within COMPANY's organization, and for working with
the Microsoft Select Account Manager (or local MS Contact) in regard to any
problems relevant to a given Select Customer. COMPANY's Select Program
Administrator shall be:
Warren Talbot
----------------------------
2140 Merritt Drive
----------------------------
Garland, TX 75041
----------------------------
----------------------------
----------------------------
COMPANY shall provide MS with at least ten (10) days advance written notice
of any change in the individual serving as its Select Program Administrator.
3.10 ENROLLMENT OF NEW SELECT CUSTOMERS
COMPANY's solicitation of new Select customers shall be on such terms and
conditions as MS specifies from time to time. MS reserves the right to accept or
reject in its sole discretion any proposed customer.
3.11 COMPANY'S REPRESENTATIONS AND WARRANTIES
COMPANY hereby represents and warrants that:
(a) It will use its best efforts to service and support its Select
Customers and will promptly inform the appropriate Microsoft Select contact of
any difficulties it encounters in servicing its Select Customers;
(b) It will not alter in any way or form the Select Software
Products or their packaging;
(c) It will deliver the Select Software Products only to the Select
Customer specified on the outside of the Select Software Product packaging and
will deliver CD-ROMs and program materials and information only to the Select
Customer named on each such CD-ROM or materials; and
(d) It will promptly inform MS of any known or suspected violations
by a Select Customer of the terms and conditions of the Master Agreement,
Enrollment Agreement, Enrollment Form, or its Select Software Products and/or
the applicable License Agreement.
Page 5
3.12 CONFIDENTIALITY
COMPANY expressly undertakes to retain in confidence the terms and conditions of
this Addendum, and the terms and conditions of all executed Select Master
Agreements and Select Enrollment Forms which are made available to COMPANY.
Should COMPANY disclose the terms and conditions of any executed Select Master
Agreement or Select Enrollment Form, this Addendum shall immediately terminate.
COMPANY shall guarantee and ensure its employees' compliance with this
paragraph. COMPANY's obligations under this paragraph shall survive any
termination of this Agreement and shall extend to the earlier of such time as
the information is in the public domain or five (5) years following the
termination of this Agreement. This section shall not prohibit COMPANY from
disclosing such information as is specifically required by any Federal or state
authorities. Notwithstanding the foregoing, COMPANY may disclose confidential
information in accordance with any judicial or other governmental order or
request, provided that COMPANY shall immediately notify MS in writing upon its
receipt of such order or request and shall assist MS as is reasonable in seeking
any protective order or its equivalent or in limiting the scope of disclosure of
any confidential information.
3.13 COMPANY TERMINATION OF ENROLLMENT AGREEMENT/FORM
At anytime during the Term, COMPANY shall be able to terminate its rights and
obligations related to any Enrollment Agreement/Form currently administered by
COMPANY. In order for such termination to be effective, COMPANY must notify the
other party in writing of its desire to terminate its rights and obligations.
Such notification shall include the Select Customer's name and current contact
information, Select Agreement Number, and date of execution. All notification
shall be sent via a courier service able to track package delivery. COMPANY's
rights and obligations shall terminate thirty (30) days upon receipt of the
required notice.
3.14 MICROSOFT SELECT OPERATIONS POLICIES AND PROCEDURES
COMPANY shall materially perform its obligations pursuant to this Addendum in
accordance with the MS Select Operations Policies and Procedures. The MS Select
Operations Policies and Procedures may be modified by MS upon thirty (30) days
notice to COMPANY.
4. COMPANY AND MS OBLIGATIONS
4.1 DELIVERY OF SELECT SOFTWARE PRODUCTS AND SELECT CD-ROMS.
Within fifteen (15) days of MS's approval of a given Enrollment Agreement or
Form, MS agrees to deliver to COMPANY the Select Software Products identified on
such Enrollment. Each Select Software Product delivered to COMPANY will be a
custom package specific to the named Select Customer and will set forth the
Customer's Select Agreement Number and any special conditions relevant to the
named Select Customer. Select Software Products are provided in order that
COMPANY may provide the Select Software Products and their associated license
rights to the named Select Customer on such pricing and payment terms and
conditions as COMPANY and the Select Customer agree. COMPANY agrees to pay MS
for Select Software Products as set forth in Section 3.6 above. From time to
time during the term of this Addendum, MS will provide COMPANY with CD-ROMs
containing upgraded copies of the Select Software Products covered by a Select
Customer's Select Agreement. COMPANY agrees to immediately deliver all CD-ROMs
and any additional MS supplied program information and materials to the named
Select Customer.
Page 6
4.2 RESERVATION OF RIGHTS
MS expressly reserves the right at any time during the Term to terminate any
Select Customer's status as a Select Customer in the event the Select Customer
fails to comply with the terms of either the Master Agreement, the Enrollment
Form or the applicable License Agreement. MS agrees to promptly notify COMPANY
of the termination of any Select Customer to whom COMPANY has distributed Select
Software Products. Following such a notice, COMPANY shall immediately cease the
distribution of any Select Software Products, licenses, CD-ROMs or any
additional program information and materials to the terminated Select Customer.
Termination shall not, however, affect the Select Customer's obligation to file
the next due order/report and MS's right to invoice COMPANY in regard to such
order. If MS terminates a given Select Customer, COMPANY shall not have any
claim against MS or the Select Customer for damages or lost profits resulting
from such termination. COMPANY shall, however, be entitled to invoice the Select
Customer for copies of Select Software Products reproduced by the Select
Customer as set forth in the Select Customer's final order, such invoice to be
on the terms and conditions previously agreed to between COMPANY and the Select
Customer.
4.3 OBLIGATIONS ON TERMINATION
Promptly following termination or expiration of this Addendum, MS shall inform
each of COMPANY's Select Customers that COMPANY is no longer a Large Account
Reseller and shall request that each Select Customer appoint a new Large Account
Reseller. COMPANY may invoice any and all Select Customer orders received
before the Select Customer is required to submit its next verified invoice for
Select Software Products to MS for orders placed under Microsoft Select version
1.x and 2.x and may invoice any orders it has received from Select Customers
under Microsoft Select version 3.0 and 4.0 prior to the effective date of the
termination or expiration. COMPANY shall invoice these remaining orders subject
to the terms and conditions of this Agreement. For purposes of this Section, the
terms and conditions of the Agreement shall survive until COMPANY completes its
wind down obligations. In the event this Addendum is terminated for cause, MS
shall be entitled to direct all of COMPANY's Select Customers to report/order
and pay to MS or to the Select Customer's newly designated Select Large Account
Reseller any and all payments due after termination. In such an event, COMPANY
shall not under any circumstances be entitled to any portion of, or any
compensation for, the Select Customer's next orders and payments or any future
orders and payments.
4.4 ESSENTIAL ELEMENT
Both COMPANY and MS acknowledge that this Addendum is essential to any agreement
it enters into with a Select Customer. Except as is specifically provided in
Section 4.3 related to COMPANY's right to collect any outstanding payment
following termination of this Addendum, COMPANY's rights to acquire and/or
distribute Select Software Products, Select CD-ROMs and/or any additional
program information and materials, and to collect payment from its Select
Customers are conditional upon this Addendum being in full force and effect.
COMPANY acknowledges further that, if and when it is the subject of a bankruptcy
filing (under any Chapter of 11 United States Code Section 101 ET SEQ. including
any future amendments), then assumption of any contract with a Select Customer
is conditional upon the assumption of this Addendum.
Page 7
5. EXPORT RESTRICTIONS
All Product distributed by COMPANY pursuant to this Agreement is subject to the
export control laws and regulations of the United States. COMPANY agrees that
neither COMPANY nor its customers intend to or will, directly or indirectly: (i)
export or transmit any Product to any country to which such export or
transmission is restricted by any applicable U.S. regulation or statute
(currently including, but not limited to Cuba, the Federal Republic of
Yugoslavia (Serbia and Montenegro, U.N. Protected Areas and areas of Republic of
Bosnia and Herzegovina under the control of Bosnian Serb forces), Iran, Iraq,
Libya, North Korea, and Syria), without the prior written consent, if required,
of the Bureau of Export Administration of the U.S. Department of Commerce, or
such other governmental entity as may have jurisdiction over such export or
transmission; (ii) provide any Product in any manner to any Reseller or End User
whom COMPANY or its customer knows or has reason to know will utilize such
Product in the design, development or production of nuclear, chemical or
biological weapons, or (iii) to any End User who has been prohibited from
participating in U.S. export transactions by any federal agency of the U.S.
government.
6. AGREEMENT AND ADDENDUM TERMS
If any terms and conditions in this Addendum conflict with the term and
conditions in the Agreement, with respect to COMPANY's authorization as a Large
Account Reseller only, the terms and conditions of this Addendum shall control.
7. SURVIVAL
Sections 3.6, 3.7, 3.12, 4.3, 5 and 6 shall survive any termination of this
Addendum.
IN WITNESS WHEREOF, the parties have signed this Addendum on the date indicated
below. This Addendum is hereby made part of the Agreement. All terms and
conditions of the Agreement not supplemented herein shall remain in full force
and effect. This Addendum is not binding until executed by MS.
MICROSOFT CORPORATION SOFTWARE SPECTRUM, INC.
("MS") ("COMPANY")
By: /s/ Lori Moore By: /s/ Robert D. Graham
----------------------------------- --------------------------
Lori Moore Robert D. Graham
- -------------------------------------- -----------------------------
Name (please print) Name (please print)
Director, Field Strategy & Sales Ops. V.P. and General Counsel
- -------------------------------------- -----------------------------
Title Title
9/22/97 September 16, 1997
- -------------------------------------- ------------------------------
Date Date
Page 8
SCHEDULE A
DEFINITIONS
"DOCUMENTATION PRODUCTS" is defined as supplemental disk sets and Product
documentation available from Microsoft World Wide Fulfillment.
"ENROLLMENT AGREEMENT" is defined as the Microsoft Select Enrollment
Agreement in the form provided by MS to be signed by each Select Customer and
MS, and approved by COMPANY.
"ENROLLMENT AGREEMENT NUMBER" is defined as the number assigned by MS to a
given Enrollment Agreement.
"ENROLLMENT FORM" is defined as the Microsoft Select Enrollment Form in the
form provided by MS to be signed by each Select Customer and MS.
"LARGE ACCOUNT RESELLER" is defined as any reseller which MS has authorized
to distribute licenses to Select Customers.
"LARGE ACCOUNT RESELLER AFFILIATE" is defined as any entity which owns,
controls, is owned or controlled by, or under common ownership or control with
the Large Account Reseller. For the purposes of this Addendum, an entity is
"controlled" by another if that other company or legal entity, either directly
or through its control of another company or legal entity: (i) holds the
majority of voting rights in it; (ii) is a member of it and has the right to
appoint or remove a majority of its board of directors; or (iii) is a member of
it and controls alone or under an agreement with other shareholders or members,
the majority of the voting rights in it.
"LEAD CUSTOMER" is defined as the company or entity signing a Master
Agreement.
"LEAD CUSTOMER AFFILIATE" is defined as a company or legal entity which
owns and controls, is owned or controlled by, or is under common ownership and
control with, the Lead Customer.
"LICENSE AGREEMENT(S)" is defined as the license agreement attached to the
Enrollment Form.
"MASTER AGREEMENT" is defined as the Microsoft Select Master Agreement in
the form provided by MS to be signed by a given Select Customer or an entity
acting on behalf of the Select Customer.
"MASTER AGREEMENT NUMBER" is defined as the number assigned by MS to a
given Master Agreement.
"SELECT CUSTOMER" is defined as the Lead Customer, any Lead Customer
Affiliate and /or identifiable division, business unit or office location of the
Lead Customer or Lead Customer Affiliate identified as the Select Customer on an
Enrollment Form or identified as an "Enrollment Customer", as that term is
defined in the Microsoft Select version 4.0 or in any Enrollment Agreement. This
definition shall also include "Enrollment Customers" as such terms are defined
in the Microsoft Select version 4.0.
"SELECT PROGRAM ADMINISTRATOR" is defined as the individual appointed by
COMPANY to act as COMPANY's primary contact with respect to the Microsoft Select
Program.
"SELECT SOFTWARE PRODUCT" is defined as the MS software as designated from
time to time by Microsoft which may be reproduced pursuant to an Enrollment
Form, excluding Documentation Products.
Page A-1
SCHEDULE B
COMPANY SELECT PRICE SCHEDULE
Page B-1
DIRECT RESELLER ADDENDUM TO THE
MICROSOFT CORPORATION
CHANNEL AGREEMENT
This Addendum ("Addendum") entered into as of the 1st day of July, 1997,
supplements that certain Microsoft Corporation Channel Agreement
("Agreement") between MICROSOFT CORPORATION ("MS") having its principal place
of business at One Microsoft Way Redmond, WA 98052 and SOFTWARE SPECTRUM,
INC. ("COMPANY") having its principal place of business at 2140 Merritt
Drive, Garland, TX 75041. The Agreement is supplemented as follows:
1. PURPOSE
The purpose of this Addendum is to set forth the framework by which MS
appoints COMPANY as a non-exclusive Direct Reseller in the United States of
America for the MS Product listed on the COMPANY Price List attached hereto
and incorporated herein by reference as Schedule B
2. DEFINITIONS
For purposes of this Addendum, capitalized terms are as defined in Schedule A
attached hereto and incorporated herein by reference. Any capitalized terms
not otherwise defined herein, shall have the same definition as set forth in
the Agreement.
3. TERM
This Addendum shall take effect as of the date indicated above and shall
continue until September 30, 1997.
4. COMPANY OBLIGATIONS
4.1 DISTRIBUTION TO END USERS ONLY
MS authorizes COMPANY to distribute Product to End Users in the Territory only,
and not to resellers of any kind.
4.2 LICENSING PROVISIONS
COMPANY acknowledges that Product is distributed to End Users subject to the
terms of the applicable Microsoft End User License Agreement. COMPANY shall make
commercially reasonable efforts to prevent distribution of Product to End Users
who intend to copy or reproduce the Product in violation of the Microsoft End
User License Agreement.
4.3 PAYMENT TERMS
Payment terms are net thirty (30) days from the date of MS' invoice, subject to
approval of open terms by MS. All invoices outstanding over thirty (30) days
past term may be assessed a finance charge of two percent (2%) of the invoice
amount due per month or the legal maximum, whichever is less. Failure by COMPANY
to meet payment terms may result in a hold by MS of all pending COMPANY orders.
All payments to MS by COMPANY pursuant to this Addendum shall be in the form
of a bank wire transfer, or electronic funds transfer through an Automated
Clearinghouse ("ACH") with electronic remittance detail attached. Payments
shall be remitted to::
Microsoft North America Collections #844505
Account #3750771767
ABA: #11100001-2
NationsBank of Texas, N.A.
Remittance detail must be received at NationsBank by 10:00AM Central time/8:00AM
Pacific time to ensure same-day credit to COMPANY's account with MS.
Effective January 1, 1998, payments must be sent to NationsBank, at the address
indicated above, using the 820 Remittance EDI transaction set or other form of
ACH payment with electronic remittance detail attached.
4.4 SHIPMENT SHORTAGE CLAIMS AND FREIGHT DAMAGE
(a) COMPANY shall submit all claims for shortages and/or variances in
shipments to MS in writing within fifteen (15) days of COMPANY's receipt of such
shipment. All such claims not submitted in writing to MS within fifteen (15) day
period may be deemed waived by COMPANY. Any claims for shortages and/or
variances must be noted on the carrier's receiving documents.
(b) If COMPANY participates in the MS Account Forecasting System
Program, described more fully in Section 6.2 below, COMPANY may submit claims
for freight damage to MS in writing within fifteen (15) days of MS' invoice
date. Freight damage must be noted on the carrier's receiving documents. COMPANY
shall be responsible for all claims made with respect to freight collect
shipments, and shall not withhold payment to MS as a result of such claims.
COMPANY may take a remittance deduction for the Shipping Claims, provided that a
deduction notice identifying the claim (e.g., freight damage or shortage)
accompanies the remittance. If, upon MS' investigation of such Shipping Claims
MS rejects the claim, then COMPANY shall remit the amount due with respect to
the rejected claim with the next remittance. MS, at its sole discretion,
reserves the right to accept any Shipping Claims submitted by COMPANY over sixty
(60) days from receipt of shipment provided that COMPANY may be assessed a
fifteen percent (15%) handing fee. Credit will not be granted for claims
submitted over one hundred eighty (180) days from receipt of shipment.
4.5 PRODUCT FORECASTING
MS may require Product forecasting for COMPANY. COMPANY shall comply with all
Product forecasting requirements which MS may, from time to time, designate.
Page 2
5. MS OBLIGATIONS
5.1 NEW PRODUCTS; PROMOTIONAL PRODUCTS
In the event MS elects to announce new or Promotional Product, MS shall use
commercially reasonable efforts to provide COMPANY with thirty (30) days prior
notice of such announcement. MS reserves the right to determine, at its sole
discretion, how the new or Promotional Product will be distributed.
5.2 INVENTORY PRICE PROTECTION
During the Term, MS shall grant COMPANY a price adjustment against Product price
reductions made and implemented by MS for an indefinite period of time. Price
adjustments shall be available on all inventory which COMPANY reports as being
in its possession as of the day of the reduction. Such price adjustment shall be
in the form of a Purchase Credit equal to the difference between the lowest
price paid by COMPANY during the six (6) months prior to the price reduction and
the reduced price. All claims accompanied with the appropriate proof of
inventory must be submitted to MS within sixty (60) days of the date the price
reduction takes effect. Adjustments shall be paid no later than thirty (30) days
after COMPANY provides proof of inventory. Special temporary prices and
promotional offerings, which may include price reductions or free goods, shall
not be considered a price reduction to which this Section applies.
6. COMPANY AND MS OBLIGATIONS
6.1 PRICE LIST
COMPANY prices are set forth on the COMPANY Price List. MS reserves the right to
modify the COMPANY Price List for Products which are currently being shipped, at
any time upon thirty (30) days written notice to COMPANY. MS may offer, without
prior notice, temporary "special" prices on any or all Product. Notwithstanding
the foregoing, MS may change, with or without prior notice, prices on new
Products which have not yet shipped.
6.2 DELIVERY AND PRODUCT DISTRIBUTION
Product shall be invoiced and shipped Free On Board ("FOB") Origin, and COMPANY
shall be responsible for freight charges. If COMPANY desires to specify its own
carrier, delivery shall then be "freight collect." COMPANY shall assume all risk
of loss and pay all costs of insurance for Products upon MS' delivery of the
Products to the point of origin.
In any month COMPANY participates in the MS Account Forecasting System ("AFS")
Program as outlined in MS' then current AFS Program Guidelines, for which MS is
allowed to choose the freight carrier and a mutually agreed-upon guaranteed
delivery window is established whereby Product is unloaded from the carrier
within four (4) hours of arrival, one hundred percent (100%) of the freight cost
of delivery of Product to each COMPANY warehouse, excluding consolidation
centers, will be paid by MS.
Page 3
6.3 ORDER PROCESSING
COMPANY shall order Product from MS via EDI purchase order. All orders by
COMPANY shall be in Master Pack quantities only. MS shall have ten (10) days
from receipt to reject any purchase order. MS shall fulfill unconditional
EDI purchase orders from COMPANY subject to COMPANY's credit limits, current
payment status, and approved Average Payment Days ("APD") guidelines as
determined by MS. Rejected EDI purchase orders must be re-transmitted using
an unconditional EDI purchase order. Any terms present in any COMPANY
purchase order that is inconsistent with the terms of this Agreement shall be
null and void and the terms of this Agreement shall govern.
Except as provided herein, COMPANY shall have the right to change or cancel any
purchase order, provided that COMPANY notifies MS of the change or cancellation
no later than seventy-two (72) hours prior to the order shipment to COMPANY by
MS. Should COMPANY choose to change or cancel a purchase order, COMPANY must
contact its Microsoft Account Management Specialist with such change or
cancellation request. MS expressly reserves the right to limit order
quantities.
6.4 DEFECTIVE PRODUCT CREDIT
At MS' sole discretion, MS may determine that a Product or Product shipment is
defective. COMPANY shall immediately notify MS of any customer complaints or
returns relating to defects in the Product. Should MS determine that a Product
or Product shipment is defective, MS shall instruct COMPANY to return all
Defective Product to MS and, MS shall provide COMPANY with replacement Product
for returned Defective Products and shall pay freight costs of Product returned
to MS by COMPANY as well as for shipment of replacement Product from MS to
COMPANY.
6.5 PRIOR VERSION CREDIT
When MS ships a new version of a Product or discontinues an existing Product
where no replacement supersedes such Product, MS shall provide notification to
COMPANY. COMPANY shall receive a Purchase Credit for prior version of the
Product and/or Discontinued Product, provided COMPANY complies with all of the
following:
(a) Product for which COMPANY receives a Purchase Credit must be
offset by an order for the new version of the Product for which the Purchase
Credit was received or, in the case of a Discontinued Product, an order for
Product. Orders must be in an aggregate dollar amount equal to or greater than
the aggregate dollar amount of the Purchase Credit
(b) COMPANY shall be eligible to receive a Purchase Credit for up to
three hundred (300) days from the date the new version of such Product first
ships from MS to COMPANY or until the expiration of this Addendum, whichever
occurs first;
(c) Promotional Product is not eligible for credit pursuant to this
Section;
(d) Product must only include Product purchased by COMPANY from MS;
(e) Unresaleable Product is not eligible for credit pursuant to this
Section;
(f) This credit is available only for the Product version number
immediately prior to the new Product version or for the Discontinued Product;
and
Page 4
(g) COMPANY must submit its Prior Version requests electronically
using MS' then current electronic Returns Authorization Form. COMPANY must
provide all required information, including, but not limited to, MS part number,
Product description, quantity, unit price, and extended price as defined in the
then current Return Processing Guidelines. Freight costs shall be paid by
COMPANY.
MS shall use commercially reasonable efforts to notify COMPANY within thirty
(30) days prior to the shipment of any new Product version, or the existence of
a Discontinued Product which would be subject to this Section.
It the foregoing conditions have been met, Product shall be returned to MS
pursuant to the terms of MS' then current Return Processing Guidelines. Prior
Version Returns shall be authorized once per month.
MS may, at its sole discretion, allow COMPANY to return Prior Version Product
for Purchase Credit for the period of three hundred one (301) days to three
hundred sixty-five (365) days from the date the new version of such Product
first ships from MS to COMPANY, provided that all such returns shall be subject
to a fifteen percent (15%) handling fee. In no event shall MS accept returns of
Prior Version Product after three hundred sixty-five (365) days. All Product
returned for Prior Version Credit must be in resalable condition.
6.6 UNRESALEABLE PRODUCT ALLOWANCE
Every other Month COMPANY shall be eligible to return current version or
immediately prior version Unresaleable Product and receive a Purchase Credit of
up to (*) percent (*) of COMPANY's net purchases, excluding Microsoft Variable
Licenses, Microsoft Enterprise Licenses, and Microsoft Maintenance, for the
previous two (2) Months. All Unresaleable Product shall be audited by MS.
COMPANY must submit its Unresaleable Product Allowance request electronically
using MS' then current electronic Returns Authorization Form. COMPANY must
provide all required information, including, but not limited to, MS part number,
Product description, quantity, unit price, and extended price in accordance with
the timeline as defined in the then current Return Processing Guidelines.
Freight costs shall be paid by COMPANY. Unresaleable Product may not be resold
or donated.
6.7 PRODUCT AUTHORIZATION CATEGORY PROCEDURES
From time to time, MS may classify certain of its Products by a Product
Authorization Category (e.g. Academic Edition Product) which Product may only be
obtained and distributed by COMPANY upon written authorization from MS. Such
written authorization from MS may be specific to the particular COMPANY outlet
location. COMPANY may apply for such authorization by completing the applicable
Reseller Authorization Application and/or Agreement process required by MS. MS
may by prior written notification terminate COMPANY's authorization to obtain
and distribute Product Authorization Category Product with respect to one or
more COMPANY outlets. For each Product Authorization Category Product
distributed, COMPANY shall complete and return to MS all requested COMPANY
registration documents.
- ---------------------
* Information omitted pursuant to a request for confidential treatment.
Page 5
7. EXPORT RESTRICTIONS
All Product distributed by COMPANY pursuant to this Agreement is subject to the
export control laws and regulations of the United States. COMPANY agrees that
neither COMPANY nor its customers intend to or will, directly or indirectly: (i)
export or transmit any Product to any country to which such export or
transmission is restricted by any applicable U.S. regulation or statute
(currently including, but not limited to Cuba, the Federal Republic of
Yugoslavia (Serbia and Montenegro, U.N. Protected Areas and areas of Republic of
Bosnia and Herzegovina under the control of Bosnian Serb forces), Iran, Iraq,
Libya, North Korea, and Syria), without the prior written consent, if required,
of the Bureau of Export Administration of the U.S. Department of Commerce, or
such other governmental entity as may have jurisdiction over such export or
transmission; (ii) provide any Product in any manner to any Reseller or End User
whom COMPANY or its customer knows or has reason to know will utilize such
Product in the design, development or production of nuclear, chemical or
biological weapons; or (iii) to any End User who has been prohibited from
participating in U.S. export transactions by any federal agency of the U.S.
government.
8 SURVIVAL
Section 7 shall survive any termination of this Addendum.
IN WITNESS WHEREOF, the parties have signed this Addendum on the dates indicated
below. All terms and conditions of the Agreement not amended herein shall remain
in full force and effect. This Addendum is not binding until executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS") SOFTWARE SPECTRUM, INC.
("COMPANY")
By: /s/ Lori Moore By: /s Robert D. Graham
- -------------------------------------- ----------------------------------
Lori Moore Robert D. Graham
- -------------------------------------- ----------------------------------
Name (please print) Name (please print)
Director, Field Strategy & Sales Ops. V.P. and General Counsel
- -------------------------------------- ----------------------------------
Title Title
9/22/97 September 16, 1997
- -------------------------------------- ----------------------------------
Date Date
Page 6
SCHEDULE B
COMPANY PRICE LIST
*
- ------------------------
* Information omitted pursuant to a request for confidential treatment.
Page B-1
SCHEDULE C
MS CALENDAR
MICROSOFT - FISCAL CALENDAR FY '98
[CALENDAR - JULY '97 TO JUNE '98]
Page C-1
REBATE AND MARKETING FUND
ADDENDUM TO THE MICROSOFT
CHANNEL AGREEMENT
This Addendum ("Addendum") entered into as of the 1st day of July, 1997,
supplements that certain Microsoft Channel Agreement ("Agreement") between
MICROSOFT CORPORATION ("MS") having its principal place of business at One
Microsoft Way Redmond, WA 98052 and SOFTWARE SPECTRUM, INC. ("COMPANY") 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 COMPANY 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 September 30, 1997. 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 COMPANY have executed a Microsoft Channel Agreement,
and the Addendum to The Microsoft 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
4.1 PACKAGED PRODUCT REBATE
COMPANY is eligible to receive up to a (*) percent (*) Rebate on its Qualified
Sales, excluding Open License sales, made during the Rebate and Marketing Fund
Period. The Rebate shall be paid provided COMPANY complies with the Rebate
Program Guidelines outlined in Schedule B.
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
5.1 OPPORTUNITY FUNDS
Periodically, MS at its discretion may allow COMPANY to participate in MS
programs which provide the opportunity to earn Opportunity Marketing Funds.
COMPANY'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 COMPANY's MS Account Manager. Without limiting the
foregoing, COMPANY 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 COMPANY's Marketing Fund account at MS'
Marketing Fund vendor or submitted in excess of the pre-approved dollar amount
shall not be granted to COMPANY.
(*) Information omitted pursuant to a request for a confidential treatment.
COMPANY must obtain MS approval from a MS representative prior to claiming
Marketing Funds. COMPANY agrees to report any suspected error or discrepancy in
the amount of Marketing Funds received by COMPANY within thirty (30) days of
receipt thereof. Failure to provide such notice within the specified period
shall mean that COMPANY forfeits the opportunity to request a re-audit. MS
reserves the right at any time to adjust COMPANY'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 COMPANY as is
reasonable to verify COMPANY's compliance with the terms of this Addendum.
Additionally, MS may audit specific Opportunity Marketing Fund claims submitted
by COMPANY as outlined in COMPANY's then current Marketing Fund Guidelines. Any
audit shall be conducted during COMPANY's normal business hours in such a manner
as not to unreasonably interfere with COMPANY'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 COMPANY. For
purposes of this Section, "material discrepancies" shall mean ten thousand U.S.
dollars (US$10,000) or more in each Rebate or Marketing Fund payment.
If the results of any audit show that COMPANY used Marketing Funds in any manner
other than as authorized under this Addendum, MS shall be entitled to recover
from COMPANY 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 audit shows that
COMPANY 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.
6. REPORTING REQUIREMENTS
COMPANY shall submit reports to MS as outlined in COMPANY's Rebate Program
Guidelines in accordance with the then current EDI Implementation Guide provided
by MS. Failure by COMPANY to comply with the terms of the Guidelines shall
result in COMPANY'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.
("COMPANY"):
By:/s/ Lori Moore By: /s/ Robert D. Graham
--------------------------- -------------------------------
Lori Moore Robert D. Graham
--------------------------- -------------------------------
Name (please print) Name (please print)
Director, Field Strategy & V.P. and General Counsel
Sales Ops.
--------------------------- -------------------------------
Title Title
9/22/97 September 16, 1997
--------------------------- -------------------------------
Date Date
PAGE 2
SCHEDULE A
DEFINITIONS
"DEFECTIVE PRODUCT" is defined as a manufacturer's defect in materials or
media.
"DISCONTINUED PRODUCT" is defined as Product that MS has stopped
manufacturing and discontinued from the COMPANY Price List.
"INVENTORY BALANCING" is defined as the return of eligible MS Product for
the purpose of reducing COMPANY's stock of such Product as is more fully
described in Section 5.5 of this Addendum.
"MONTH" is defined as a MS fiscal month as outlined in the calendar
attached hereto as Schedule C.
"PROMOTIONAL PRODUCT" is defined as a special Product SKU which may be
available to COMPANY for resale for a limited time. Free Product promotions are
not considered Promotional Product.
"RETURN AUTHORIZATION NUMBER" is defined as the unique number assigned to
COMPANY by MS for the purpose of Product returns for COMPANY to MS.
"SHIPPING CLAIMS" shall mean any shipping shortage or freight damage claim
COMPANY may submit pursuant to Section 4.4 of this Addendum.
"UNRESALEABLE PRODUCT" is defined as any current or immediately prior
version Product held in COMPANY's inventory, including damaged Product and
Product returned by COMPANY's customers which is no longer fit for resale, and
is ineligible for return to MS. In no event shall COMPANY be eligible to receive
a Unresaleable Product Allowance for any version prior to the version
immediately prior to the current version, or obsolete Product no longer eligible
for return in accordance with the terms of Section 6.5. For purposes of this
Addendum, Unresaleable Product shall not include that Product which has
sustained solely shrink wrap damage.
Page A-1
SCHEDULE B
JULY - SEPTEMBER, 1997
REBATE GUIDELINES
PROGRAMS: Microsoft offers three (3) rebate programs for the July - September,
1997 Rebate period. The total available Rebate is divided as follows:
MAXIMUM PERCENTAGE
REBATE PROGRAM AVAILABLE
-----------------------------------------------------------
Total Sales-out Program *
-----------------------------------------------------------
Business Systems Sales-out Program *
(excluding Windows NT(TM)
Server and Windows NT(TM)
Client Access Licenses
-----------------------------------------------------------
32-Bit 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 the quarterly
Rebate Period (November 15th). 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 COMPANY's achievement
toward the Sales-out goal, but shall not be included in COMPANY'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 COMPANY'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 quarter of the Rebate Period.
PURCHASES THROUGH DISTRIBUTION: COMPANY's full packaged product and MLP
purchases through distribution during the month of July, 1997 will be subtracted
from COMPANY's Qualified Sales for purposes of Rebate payment. Full packaged
product and MLP purchases through distribution during the remainder of the term
of this Addendum shall be included in COMPANY'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, COMPANY's purchases through
distribution of those SKUs will count toward COMPANY'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. 22/2054
REDMOND, WA 98052
ATTN.: REBATE MANAGER, CHANNEL POLICIES
ANY ISSUES REGARDING REBATES SHOULD BE SENT IN WRITING TO REBATE MANAGER,
CHANNEL POLICIES, NO LATER THAN THIRTY (30) DAYS FOLLOWING RECEIPT OF REBATE
PAYMENT. If such written notice is not provided within thirty (30) days, COMPANY
shall have no further right to dispute Rebate payment.
CONTRACT COMPLIANCE: In order to receive rebates from Microsoft, COMPANY must
comply with Microsoft's established payment terms, Street Date requirements, EDI
reporting requirements, and Microsoft Select transaction requirements.
Compliance with these terms will be measured on a monthly basis, and COMPANY's
failure to comply will result in a loss of up to one fourth of its available
monthly rebate. At the time of rebate payment, COMPANY's entire rebate payment
shall be withheld until COMPANY is in compliance with the terms of this section.
Contract compliance obligations are outlined below.
1. MICROSOFT PAYMENT REQUIREMENTS:
Microsoft requires its customers to pay its invoices within terms. In order to
maintain compliance one hundred percent (100%) of the gross invoice value for
non-Select must be current as of Microsoft's fiscal month end, no less than
eighty-five percent (85%) of the gross invoice value for Select must be current
as of the end of Microsoft's
- -----------------------
* Information omitted pursuant to a request for confidential treatment.
PAGE B1
fiscal months July, August, October and November, and no less than ninety (90%)
of the gross invoice value for Select must be current as of the end of
Microsoft's fiscal months September and December. Additionally, no less than
ninety percent (90%) of unapplied credits must be current as of Microsoft's
fiscal month-end, and no greater than one percent (1%) of the gross value for
Select invoices shall be past net 60 days. Unapplied credits will be excluded
from the calculation. Beginning in January, 1998 no less thin ninety percent
(90%) of Select invoices must be current as of Microsoft's fiscal month end for
all months.
2. MS STREET DATE-REQUIREMENTS:
From time to time, MS may announce a new product or new versions of an existing
Product for which MS shall set a Street Date. The Street Date Program requires
Resellers to sell Product no sooner than the date specified as the "Street
Date". MS' Street Date Requirements are as follows:
RETAIL DELIVERY OF PRODUCT, COMPANY SHALL NOT:
- Ship or deliver the Product to any End User prior to the Street
Date. Proof of violation is an early-dated sales slip.
- Accept any End User payment for the Product prior to the Street
Date. Checks and/or credit card numbers may be accepted by
COMPANY, but can only be processed when product is delivered to
the End User on or after the Street Date.
MALL ORDER DELIVERY OF PRODUCT, COMPANY SHALL NOT:
- Deliver the Product to any End User customer prior to the Street
Date. If COMPANY wishes, COMPANY may ship Product by public
carrier up to 2 days early provided the carrier provides proof of
delivery and guarantees no End User will receive the Product
before street date. Proof of violation is an early-dated carrier
slip.
- Accept any End User payment for the Product prior to Product
shipment. Checks and/or credit card numbers may be accepted by
COMPANY, but can only be processed when Product is shipped to the
End User for arrival on or after the Street Date.
ELECTRONIC SOFTWARE DISTRIBUTION OF PRODUCT, COMPANY SHALL NOT:
- Ship or deliver an un-lock key for Product to any desktop package
or End User prior to the Street Date. (ESD RESELLER IS
RESPONSIBLE FOR MAKING SURE AGREEMENTS WITH CLEARINGHOUSES ARE
CLEAR ON THIS POINT.) Proof of violation is an early-dated
un-lock key.
- Accept any End User payment for the Product prior to the Street
Date. Checks and/or credit card numbers may be accepted by
COMPANY, but can only be processed when the un-lock key for the
Product is delivered to the End User on or after the Street Date.
ADDITIONALLY, COMPANY SHALL NOT:
- Advertise, merchandise, or promote the Product to End User
customers until MS' officially announced "Coming Soon" date.
(Appearance on a WEB page is considered an advertisement.) If the
Product is advertised, merchandised and/or promoted beginning
with "Coming Soon" Date and before Street Date, all such
promotions must clearly state that the Product is not yet
available for purchase.
- 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 MS in its
sole discretion has determined to be in violation of the Street
Date Requirements.
In the event COMPANY violates the Street Date for any special Products specified
in a MS Street Date letter, COMPANY shall forfeit up to * percent * of its
eligible Rebate percentage for the six month Rebate Period in which the
violation occurred.
Should COMPANY fail to comply with the Street Date Requirements, MS may also,
for a period of up to twelve (12) months, withhold shipments to COMPANY of
future Product until the Street Date of such Product.
Should COMPANY wish to report a Street Date violation, COMPANY 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, MS shall investigate the violation, and take
remedial action as appropriate. Please note, in order to confirm a suspected
violation, MS must receive proof of violation as indicated above.
- -----------------------
* Information omitted pursuant to a request for confidential treatment.
PAGE B2
3. MICROSOFT REPORTING REQUIREMENTS
ALL EDI REPORTING MUST BE TIMELY, ACCURATE, AND COMPLETE. 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.
MICROSOFT PRODUCT REPORTING RULES
Reporting includes, but is not limited to, reports sent to Microsoft via
Electronic Data Interchange format ("EDI") of weekly Sales, Inventory, and
Internal Market Share. COMPANY must make the EDI Sales, Inventory and Market
Share reports available to MS' EDI mailbox each Monday by Noon (Pacific time).
These reports shall cover the seven-day period (Saturday through Friday EOB).
Please refer to the EDI Reporting Guidelines for details on reporting
requirements.
MS reserves the right to modify the EDI Reporting Guidelines. MS shall provide
COMPANY with sixty (60) days prior written notice of changes to existing EDI
Guidelines. COMPANY's failure to implement changes with sixty (60) days shall
result in forfeiture of c of COMPANY's total eligible Rebate for each month
in which changes are not implemented.
- Each unit of Microsoft single license Full Package Product should
be reported as one (1) unit.
EXAMPLE: MICROSOFT(R) WORD FOR WINDOWS (R) FPP- REPORT AS ONE (I) UNIT.
- Any single Microsoft Multiple License Pack (MLP) should be
reported as one (1) unit.
EXAMPLE: MICROSOFT(R) WINDOWS NT(TM) WORKSTATION LICENSE PACK 20 USER -
REPORT AS ONE (1) UNIT.
- All Microsoft Volume Licensing Agreements (such as Open Licenses,
Select Variable Licenses and Enterprise Licenses) should be
reported as one unit for each license sold.
EXAMPLE: MICROSOFT SELECT MVLP LEVEL B (MIN 8000 LICENSES) AGREEMENT -
CUSTOMER BUYS 9356 WORD - REPORT 9356 WORD UNITS.
Accounts are required to report units sold (Sales) and units in inventory
(Inventory) for each Microsoft SKU, but are required only to report the
aggregate total license count for competitive products sold for each Market
Share (Internal Market Share) category. All SKUs for these titles should be
counted, including full packaged product, upgrades, license packs, initial sale
of new maintenance and education and government SKUs of the foregoing. 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. For a comprehensive competitive SKU list
please contact your Microsoft Channel Measurement Specialist. MS reserves the
right to add or delete categories with sixty (60) days prior written notice to
COMPANY.
A comprehensive competitive SKU list shall be provided to COMPANY at the
beginning of each quarter. COMPANY must implement use of the list no later
than thirty (30) days after receiving the list. To the extent that COMPANY
sells any of the products contained on the list, COMPANY's Internal Market
Share reporting will include those SKUs. If between quarters there are any
new major releases of competitive products that fall under the competitive
product categories or upgrades to products already listed on the competitive
SKU list, COMPANY shall include those SKUs in COMPANY's Internal Market Share
reporting immediately upon release of new products.
PAGE B3
Windows-based competitive products summaries:
- ------------------------------------------------------------------------------------------------------------------------
DATABASE VENDOR DESCRIPTION
BORLAND DBASE, PARADOX
LOTUS APPROACH
CLARIS FILEMAKER PRO
DATAEASE DATAEASE
SAPPHIRE SQL CONNECT
SYMANTEC Q & A
- ------------------------------------------------------------------------------------------------------------------------
DEVELOPER VENDOR DESCRIPTION
BORLAND DELPHI
GUPTA SQL WINDOWS
ORACLE DEVELOPER 2000, POWEROBJECTS
POWERSOFT POWERBUILDER
- ------------------------------------------------------------------------------------------------------------------------
MESSAGING SERVERS
VENDOR DESCRIPTION (Servers only. Do not report clients.)
BANYAN BEYOND MAIL
LOTUS CC:MAIL, NOTES, NOTESUITE
NETSCAPE MAIL SERVER
NOVELL GROUPWISE
- ------------------------------------------------------------------------------------------------------------------------
SUITE VENDOR DESCRIPTION
COREL OFFICE PRO, WORDPERFECT SUITE
LOTUS SMARTSUITE
NOVEL PERFECT OFFICE
- ------------------------------------------------------------------------------------------------------------------------
WORDPROCESSOR VENDOR DESCRIPTION
LOTUS WORD PRO, AMI PRO
NOVELL WORDPERFECT
SOFTKEY WORDSTAR, PFS:WRITE
SOFTWARE PUBLISHER OFFICE WRITER, PROFESSIONAL WRITE PLUS
XYQUEST XYWRITE
- ------------------------------------------------------------------------------------------------------------------------
SPREADSHEET VENDOR DESCRIPTION
COMPUTER ASSOCIATES SUPERCALC
COREL QUATTRO PRO
LOTUS 1-2-3
NOVELL QUATTRO PRO
- ------------------------------------------------------------------------------------------------------------------------
NOS SERVERS VENDOR DESCRIPTION (Servers only. Do not report clients)
BANYAN VINES, SERVER
IBM OS/2, OS/2 LAN SERVER, OS/2 WARP, OS/2 WARP CONNECT
NOVELL NETWARE, NETWARE FOR SAA:AS400, INTRANETWARE, MPR,
MANAGEWISE W/NETWARE
SANTA CRUZ OPEN SERVER, UNIXWARE
OPERATION
- ------------------------------------------------------------------------------------------------------------------------
BROWSERS VENDOR DESCRIPTION
NETMANAGE CHAMELEON
NETSCAPE NETSCAPE BROWSER
SPRY SPRY MOSAIC; INTERNET IN-A-BOX
IBM WEB EXPLORER
QUARTERDECK MOSAIC
NCSA MOSAIC
- ------------------------------------------------------------------------------------------------------------------------
PAGE B4
COMPETITIVE PRODUCT MARKET SHARE REPORTING RULES
- Each unit of COMPETITIVE single license FULL PACKAGE PRODUCT should be
reported as one (1) unit.
EXAMPLE: LOTUS SMARTSUITE FOR WINDOWS FPP-REPORT AS 1 UNIT
- Any single COMPETITIVE product that is a MULTIPLE LICENSE PACK (MLP)
should be reported as the exact number of licenses contained in the
MLP. Examples of these products include competitive 10 User Packs, 20
User Packs, and 100 User Packs. Unlike MS Products, competitive MLPs
are not reported as a single unit, but instead as the exact number of
licenses included in the MLP. If the MLP is a Network Operating System
or Messaging Server MLP, count only server licenses contained in the
MLP.)
EXAMPLE: WORDPERFECT V6.0 FOR WINDOWS 20-USER LICENSE PACK - REPORT AS 20
UNITS
- All SKUs (with the exception of Mail clients and Network Operating
System clients) contained in COMPETITIVE VOLUME LICENSING AGREEMENTS
should be reported as one (1) unit for each license sold within the
volume license agreement.
EXAMPLE: LOTUS VPO-LEVEL E 1-2-3)OR WINDOWS (CUSTOMER BUYS 7421 UNITS)
- REPORT AS 7421 UNITS
- COMPETITIVE MAIL SERVERS and NETWORK OPERATING SYSTEMS must be
reported as one (1) unit for each SERVER LICENSE SOLD. DO NOT REPORT
CLIENT LICENSES IN FPP, MLP, OR VOLUME LICENSE AGREEMENTS.
- Report MAINTENANCE only at the time the maintenance SKU is sold.
- Product Support for any competitive SKU should NOT be reported.
- Documentation-only SKUs should NOT be reported.
- Only US versions of competitive SKUs should be reported. Do not report
non-English, International English, or International versions of
competitive SKUs.
- Promotional competitive SKUs should be reported.
4. MICROSOFT SELECT TRANSACTION REQUIREMENTS:
Microsoft Select Electronic Data Interchange format ("EDI") transactions
include, but are not limited to 850/855 EDI transactions and all other EDI
reporting requirements which may be required by MS and in the EDI Implementation
Guide provided by MS from time to time. COMPANY must place Select EDI
transaction orders at a minimum of once per month per Enrollment Site if product
is purchased during said month.
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 ESD) are included in measuring performance
against this goal, however, the Rebate is paid on full packaged product sales
only.
REBATE GOALS: COMPANY's performance for first three months of quarter will be
measured against the quarter Sales-out goals. At the end of first quarter,
COMPANY will receive the percentage of the eligible Rebates earned based on
performance against the quarter goals.
SALES-OUT DEFINITIONS/MEASUREMENT: MS Product Sales-out is defined as those
MS net (sales less returns) Product units sold through COMPANY's outlet
locations. COMPANY's full packaged product, Microsoft Open License, and
upgrade sales-out units will be measured from the sales-out reported by
COMPANY 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.
PAYMENT: At the end of the quarter, COMPANY will be paid Sales-out Rebates based
on performance against the quarter goals. If COMPANY achieves greater than *
percent * of each quarter Sales-out goal, COMPANY will receive the exact
achieved percentage of the eligible Sales-out Rebate up to one hundred percent
(100%). If COMPANY achieves less than * percent * of any Sales-out Rebate goal,
COMPANY will not receive any portion of that Sales-out Rebate.
Although MS pays the Sales-out Rebate ultimately based on performance against an
annual Sales-out goal, Microsoft also pays a Sales-out Rebate at the end each
quarter based on performance against the quarter goal. Microsoft pays a portion
of the Rebate after each quarter to provide incentive for COMPANY to focus on
Sales-out throughout the entire year. However, should COMPANY's total quarterly
Rebate payments exceed the final Rebate total as calculated at the end of the
year, MS reserves the recover from COMPANY any such Rebate overpayment.
- --------------------------------
* Information omitted pursuant to a request for confidential treatment.
PAGE B5
- -------------------------------------------------------------------------------
SALES-OUT REBATE PROGRAM GOALS
- -------------------------------------------------------------------------------
COMPANY's Total Sales-out Rebate Program goals are as follows:
- Quarter Goal (July - September, 1997): *
COMPANY's Business Systems (excluding Windows NT-TM- Server and Windows NT-TM-
Client Access Licenses) Sales-out Rebate Program goals are as follows:
- Quarter Goal (July - September, 1997): *
COMPANY's 32 bit Office Sales-out Rebate Program goals are as follows:
- Quarter Goal (July - September, 1997): *
- --------------------------------
* Information omitted pursuant to a request for confidential treatment.
PAGE B6