1
EXHIBIT 10.13
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED
PROVISIONS OF THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE
ASTERISKS ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
--------------------------------------------------------------------------------
PRODUCT PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
FIRSTWORLD COMMUNICATIONS, INC.
AND
ACCELERATED NETWORKS, INC.
DATED
AUGUST 1, 1999
--------------------------------------------------------------------------------
2
[ACCELERATED NETWORKS LOGO]
PRODUCT PURCHASE AND SALE AGREEMENT
This Product Purchase and Sale Agreement ("Agreement"), effective as of
August 1, 1999 (the "Effective Date'), is made by and between ACCELERATED
NETWORKS, INC., a California corporation with its principal place of business at
000 Xxxxxxx Xxxxx, Xxxxxxxx XX 00000 ("Seller") and FIRSTWORLD COMMUNICATIONS,
INC., a Delaware corporation with its principal place of business at 0000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000 ("Customer").
Customer and Seller are also referred to collectively as the "Parties". The
Parties agree as follows:
WHEREAS, Seller desires to supply to Customer and Customer desires to
purchase from Seller the products described herein, pursuant to the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties intending to be lawfully bound agree as
follows:
1. TERM
The Agreement shall commence on the Effective Date and shall continue in
force for an initial period of eighteen (18) months unless earlier terminated as
provided for in Section 13 ("Initial Term"). Thereafter this Agreement shall
continue on a month-to-month term unless a party provides written notice to the
other party 60 days of its termination.
2. SCOPE
The terms and conditions of this Agreement shall apply to all
transactions occurring during the Term whereby products or Services are provided
by Seller to Customer. Customer as used herein shall mean FirstWorld
Communications, Inc. or any of its wholly owned subsidiaries.
Customer understands and agrees that all Products, provided by Seller to
Customer pursuant to this Agreement and to the Exhibits listed below shall be
for Customer's internal use in the United Sates only.
Exhibit A Products
Exhibit B FirstWorld Communications National Price List
Exhibit C End-User Software License
1
3
3. PURCHASE OF PRODUCTS
3.1 Annual Purchase
In consideration for Seller's discounts, allowances, credits, and
incentives as set forth in Section 3.2 of this Agreement or any Schedule or
Exhibit ("Attachments") to this Agreement; Customer intends to purchase from
Seller an aggregate of $10 Million ("Purchase Objective") for Products purchased
during the Initial Term of this Agreement.
3.2 Discounts
From the Effective Date up to and through February 1, 2001, Customer
shall receive a purchase discount of [***] from the list prices set forth in
Exhibit B of all Products purchased by Customer from Seller. In the event
Customer has not achieved an aggregate purchase of $10 Million in Products on or
before February 1, 2001, Customer shall not be eligible for any future
discounts. Forfeiture of future discounts after February 1, 2001 shall be
Seller's sole and exclusive remedy for Customer's failure to meet its Purchase
Objective. Failure to attain the Purchase Objective shall not be a default or
breach of this Agreement.
3.3 Pricing
Prices are exclusive of all taxes, customs duties or similar tariffs and
fees, shipping and insurance charges which Seller may be required to pay or
collect upon the sale or delivery of the Products or upon collection of the
sales price, all of which shall be Customer's responsibility.
4. ORDERS AND PAYMENT
4.1 Customer shall submitted purchase orders by fax to the following
address:
Accelerated Networks, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Sales Administration
Fax: (000) 000-0000
4.2 Cancellation and Rescheduling
Customer may cancel delivery of Products pursuant to a purchase order
without charge upon written notice to Seller not less than one hundred and
eighty (180) days prior to the scheduled delivery date. Customer will be
responsible for payment of 75% (seventy-five percent) of the amount of any
portion of a purchase order that is cancelled less than one hundred and eighty
(180) days prior to the scheduled delivery date. Customer may reschedule, or
extend the date of, delivery of Products pursuant to a purchase order without
charge upon written notice
---------------------
*** Confidential Treatment has been requested for certain redacted
provisions of this agreement. The redacted provisions are identified by three
asterisks, enclosed by brackets and underlined. The confidential portion has
been filed separately with the Securities and Exchange Commission.
2
4
to Seller not less than sixty (60) days prior to the scheduled delivery date.
This reschedule of delivery of Products by Seller can only be done one (1) time
per purchase order and the revised delivery date cannot be greater than sixty
(60) days from the originally scheduled date of delivery.
4.3 Payment
Payment for Products (including transportation charges and taxes, if
applicable) will be due as follows:
To Accompany Purchase Order [***]
Upon Delivery [***]
Within thirty (30) days of Seller's invoice [***]
date after delivery
All payments shall be made in U.S. dollars in the United States.
5. DELIVERY AND ACCEPTANCE
5.1 Delivery
Products are delivered FOB Seller's plant or other place of shipment.
Shipments will be made to the delivery address specified on Customer's purchase
order. In the absence of a specified delivery address, delivery will be made to
Customer's facility in Greenwood Village, Colorado, or any other standard
location designated by Customer. Shipping arrangements will be mutually agreed
upon by the Parties prior to delivery. Seller shall use its commercially
reasonable efforts to fill (by full or partial shipment) Customer's purchase
orders for Products within sixty (60) days of receiving purchase order. If
Seller cannot fill Customer's purchase order, in which said purchase order falls
within the range of quarterly forecasts (as set forth in Section 7 herein)
within 60 days for reasons other than those as described in Section 17.5 herein,
Customer may cancel purchase order without penalty and Seller will apply
cancelled purchase order's value toward Purchase Objective.
5.2 Inspection and Acceptance of Deliveries
Customer shall have the right to visually inspect all Products ordered
pursuant to this Agreement for a period of ten (10) days following delivery. If
the delivered Product(s) fails to conform to the applicable purchase order or
release, in whole or in part, Customer may reject the delivery and Customer
shall promptly return the rejected Product(s) to Seller at Seller's risk and
expense. Upon receipt of the rejected Product(s), Seller will promptly ship
replacement Product(s) to Customer.
---------------------
*** Confidential Treatment has been requested for certain redacted
provisions of this agreement. The redacted provisions are identified by three
asterisks, enclosed by brackets and underlined. The confidential portion has
been filed separately with the Securities and Exchange Commission.
3
5
5.3 Pre-shipment Review
If reasonably requested by Customer, a representative of Customer may
participate, to the extent applicable, in Seller's preshipment configuration,
prestaging and inspection of Product at Seller's facility.
6. SOFTWARE LICENSE
6.1 License Grant
Seller grants Customer, subject to the terms and conditions set forth in
this Agreement, a non-exclusive, non-transferable, non-sublicensable license to
(i) use the software comprising any Product (including software contained in
firmware embedded in a Product) ("Software") and (ii) at Customer's option, to
distribute the Software as incorporated and/or embedded within a Product to
Customer's end-user customers in conjunction with Customer's product and service
offerings. All copies of the Software are licensed and not sold. As between the
Parties, Seller retains all title to (except as expressly licensed by Seller),
and rights (including all intellectual property and proprietary rights anywhere
in the world) and interest in the Software. Seller shall use commercially
reasonable efforts to deliver Seller's standard End User Software License
Agreement ("End User License Agreement") included in the Product package
delivered to the end user.
6.2 License Restrictions
Customer shall not, nor permit others to, (i) copy, modify or create any
derivative work of the Software or include the Software in any other software,
(ii) delete, alter. or obscure any copyright or other notice or proprietary
legend appearing in the Software or on any documentation, media, master or
package materials for the Software provided by Seller or (iii) reverse assemble,
decompile, reverse engineer or otherwise attempt to derive the source code (or
the underlying ideas, structure, sequence, organization or algorithms) from the
Software (each, a "Misuse"). Customer shall have no liability to Seller or any
other party for an end-user's Misuse of the Software, unless Customer has actual
knowledge of an end-user's Misuse and fails to promptly take corrective action.
7. MONTHLY MEETINGS AND QUARTERLY FORECASTS
Seller and Customer shall each designate at least one representative to
serve as a liaison with the other party (each, a "Representative"). The
Representatives shall meet, either in person or by telephone, to discuss in good
faith matters relating to this Agreement including Product delivery schedules,
joint marketing activities, sales training needs, price changes and new Product
features and enhancements, and Purchase Objective levels. Customer shall provide
seller with quarterly product forecasts. Such forecasts will contain, but are
not necessarily limited to, requested products and quantities, projected
shipping dates, and shipping locations. Quarterly forecasts shall commence and
be in effect beginning with Q3, 1999, and shall continue for the term of this
contract. Such meetings shall take place on a monthly basis at a mutually agreed
upon location. Each party shall bear its own costs incurred in attending or
participating in such meetings.
4
6
8. SELLER'S WARRANTY
8.1 Product Warranty
Seller warrants to Customer: (i) For a period of one (1) year from the
date of shipment that the hardware Products will be free from material defects
in materials and workmanship, (ii) for a period of ninety (90) days from the
date of shipment, the Software will perform substantially in accordance with
applicable specifications identified in the user manual of the then current
release and (iii) services performed by Seller hereunder will be performed in a
professional and workmanlike manner and in accordance with current industry
standards. Seller's warranty does not extend to any Product that (a) is modified
or altered, (b) is not maintained to Seller's maintenance recommendations, (c)
is operated in a manner other than that specified by Seller, (d) has its serial
number removed or altered or (e) is treated with abuse, negligence or other
improper treatment (including, without limitation, use outside the recommended
environment).
8.2 Remedies
Products delivered to Customer by Seller hereunder which do not comply
with the warranty in Section 8.1 above and are returned to Seller during the
applicable warranty period will be repaired or replaced at Seller's option, at
no cost to Customer. If Seller cannot, or determines that it is not practical
to, repair or replace a returned Product, the price paid by Customer for such
Product will be credited and applied to future orders.
8.3 Disclaimer
SELLER MAKES NO WARRANTIES (OTHER THAN AS EXPRESSLY PROVIDED IN SECTION
8.1 ABOVE) WITH RESPECT TO THE PRODUCTS, THE SOFTWARE OR ANY SERVICES AND
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. FURTHER,
SELLER DOES NOT WARRANT THE USE, OR THE RESULTS OF THE USE, OF THE PRODUCTS OR
THAT ANY SOFTWARE WILL BE ERROR-FREE.
8.4 Year 2000 Compliance Warranty
Seller represents and warrants (the "Year 2000 Warranty) that (a) all
calendar date-related processing by the Products of date data or of any system
date will not cause the Products to cease to operate substantially in accordance
with their specifications, (b) all data fields for the date data contained in
the Products are four-digit fields capable of indicating century and millennium,
and (c) that Seller has verified through its testing procedures that no change
in the system date (including the change from the year 1999 to the year 2000)
will cause the Products to cease to operate substantially in accordance with
their specifications. Notwithstanding any provision to the contrary set forth in
this Agreement, Seller makes no representation or warranty with respect to the
Products operating in conjunction with any computer software, computer firmware,
computer hardware, or any combination of the foregoing supplied by third
parties.
5
7
9. CUSTOMER'S REPRESENTATIONS AND WARRANTIES
Customer represents, warrants and covenants that: (i) it shall comply
with good business practices and all laws and regulations relevant to this
Agreement or the subject matter hereof, (ii) it shall use the then current names
used by Seller for the Products, provided that all advertisements, promotional
materials, packaging and anything else bearing any trademark of Seller's shall
identify Seller as the trademark owner and shall be subject to Seller's prior
written approval and (iii) it shall comply with all export laws, restrictions,
national security controls and regulations of the United States or other
applicable foreign agency or authority, and not to export or re-export, or allow
the export or re-export of any Product or Proprietary Information of Seller or
any direct product thereof in violation of any such restrictions, laws or
regulations, or without all required licenses and proper authorizations, any
Group D:I or E:2 country (or national of such country) specified in the then
current U.S. Export Administration Regulations (or any successor supplement or
regulations).
10. LIMITATION OF LIABILITY
NEITHER PARTY WELL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY FOR (I) ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF THE AMOUNTS
PAID TO IT (IN THE CASE OF SELLER) OR (IN THE CASE OF CUSTOMER) PAID OR OWED BY
IT HEREUNDER DURING THE TWELVE (12) MONTH PERIOD PRIOR TO DATE THE CAUSE OF
ACTION AROSE OR (II) ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOST PROFITS OR
LOST DATA OR (III) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR
SERVICES. THE LIMITATIONS OF THIS SECTION 10 SHALL NOT APPLY TO ANY BREACH OF
SECTION 6.2 OR 13.
11. INDEMNIFICATION
Seller hereby agrees to defend, indemnify and hold harmless Customer
from and against any third party claims, action, demands, costs or expenses
arising from (i) infringement by the Products as and in the form delivered to
Customer of any United States patent, trademark, copyright or other intellectual
property right of any third party or (ii) the Products' failure to perform in
accordance with the Product Warranty set forth in Section 8.1, provided that
Customer (a) promptly notifies Seller in writing of any such claim, action or
demand, (b) permits Seller to have sole control and authority in the
investigation, defense and settlement of such claim, action or demand and (c)
provides Seller with reasonable assistance and cooperation in connection with
the investigation, defense and settlement thereof and Seller agrees to reimburse
Customer for out-of-pocket expenses incurred in providing such cooperation and
assistance. Seller shall have no obligation with respect to any settlement that
it does not approve in writing. Customer shall permit Seller to replace or
modify any affected Product so to avoid infringing, so long as the replacement
or modification has substantially the equivalent functionality as set forth in
the design specifications, or to procure the right for Customer to continue use
of such Products. If neither of such alternatives is reasonably practicable, the
infringing Products shall be returned to Seller and Seller's sole liability
hereunder, in addition to Seller's obligations to defend, indemnify and hold
harmless set forth in this Section 11, shall be to refund amounts paid
6
8
therefor by Customer. Seller shall have no obligation hereunder for or with
respect to claims, actions, or demands alleging infringement that arise by (i)
reason of combination of noninfringing, Product with any other product, system
or process not supplied by Seller; (ii) Products modified after delivery to
Customer without Seller's prior written consent; (iii) Products not supplied by
Seller; and (iv) Customer's continued use of infringing Products after being
notified of the alleged infringement and after being provided with modifications
that would have avoided the alleged infringement. The foregoing states Seller's
entire liability with respect to infringement of any intellectual property
rights by any Product.
12. RELATIONSHIP OF PARTIES
Customer expressly acknowledges that it is an independent contractor in
the performance of this Agreement, and is solely liable for all labor and
related expenses in connection with this Agreement. Customer will not have, and
will not represent that it has, any power, right or authority to bind Seller, or
to assume or create any obligation or responsibility, express or implied, on
behalf of Seller.
13. PROPRIETARY INFORMATION
The Parties acknowledge that in the course of performing their duties
under this Agreement, each may obtain confidential and proprietary information
of the other ("Proprietary Information"). Such Proprietary Information may
include, but is not limited to, trade secrets, know-how, inventions, techniques,
processes, programs, schematics, software source code, data, customer lists,
financial information, and sales and marketing plans. Each party shall at all
times keep in trust and confidence all Proprietary Information of the other
party and, during the term of this Agreement and for five (5) years after its
termination, shall not use such Proprietary Information other than in the course
of performing its duties under this Agreement nor shall it disclose any such
Proprietary Information to any third party without the written consent of the
other. Upon termination or expiration of this Agreement or upon the request of
the disclosing party, each party shall promptly return all manifestations of the
other's Proprietary Information in its possession.
14. TERMINATION
14.1 Termination for Cause
This Agreement may be terminated by either party for cause immediately
by written notice upon the occurrence of any of the following events: (i) if the
other ceases to do business, or otherwise terminates its business operations;
provided, however, that the acquisition of all or substantially all of a party's
stock, assets or business shall not be grounds for termination of this
Agreement; or (ii) if the other breaches any material provision of this
Agreement and fails to cure such breach within thirty (30) days of written
notice describing the breach; provided, however, that a breach of the
obligations set forth in Section 6.2 or 13 and shall be grounds for immediate
termination of this Agreement by the non-breaching party; or (iii) if the other
becomes insolvent or seeks protection under any bankruptcy, receivership, trust
deed, creditors arrangement, composition or comparable proceeding, or if any
such proceeding is instituted against the other (and not, dismissed within
ninety (90) days).
7
9
14.2 Effect of Termination
Upon any termination or expiration of this Agreement, all pending
purchase orders for release of Products shall be cancelled as of the effective
date of termination or expiration, all sums payable to Seller shall be due and
payable on the effective date of termination or expiration and all licenses
granted to Customer under this Agreement shall immediately terminate, and
Customer shall discontinue all use and distribution of the Products. Upon an
end-user acquiring a copy of the Software incorporated and/or contained in a
Product, the end-user shall be entitled to use that copy of the Software,
subject to the terms and conditions of the End-User License Agreement.
15. PUBLICITY
The Parties shall announce this Agreement and the establishment of the
relationship between Customer and Seller under this Agreement pursuant to a
joint press release to be mutually agreed upon prior to issuance. The Parties
agree to submit to each other for approval all press releases relating to this
Agreement and to not publish any press release which mentions the parties
relationship without prior approval of the other party, which approval shall not
be unreasonably withheld.
16. ASSIGNMENT
This Agreement shall be binding upon and insure to the benefit of the
parties hereto and their respective permitted successors and assigns. Neither
party may assign its rights or obligations hereunder without the prior written
consent of the other which consent shall not be unreasonably withheld,
conditioned or delayed, provided that no consent shall be required in connection
with an assignment to an entity controlling, controlled by or under common
control with such party, or to an entity that succeeds to all, or substantially
all, of the party's assets whether by merger, sale or otherwise.
17. MISCELLANEOUS
17.1 No Waiver
A waiver by either party of any provision of this Agreement or breach,
in any one instance, shall not be construed as a waiver of any other provision
or subsequent breach thereof.
17.2 Notices
Notices under this Agreement shall be in writing and delivered by
certified or registered mail, return receipt requested, or by nationally
recognized overnight courier service next day delivery, or personal deliver, to
the addresses as specified in the first paragraph of this Agreement. Such notice
shall be effective on the date of receipt or refusal thereof by the receiving
party.
8
10
17.3 Governing Law
This Agreement shall be governed and construed under California law
without regard to conflicts of law provisions.
17.4 Severability
If any provision of this Agreement is held by a court of competent
jurisdiction to be illegal, invalid or unenforceable, that provision shall be
limited or eliminated to the minimum extent necessary so that this Agreement
shall otherwise remain in full force and effect and enforceable.
17.5 Force Majeure
A party shall not be liable for non-performance or delay in performance
(other than of payment or confidentiality obligations) caused by any event
reasonably beyond the control of such party including, but not limited to wars,
hostilities, revolutions, riots, civil commotion, national emergency, strikes,
lockouts or other labor disputes or shortages or inability to obtain material or
equipment, unavailability of supplies, compliance with laws or regulation
(including, without limitation, those related to infringement), epidemics, fire,
flood, earthquake, force of nature, explosion, embargo, or any Act of God, or
any law, proclamation, regulation, ordinance or other act or order of any court,
government or governmental agency.
17.6 Entire Agreement; Amendment
This Agreement, including all Attachments to this Agreement, constitutes
the entire agreement between the parties relating to the subject matter hereof
and all prior or simultaneous proposals, negotiations, representations,
conversations, discussions and agreements, whether written or oral, among the
parties and all past dealing or industry custom. This Agreement may not be
amended except by a writing signed by the Parties.
17.7 Counterparts
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
9
11
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
effective as of the Effective Date.
ACCELERATED NETWORKS, INC. FIRSTWORLD COMMUNICATIONS, INC.
By: /s/ Xxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxx
--------------------------- ---------------------------------
Name: Xxxxxx Xxxxxxxx Name: Xxxx Xxxxxx
--------------------------- ---------------------------------
Title: President & CEO Title: Chief Technology Officer
--------------------------- ---------------------------------
Date: 8/5/99 Date: 8/4/99
--------------------------- ---------------------------------
10
