EXHIBIT 10.8
CONFIDENTIAL TREATMENT REQUESTED
[*] Denotes information for which confidential treatment has been requested.
Confidential portions omitted have been filed separately with the Commission.
DISTRIBUTION AGREEMENT
BETWEEN
TECH DATA PRODUCT MANAGEMENT, INC.
AND
SONIC SYSTEMS, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT, dated as of this 9th day of February, 1999, is between
TECH DATA PRODUCT MANAGEMENT, INC., a Florida corporation ("Tech Data"), with
its principal corporate address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ and SONIC SYSTEMS, INC., a California corporation ("VENDOR" or "Vendor"),
with its principal corporate address at: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
RECITALS
A. Tech Data desires to purchase certain Products from VENDOR from
time to time and VENDOR desires to sell certain Products to Tech Data in
accordance with the terms and conditions set forth in this Agreement.
B. VENDOR desires to appoint Tech Data as its non-exclusive
distributor to market Products within the Territory (as hereinafter defined) and
Tech Data accepts such appointment on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the Recitals, the mutual covenants
contained in this Agreement and other good and valuable consideration, Tech Data
and VENDOR hereby agree as follows:
ARTICLE I.
----------
DEFINITIONS, APPOINTMENT AND TERM OF AGREEMENT
----------------------------------------------
1.1 Definitions. The following definitions shall apply to this Agreement.
-----------
(a) "Customers" of Tech Data shall include dealers, resellers, value added
resellers, mail order resellers and other entities that acquire the
Products from Tech Data.
(b) "DOA" shall mean Product, or any portion thereof, which fails to
operate properly on initial "burn in," boot, or use, as applicable.
(c) "Documentation" shall mean user manuals, training materials, product
descriptions and specifications, brochures, technical manuals, license
agreements, supporting materials and other printed information relating to
the Products, whether distributed in print, electronic, or video format.
(d) "Effective Date" shall mean the date on which this Agreement is signed
and dated by a duly authorized representative of Tech Data.
(e) "End Users" shall mean the final retail purchasers or licensees who
have acquired Products for their own use and not for resale, remarketing or
redistribution.
(f) "Non-Saleable Products" shall mean any Product that has been returned
to Tech Data by its Customers that has had the outside shrink wrapping or
other packaging seal
2
broken; any components of the original package are missing, damaged or
modified; or is otherwise not fit for resale.
(g) "Products" shall mean, individually or collectively as appropriate,
hardware, licensed software, Documentation, supplies, accessories, and
other commodities related to any of the foregoing produced by VENDOR, as
more particularly described in Schedule 1.1 (g) attached hereto.
(h) "Return Credit" shall mean a credit to Tech Data in an amount equal to
the price paid by Tech Data for Products less any price protection credits
but not including any early payment or prepayment discounts.
(i) "Services" means any warranty, maintenance, advertising, marketing or
technical support and any other services performed or to be performed by
VENDOR.
(j) "Territory" shall mean the United States of America, Canada, Mexico and
South America.
1.2 Term of Agreement. The term of this Agreement shall commence on the
-----------------
Effective Date and, unless terminated by either party as set forth in this
Agreement, shall remain in full force and effect for a term of one (1)
year, and will be automatically renewed for successive one (1) year terms
unless prior written notification of termination is delivered by one of the
parties in accordance with the notice provision of this Agreement.
1.3 Appointment as Distributor. VENDOR hereby grants to Tech Data the non-
--------------------------
exclusive right to distribute Products within the Territory during the term
of this Agreement. This Agreement does not grant VENDOR or Tech Data an
exclusive right to purchase or sell Products and shall not prevent either
party from developing or acquiring other vendors or customers or competing
Products. Tech Data will use commercially reasonable efforts to promote
sales of the Products. VENDOR agrees that Tech Data may obtain Products in
accordance with this Agreement for the benefit of its parent, affiliates
and subsidiaries of Tech Data. Said parent, affiliates and subsidiaries of
Tech Data shall be entitled to order Products directly from VENDOR pursuant
to this Agreement.
ARTICLE II. PURCHASE ORDERS
---------------------------
2.1 Issuance and Acceptance of Purchase Order.
-----------------------------------------
(a) This Agreement shall not obligate Tech Data to purchase any Products or
Services except as specifically set forth in a written purchase order.
(b) Tech Data may issue to VENDOR one or more purchase orders identifying
the Products Tech Data desires to purchase from VENDOR. Notwithstanding
any preprinted terms or conditions on Tech Data's purchase orders, the
terms and conditions of this Agreement shall apply to and govern all
purchase orders accepted or shipped by VENDOR hereunder, except that
purchase orders may include other terms and conditions which are consistent
with the terms and conditions of this Agreement, or which are
3
mutually agreed to in writing by Tech Data and VENDOR. Purchase orders will
be placed by Tech Data by fax or electronically transferred.
(c) A purchase order shall be deemed accepted by VENDOR unless VENDOR
notifies Tech Data in writing within five (5) days of the date of the
purchase order that VENDOR does not accept the purchase order.
2.2 Purchase Order Alterations or Cancellations. Prior to shipment of Products,
-------------------------------------------
VENDOR shall accept alterations or cancellation to a purchase order in
order to: (i) change a location for delivery, (ii) modify the quantity or
type of Products to be delivered or (iii) correct typographical or clerical
errors.
2.3 Evaluation or Demonstration Purchase Orders. VENDOR shall provide to Tech
-------------------------------------------
Data a reasonable number of demonstration or evaluation Products at no
charge.
2.4 Product Shortages. If for any reason VENDOR's production is not on
-----------------
schedule, VENDOR may allocate available inventory to Tech Data and make
shipments based upon a fair and reasonable percentage allocation among
VENDOR's customers.
2.5 Proof of Delivery. Vendor shall provide to Tech Data, at no charge, a hard
-----------------
copy Proof of Delivery ("POD") for any drop shipment requested by Tech
Data. The POD shall be faxed to Tech Data within five (5) business days of
the initial request. If the POD is not received within the specified time,
the invoice will be considered disputed and no payment shall be made to
Vendor on that invoice.
ARTICLE III. DELIVERY AND
-------------------------
ARTICLE IV. ACCEPTANCE OF PRODUCTS
----------------------------------
3.1 Acceptance of Products. Tech Data shall, after a reasonable time to
----------------------
inspect each shipment, which will not exceed thirty (30) days, accept
Product (the "Acceptance Date") if the Products and all necessary
documentation delivered to Tech Data are in accordance with the purchase
order. Any Products not ordered or not otherwise in accordance with the
purchase order (e.g. mis-shipments, overshipments) may be returned to
VENDOR at VENDOR's expense (including without limitation costs of shipment
or storage). VENDOR shall refund to Tech Data within ten (10) business
days following notice thereof, all monies paid in respect to such rejected
Products. Tech Data shall not be required to accept partial shipment
unless Tech Data is notified prior to shipment.
3.2 Title and Risk of Loss. FOB Origin, Santa Clara, CA. Title and risk of loss
----------------------
or damage to Products shall pass to Tech Data at the time the Products are
delivered to Tech Data's designated carrier.
3.3 Transportation of Products. VENDOR shall deliver the Products clearly
--------------------------
marked on the Product package with serial number, Product description and
machine readable bar code (employing UPC or other industry standard bar
code) to Tech Data at the location shown and on the delivery date set forth
in the applicable purchase order or as otherwise agreed upon by the
parties. Charges for transportation of the Products shall be paid by
VENDOR. VENDOR shall use only those common carriers preapproved by Tech
Data
4
or listed in Tech Data's published routing instructions, unless prior
written approval of Tech Data is received.
ARTICLE IV RETURNS
------------------
4.1 Inventory Adjustment. VENDOR agrees to accept return of overstocked
--------------------
Products up to [*] of net quarterly purchases for the preceding quarter.
Shipments of Product being returned shall be new, unused and in sealed
cartons. VENDOR shall credit Tech Data's account in the amount of the
Return Credit.
4.2 Defective Products/Dead on Arrival (DOA). Tech Data shall have the right
----------------------------------------
to return to VENDOR for Return Credit any DOA Product that is returned to
Tech Data within ninety (90) days after the initial delivery date to Tech
Data's Customer and any Product that fails to perform in accordance with
VENDOR's Product warranty. VENDOR shall bear all costs of shipping and risk
of loss of DOA and in-warranty Products to VENDOR's location.
4.3 Obsolete or Outdated Product. Tech Data shall have the right to return for
----------------------------
Return Credit, without limitation as to the dollar amount, all Products
that become obsolete or VENDOR discontinues or are removed from VENDOR's
current price list; provided Tech Data returns such Products within ninety
(90) days after Tech Data receives written notice from VENDOR that such
Products are obsolete, superseded by a newer version, discontinued or are
removed from VENDOR's price list. VENDOR shall bear all costs of shipping
and risk of loss of obsolete or outdated Products to VENDOR's location.
4.4 Miscellaneous Returns.
---------------------
(a) Bad Box. Tech Data shall have the right to return to VENDOR for Return
-------
Credit Products which have boxes that are or become damaged.
(b) Non-Saleable. Tech Data shall have the right to return to VENDOR for
------------
Return Credit Non-Saleable Products.
4.5 Condition Precedent to Returns. As a condition precedent to returning
------------------------------
Products, Tech Data shall request and VENDOR shall issue a Return Material
Authorization Number ("RMA") in accordance with this Agreement as provided
in Section 8.9.
ARTICLE V. PAYMENT TO VENDOR
----------------------------
5.1 Charges, Prices and Fees for Products. Charges, prices, quantities and
-------------------------------------
and discounts, if any, for Products shall be determined as set forth in
Schedule 1.1 (g), or as otherwise mutually agreed upon by the parties in
writing, and may be confirmed at the time of order. In no event shall
charges exceed VENDOR's then current established charges. Tech Data shall
not be bound by any of VENDOR's suggested prices.
5.2 Payment. Except as otherwise set forth in this Agreement, any undisputed
-------
sum due to VENDOR pursuant to this Agreement shall be payable as follows:
[*], net forty five (45) days after the invoice receipt. VENDOR shall
invoice Tech Data no earlier than the
5
applicable shipping date for the Products covered by such invoice. Products
which are shipped from outside the United States shall not be invoiced to
Tech Data prior to the Products being placed on a common carrier within the
United States for final delivery to Tech Data. The due date for payments
directly associated with a bona fide dispute shall be extended during any
time the parties have a bona fide dispute concerning such payment. During
the time a bona fide dispute is being rectified all other payments shall be
made as per the terms in this section. Notwithstanding anything herein to
the contrary, for the initial order only, payment shall be made by Tech
Data net ninety (90) days after receipt of invoice.
5.3 Invoices. A "correct" invoice shall contain (i) VENDOR's name and invoice
--------
date, (ii) a reference to the purchase order or other authorizing document,
(iii) separate descriptions, unit prices and quantities of the Products
actually delivered, (iv) credits (if applicable), (v) shipping charges (if
applicable) (vi) name (where applicable), title, phone number and complete
mailing address as to where payment is to be sent, and (vii) other
substantiating documentation or information as may reasonably be required
by Tech Data from time to time. Notwithstanding any pre-printed terms or
conditions on VENDOR's invoices, the terms and conditions of this Agreement
shall apply to and govern all invoices issued by VENDOR hereunder, except
that invoices may include other terms and conditions which are consistent
with the terms and conditions of this Agreement, or which are mutually
agreed to in writing by Tech Data and VENDOR.
5.4 Taxes. Tech Data shall be responsible for franchise taxes, sales or use
-----
taxes or shall provide VENDOR with an appropriate exemption certificate.
VENDOR shall be responsible for all other taxes, assessments, permits and
fees, however designated which are levied upon this Agreement or the
Products, except for taxes based upon Tech Data's income. No taxes of any
type shall be added to invoices without the prior written approval of Tech
Data.
5.5 Fair Pricing and Terms. VENDOR represents that the prices charged and the
----------------------
terms offered to Tech Data are and will be at least as beneficial to Tech
Data as those charged or offered by VENDOR to any of its other distributors
in the Territory. If VENDOR offers price discounts, payment discounts,
promotional discounts or other special prices to its other distributors in
the Territory, Tech Data shall also be entitled to participate and receive
notice of the same no later than other distributors.
5.6 Price Adjustments.
-----------------
(a) Price Increases. VENDOR shall have the right to increase prices from
---------------
time to time, upon written notice to Tech Data not less than thirty (30)
days prior to the effective date of such increase. All orders placed prior
to the effective date of the increase, for shipment within thirty (30) days
after the effective date, shall be invoiced by VENDOR at the lower price.
(b) Price Decreases. VENDOR shall have the right to decrease prices from
---------------
time to time, upon written notice to Tech Data not less than the notice
which it provides its other distributors in the channel. VENDOR shall
grant to Tech Data, its parent, affiliates and
6
subsidiaries and Tech Data's Customers (any Customer price protection will
be determined on a case by case basis), a price credit for the full amount
of any VENDOR price decrease on all Products on order, in transit and in
their inventory on the effective date of such price decrease. Tech Data and
its Customers shall, within forty five (45) days after receiving written
notice of the effective date of the price decrease, provide a list of all
Products for which they claim a credit. VENDOR shall have the right to a
reasonable audit at VENDOR's expense.
5.7 Advertising.
-----------
(a) Cooperative Advertising. VENDOR offers a three percent (3%) co-op
-----------------------
program and may offer additional advertising credits, or other promotional
programs or incentives to Tech Data as it offers to its other distributors
or customers. Tech Data shall have the right, at Tech Data's option, to
participate in such programs. Attached as Schedule 5.7 is a copy of
VENDOR's co-op policy.
(b) Advertising Support. VENDOR shall provide at no charge to Tech Data
-------------------
and the Customers of Tech Data, marketing support, and advertising
materials in connection with the resale of Products as are currently
offered or that may be offered by VENDOR. Tech Data reserves the right to
charge VENDOR for advertising, marketing and training services.
(c) Launch Funds. Prior to receipt of the initial purchase order, VENDOR
------------
shall pay Tech Data for all launch funds expenditures to which VENDOR and
Tech Data have agreed.
ARTICLE VI.
-----------
WARRANTIES, INDEMNITIES AND OTHER OBLIGATIONS OF VENDOR
-------------------------------------------------------
6.1 Warranty. VENDOR hereby represents and warrants that VENDOR has all right,
--------
title, ownership interest and marketing rights necessary to provide the
Products to Tech Data. VENDOR further represents and warrants that it has
not entered into any agreements or commitments which are inconsistent with
or in conflict with the rights granted to Tech Data in this Agreement; the
Products are new and shall be free and clear of all liens and encumbrances;
Tech Data and its Customers and End Users shall be entitled to use the
Products without disturbance; the Products have been listed with
Underwriters' Laboratories or other nationally recognized testing
laboratory whenever such listing is required; the Products meet all FCC
requirements; the Products do and will conform to all codes, laws or
regulations; the Products have the ability to accurately recognize and
process date data related to the 20/th/ and 21/st/ centuries and leap year,
without error or interruption (are Year 2000 compliant); and the Products
conform in all respects to the Product warranties. VENDOR agrees that Tech
Data shall be entitled to pass through to Customers of Tech Data and End
Users of the Products all Product warranties granted by VENDOR. Tech Data
shall have no authority to alter or extend any of the warranties of VENDOR
expressly contained or referred to in this Agreement without prior approval
of VENDOR. VENDOR has made express warranties in this Agreement and in
Documentation, promotional and advertising materials. EXCEPT AS SET FORTH
7
HEREIN OR THEREIN, VENDOR DISCLAIMS ALL WARRANTIES WITH REGARD TO THE
PRODUCTS, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THIS SECTION SHALL
SURVIVE TERMINATION OR EXPIRATION OF THIS AGREEMENT.
6.2 Proprietary Rights Indemnification. VENDOR hereby represents and warrants
----------------------------------
that the Products and the sale and use of the Products do not infringe upon
any copyright, patent, trademark, trade secret or other proprietary or
intellectual property right of any third party, and that there are no suits
or proceedings, pending or threatened, alleging any such infringement.
VENDOR shall indemnify and hold Tech Data, Tech Data's parent, affiliates
and subsidiaries and their respective officers, directors, employees and
agents harmless from and against any and all actions, claims, losses,
damages, liabilities, awards, costs and expenses, which they or any of them
incur or become obligated to pay resulting from or arising out of any
breach or claimed breach of the foregoing warranty. Tech Data shall inform
VENDOR of any such suit or proceeding filed against Tech Data and shall
have the right, but not the obligation, to participate in the defense of
any such suit or proceeding at Tech Data's expense. VENDOR shall, at its
option and expense, either (i) procure for Tech Data, its Customers and End
Users the right to continue to use the Product as set forth in this
Agreement, or (ii) replace, to the extent Products are available, or modify
the Product to make its use non-infringing while being capable of
performing the same function without degradation of performance. If neither
of the foregoing alternatives (i) or (ii) is reasonably available, VENDOR
shall accept a return of the Products from Tech Data, at VENDOR's sole cost
and expense, and shall refund to Tech Data the full amount of the price
paid by Tech Data for said returned Products, less any price protection
credits, but not including any early payment or prepayment discounts.
VENDOR shall have no liability under this Section 6.2 for any infringement
based on the use of any Product, if the Product is used in a manner or with
equipment for which it was not reasonably intended. VENDOR's obligations
under this Section 6.2 shall survive termination or expiration of this
Agreement.
6.3 Indemnification.
---------------
(a) Vendor. VENDOR shall be solely responsible for the design,
------
development, supply, production and performance of the Products. VENDOR
agrees to indemnify and hold Tech Data, its parent, affiliates and
subsidiaries and their officers, directors and employees harmless from and
against any and all claims, damages, costs, expenses (including, but not
limited to, reasonable attorneys' fees and costs) or liabilities that may
result, in whole or in part, from any warranty or Product liability claim,
or any claim for infringement, or for claims for violation of any of the
warranties contained in this Agreement.
(b) Tech Data. Tech Data agrees to indemnify and hold VENDOR, its
---------
officers, directors and employees harmless from and against any and all
claims, damages, costs, expenses (including, but not limited to, reasonable
attorneys' fees and costs) or liabilities that may result, in whole or in
part, from Tech Data's gross negligence or willful misconduct in the
distribution of the Products pursuant to this Agreement, or for
8
representations or warranties made by Tech Data related to the Products in
excess of the warranties of VENDOR.
6.4 Insurance.
---------
(a) The parties shall be responsible for providing Workers' Compensation
insurance in the statutory amounts required by the applicable state laws.
(b) Without in any way limiting VENDOR's indemnification obligation as set
forth in this Agreement, VENDOR shall maintain Commercial General Liability
or Comprehensive General Liability Insurance in such amounts as is
reasonable and standard for the industry. Either policy form should
contain the following coverages: Personal and Advertising Injury, Broad
Form Property Damage, Products and Completed Operations, Contractual
Liability, employees as Insured and Fire Legal Liability.
(c) VENDOR will provide evidence of the existence of insurance coverages
referred to in this Section 6.4 by certificates of insurance, which should
also provide for at least thirty (30) days notice of cancellation, non-
renewal or material change of coverage to Tech Data. The certificates of
insurance shall name Tech Data Product Management, Inc., its parent,
affiliates and subsidiaries as an additional insured for the limited
purpose of claims arising pursuant to this Agreement.
6.5 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
-----------------------
PURSUANT TO THIS AGREEMENT FOR AMOUNTS REPRESENTING INDIRECT, SPECIAL,
INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES OF THE OTHER PARTY ARISING
FROM THE PERFORMANCE OR BREACH OF ANY TERMS OF THIS AGREEMENT.
6.6 ECCN/Export. VENDOR agrees to provide Tech Data, upon signing this
-----------
Agreement and at any time thereafter that VENDOR modifies or adds Products
distributed or to be distributed by Tech Data, with the Export Control
Classification Number (ECCN) for each of VENDOR's Products, and information
as to whether or not any of such Products are classified under the U.S.
Munitions List.
6.7 Financial Statements. VENDOR agrees that for the term of this Agreement,
--------------------
VENDOR shall provide, within one hundred and twenty (120) days after the
end of VENDOR's 1998 fiscal year, audited financial statements for the 1998
fiscal year prepared by an independent certified public accountant. Such
financial statements shall include profit and loss statement, balance
sheets and such other accounting data as may be requested by Tech Data and
be acknowledged by VENDOR's authorized representative in writing as true
and correct.
6.8 Vendor Reports. VENDOR shall, if requested, render monthly reports to
--------------
Tech Data setting forth the separate Products, dollars invoiced for each
Product, and total dollars invoiced to Tech Data for the month, and such
other information as Tech Data may reasonably request.
9
6.9 Tech Data Reports. Tech Data shall, if requested, render monthly sales
-----------------
out reports on Tech Data's BBS system. Information provided will include:
month and year sales activity occurred, internal product number (assigned
by Tech Data), written description, state and zip-code of Customer's
location, unit cost (distributor's cost at quantity 1), quantity and
extended cost (cost times quantity). A monthly inventory report will be
provided on a paper format once a month. VENDOR agrees that any such
information provided by Tech Data shall be received and held by VENDOR in
strict confidence and shall be used solely for sell through or compensation
reporting information and shall not be used for purposes related to
VENDOR's direct sales activities.
6.10 Trademark Usage. Tech Data is hereby authorized to use trademarks and
---------------
tradenames of VENDOR and third parties licensing VENDOR, if any, used in
connection with advertising, promoting or distributing the Products. Tech
Data recognizes VENDOR or other third parties may have rights or ownership
of certain trademarks, trade names and patents associated with the
Products. Tech Data will act consistent with such rights, and Tech Data
shall comply with any reasonable written guidelines when provided by VENDOR
or third parties licensing VENDOR related to such trademark or trade name
usage. Tech Data will notify VENDOR of any infringement of which Tech Data
has actual knowledge. Tech Data shall discontinue use of VENDOR's
trademarks or trade names upon termination of this Agreement, except as may
be necessary to sell or liquidate any Product remaining in Tech Data's
inventory.
ARTICLE VII.
------------
TERMINATION; EXPIRATION
-----------------------
7.1 Termination.
-----------
(a) Termination With or Without Cause. Either party may terminate this
---------------------------------
Agreement, without cause, upon giving the other party thirty (30) days
prior written notice. In the event that either party materially or
repeatedly defaults in the performance of any of its duties or obligations
set forth in this Agreement, and such default is not substantially cured
within thirty (30) days after written notice is given to the defaulting
party specifying the default, then the party not in default may, by giving
written notice thereof to the defaulting party, terminate this Agreement or
the applicable purchase order relating to such default as of the date
specified in such notice of termination.
(b) Termination for Insolvency or Bankruptcy. Either party may immediately
----------------------------------------
terminate this Agreement and any purchase orders by giving written notice
to the other party in the event of (i) the liquidation or insolvency of the
other party, (ii) the appointment of a receiver or similar officer for the
other party, (iii) an assignment by the other party for the benefit of all
or substantially all of its creditors, (iv) entry by the other party into
an agreement for the composition, extension, or readjustment of all or
substantially all of its obligations, or (v) the filing of a petition in
bankruptcy by or against a party under any bankruptcy or debtors' law for
its relief or reorganization which is not dismissed within ninety (90)
days.
7.2 Rights Upon Termination or Expiration.
-------------------------------------
10
(a) Termination or expiration of this Agreement shall not affect VENDOR's
right to be paid for undisputed invoices for Products already shipped and
accepted by Tech Data or Tech Data's rights to any credits or payments owed
or accrued to the date of termination or expiration. Tech Data's rights to
credits upon termination or expiration shall include credits against which
Tech Data would, but for termination or expiration, be required under this
Agreement to apply to future purchases.
(b) VENDOR shall accept purchase orders from Tech Data for additional
Products which Tech Data is contractually obligated to furnish to its
Customers and does not have in its inventory upon the termination or
expiration of this Agreement; provided Tech Data notifies VENDOR of any and
all such transactions within fifteen (15) days following the termination or
expiration date.
(c) Upon termination or expiration of this Agreement, Tech Data shall
discontinue holding itself out as a distributor of the Products.
7.3 Repurchase of Products Upon Termination or Expiration. Upon the effective
-----------------------------------------------------
date of termination or expiration of this Agreement for any reason, VENDOR
agrees to repurchase all Products in Tech Data's inventory and Products
which are returned to Tech Data by its Customers within one hundred twenty
(120) days following the effective date of termination or expiration.
VENDOR will repurchase such Products at the original purchase price, less
any deductions for price protection. The repurchase price shall not be
reduced by any deductions or offsets for early pay or prepay discounts.
Such returns shall not reduce or offset any co-op payments or obligations
owed to Tech Data. Within forty five (45) days following the effective date
of termination or expiration, Tech Data shall return to VENDOR for
repurchase all Product held in Tech Data's inventory as of the effective
date of termination or expiration. VENDOR will issue an RMA to Tech Data
for all such Products; provided, however, that VENDOR shall accept returned
Products in accordance with this Section absent an RMA if VENDOR fails to
issue said RMA within five (5) business days of Tech Data's request. VENDOR
shall credit any outstanding balances owed to Tech Data. If such credit
exceeds amounts due from Tech Data, VENDOR shall remit in the form of a
check to Tech Data the excess within ten (10) business days of receipt of
the Product. Customized Products shall not be eligible for repurchase
pursuant to this Section.
7.4 Survival of Terms. Termination or expiration of this Agreement for any
-----------------
reason shall not release either party from any liabilities or obligations
set forth in this Agreement which (i) the parties have expressly agreed
shall survive any such termination or expiration, or (ii) remain to be
performed or by their nature would be intended to be applicable following
any such termination or expiration. The termination or expiration of this
Agreement shall not affect any of VENDOR's warranties, indemnification
obligations or obligations relating to returns, co-op advertising payments,
credits or any other matters set forth in this Agreement that should
survive termination or expiration in order to carry out their intended
purpose, all of which shall survive the termination or expiration of this
Agreement.
11
ARTICLE VIII.
-------------
MISCELLANEOUS
-------------
8.1 Binding Nature, Assignment, and Subcontracting. This Agreement shall be
----------------------------------------------
binding on the parties and their respective successors and assigns. Neither
party shall have the power to assign this Agreement without the prior
written consent of the other party.
8.2 Counterparts. This Agreement may be executed in several counterparts, all
------------
of which taken together shall constitute one single agreement between the
parties.
8.3 Headings. The Article and Section headings used in this Agreement are for
--------
reference and convenience only and shall not affect the interpretation of
this Agreement.
8.4 Relationship of Parties. The Parties are performing pursuant to this
-----------------------
Agreement only as independent contractors. Nothing set forth in this
Agreement shall be construed to create the relationship of principal and
agent between Tech Data and VENDOR. Neither party shall act or represent
itself, directly or by implication, as an agent of the other party.
8.5 Confidentiality. Each party acknowledges that in the course of
---------------
performance of its obligations pursuant to this Agreement, it may obtain
certain information specifically marked as confidential or proprietary.
Each party hereby agrees that all such information communicated to it by
the other party, its parent, affiliates, subsidiaries, or Customers,
whether before or after the Effective Date, shall be and was received in
strict confidence, shall be used only for purposes of this Agreement, and
shall not be disclosed without the prior written consent of the other
party, except as may be necessary by reason of legal, accounting or
regulatory requirements beyond either party's reasonable control. The
provisions of this Section shall survive termination or expiration of this
Agreement for any reason for a period of one (1) year after said
termination or expiration.
8.6 Arbitration. Any disputes arising under this Agreement shall be submitted
-----------
to arbitration in accordance with such rules as the parties jointly agree.
If the parties are unable to agree on arbitration procedures, arbitration
shall be conducted in Pinellas County, Florida, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Any
such award shall be final and binding upon both parties.
8.7 Notices. Wherever one party is required or permitted to give notice to
-------
the other party pursuant to this Agreement, such notice shall be deemed
given when actually delivered by hand, by telecopier (if and when
immediately confirmed in writing by any of the other means provided herein
ensuring acknowledgment of receipt thereof for purposes of providing notice
of default or termination), via overnight courier, or when mailed by
registered or certified mail, return receipt requested, postage prepaid,
and addressed as follows:
12
In the Case of Vendor: In the Case of Tech Data:
--------------------- ------------------------
Sonic Systems, Inc. Tech Data Product Management, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Vice President-
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, CEO Marketing Operations
cc: Contracts Administration
Either party may from time to time change its address for notification
purposes by giving the other party written notice of the new address and
the date upon which it will become effective.
8.8 Force Majeure. The term "Force Majeure" shall be defined to include fires
-------------
or other casualties or accidents, acts of God, severe weather conditions,
strikes or labor disputes, war or other violence, or any law, order,
proclamation, regulation, ordinance, demand or requirement of any
governmental agency.
(a) If a Force Majeure condition prevents a party from performance, such
performance is excused so long as the excused party provides prompt written
notice describing the Force Majeure condition and immediately continues
performance once the Force Majeure condition is removed.
(b) If, due to a Force Majeure condition, the scheduled time of delivery or
performance is or will be delayed for more than ninety (90) days after the
scheduled date, the party not relying upon the Force Majeure condition may
terminate, without liability to the other party, any purchase order or
portion thereof covering the delayed Products.
8.9 Return Material Authorization Numbers. VENDOR is required to issue a
-------------------------------------
Return Material Authorization number ("RMA") to Tech Data within five (5)
business days of Tech Data's request; however, if the RMA is not received
within five (5) business days, VENDOR shall accept returned Products absent
an RMA.
8.10 Credits to Tech Data. In the event any provision of this Agreement or any
--------------------
other agreement between Tech Data and VENDOR requires that VENDOR grant
credits to Tech Data's account, and such undisputed credits are not
received within thirty (30) days, all such undisputed credits shall become
effective immediately upon notice to VENDOR. In such event, Tech Data
shall be entitled to deduct any such undisputed credits from the next
monies owed to VENDOR. In the event undisputed credits exceed any balances
owed by Tech Data to VENDOR, VENDOR shall, upon request from Tech Data,
issue a check payable to Tech Data within thirty (30) days of such notice.
Credits owed to Tech Data shall not be reduced by early payment or
prepayment discounts. Tech Data shall have the right to set off against
any amounts due to VENDOR under this Agreement or any invoices issued by
VENDOR related to this Agreement any and all amounts due to Tech Data from
VENDOR.
8.11 Severability. If, but only to the extent that, any provision of this
------------
Agreement is declared or found to be illegal, unenforceable or void, then
both parties shall be relieved of all
13
obligations arising under such provision, it being the intent and agreement
of the parties that this Agreement shall be deemed amended by modifying
such provision to the extent necessary to make it legal and enforceable
while preserving its intent.
8.12 Waiver. A waiver by either of the parties of any covenants, conditions or
------
agreements to be performed by the other party or any breach thereof shall
not be construed to be a waiver of any succeeding breach thereof or of any
other covenant, condition or agreement herein contained.
8.13 Remedies. All remedies set forth in this Agreement shall be cumulative and
--------
in addition to and not in lieu of any other remedies available to either
party at law, in equity or otherwise, and may be enforced concurrently or
from time to time.
8.14 Entire Agreement. This Agreement, including any Exhibits and documents
----------------
referred to in this Agreement or attached hereto, constitutes the entire
and exclusive statement of Agreement between the parties with respect to
its subject matter and there are no oral or written representations,
understandings or agreements relating to this Agreement which are not fully
expressed herein. The parties agree that unless otherwise agreed to in
writing by the party intended to be bound, the terms and conditions of this
Agreement shall prevail over any contrary terms in any purchase order,
sales acknowledgment, confirmation or any other document issued by either
party affecting the purchase or sale of Products hereunder.
8.15 Governing Law. This Agreement shall have Florida as its situs and shall be
-------------
governed by and construed in accordance with the laws of the State of
Florida, without reference to choice of laws. The parties agree that this
Agreement excludes the application of the 1980 United Nations Convention on
Contracts for the International Sale of Goods, if otherwise applicable.
8.16 Software Licenses. Whenever the Products described in this Agreement shall
-----------------
include software licenses, VENDOR hereby grants to Tech Data a non-
exclusive right to market, demonstrate and distribute the software to
Customers of Tech Data. Tech Data acknowledges that no title or ownership
of the proprietary rights to any software is transferred by virtue of this
Agreement notwithstanding the use of terms such as purchase, sale or the
like within this Agreement.
8.17 Time of Performance. Time is hereby expressly made of the essence with
-------------------
respect to each and every term and condition of this Agreement.
14
IN WITNESS WHEREOF, the parties have each caused this Agreement to be
signed and delivered by its duly authorized officer or representative as of
the Effective Date.
SONIC SYSTEMS, INC. TECH DATA PRODUCT MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇.▇. ▇▇▇▇▇
------------------------- ------------------------------------
Printed Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Printed Name: ▇.▇. ▇▇▇▇▇
Title: President & CEO Title: Senior Vice President, Marketing
Date: 1/25/99 Date: 2/9/99
15
SCHEDULE 5.7
CO-OP GUIDELINES
To increase the effectiveness of advertising and sales promotions Tech Data has
developed the following advertising requirements:
HOW CO-OP IS EARNED:
- Co-op dollars will be [*]% of the purchases made by Tech Data, net of
returns.
- Co-op dollars will be accrued on a monthly basis.
HOW CO-OP IS SPENT:
- Tech Data will obtain VENDOR's prior approval for all co-op expenditures.
- Tech Data will be reimbursed for [*]% of the cost for ads or promotions that
feature Vendor products.
- Co-op dollars will be used within the 12 months immediately following the
month in which they are earned.
HOW CO-OP IS CLAIMED:
- Claims for co-op will be submitted to vendor within 60 days of the event
date.
- Claims for co-op will be submitted with a copy of vendor prior approval and
proof of performance.
- Payment must be remitted within 30 days of the claim date, or Tech Data
reserves the right to deduct from the next invoice.
CO-OP REPORTING:
- Vendor will submit a quarterly co-op statement outlining (i) co-op earned,
(ii) co-op used and (iii) co-op claims paid.
Accepted:
SONIC SYSTEMS, INC.
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President & CEO
Date:
16
Sonic Products (2/1/99)
For more information: Sonic Systems 888-557-6642
UPC Codes Network Access and Security Appliances Sonic Part # ECCN Retail Price T.D. Cost
--------------------------------------------------------------
Internet Firewall Appliance [*]
--------------------------------------------------------------
0758479025504 SonicWALL/10 01-SSC-2550 5E991 $ 495 [*]
0758479025528 SonicWALL/50 01-SSC-2552 5E991 $ 995 [*]
0758479025542 SonicWALL Plus 01-SSC-2554 5E991 $1,495 [*]
0758479025566 SonicWALL Plus DMZ 01-SSC-2556 5E991 $1,795 [*]
0758479026501 SonicWALL PRO (AVAILABLE APPROX. 3/15/99) 01-SSC-2650 5E991 $2,995 [*]
--------------------------------------------------------------
Internet Firewall Appliance Upgrades
--------------------------------------------------------------
0758479025955 SonicWALL VPN for SonicWALL/10 & SonicWALL/50 01-SSC-2595 5D992 $ 495 [*]
0758479025962 SonicWALL VPN for SonicWALL Plus & SonicWALL Plus DMZ 01-SSC-2596 5D992 $ 695 [*]
0758479025603 SonicWALL/10 Content Filter Subscription 01-SSC-2560 5D991 $ 175/year [*]
0758479025634 SonicWALL/50 Content Filter Subscription 01-SSC-2563 5D991 $ 495/year [*]
0758479025665 SonicWALL Plus, Plus DMZ & PRO Content Filter Subscription 01-SSC-2566 5D991 $ 695/year [*]
0758479025726 SonicWALL/10 to SonicWALL/50 Upgrade (50 Nodes) 01-SSC-2572 5D991 $ 650 [*]
0758479025733 SonicWALL/10 to SonicWALL Plus Upgrade (Unlimited Nodes) 01-SSC-2573 5D991 $1,300 [*]
0758479025740 SonicWALL/50 to SonicWALL Plus Upgrade (Unlimited Nodes) 01-SSC-2574 5D991 $ 750 [*]
17