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EXHIBIT 10.1
DISTRIBUTION AGREEMENT
This Agreement is entered into as of February 28, 2001, between NEC
Corporation, a Japanese corporation with its principal place of business at 0-0,
Xxxxx 0-xxxxx, Xxxxxx-xx, Xxxxx 000-0000, Xxxxx ("NEC"), and Cray Inc., a
Washington corporation with its principal place of business at 000 Xxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000-0000, U.S.A. ("Cray").
RECITALS:
A. NEC is in the business of manufacturing and selling high-performance
vector supercomputers. Cray has expertise and capabilities for the distribution
of such computers.
B. NEC desires to appoint Cray as its exclusive North American
distributor for NEC's vector supercomputers, as described more particularly in
Section 3, and the software, component parts, and spare parts associated with
such vector supercomputers, and as a non-exclusive distributor of the Products
elsewhere in the world, and Cray is willing to be such distributor, all in
accordance with the terms and conditions of this Agreement.
C. Concurrently with this Agreement, the parties are entering into a
Preferred Stock Purchase Agreement (the "Stock Purchase Agreement") and certain
other related agreements (collectively the "Other Agreements"). Except as
otherwise defined in this Agreement, all capitalized terms shall have the
meanings assigned to them in the Stock Purchase Agreement.
Now, therefore, in consideration of the premises and covenants contained
herein, the parties agree as follows:
1. Term. The initial term of this Agreement (the "Term") shall be
conditioned upon and commence upon the closing under the Stock Purchase
Agreement, and continue through March 31, 2011. Within ninety (90) days
after the fifth anniversary of this Agreement, the parties shall, at the
request of either party, meet to review the performance of the parties
with regard to their obligations hereunder. If, pursuant to such
meeting, it is found that either party has materially breached its
obligations hereunder, the other party may terminate this Agreement upon
thirty (30) days prior written notice to the breaching party. If neither
party gives the other such notice of termination, this Agreement shall
continue in effect for the Term; provided, however, that the Term shall
be subject to early termination as provided in Sections 9, 14 and 19.11.
2. Products. As used herein, the term "Products" means (i) NEC vector
supercomputers, present and future, including the SX-5, the SX-5X, and
any other NEC supercomputers using vector processors, including spare
parts, and (ii) their software products. The Products shall be specified
in the product list to be separately provided by NEC from time to time.
Nothing herein shall be construed
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as obligating NEC to continue development of vector supercomputers
beyond SX-5X. NEC reserves the right to discontinue supplying all or
some of the Products at its option and at any time during the Term,
provided that (i) NEC discontinues all sales of such Product in all
countries, (ii) notwithstanding that a final decision on discontinuance
has not been made, NEC gives Cray NEC's informal plan with respect to
the expected date of discontinuance promptly after NEC believes that (A)
all or some of the Products are likely to be discontinued, or (B) the
date or any other material provision of any prior notice of
discontinuance has changed, and (iii) NEC gives at least three (3)
months prior notice to Cray of the date on which NEC will no longer
accept purchase orders for such Products. The discontinuance of a
Product shall not excuse NEC's obligation to fill accepted orders.
3. Territory/Exclusivity. Subject to the terms and conditions of this
Agreement, NEC hereby grants Cray and Cray hereby accepts (i) the
exclusive right to sell and distribute the Products in the United
States, Canada and Mexico (together, the "Exclusive Territory") and (ii)
to the extent permissible under EU and other applicable antitrust laws
and regulations (as confirmed by opinions or other legal advice of
qualified counsel to the respective parties) the non-exclusive right to
sell and distribute the Products in the rest of the world (the
"Non-Exclusive Territory" and together with the Exclusive Territory the
"Territory"). In the event that the parties are unable to confirm that
distribution in a particular territory is permissible under such laws
and regulations, the parties will discuss in good faith the feasibility
of amending this Agreement as it relates to such territory to the
minimum extent necessary so that the grant of non-exclusive rights is
permissible under such laws and regulations. Cray's non-exclusive
distribution rights in the Non-Exclusive Territory are subject to NEC's
existing exclusive distributor agreements, which are listed in the
attached Exhibit A. During the Term, NEC will not without Cray's consent
(i) sell Products knowingly (directly or indirectly) into the Exclusive
Territory, (ii) appoint any other distributor of the Products for the
Exclusive Territory, or (iii) sell the Products to any reseller that it
knows is selling the Products for installation in the Exclusive
Territory. During the Term, Cray will not sell vector supercomputers
manufactured by any party unrelated to Cray or NEC. A vector
supercomputer is any computer with a vector hardware unit as an integral
part of its central processing unit boards.
4. Pricing.
4.1 Determination of Prices. NEC will sell the Products (excluding
spare parts, the purchase prices for which are provided for in
Section 2.2.4 of Schedule A of the Maintenance Agreement) to Cray
at *% of the List
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* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.
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Prices for SX-5 computers and *% of the List Prices for SX-5X
computers and Products released by NEC following the commencement
of the Term. For this purpose the term "List Prices" refers to
NEC's standard international list prices for the Products (which
prices shall be the same for all countries, except Japan), as
published from time to time (such publication, the "Price List").
NEC reserves the right to change any List Price at any time upon
not less than thirty (30) days prior notice. Cray will have the
exclusive right to control prices to its customers. NEC shall
consider in good faith on a case-by-case basis any request by
Cray to lower prices to Cray for special competitive situations;
provided, that the final determination to lower prices shall be
within NEC's sole discretion. In connection with any such
request, Cray shall provide NEC with reasonably detailed
information regarding the special situation. All transfer prices
of the Products are CIP at Cray's designated port/airport in the
Territory, provided, however, that NEC shall pay all export and
shipping costs. "CIP" means "Carriage And Insurance Paid To" as
defined in INCOTERMS 2000.
4.2 Most Favored Nation. The Marketing Coordination Board created
pursuant to the Sales and Marketing Services Agreement shall meet
twice during each year of the Term to discuss whether during the
preceding twelve months the parties have achieved the objective
that *. In the event that the parties agree that this objective
has not been achieved, then the parties shall discuss what
adjustments, if any, to the transfer prices set forth in Section
4.1 are appropriate.
4.3 RPQ. In the event that Cray receives a request from a customer or
prospective customer for a special, nonstandard feature or
capability of the Products supplied by Cray, and Cray determines
that there is no reasonable alternative method of satisfying the
request for such feature or capability without requesting that
NEC modify the Product, and NEC agrees to such determination,
Cray may submit to NEC a Request for Price Quotation ("RPQ") that
NEC modify such Product. Provided that the Product in question is
designed and manufactured by NEC, and has not been subsequently
modified other than by NEC, NEC shall negotiate such RPQ in good
faith with Cray and shall, if mutual agreement is reached as to
terms and conditions, including reasonable charges for such RPQ,
use its reasonable efforts to modify the Product in the manner
requested by Cray. Cray shall also pay NEC's reasonable charges
for consulting with Cray with respect to a proposed RPQ.
Notwithstanding the foregoing, if the requested feature or
capability is, in NEC's judgment, commonly applied to the
Products for NEC customers, NEC will bear the cost.
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* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.
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4.4 Improvement and Enhancement. In the event Cray requests of NEC
any improvements or modifications of the software products
included in the Products or listed in NEC's Price List (the
"Software Products"), NEC shall discuss with Cray in good faith
the technical possibility of such requested improvements or
modifications and, if they are technically possible, NEC and Cray
shall further discuss in good faith (i) the specifications of
such requested improvements or modifications, (ii) the possible
time schedule of delivery of Software Products which include such
requested improvements or modifications and (iii) the costs to be
borne by Cray for such requested improvements or modifications.
In the event that NEC produces Software Products with
improvements or modifications, NEC shall not be obligated to
furnish Software Products which include all accumulated
improvements and modifications more frequently than twice a year.
5. Title; Delivery. Title to and risk of loss or damage to the Products
ordered by Cray shall pass to Cray upon NEC's delivery of the Products
to the carrier in Japan (the "Delivery"). Unless otherwise agreed upon
between the parties, NEC shall pack the Products in accordance with
NEC's standard overseas packing.
6. Forecasts; Orders; Shipment.
6.1 Forecast. On or before 5th business day of each month during the
Term, Cray shall provide NEC with an eighteen (18) month rolling
forecast which will state the number of the Products by model
number and system configuration of which Cray reasonably
forecasts it will request delivery. Such forecasts shall not
constitute a firm order to purchase by Cray nor a firm commitment
to sell by NEC. Cray shall use commercially reasonable efforts to
provide NEC with accurate forecasts. Commitment to sell a
particular Product shall arise only upon the acceptance by NEC of
Cray's purchase order for such Product (such purchase order and
acceptance, a "Contract").
6.2 Orders. Cray shall make purchases by submitting firm purchase
orders to NEC in such form and manner as NEC may reasonably
request, provided, that the terms of such form comply with the
terms of this Agreement, and NEC will promptly accept or reject
such purchase orders. NEC shall accept such purchase orders with
a requested delivery date at least six (6) months after the date
of NEC's receipt of such purchase orders. Each purchase order
that NEC is obligated to accept pursuant to the foregoing
sentence is a "Standard Purchase Order." NEC may, at its sole
discretion, accept purchase orders with an delivery date six (6)
months or less from the date of NEC's receipt of such purchase
orders. If a shortage of production capacity due to prior pending
contracts will prevent NEC from delivering a Product by the
delivery date requested in a Standard Purchase Order, then: (i)
NEC shall promptly notify Cray that NEC will not be able
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to meet the requested delivery date and provide Cray with a list
of available delivery dates and (ii) the Standard Purchase Order
shall become a Contract upon Cray's notice to NEC of Cray's
acceptance of an available delivery date. If none of the
available delivery dates provided by NEC are satisfactory to Cray
or Cray's customer, Cray and NEC shall attempt to agree on an
acceptable date. Cray's minimum order obligations pursuant to
Section 9 shall be reduced by the amount of any Firm Orders (as
defined in Section 9.1) lost due to NEC's inability to deliver
Products by the requested delivery date in a Standard Purchase
Order. The terms and conditions of this Agreement shall prevail
over any inconsistent terms of sale in any Contract, unless such
inconsistency is agreed to in a writing signed by both parties
expressly stating that it is a deviation from this Agreement.
Unless otherwise expressly agreed upon between the parties in
writing, once accepted by NEC, a Contract will be binding upon
the parties.
6.3 Shipment. NEC shall deliver the ordered Products to Cray in
accordance with the relevant Contract and this Agreement. If NEC
is unable to meet the requested delivery date specified in any
Contract, the parties will promptly establish a date mutually
acceptable to the parties; provided, however, that NEC shall
deliver such Products to Cray as quickly as reasonably possible.
Shipment will be by air freight from Japan to locations within
the Territory reasonably specified by Cray.
6.4 Approvals. Export licenses and other legally required approvals
for the Products shipped by NEC hereunder shall be the
responsibility of NEC, and import licenses and other legally
required import approvals shall be the responsibility of Cray
(all such licenses and approvals, the "Approvals"). Each party
shall use commercially reasonable efforts to promptly obtain the
Approvals for which it is responsible, and NEC shall not be
required to ship any Product until its receipt of all required
Approvals. If shipment of the Products is delayed due to delays
in granting or securing Approvals (other than by reason of a
breach of the foregoing sentence), then the parties will seek to
establish a mutually agreeable alternate date of shipment without
penalty by reason thereof.
6.5 Restrictions on Use of Products. Cray agrees that the Products
supplied hereunder shall not be used, sold and/or otherwise
disposed for the development and/or manufacture of weapons of
mass destruction, or for use in or as any other type of weapons.
Should the Products be used for the development and/or
manufacturing of weapons of mass destruction or for use in or as
any other type of weapons, NEC shall have the right to
immediately terminate the relevant Contract, disclaiming all
liability on the part of NEC, and Cray shall indemnify NEC for
all damages and losses of any nature caused by or arising out of
Cray's breach of this Section 6.5. In connection with Cray's
distribution of Products to its customers
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hereunder, Cray shall first obtain from such customers a written
contract with a provision having the same kind of disclaimer and
indemnification as in this Section 6.5.
7. Acceptance. Prior to Delivery, NEC will test the Products for
conformance to their respective specifications in accordance with its
standard test procedures, certify all Products which pass as having
passed such tests, and supply appropriate test details and results to
Cray along with the Products. Cray may perform confirmation tests using
NEC test procedures at Cray's or Cray's customer's site. Upon request,
NEC will cooperate reasonably with Cray for such tests.
8. Payment. The purchase price for the Products will be paid in United
States dollars within sixty (60) days following the Delivery by means of
document against acceptance ("D/A"). Amounts not paid when due will bear
a late payment charge of 1.5% percent per month or the maximum legal
rate, whichever is less. If installation of any Product by Cray at the
customer's site is delayed due to the fault of NEC, including without
limitation any nonconformance of the Product with the warranty in
Section 10.1, then NEC will pay Cray interest on the amount actually
paid to NEC for such Product at the rate of 1.5% per month or the
maximum legal rate, whichever is less, for any period of delay exceeding
60 days. In the event that D/A payment is not accepted by a bank or NEC
cannot obtain cargo insurance for reasons attributable to Cray, both
parties shall discuss in good faith and agree upon alternatives,
including increase of the transfer price, opening a security account, or
provision of letters of credit or other financial assurance, for
reducing NEC's risks arising therefrom.
9. Cray Performance Requirements.
9.1 Minimum Orders. During each overlapping two-year period during
the Term (each an "Order Period"), Cray must submit to NEC Firm
Orders for Products to be sold that satisfy at least one of the
two minimum volume options in Sections 9.1.1 and 9.1.2. For
purposes of this Section 9, "Firm Orders" means all Standard
Purchase Orders (as defined in Section 6.2) and any other
purchase orders that are accepted by NEC hereunder. The initial
Order Period runs from April 1, 2001 through March 31, 2003; the
second Order Period runs from April 1, 2002 through March 31,
2004; and the third Order Period runs from April 1, 2003 through
March 31, 2005, and so on throughout the Term.
9.1.1 Minimum Order Volume Option. To satisfy this option,
during each Order Period Cray must submit Firm Orders that
total at least
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$* during the first Order Period, $* during the second
Order Period, and $* during the third Order Period and
each subsequent Order Period (each of the foregoing
amounts, a "Minimum Order Volume"). To satisfy the
requirements of this Section 9.1.1, not less than *% of
the Minimum Order Volume for each Order Period must be
attributable to sales by Cray in the Exclusive Territory.
The balance of the Minimum Order Volume for each Order
Period may be attributable to Incremental Sales.
"Incremental Sales" are sales by Cray in the Non-Exclusive
Territory (i) for which NEC did not submit a Best and
Final Order (BAFO) in procurements for which a BAFO is
required, or (ii) where no BAFO is required, sales in
which NEC did not submit an offer equivalent to a BAFO.
The parties shall consult regarding the identification of
Incremental Sales. For the avoidance of doubt, Minimum
Order Volumes shall be calculated on the basis of the
transfer prices actually paid to NEC by Cray for the
Products.
9.1.2 Percentage Order Volume Option. To satisfy this option,
during each Order Period, Cray must submit Firm Orders to
NEC representing Cray Revenues of at least the Minimum
Percentage of SX Revenues. "Minimum Percentage" means,
during the first Order Period, *%; during the second Order
Period, *%; and during the third Order Period and each
following Order Period, *%. "SX Revenues" means worldwide
gross revenues from all sales of the Products, including,
without limitation, revenues from sales by Cray of the
Products hereunder, but excluding (i) revenues from sales
by NEC in Japan and sales to NEC or to its majority-owned
subsidiaries (to the extent that NEC or such subsidiaries
are intended to be the end-users of the Products sold)
and, (ii) revenues from Incremental Sales. "Cray Revenues"
means Cray's gross revenues from Firm Orders for sales of
Products in the Exclusive Territory. For purposes of this
Section 9.1.2, revenue shall equal the price at which the
Products are sold to end-users.
If in any Order Period Cray fails to satisfy both of the minimum order
volume options set forth above, NEC may as its exclusive remedy, after at least
ninety (90) days written notice to Cray, (i) change the exclusive
distributorship of Cray in North America into a non-exclusive distributorship,
(ii) terminate Cray's distributorship in North America, or (iii) terminate this
Agreement.
The parties recognize that the above figures are minimums only, and that
Cray's objective in entering into this Agreement is to sell greater volumes of
Products as
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* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.
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follows: Firm Orders to NEC of $* in the first Order Period, $* in the second
Order Period, and $* in the third and each subsequent Order Period.
9.2 Revenue Determination.
9.2.1 Cray Revenues and SX Revenues shall be determined by
reference to the vector computer sales data published by
the International Data Corporation ("IDC") following the
close of each Order Period relating to such Order Period
(the "Sales Data"). If either party disputes the Sales
Data, it may request IDC investigate the Sales Data, in
which event any adjusted Sales Data republished by IDC
shall be the Sales Data; provided, that neither party is
obligated to wait for IDC to investigate or publish
adjusted Sales Data before pursuing the remedy set forth
in Section 9.2.4 below.
9.2.2 NEC shall provide IDC with accurate information regarding
its sales to the extent necessary to permit IDC to
determine the SX Revenues. Cray shall provide IDC with
accurate information regarding its sales to the extent
necessary to permit IDC to determine the Cray Revenues.
9.2.3 In the event that the Sales Data published by IDC is
insufficient to calculate SX Revenues or Cray Revenues or
is not available or timely at the close of an Order
Period, the parties shall request IDC prepare and publish
a bulletin containing sufficient Sales Data to determine
the SX Revenues and Cray Revenues.
9.2.4 In the event that either party disputes the Sales Data or
cannot obtain all necessary Sales Data within thirty (30)
days following the close of an Order Period, either party
may submit the determination of the SX Revenues and Cray
Revenues to determination by arbitration in accordance
with Section 18.1.
9.3 Sales Efforts. Cray shall use commercially reasonable efforts to
sell and promote the sale of the Products in the Exclusive
Territory, which shall be at least equivalent to Cray's efforts
to sell and promote the sale of its supercomputers in the
Exclusive Territory. NEC's exclusive remedy for Cray's breach of
this Section 9.3 shall be termination of this Agreement;
provided, that Cray has acted diligently and in good faith to
sell and promote the sale of Products.
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* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.
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9.4 Licenses and Regulations. Cray shall obtain and maintain in full
force and effect all licenses and consents required to carry on
business as a distributor of the Products hereunder, and shall in
all material respects comply with any and all applicable laws,
regulations and orders of governmental authorities and agencies
in performing its obligations hereunder.
9.5 Export Control. Cray shall not re-export, directly or indirectly,
any Product to any country for which the U.S. government or any
agency of the U.S. government at the time of re-export requires a
license or other government approval without first obtaining such
license or approval, or otherwise export or re-export the Product
in violation of U.S. or Japanese law.
10. Warranty/Warranty Claim Procedures/General Failures.
10.1 Warranty. NEC warrants to Cray that each Product and part thereof
will (i) be in good working order and free of error or defect
that materially impairs use, and (ii) conform in all material
respects to NEC's published specifications for such Product. THIS
WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES OR OBLIGATIONS,
EXPRESS OR IMPLIED. NEC EXPRESSLY DISCLAIMS ALL IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
10.2 Warranty Claims Procedures. Cray shall notify NEC in writing and
reasonable detail of any nonconformance with the warranty in
Section 10.1 with respect to a particular Product or part within
three months after its Delivery in accordance with the procedures
set forth in the Operational Plan (as defined in the Maintenance
Agreement). In the event that the Product or part does not
conform to the warranty in Section 10.1, NEC shall, as Cray's
exclusive remedy, deliver a replacement for the nonconforming
Product or part within ten (10) business days from NEC's receipt
of such notification from Cray. If NEC cannot with commercially
reasonable efforts deliver the replacement Product or part within
such ten (10) business day period, NEC shall, prior to the
expiration of such period, deliver to Cray a written schedule for
delivery of the replacement and use commercially reasonable
efforts to comply with such schedule.
10.3 Warranty Exclusions. The warranties for the Products shall not
apply to defects resulting from (i) improper or inadequate
maintenance by Cray or its customers; (ii) modification of the
Products in a manner which is not expressly authorized by NEC;
(iii) misuse; (iv) Cray or customer supplied parts, software or
interfacing not authorized by NEC; or (v) operation outside the
environmental specification for the Products.
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10.4 Third Party Beneficiaries. All warranties that NEC provides to
Cray hereunder are solely for Cray's benefit. Cray shall not
transfer or assign any of such warranties to any other party,
including Cray's customers.
11. Confidentiality.
11.1 Confidential Information. Each party agrees to keep all
Confidential Information (as defined below) confidential and not
to use or disclose such information except as required by law or
stock exchange rule or regulation, authorized by this Agreement
or otherwise authorized by the disclosing party in writing, and
to accord such Confidential Information the same standards and
protections that it uses to protect its own confidential business
information. Each party will limit dissemination of Confidential
Information to its employees, contractors and agents who
reasonably require access in order to carry out the terms of this
Agreement and who have been informed of and are obligated to
maintain confidentiality. Except for Confidential Information
necessary for the performance of obligations or exercise of
rights under this Agreement, all materials or documents in the
receiving party's possession containing Confidential Information
will be returned to the disclosing party promptly following
written request therefor. If the receiving party is subpoenaed or
ordered by any court or governmental agency to disclose
Confidential Information, it will provide prompt written notice
to the other party so as to allow the other party to seek a
protective order to protect the confidentiality of such
information. As used herein, "Confidential Information" means (y)
the terms of this Agreement and the Other Agreements, and (z) all
data and information received by one party from the other
(whether received orally or in electronic, written or other form)
including, without limitation, know-how and trade secrets
relating to or contained or embedded in the Products.
Confidential Information does not include information: (i) that
is or becomes generally available to the public through no fault
or breach by the receiving party; (ii) that the receiving party
can document was already known to it prior to disclosure by the
disclosing party; (iii) that was independently developed by the
receiving party without use of any of the other party's
Confidential Information; and (iv) that the receiving party
rightly obtained from a third-party who did not transfer or
disclose it in violation of a confidentiality obligation to the
other party.
11.2 Survival. The obligations of this Section 11 will survive
expiration or termination of this Agreement for a period of two
(2) years.
12. Indemnity.
12.1 By NEC. NEC will defend, indemnify and hold Cray harmless from
all costs of any claim that Products infringe any patent,
copyright or other
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intellectual property right of any third party. If any such claim
has occurred, or in NEC's opinion is likely to occur, NEC shall,
at its option and its expense, either (i) procure for Cray the
right to continue selling the relevant Product hereunder, (ii)
replace or modify the relevant Product so that it becomes
non-infringing, or (iii) if neither of the foregoing is
practicable, refund the depreciated value of the relevant Product
and accept return of the same. This Section 12 states the entire
liability of NEC for infringement of intellectual property rights
for the Products provided hereunder.
12.2 By Cray. Cray will defend, indemnify and hold NEC harmless from
all costs of any claim (whether for infringement of patents,
copyrights or other intellectual property rights or otherwise)
resulting from (i) NEC's compliance with Cray's specifications,
instructions or designs, (ii) modification of the Products by
Cray or a third party, (iii) use of the Products other than as
specified in relevant specifications provided by NEC, (iv) use of
the Products with products not approved or supplied by NEC, if
such infringement could have been avoided by the exclusive use of
the Products, and (v) the improper furnishing of any information,
service or technical support by Cray.
12.3 Notification and Procedures. In connection with any indemnity
hereunder, the party seeking an indemnity shall: (i) promptly
notify the indemnifying party of any claim or proceeding, or
threatened claim or proceeding; (ii) permit the indemnifying
party to take full control of such claim or proceeding; (iii)
cooperate in the investigation and defense of such claim or
proceeding; (iv) not compromise or otherwise settle such claim or
proceeding without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld,
conditioned or delayed; and (v) take all reasonable steps to
mitigate any loss or liability in respect of any such claim or
proceeding. In any action in which the indemnifying party assumes
control, the indemnifying party shall not enter into any
settlement without the prior written consent of the indemnified
party, which shall not be unreasonably withheld, conditioned or
delayed.
13. Trademarks.
13.1 NEC Marks. To the extent it has the right to do so, NEC grants
Cray, during the Term and in the Territory, a nonexclusive
license to use NEC trademarks, including NEC model nomenclature,
applicable to the Products (the "Marks") solely in connection
with, and only to the extent reasonably necessary for, the
marketing, distribution and support of Products during the Term,
provided that any such use and display shall comply with NEC's
then current trademark usage policies. NEC shall have the right
to object to any use of its Marks by Cray in its sole discretion
by providing written notice to Cray and Cray shall promptly
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cease any such objectionable use. Cray hereby acknowledges that
the Marks and all goodwill associated therewith are the property
of NEC and that except as expressly provided in this Section 13,
Cray shall not acquire any rights in or to the Marks. Cray agrees
to fully cooperate with NEC with respect to the protection of
NEC's rights in the Marks.
13.2 Co-Branding. The parties may brand certain of the Products with
both Cray trademarks and the SX-5 and SX-5X model nomenclature
(each a "Contribution"). In the event that such co-branding
becomes a trademark (a "New Xxxx" ), such New Xxxx shall be
jointly owned by NEC and Cray and each of NEC and Cray shall have
the right to use the New Xxxx during the term of this Agreement
solely in connection with Products distributed hereunder.
Following the termination or expiration of this Agreement,
neither party shall have the right to use the New Xxxx without
the other party's written consent; provided that this Section
13.2 shall not (i) confer on either party any rights to the other
party's Contribution following the expiration or termination of
this Agreement or (ii) restrict either party's right to use its
Contribution in association with products or services other than
the Products during the Term or following the termination or
expiration of this Agreement.
14. Termination.
14.1 Material Breach. Except for Cray's failure to satisfy the minimum
order requirement provided for in Section 9.1 (which shall be
governed by Section 9.1), either party may terminate this
Agreement if the other party materially breaches any term of this
Agreement and such breach is not cured (i) in the case of a
breach of Section 8 within five (5) business days after receipt
of notice of such breach or (ii) in the case of a breach of any
other provision of this Agreement within thirty (30) days after
receipt of notice of such breach.
14.2 Other. Either party may terminate this Agreement and any existing
Contracts immediately if (i) the other party files a petition in
bankruptcy or makes a general assignment for the benefit of
creditors or otherwise acknowledges insolvency, (ii) the other
party is adjudged bankrupt or goes into liquidation, (iii) a
receiver is appointed for the benefit of the other party, or (iv)
there shall occur a Change of Control of the other party. "Change
of Control" means (a) (i) the merger or consolidation of a party
into or with one or more entities, (ii) the merger or
consolidation of one or more entities into or with a party or
(iii) a completed tender offer or other business combination if,
in the case of (i), (ii) or (iii), the stockholders of such party
prior to such merger, consolidation or business combination do
not retain at least a majority of the voting power of the
surviving entity or (b) the voluntary sale, conveyance,
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exchange or transfer to another entity of (i) the voting capital
stock of a party if, after such sale, conveyance, exchange or
transfer, the stockholders of such party prior to such sale,
conveyance, exchange or transfer do not retain at least a
majority of the voting power of such party or (ii) all or
substantially all of the assets of a party.
14.3 Continuing Obligations. Termination of this Agreement or any
Contract by expiration or otherwise shall not affect any
obligation of Cray to pay for the Products shipped prior to such
termination. Upon termination of this Agreement or any Contract,
all payments required to be made by Cray to NEC hereunder or
thereunder shall become immediately due and payable.
15. Software License.
15.1 Cray. NEC hereby grants Cray, during the Term and in the
Territory, a non-exclusive license to distribute the Software
Products in accordance with the terms and conditions of this
Agreement. Section 4 shall be applied to the pricing of the
Software Products. NEC hereby grants Cray, during the Term and in
the Territory, a nonexclusive license to use the Software
Products solely for internal use for purposes of marketing,
distribution, sale, services and support of Products. Other than
the rights provided above in this Section 15.1, nothing herein
shall be construed as granting Cray any right or license to NEC's
software products, including, without limitation, rights to copy,
reproduce and modify. Cray agrees (i) not to reverse assemble or
reverse engineer any Product, or decompile or otherwise attempt
to derive source code from the Software Products, (ii) not to
authorize or permit others to do so, and (iii) to promptly inform
NEC of any such action taken by third parties of which Cray
becomes aware.
15.2 Customers. NEC shall xxxxx Xxxx'x customers of the Products all
software licenses NEC normally grants to NEC customers for the
same Products, subject to any necessary third party consents in
the case of any Software Product that is third-party software.
Cray shall obtain customer signatures on such software license
agreements, as required by NEC. All fees for such licenses shall
be included in the price of the associated Products. If a Cray
customer needs software source code, the parties shall agree, on
a transaction-by-transaction basis, for NEC to license the
applicable source code to such customer; provided, however, that
(i) Cray will obtain and pay for any third party consents
required for such license, with the reasonable assistance and
cooperation of NEC, and (ii) the customer agrees to enter into
any relevant NEC or third-party source code license(s). If such
source code is NEC's source code, NEC will grant such a customer
license for the source code to the extent NEC normally grants
such licenses to its customers for the same Software Products.
NEC shall not unreasonably refuse to license such a customer, but
if NEC should
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nonetheless refuse to license the source code, Cray's minimum
order obligations pursuant to Section 9.1 shall be reduced by the
amount of any Firm Orders lost as a result.
16. Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
INCLUDING LOSS OF PROFITS, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
LEGAL THEORY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. Except
for claims arising out of third party tort claims where a Product is
determined by a court of competent jurisdiction to have caused bodily
injury, death or property damage, or claims pursuant to Section 12.1,
NEC's maximum liability arising out of or relating to the Products sold
to Cray hereunder for any cause whatsoever, regardless of the form of
any claim or action, whether based on contract, tort or any other legal
theory, shall not exceed the transfer price paid by Cray for the
relevant Product.
17. Contact Persons. Each party will appoint a senior management person to
be its principal contact person for communications regarding the
relationship between the parties created by this Agreement, and the
contact persons will meet regularly to discuss plans, issues, and
concerns. Each party may change its contact person at any time by
written notice to the other party. The initial contact person for each
party will be:
CRAY INC.
Xxxx X. Xxxxxxxx
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Email: xxxxx@xxxx.xxx
With a copy to:
Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Email: xxx@xxxx.xxx
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NEC CORPORATION
Xxxxxxx Xxxxxxxx
0-0 Xxxxx 0-xxxxx
Xxxxxx-xx, Xxxxx 000-0000
Phone: 00-0-0000-0000
Fax: 00-0-0000-0000
Email: xxxxxxxx@xxxxx.xx.xxx.xx.xx
18. Dispute Resolution.
18.1 Arbitration. Any dispute, controversy or claim arising out of or
in connection with this Agreement that the parties are unable to
resolve amicably shall be determined and settled by arbitration
in London, U.K. in accordance with the rules then in effect of
the International Chamber of Commerce, and both parties hereby
consent to the jurisdiction thereof. Any award rendered shall be
final and conclusive upon the parties and a judgment thereon may
be entered in a court having competent jurisdiction.
18.2 Performance Not Excused by Dispute. Except where clearly
prevented by the matter in dispute, both parties agree to
continue performing their respective obligations under this
Agreement while any dispute is being resolved.
19. Miscellaneous.
19.1 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. No party may assign
either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the
other party; provided, however, that (i) without the consent of
the other party, a party may assign any or all of its rights and
delegate its obligations hereunder to any entity controlling,
controlled by or under common control with such party, in which
event the assigning party shall remain fully liable for the
performance of all its obligations hereunder; and (ii) subject to
Section 14.2, a successor in interest by merger, by operation of
law, or by assignment, purchase or other acquisition of all or
substantially all of the business of such party may acquire the
respective rights and obligations of such party under this
Agreement. Any prohibited assignment shall be null and void.
19.2 Construction. This Agreement is the result of negotiation between
sophisticated parties and no provision hereof shall be construed
against a party solely because that party was responsible for
drafting the provision.
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19.3 Entire Agreement. This Agreement and the Other Agreements
constitute the entire agreement between the parties with respect
to the subject matter hereof and thereof and supersede all prior
agreements and understandings between the parties with respect to
such subject matter.
19.4 Severability. If any provision contained herein, or the
application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity,
legality and enforceability of such provision in every other
respect and of the remaining provisions hereof shall not be in
any way impaired, unless the provision held invalid, illegal or
unenforceable shall substantially impair the benefits to either
party of the remaining provisions hereof.
19.5 Waiver and Amendment. No waiver of any violation or
nonperformance of this Agreement in one instance will be deemed
to be a waiver of any subsequent violation or nonperformance. All
waivers must be in writing and signed by the party making such
waiver. This Agreement may not be modified or amended except in
writing signed by both parties.
19.6 Notice. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be
by registered or certified first class mail, return receipt
requested, telecopier, courier or personal delivery to the
address below:
If to Cray:
Cray Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
With a copy to:
Stoel Rives LLP
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxx
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If to NEC:
NEC Corporation
0-00, Xxxxxxxxxx
Xxxxx Xxxx
Xxxxx 000-0000 Xxxxx
Telecopy: 00-00-000-0000
Attention: General Manager, Supercomputer Marketing
Promotion Division
With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx
All such notices, demands and other communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; when delivered by a
recognized international express courier service, if delivered by courier: five
(5) business days after being deposited in the mail, postage prepaid if mailed;
and when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 19.6 designate another address or
person for receipt of notices hereunder.
19.7 Survival. The provisions contained in this Agreement that by
their sense and context are intended to survive the termination
of this Agreement shall survive any such termination.
19.8 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same
agreement.
19.9 Headings. The headings in this Agreement are for convenience or
reference only and shall not limit or otherwise affect the
meaning hereof.
19.10 Choice of Law. This Agreement will be governed by the internal
laws of the State of New York without regard to the conflicts of
laws principles thereof.
19.11 Force Majeure. If the whole or any part of the performance by
either party of any part of its obligations under this Agreement
is prevented, hindered or delayed or otherwise made impracticable
by reason of strikes, labor troubles, floods, fires, accidents,
earthquakes, riots, explosions, wars, hostilities, acts of
government, customs barriers or taxes, export/import
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control regulations, interruption or shortage of or delay in
transportation, inability to obtain key raw materials, components
or supplies or other causes of like character beyond the
reasonable control of that party, such party shall be excused
from such performance (other than payment obligations) during the
continuance of such contingency and for so long as such
contingency shall continue to prevent, hinder or delay such
performance. If the contingency specified in this Section 19.11
shall continue for more than six (6) months from its occurrence,
either party may terminate this Agreement forthwith without any
liability (subject to Section 14.3) by giving a written notice to
the other party. Notwithstanding the foregoing, (i) Cray's
minimum order obligation pursuant to Section 9.1 shall be reduced
to the extent that NEC is unable to accept Cray purchase orders
due to a force majeure and (ii) Cray may cancel any Contract if
the corresponding order is cancelled by Cray's customer due to
NEC's delay caused by a force majeure.
19.12 No Third-Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity other than the
parties and each party's respective successors and permitted
assigns.
19.13 Disclaimer of Agency. Cray is and shall remain an independent
contractor of NEC. Neither party has the authority to make any
statement, representation, warranty or other commitment on behalf
of the other party. Nothing contained herein or done pursuant to
this Agreement shall constitute the parties as entering into a
joint venture or partnership, or shall constitute either party as
the agent of the other party for any purpose whatsoever and
neither party shall represent or hold itself out otherwise.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Distribution Agreement to be executed in duplicate by their duly authorized
representatives as of the date first above written.
CRAY INC.
By /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and CEO
NEC CORPORATION
By /s/ Xxxxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxxxx Xxxxxxxxx
Title: Senior Vice President
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EXHIBIT A
NEC EXCLUSIVE DISTRIBUTION RIGHTS
1. *
2. *
3. *
4. *
--------
* Confidential material has been intentionally omitted at this point pursuant to
a request for confidential treatment, and such material has been filed
separately with the Securities and Exchange Commission.
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