1
Exhibit 10.4
Microsoft Corporation
Channel Agreement
This Microsoft Corporation Channel Agreement ("Agreement") is entered into as of
the 1st day of July, 1998 (the "Effective Date") between MICROSOFT CORPORATION
("MS"), having its principal place of business at Xxx Xxxxxxxxx Xxx, Xxxxxxx, XX
00000-0000 and WAREFORCE, INC. ("COMPANY"), having its principal place of
business at 0000 Xxxxxxxxx Xxx #000, Xx Xxxxxxx, XX 00000.
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.
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, 1999.
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
2
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, or such
Product may be returned to MS within sixty (60) calendar days after the
effective termination or expiration. 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 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.
4.2 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.
3
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
This Agreement does not constitute a trademark or service xxxx license. COMPANY
acknowledges and agrees that the Trademarks are the exclusive property of MS or
one of its affiliated companies and that COMPANY is not entitled either by
implication or otherwise to any title in the Trademarks. COMPANY shall not use
any Trademarks other than in accordance with this Agreement (including but not
limited to the guidelines set out in the TM Web Site) or as otherwise permitted
in writing from time to time by MS. With respect to the distribution of Product,
COMPANY shall use the appropriate trademark symbol "TM" or "(R)" 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 Products.
4.5 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.
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
4
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 xxxx, 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.
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.
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
5
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 Reporting/Electronic Data Interchange
COMPANY shall provide weekly sales and inventory reporting in a timely and
accurate manner during the Term. 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.
5.4 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 audit uncovers material discrepancies COMPANY shall bear the
costs for the audit. For purposes of this Section, "material
6
discrepancies" shall mean a discrepancy of five hundred thousand U.S. dollars
(US$500,000) or more in any revenue or sales reporting.
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 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.
(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
7
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
Offer Letter, 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 Rebate Letter, and COMPANY s Rebate Program Guidelines, as
such may be promulgated and modified by MS, in its sole discretion, from time to
time.
7. Indemnification
7.1 By MS
(a) If a cause of action, claim, or demand is brought under United
States laws against COMPANY for an Infringement Claim, COMPANY shall promptly
notify MS in writing of the Infringement Claim, specify the nature of such claim
and the relief sought. COMPANY shall tender the defense of the Infringement
Claim to MS. Within thirty (30) calendar days of MS' receipt of such notice, MS
shall notify COMPANY in writing of MS' acceptance or rejection of the defense of
the Infringement Claim. If MS accepts the defense of the Infringement Claim,
then MS shall pay any settlement to which MS consents or shall pay the amount of
any adverse final judgment. MS' acceptance or rejection of any Infringement
Claim shall be based on MS' discretion which shall be reasonable. MS shall have
sole control over the defense and/or settlement of Infringement Claims. COMPANY
shall provide reasonable assistance in the same.
(b) In the event MS receives information concerning an intellectual
property infringement claim (including an Indemnified Claim) under United States
laws and related to the Product(s) or the Marks, MS may at its expense, without
8
obligation to do so, either (i) procure for COMPANY the right to continue to
distribute the alleged infringing Product or Xxxx, or (ii) replace or modify the
Product or Xxxx to make it non-infringing, and in which case, COMPANY shall
thereupon cease distribution of the alleged infringing Product or Xxxx.
(c) MS shall have no liability for any intellectual property
infringement claim (including an Infringement Claim) based on COMPANY's (i)
distribution or use of any Product or Xxxx after MS' notice that COMPANY should
cease distribution, or use of such Product or Xxxx due to such a claim; or (ii)
combination of a Product with any other product, program or data; or (iii)
adaptation or modification of any Product. For all claims described in this
Section 7.1(c), COMPANY agrees to indemnify and defend MS from and against all
damages, costs and expenses, including reasonable attorneys' fees.
7.2 By Company
COMPANY shall defend MS, its subsidiaries, and affiliated companies from and
against any claims, losses, and damages relating to any default, breach or
alleged breach of COMPANY's obligations, promises, representations, warranties
or agreements hereunder. COMPANY's obligation to 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. At MS's sole
option, and at COMPANY's cost, MS may participate in the selection of counsel,
defense and settlement of any claims covered by this Section 7.2, or may tender
sole control over the defense or settlement of the claim to COMPANY. If MS
chooses to participate in the selection of counsel, defense and settlement of
such claims, the parties shall work together in good faith to reach decisions
which are mutually acceptable to both parties. MS shall provide reasonable
assistance in the defense of any claim.
8. Insurance
8.1 COMPANY
9
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.
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 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 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. Export Restrictions
COMPANY agrees that COMPANY and, as applicable, its Resellers will not
export or re-export Product to any country, person, or entity subject to
U.S. export restrictions. COMPANY specifically agrees not to export or
reexport Product (i) to any country to which the U.S. embargoes or
restricts the export of goods or services, which as of March 31, 1998,
includes, but is not necessarily limited to, Cuba, Iran, Iraq, Libya, North
Korea, Sudan and Syria, or to any national of any such country who COMPANY
knows intends to transmit or transport the products back to such country;
(ii) to any person or entity that COMPANY or, as applicable, its Resellers
know will utilize Product in the design, development or production of
nuclear, chemical or biological
10
weapons; or (iii) to any person or entity that has been prohibited from
participating in U.S. export transactions by any federal agency of the U.S.
government.
10. 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.
11. 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.
12. 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.
13. 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
11
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.
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.
15. U.S. Government Rights
All Products provided to the U.S. Government pursuant to solicitations issued on
or after December 1, 1995, are provided with commercial license rights only. All
Products provided to the U.S. Government pursuant to solicitations issued prior
to December 1, 1995 are provided with RESTRICTED RIGHTS as provided for in FAR,
48 C.F.R. 52.227-14 (June 1987) or FAR, 48 CFR 252.227-7013 (OCT 1988), as
applicable. COMPANY shall be responsible for ensuring that all Products are
marked with the "Restrictive Rights" legend. Manufacturer is Microsoft
Corporation, Xxx Xxxxxxxxx Xxx. Xxxxxxx, XX 00000-0000.
16. 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
12
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 fore going, 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.
17. 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. MS may assign this Agreement or any portions
thereof, to any MS related company.
18. 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
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Attn.: Channel Policies
With cc to: Law and Corporate Affairs
If to COMPANY:
WAREFORCE, INCORPORATED
0000 XXXXXXXXX XXX
#000
00
XX XXXXXXX XX 00000
Attn: XXX XXXXXXXX - GENERAL CONSUL
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.
19. Survival
Sections 3.3, 4.6, 5.4, 6.1, 7, 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") WAREFORCE, INC. ("COMPANY")
By: /s/ Xxxx Xxxxxxxxxxxxx By: /s/ Xxxx Xxxxxxxx
---------------------------- ---------------------------
Xxxx Xxxxxxxxxxxxx XXXX XXXXXXXX
---------------------------- ---------------------------
Name (please print) Name (please print)
General Manager. US Headquarter Sales CEO
------------------------------------- --------------------------
Title Title
5/19/98 5-18-98
------- -------
Date Date
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
14
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.
"Infringement Claim" shall mean any allegation against the COMPANY that the
Products or Marks infringes any copyright, patent, or trademark of a third
party, or misappropriates a third party trade secret.
"Marks" shall mean the Trademarks (defined below) or any and all copyrights
MS may own.
"Product" shall mean any MS Stock Keeping Unit ("SKU") listed on COMPANY's
then current Price List.
"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 is specified in Section
3.1 of this Agreement.
"Territory" shall mean the geographic boundaries of the United States of
America, excluding all United States territories, possessions, or protectorates.
The parties agree that if this Agreement includes a Large Account Reseller
Addendum, then for that Addendum only, Territory shall mean both
00
Xxxxxx xxx xxx Xxxxxx Xxxxxx, excluding all United States territories,
possessions, or protectorates.
"TM Web site" shall mean the web site located at
xxxx://xxx.xxxxxxxxx.xxx/xxxxxxxxxx.
"Trademarks" shall mean the trademark and trade name "Microsoft", and all
trademarks and tradenames derived therefrom, and the trademarks used in
association with all Products or which are set out at the TM Web site, as may be
amended from time to time by MS.
Large Account Reseller
Addendum to The Microsoft
Channel Agreement
This Addendum ("Addendum") entered into this 1st day of July, 1998 supplements
that certain Channel Agreement ("Agreement") between MICROSOFT CORPORATION
("MS") having its principal place of business at Xxx Xxxxxxxxx Xxx, Xxxxxxx, XX
00000 and WAREFORCE, INC. ("COMPANY") having its principal place of business at
0000 Xxxxxxxxx Xxx #000, Xx Xxxxxxx, XX 00000. 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 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. For purposes of this Addendum only, the parties agree that
"Territory" shall mean Canada and the United States, excluding all United States
territories, possessions, or protectorates.
2. Definitions
For purposes of this Addendum, capitalized terms are as defined in Schedule A
attached hereto and incorporated herein by
16
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, in accordance with Subsection 3.1(a) below, at the
direction of any Select Customer, outside of the Territory. However, should a
Select Customer desire 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.
3.1(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.
17
3.2 Documentation
COMPANY shall be authorized to purchase Documentation Components from MS
Worldwide Fulfillment for resale to MS volume license customers only. A
validation process must be implemented by COMPANY to ensure that only MS volume
license customers receive Documentation Components. This validation process must
include, at a minimum, verification of the Select or Open Licensee Authorization
number, as applicable, of the customer. The validation process must be
documented in writing, which documentation will be made available to Microsoft
upon request. Price protection is not available for Documentation Components
purchased from MS Worldwide Fulfillment.
COMPANY may request authorization to return Documentation Components purchased
from MS Worldwide Fulfillment within sixty (60) calendar days from the date of
invoice. Upon request, MS will provide COMPANY with a Return Authorization Form
which COMPANY must complete and return to MS. MS will issue a return
authorization number for Documentation Components meeting return criteria
Documentation Components must be returned within thirty (30) calendar days of
the issuance of the return authorization number. Freight costs shall be paid by
COMPANY. MS shall issue COMPANY a purchase credit in the amount of the
authorized return.
3.3 Distribution Restrictions
Nothing in this Addendum authorizes the Large Account Reseller to use Select
Software Products internally or to distribute or otherwise transfer Select
Software Products to any Large Account Reseller Affiliate without the prior
written consent of MS.
3.4 COMPANY Acceptance of Enrollment Agreements
In order to remain authorized to purchase Select Software Products and
Documentation Components from MS for resale to Select Customers, an authorized
representative of COMPANY must review and acknowledge the Select Customer's
Enrollment Agreement. COMPANY's signature on the Enrollment Agreement shall
18
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, a sample of
which is attached hereto and incorporate 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.
3.6 COMPANY's Reporting and/or Ordering and Payment to MS
(a) Microsoft Select 2.x Enrollment Agreement Reporting
For each executed Microsoft Select 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 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 Addendum.
19
Following receipt of such purchase order, MS shall invoice COMPANY and COMPANY
shall be obligated to pay MS according to the Schedule B prices, 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, 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. COMPANY shall use its best efforts to collect any and all
amounts due from any Select Customer. Notwithstanding the foregoing, if any
Enterprise Customer defaults on its payment obligation to COMPANY for more than
ninety (90) calendar days, COMPANY will provide MS with written notice
identifying the Enterprise Customer and the amount of the delinquency. COMPANY
shall deliver such notice to MS at the address set forth in Section 17 of the
Channel Agreement. Provided that the Enterprise Customer certifies its inability
to pay the amounts due and MS determines that the applicable Enterprise
Agreement will be terminated, then COMPANY shall be released from any payment
obligation arising from the delinquent Enterprise Customer's account.
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 # (omitted)
Account # (omitted)
20
ABA: # (omitted)
NationsBank of Texas, N.A.
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. 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. COMPANY may not withhold payment or take deductions
prior to MS issuing credit for rebates, price adjustments, billing errors or any
other credit memo issued by MS.
(d) Report Revisions
COMPANY shall use its best efforts to process all adjustments of Microsoft
Select Software Products within ninety (90) days from the original invoice date.
All revised reports must provide detailed back-up as required by MS. 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
whether such revised report is eligible for credit.
(e) EDI Transaction Sets
COMPANY shall utilize EDI transaction sets Purchase Order Acknowledgment (855),
Advance Ship Notice (856), Price Catalog (832), Purchase Order Transmission
(850), and Re Invoices (810). MS may elect, during the term of this Addendum, to
require COMPANY to implement Backorder Reports using EDI transaction set 870
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
21
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 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.
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 xxxxxxxx
and transactions, contract compliance, 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
22
Administrator shall be:
(OMITTED)
WAREFORCE, INCORPORATED
0000 XXXXXXXXX #000
XX XXXXXXX, XX. 00000
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 COMPANY shall:
(a) Have email availability, Internet access, and an active VLOR
account as is necessary to perform COMPANY's obligations pursuant to this
Addendum;
(b) 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;
(c) Not alter in any way or form the Select Software Products or their
packaging;
(d) 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
23
and information only to the Select Customer named on each such CD-ROM or
materials; and
(e) 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.
3.12 Confidentiality
CUSTOMER expressly undertakes to retain in confidence the terms and conditions
of this Addendum, and the terms and conditions of all executed Select Master
Agreements and Select Enrollment Forms which are made available to CUSTOMER.
Should CUSTOMER disclose the terms and conditions of any executed Select Master
Agreement or Select Enrollment Form, this Addendum shall immediately terminate.
CUSTOMER shall guarantee and ensure its employees' compliance with this
paragraph. CUSTOMER's obligations under this paragraph shall survive any
termination of this Agreement and shall extend to the earlier of such time as
the information is in the public domain or five (5) years following the
termination of this Agreement. 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 MS
in writing of its desire to terminate its rights and obligations.
24
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.
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.
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,
25
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
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
Customers' next orders and payments or any future orders and payments.
Termination or expiration shall not affect COMPANY's ability to perform its
obligations pursuant to this Addendum as it relates to any of COMPANY's existing
Enrollment Agreements. However, COMPANY shall have no right to enter into
additional Enrollment Agreements, or to present itself as a Large Account
Reseller.
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
26
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.
5. 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.
6. Survival
Sections 3.6, 3.7, 3.12, 4.3, 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 ("MS") WAREFORCE, INC. ("COMPANY")
By: /s/ Xxxx Xxxxxxxxxxxxx By: /s/ Xxxx Xxxxxxxx
----------------------------- -----------------------------
Xxxx Xxxxxxxxxxxxx XXXX XXXXXXXX
--------------------------------- -----------------------------
Name (please print) Name (please print)
General Manager. US Headquarter Sales CEO
------------------------------------- -----------------------------
Title Title
5/19/98 5-18-98
------- -------
Date Date
27
Schedule A
Definitions
"Documentation Components" shall mean the supplemental disk sets and
Product documentation available from Microsoft World Wide Fulfillment
"Enrollment Agreement" shall mean 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" shall mean the number assigned by MS to a
given Enrollment Agreement.
"Enrollment Form" shall mean the Microsoft Select Enrollment Form in the
form provided by MS to be signed by each Select Customer and MS.
"Enterprise Customer" shall mean any company having a valid Enterprise
Enrollment Agreement under MS's Select volume licensing program.
"Large Account Reseller" shall mean any reseller which MS has authorized to
distribute licenses to Select Customers.
"Large Account Reseller Affiliate" shall mean 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" shall mean the company or entity signing a Master
Agreement.
28
"Lead Customer Affiliate" shall mean 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)" shall mean the license agreement attached to the
Enrollment Form.
"Master Agreement" shall mean 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" shall mean the number assigned by MS to a given
Master Agreement.
"Select Customer" shall mean the Lead Customer, any Lead Customer Affiliate
and for 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" shall mean the individual appointed by
COMPANY to act as COMPANY's primary contact with respect to the Microsoft Select
Program.
"Select Software Product" shall mean the MS software as designated from
time to time by Microsoft which may be reproduced pursuant to an Enrollment
Form, excluding Documentation Components.
Schedule B
COMPANY Select Price Schedule
(OMITTED)
