AMENDMENT NO. 1 TO THE
MICROSOFT CORPORATION
1995/1996 CHANNEL AGREEMENT
This Amendment No. 1 ("Amendment") amends that certain Microsoft Corporation
1995/1996 Channel Agreement ("Agreement") dated July 1, 1995, between MICROSOFT
CORPORATION ("MS") having its principal place of business at Xxx Xxxxxxxxx Xxx,
Xxxxxxx, XX 00000 and DJ&J SOFTWARE D/B/A EGGHEAD ("CUSTOMER") having its
principal place of business at 00000 Xxxx Xxxxxxx, Xxxxxxx Xxxx, XX 00000. The
Agreement is hereby amended as follows:
2. TERM OF AGREEMENT
Section 2.1 is replaced in its entirety with the following:
"2.1 TERM
This Agreement shall take effect on the date indicated above and shall continue
until June 30, 1997."
3. CUSTOMER OBLIGATIONS
Section 3.6 is replaced in its entirety with the following:
"3.6 TAXES
3.6(a) CUSTOMER TAXES
All amounts to be paid by CUSTOMER to MS herein are exclusive of any federal,
state, municipal or other governmental taxes, including income, franchise,
excise, sale, use, gross receipts, value added, goods and services, property or
similar tax, now or hereafter imposed on CUSTOMER. Such charges will be the
responsibility of CUSTOMER and may not be passed on to MS, unless they are owed
solely as a result of entering into this Agreement and are required to be
collected from MS by CUSTOMER under applicable law.
3.6(b) BILLING AND COLLECTION
CUSTOMER will xxxx, collect and remit sales, use, value added, and other
comparable taxes determined by CUSTOMER to be due with respect to the
distribution of the Product. Microsoft is not liable for any taxes, including
without limitation, income taxes, withholding taxes, value added, franchise,
gross receipt, sales, use, property or similar taxes, duties, levies, fees,
excises or tariffs incurred in connection with or related to the distribution of
the Product. CUSTOMER takes full responsibility for all such taxes, including
penalties, interest and other additions thereon.
3.6(c) WITHHELD TAXES
If, after a determination by foreign tax authorities, any taxes are required to
be withheld, on payments made by CUSTOMER to Microsoft, CUSTOMER may deduct such
taxes from the amount owed Microsoft and pay them to the appropriate taxing
authority; provided, however, that CUSTOMER shall promptly secure and deliver to
Microsoft an official receipt for any such taxes withheld or other documents
necessary to enable Microsoft to claim a U.S. Foreign Tax Credit. CUSTOMER will
make certain that any taxes withheld are minimized to the extent possible under
applicable law.
CUSTOMER shall indemnify, defend and hold MS harmless from any Claims arising
from or related to any failure by CUSTOMER to comply with this Section."
IN WITNESS WHEREOF, the parties have executed this Amendment as of the dates
indicated below. The Amendment is hereby made part of the Agreement. Any terms
and conditions of the Agreement not modified herein shall remain in full force
and effect. This Amendment is not binding until executed by MS.
MICROSOFT CORPORATION ("MS") DJ&J SOFTWARE D/B/A EGGHEAD
("CUSTOMER")
By: /s/ Johan Liedgren By: /s/ Xxxxx Xxxxxxxx
---------------------------- ----------------------------
Johan Liedgren Xxxxx Xxxxxxxx
------------------------------- -------------------------------
Name (please print) Name (please print)
Director, Channel Policies Executive V.P.
------------------------------- -------------------------------
Title Title
7/11/96 7/1/96
------------------------------- -------------------------------
Date Date
MICROSOFT CONFIDENTIAL - DISCLOSURE PROHIBITED
AMENDMENT NO. 1 TO THE
ADDENDUM OF THE MICROSOFT
1995/1996 CHANNEL AGREEMENT
(APPOINTMENT AS A DIRECT RESELLER)
This Amendment No. 1 ("Amendment") amends that certain Addendum to The Microsoft
1995/1996 Channel Agreement (the "Agreement") (Appointment As A Direct Reseller)
("Addendum") dated July 1, 1995, between MICROSOFT CORPORATION ("MS") having its
principal place of business at Xxx Xxxxxxxxx Xxx, Xxxxxxx, XX 00000 and DJ&J
SOFTWARE D/B/A EGGHEAD ("CUSTOMER") having its principal place of business at
00000 Xxxx Xxxxxxx, Xxxxxxx Xxxx, XX 00000. The Addendum is hereby amended as
follows:
5. CUSTOMER AND MS OBLIGATIONS
5.2 DELIVERY AND PRODUCT DISTRIBUTION
Paragraphs 2 and 3 are replaced in their entirety with the following:
"In any month CUSTOMER participates in the MS Account Forecasting System ("AFS")
Program as outlined in MS' then current AFS Program Guidelines, for which MS is
allowed to choose the freight carrier and a mutually agreed-upon guaranteed
delivery window is established whereby Product is unloaded from the carrier
within four (4) hours of arrival, one hundred percent (100%) of the freight cost
of delivery of Product to each CUSTOMER warehouse, excluding consolidation
centers, will be paid by MS."
Section 5.3 is replaced in its entirety with the following:
"5.3 ORDER PROCESSING
CUSTOMER shall order Product from MS via EDI purchase order. All orders by
CUSTOMER shall be in Master Pack quantities only. MS shall have ten (10) days
from receipt to reject any purchase order. MS shall fulfill unconditional EDI
purchase orders from CUSTOMER subject to CUSTOMER's credit limits, current
payment status, and approved Average Payment Days ("APD") guidelines as
determined by MS.
Except as provided herein, CUSTOMER shall have the right to change or cancel any
purchase order, provided that CUSTOMER notifies MS of the change or cancellation
no later than forty-eight (48) hours prior to the order shipment to CUSTOMER by
MS. Should CUSTOMER choose to change or cancel a purchase order, CUSTOMER must
contact its Microsoft Account Management Specialist with such change or
cancellation request.
Notwithstanding the foregoing, MS reserves the right to limit order quantities."
5.5 INVENTORY BALANCING
Section 5.5 is amended to include the following as the final paragraph:
"MS may, at its sole discretion, allow CUSTOMER to exceed the Inventory
Balancing limits outlined above, provided that all such additional Inventory
Balancing shall be subject to a [*] percent [*] handling fee. Should
CUSTOMER's actual Inventory Balancing percentage for any two month period be
less than the Inventory Balancing limits outlined above, the remainder of any
such Inventory Balancing limit (i.e. [*] limit less .75% actual credit = [*]
remaining credit) may be used to increase CUSTOMER's Inventory Balancing limit
for any future period. Any additional Inventory Balancing limit accrued shall
expire on June 30, 1997."
* Confidential Treatment Requested
MICROSOFT CONFIDENTIAL - DISCLOSURE PROHIBITED
5.6 PRIOR VERSION CREDIT
Section 5.6(a) if deleted in its entirety.
Section 5.6(c) is replaced in its entirety with the following:
"(c) CUSTOMER shall be eligible to receive a Purchase Credit for up
to (300) days from the date the new version of such Product first ships from
MS to CUSTOMER;"
Section 5.6 is amended to include the following as the final paragraph:
"MS may, at its sole discretion, allow CUSTOMER to return Prior Version Product
for Purchase Credit for the period of [*] days to [*] days from the date the
new version of such Product first ships from MS to CUSTOMER, provided that all
such returns shall be subject to a [*] percent [*] handling fee. In no event
shall MS accept returns of Prior Version Product after [*] days. All Product
returned for Prior Version Credit must be in resaleable condition.
5.7 UNRESALEABLE PRODUCT ALLOWANCE
Section 5.7 is replaced in its entirety with the following:
"Every other month CUSTOMER shall be eligible to receive a Purchase Credit of up
to [*] percent [*] of CUSTOMER's net purchases, excluding Microsoft Variable
Licenses, Microsoft Enterprise Licenses, and Microsoft Maintenance, for the
previous two (2) Months. Such Purchase Credit shall be to compensate CUSTOMER
for Product held in CUSTOMER's inventory which is no longer resaleable. All
Unresaleable Product shall be audited by MS. No Return Authorization will be
issued by MS, instead to receive the Unresaleable Product Credit, CUSTOMER must
submit its Unresaleable Product Allowance returns report, in a format determined
by CUSTOMER, to CUSTOMER's Microsoft Account Management Specialist no later than
two (2) days prior to MS' scheduled audit. Such Unresaleable Product Allowance
report shall include the MS part number, CUSTOMER's part number, product
description, quantity, unit price, and extended price. Unresaleable Product may
not be resold or donated.
MS may, at its sole discretion, allow CUSTOMER to exceed its Unresaleable
Product Allowance, provided that all such additional Unresaleable Product
Allowance shall be subject to a [*] percent [*] handling fee. Should CUSTOMER's
actual Unresaleable Product Allowance for any two month period be less than [*]
percent [*], the remainder of the Unresaleable Product Allowance limit (i.e.
[*] limit less .75% actual credit = [*] remaining credit) may be used to
increase CUSTOMER's Unresaleable Product Allowance for any future period. Any
additional Unresaleable Product Allowance accrued shall expire on June 30, 1997.
Unresaleable Product is defined only as current MS Product not fit for resale.
In no event shall CUSTOMER be eligible to receive a Unresaleable Product
Allowance for any Prior Version or obsolete Product no longer eligible for
return in accordance with the terms of Section 5.6."
* Confidential Treatment Requested
AMENDMENT NO. 1 TO THE ADDENDUM TO
THE MICROSOFT CHANNEL AGREEMENT
(APPOINTMENT AS A DIRECT RESELLER) PAGE 2
The Addendum is amended to add the following as Section 7:
"7. EXPORT RESTRICTIONS
All Product distributed by CUSTOMER pursuant to this Agreement is subject to the
export control laws and regulations of the United States. CUSTOMER agrees that
CUSTOMER will not directly or indirectly: (i) export or transmit any Product to
any country to which such export or transmission is restricted by any applicable
U.S. regulation or statute (currently including, but not limited to Cuba, the
Federal Republic of Yugoslavia (Serbia and Montenegro, U.N. Protected Areas and
areas of Republic of Bosnia and Herzegovina under the control of Bosnian Serb
forces), Iran, Iraq, Libya, North Korea, and Syria), without the prior written
consent, if required, of the Bureau of Export Administration of the U.S.
Department of Commerce, or such other governmental entity as may have
jurisdiction over such export or transmission; or (ii) provide any Product in
any manner to any Reseller or End User whom CUSTOMER knows or has reason to know
will utilize such Product in the design, development or production of nuclear,
chemical or biological weapons."
IN WITNESS WHEREOF, the parties have signed this Amendment as of the dates
indicated below. The Amendment is hereby made part of the Addendum. Any terms
and conditions of the Addendum or Agreement not amended herein shall remain in
full force and effect. This Amendment is not binding until executed by MS.
MICROSOFT CORPORATION ("MS") DJ&J SOFTWARE D/B/A EGGHEAD
("CUSTOMER")
By: /s/ Johan Liedgren By: /s/ Xxxxx Xxxxxxxx
---------------------------- ----------------------------
Johan Liedgren Xxxxx Xxxxxxxx
------------------------------- -------------------------------
Name (please print) Name (please print)
Director, Channel Policies Executive V.P.
------------------------------- -------------------------------
Title Title
7/11/96 7/1/96
------------------------------- -------------------------------
Date Date
AMENDMENT NO. 1 TO THE ADDENDUM TO
THE MICROSOFT CHANNEL AGREEMENT
(APPOINTMENT AS A DIRECT RESELLER) PAGE 3
AMENDMENT NO. 2 TO THE
REBATE AND MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT
This Amendment No. 2 ("Amendment") amends that certain Rebate and Marketing Fund
Addendum (as amended "Addendum") to The Microsoft 1995/1996 Channel Agreement
(as amended "Agreement"), dated July 1, 1995, between MICROSOFT CORPORATION
("MS") having its principal place of business at Xxx Xxxxxxxxx Xxx, Xxxxxxx, XX
00000 and DJ&J SOFTWARE D/B/A EGGHEAD ("CUSTOMER") having its principal place of
business at 00000 Xxxx Xxxxxxx, Xxxxxxx Xxxx, XX 00000. The Addendum is hereby
amended as follows:
2. TERM AND TERMINATION
The first sentence of the section is replaced with the following:
"This Addendum shall be effective as of July 1, 1996, and shall expire on
December 31, 1996."
4. REBATES
The section is replaced in its entirety with:
"4.1 PACKAGED PRODUCT REBATE
CUSTOMER is eligible to receive up to a [*] percent [*] Rebate on its
Qualified Sales, excluding Open License sales, made during the Rebate and
Marketing Fund Period. The Rebate shall be paid provided CUSTOMER complies with
the Rebate Program Guidelines outlined in Schedule B.
4.2 OPEN LICENSE REBATE
CUSTOMER is eligible to receive up to a [*] percent [*] Rebate on its Open
License sales made during the Rebate and Marketing Fund Period. The Rebate shall
be paid provided CUSTOMER complies with the those portions of the Packaged
Product Rebate Guidelines outlined in Schedule J.
4.3 PROVISION FOR EARLY PAYMENT OF REBATES
Notwithstanding such Rebate Program Guidelines, MS may, at its sole discretion,
pay all or any portion of the Rebate prior to the end of the Rebate and
Marketing Fund Period. The Rebate so paid may be adjusted subsequently based
upon compliance with the Rebate Program Guidelines."
5. MARKETING FUNDS
Section 5.4, Marketing Fund Reimbursement Policy, is deleted in its entirety.
The Addendum is amended to include the following as Section 7:
"7. FAILURE TO EXECUTE
CUSTOMER shall not be eligible to receive Rebates or Opportunity Marketing Funds
until both CUSTOMER and MS have executed this Addendum. Should CUSTOMER fail to
execute, or should MS be unable to execute this Addendum by July 1, 1996, for
each full month after July 1, 1996, in which this Addendum is not executed,
CUSTOMER shall forfeit such month's Achievement Rebate."
* Confidential Treatment Requested
MICROSOFT CONFIDENTIAL - DISCLOSURE PROHIBITED
SCHEDULE B, REBATE PROGRAM GUIDELINES.
The Schedule as previously amended is replaced in its entirety with the attached
Schedule K.
SCHEDULE G, MARKETING FUND REIMBURSEMENT POLICY.
The Schedule as previously amended is removed in its entirety.
SCHEDULE J, OPEN LICENSE REBATE PROGRAMS.
The Schedule is replaced in its entirety with the attached Schedule L.
IN WITNESS WHEREOF, the parties have signed this Amendment on the date indicated
below. This Amendment is hereby made part of the Addendum. All terms and
conditions of the Addendum not amended herein shall remain in full force and
effect. This Amendment is not binding until executed by MS.
AGREED AND ACCEPTED TO BY AGREED AND ACCEPTED TO BY
MICROSOFT CORPORATION ("MS"): DJ&J SOFTWARE D/B/A EGGHEAD
("CUSTOMER"):
By /s/ Johan Liedgren By /s/ Xxxxx Xxxxxxxx
---------------------------- ----------------------------
Johan Liedgren Xxxxx Xxxxxxxx
------------------------------- -------------------------------
Name (please print) Name (please print)
Director, Channel Policies Executive V.P.
------------------------------- -------------------------------
Title Title
7/11/96 7/1/96
------------------------------- -------------------------------
Date Date
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE 2
SCHEDULE K
JULY - DECEMBER, 1996
REBATE GUIDELINES
PROGRAMS: Microsoft offers five (5) rebate programs for the July - December,
1996 Rebate period. The total available Rebate is divided as follows:
---------------------------------------------------------------------
MAXIMUM PERCENTAGE
REBATE PROGRAM AVAILABLE
---------------------------------------------------------------------
---------------------------------------------------------------------
Achievement Program [*]
---------------------------------------------------------------------
Total Sales-out Program [*]
---------------------------------------------------------------------
Desktop Applications Division Sales-out Program [*]
---------------------------------------------------------------------
Interactive Media Division Sales-out Program [*]
---------------------------------------------------------------------
Inventory Management Program [*]
---------------------------------------------------------------------
TOTAL [*]
---------------------------------------------------------------------
REBATE CALCULATIONS AND PAYMENTS: Rebates will be paid in the form of a
Microsoft Purchase Credit forty-five (45) days after the end of each quarterly
Rebate Period (i.e. November 15th for the July - September, 1996 quarter).
Rebates are calculated by multiplying the achieved Rebate percentage by the
total Qualified Sales for the Rebate Period. Revenue generated from Microsoft
Select Enrollment Forms executed by MS on or after July 1, 1994, shall be
included in calculating CUSTOMER's achievement toward the Sales-out goal, but
shall not be included in CUSTOMER's final total Qualified Sales for purposes of
Rebate payment. Revenue generated from Microsoft Select Enrollment Forms
executed by MS prior to July 1, 1994 will be included in calculating CUSTOMER's
achievement towards the sales-out goal and will also be eligible for a
Grandfathered rebate. Rebate payment for such Select Enrollment Forms shall be
in the form of a purchase credit forty-five (45) days after the end of each
quarterly Rebate Period.
PURCHASES THROUGH DISTRIBUTION: CUSTOMER's full packaged product and MLP
purchases through distribution will be subtracted from CUSTOMER's Qualified
Sales for purposes of Rebate payment.
PRODUCT AVAILABILITY: If Microsoft is unable to ship a CURRENT VERSION of a
product for any ten (10) consecutive business days, CUSTOMER's purchases through
distribution of those SKUs will count toward CUSTOMER's Qualified Sales for
purchases of Rebate payment.
All copies of eligible purchase orders placed through distribution along with a
copy of the Microsoft Stock Out Report must be sent to Microsoft no later than
fifteen (15) days following the quarter end. Please send purchase order copies
and the Microsoft Stock Out Report to the following address:
MICROSOFT CORPORATION
XXX XXXXXXXXX XXX
XXXX. 00/0000
XXXXXXX, XX 00000
ATTN.: XXXXXXX XXXXXX, MARKETING MANAGER
ACHIEVEMENT REBATE PAYMENT: The Microsoft Achievement Rebate will be calculated
on a monthly basis. If CUSTOMER has met all of the Achievement Rebate criteria
in a given month, CUSTOMER will be entitled to [*] percent [*] of that month's
total Qualified Sales. The Rebate payment will be made forty-five (45) days
after the end of each quarterly Rebate Period.
ANY ISSUES REGARDING REBATES SHOULD BE SENT IN WRITING TO XXXXXXX XXXXXX,
MARKETING MANAGER, NO LATER THAN THIRTY (30) DAYS FOLLOWING RECEIPT OF REBATE
PAYMENT. If such written notice is not provided within thirty (30) days,
CUSTOMER shall have no further right to dispute Rebate payment.
* Confidential Treatment Requested
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE K1
--------------------------------------------------------------------------------
ACHIEVEMENT REBATE PROGRAM
--------------------------------------------------------------------------------
PROGRAM OBJECTIVES: The objective of the Achievement Rebate Program is to
provide incentive for CUSTOMER to comply with Microsoft contractual requirements
for payments, Street Dates, reporting, and EDI ordering for Select 3.0.
ACHIEVEMENT: During any given month, failure to achieve any or all of the
current Achievement criteria will result in the forfeiture of the entire
Achievement Rebate for that month. In any month CUSTOMER has already forfeited
its Achievement Rebate, and violates one or more of the Achievement Rebate
criteria, MS reserves the right to withhold any or a portion of CUSTOMER's other
available Rebate.
1. MICROSOFT PAYMENT REQUIREMENTS
Microsoft requires its customers to pay its invoices within terms. In order
to maintain compliance, [*] percent [100%] of the gross invoice value for
non-Select and [*] of the gross invoice value for Select must be current
as of Microsoft's fiscal month-end. Additionally, no greater than [*]percent
[*] of the gross value for Select invoices shall be past net 60 days.
Unapplied credits will be excluded from the calculation.
2. MICROSOFT STREET DATE REQUIREMENTS
From time to time, Microsoft may announce a new product or new versions of an
existing product for which Microsoft shall set a Street Date. In order to comply
with the Street Date requirements, CUSTOMER shall not:
- Ship or deliver the product to any end-user customer prior to the
Street Date.
- Accept any end user payment for the product prior to the Street Date.
Checks and/or credit card numbers may be accepted by CUSTOMER, but
can only be processed when product is delivered to the end user on or
after the Street Date.
- Advertise, merchandise, or promote the product to end user customers
until it is officially announced by Microsoft. Usually, the product
announcement is on the Street Date. If the product announcement is
earlier than the Street Date, Microsoft will clearly communicate the
announce date to the channel. If product is announced by Microsoft
before the Street Date, the product can be advertised, merchandised
and/or promoted immediately after such announcement, provided that all
such promotions clearly state that the product is not yet available
for purchase.
- Allow it's distribution centers and/or warehouses to distribute, for a
period of up to twelve months, a Street Date product to any individual
sales office, retail store, or outlet which Microsoft in its sole
discretion has determined to be in violation of the Street Date
Requirements.
In the event CUSTOMER violates the Street Date for any special products
specified in a Microsoft Street Date letter, CUSTOMER shall forfeit up to the
entire Achievement Rebate for the six month Rebate Period in which the violation
occurred.
Should CUSTOMER fail to comply with the Street Date Requirements, Microsoft may
also, for a period of up to twelve (12) months, withhold shipments to CUSTOMER
of future product until the Street Date of such product.
Should CUSTOMER wish to report a Street Date violation, CUSTOMER may fax a copy
of a dated sales receipt to STREET DATE VIOLATIONS AT MICROSOFT AT (206) 936-
7329. Once a violation has been reported, Microsoft shall investigate the
violation, and take remedial action as appropriate. Please note, in order to
confirm a suspected violation, Microsoft must receive a dated sales receipt.
3. MICROSOFT SELECT TRANSACTION REQUIREMENTS
Electronic Data Interchange format ("EDI") transactions are defined as 850/855
EDI transactions. CUSTOMER must place EDI transaction orders at a minimum of
once per month per Enrollment Site if product is purchased during said month.
* Confidential Treatment Requested
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE K2
4. MICROSOFT REPORTING REQUIREMENTS
ALL REPORTS OUTLINED BELOW MUST BE TIMELY, ACCURATE, AND COMPLETE. FOR PURPOSES
OF THIS AGREEMENT, "TIMELY" IS DEFINED AS MS RECEIPT OF REPORTING BY THE DUE
DATE AND TIME INDICATED, "ACCURATE" IS DEFINED AS THE CORRECT POPULATION OF ALL
REPORTING FIELDS, AND "COMPLETE" IS DEFINED AS THE POPULATION OF ALL REQUIRED
REPORTING FIELDS.
Reporting is defined as a weekly report sent to Microsoft via Electronic Data
Interchange format ("EDI") of weekly Sales, Inventory, and Internal Market
Share. CUSTOMER must make the EDI reports available to MS' EDI mailbox each
Monday by 1:00 pm (Pacific time). These reports shall cover the seven-day period
(Sunday through Saturday EOB) ending the previous Saturday night. Please refer
to the EDI Reporting Guidelines for details on reporting requirements.
MICROSOFT PRODUCT REPORTING RULES
- Each unit of Microsoft single license Full Package Product should be
reported as one (1) unit.
EXAMPLE: MICROSOFT-Registered Trademark- WORD FOR WINDOWS-Registered
Trademark- FPP-REPORT AS ONE (1) UNIT
- Any single Microsoft Multiple License Pack (MLP) should be reported as one
(1) unit.
EXAMPLE: MICROSOFT-Registered Trademark- WINDOWS NT-Trademark- WORKSTATION
LICENSE PACK 20 USER - REPORT AS ONE (1) UNIT.
- All Microsoft Volume Licensing Agreements (such as Open Licenses, Select
Variable Licenses and Enterprise Licenses) should be reported as one unit
for each license sold.
EXAMPLE: MICROSOFT SELECT MVLP LEVEL B (MIN 8000 LICENSES) AGREEMENT -
CUSTOMER BUYS 9356 WORD
- All Microsoft Mail Servers and Network Operating Systems must be reported
as one (1) unit for each server license sold. Do not report client
licenses.
Accounts are required to report units sold and inventory units for each
Microsoft SKU, but are required only to report the total license count for
competitive products sold for each category. All SKUs for these titles should be
counted, including full packaged product, upgrades, license packs, initial sale
of new maintenance and education and government SKUs of the foregoing. Please
refer to the EDI Reporting Guidelines for details on reporting requirements.
MARKET SHARE REPORTING
The following table outlines the Market Share product categories for EDI
reporting. The table also specifies the top competitive products that must be
included in the aggregated market share reporting. All competitive products
within a given category must be reported. The products listed below are just
examples, not a comprehensive list. For a comprehensive competitive SKU list
please contact your Microsoft Channel Measurement Specialist.
A comprehensive competitive SKU list shall be provided to CUSTOMER at the
beginning of each quarter. CUSTOMER must implement use of the list no later than
thirty (30) days after receiving the list. To the extent that CUSTOMER sells any
of the products contained on the list, CUSTOMER's Internal Market Share
reporting will include those SKUs. If between quarters there are any new major
releases of competitive products that fall under the competitive product
categories or upgrades to products already listed on the competitive SKU list,
CUSTOMER shall include those SKUs in CUSTOMER's Internal Market Share reporting
immediately upon release of new products.
PRODUCTS TRACKED:
--------------------------------------------------------------------------------
CATEGORY COMPETITIVE DOS & WINDOWS PRODUCTS
--------------------------------------------------------------------------------
WORD PROCESSORS Adobe Legacy
Lotus AmiPro
Lotus WordPro
Novell WordPerfect
Softkey Wordstar
Software Publisher Office Writer & WritePlus &
Professional/Write
XYQuest XYWrite
--------------------------------------------------------------------------------
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE K3
--------------------------------------------------------------------------------
CATEGORY COMPETITIVE DOS & WINDOWS PRODUCTS
--------------------------------------------------------------------------------
SPREADSHEETS Computer Associates SuperCalc
Corel-Registered Trademark- Quattro
Pro-Registered Trademark-
Lotus 1-2-3
Novell-Registered Trademark- Quattro
Pro-Registered Trademark
--------------------------------------------------------------------------------
SUITES Corel-Registered Trademark- Office Professional
Corel-Registered Trademark- WordPerfect
-Registered Trademark- Suite
Lotus Smartsuite
Novell-Registered Trademark- Perfect Office
--------------------------------------------------------------------------------
DATABASES Alpha 4 & 5
Borland dBase
Borland Paradox
Claris Filemaker Pro
Computer Associates Clipper
Computer Associates Supervase
Dataease
Lotus Approach
Symantec Q&A
--------------------------------------------------------------------------------
MAIL SERVERS Banyon Beyond Mail
SERVERS ONLY Lotus cc:Mail
DO NOT REPORT CLIENT LICENSES Lotus Notes
Lotus NoteSuite
Novell Groupwise
--------------------------------------------------------------------------------
NETWORK OPERATING SYSTEMS Banyan
SERVERS ONLY Novell-Registered Trademark- Netware-Registered
Trademark- 4.x, 3.x, 2.x -Registered Trademark-
DO NOT REPORT CLIENT LICENSES Novell-Registered Trademark- UnixWare
OS/Lan Server
SCO Global Access
SCO Open Server/Open Server Enterprise/Open
Server Network Systems
SCO Unixware Operating System
SCO-Registered Trademark- Unix
--------------------------------------------------------------------------------
DEVELOPER PRODUCTS Borland C++
Borland C++ DBase Tools
Borland Delphi
Delphi Client/Svr Dev & Kit
Delphi Developer 2
Gupta Developer Tools
Gupta SQL Windows
IBM Visual Age Basic
IBM Visual Age C++
IBM Visual Age Small Talk
Metrowerks Codewarrior
Natural Intelligence Roaster
Oracle Developer/2000
Oracle Power Objects
Powersoft Powerbuilder
Sun Java WorkShop
Sunsoft Devpak
Symantec C++
Symantec Cafe
Symantec Enterprise Developer
Watcom C++
--------------------------------------------------------------------------------
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE K4
COMPETITIVE PRODUCT MARKET SHARE REPORTING RULES
- Each unit of COMPETITIVE single license FULL PACKAGE PRODUCT should be
reported as one (1) unit.
EXAMPLE: NOVELL PERFECTOFFICE PRO 3.0 FOR WINDOWS FPP-REPORT AS 1 UNIT
- Any single COMPETITIVE product that is a MULTIPLE LICENSE PACK (MLP) should
be reported as the exact number of licenses contained in the MLP. Examples
of these products include competitive 10 User Packs, 20 User Packs, and 100
User Packs.
EXAMPLE: WORDPERFECT V6.0 DOS 20-USER LICENSE PACK - REPORT AS 20 UNITS
- All SKUs (with the exception of Mail clients and Network Operating System
clients) contained in COMPETITIVE VOLUME LICENSING AGREEMENTS should be
reported as one (1) unit for each license sold within the volume license
agreement.
EXAMPLE: LOTUS VPO-LEVEL E 1-2-3 DOS (CUSTOMER BUYS 7421 UNITS) - REPORT AS
7421 UNITS
- COMPETITIVE MAIL SERVERS and NETWORK OPERATING SYSTEMS must be reported as
one (1) unit for each SERVER LICENSE SOLD. DO NOT REPORT CLIENT LICENSES.
- Report MAINTENANCE only at the time the maintenance SKU is sold.
In addition to CUSTOMER's EDI Market Share reporting, CUSTOMER may be required
to submit a separate report summarizing Market Share reporting for Non Partners
only.
CUSTOMER must supply to MS Monthly AMS Reporting as described in the attached
Schedule M. CUSTOMER's AMS Monthly Reporting shall be supplied to MS until
CUSTOMER is fully compliant with Weekly EDI Reporting and has MS received three
consecutive months' worth of compliant EDI Reporting. Achievement Rebates shall
not be granted for AMS Reporting.
--------------------------------------------------------------------------------
SALES-OUT REBATE PROGRAMS
--------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of all Sales-out Rebate Programs is to increase
the sales of Microsoft products. All license types (Select, Microsoft Open
License, Full Package Product, MLPs) are included in measuring performance
against this goal, however, the Rebate is paid on full packaged product sales
only.
REBATE GOALS: CUSTOMER has first quarter Sales-out goals and total Semester
Sales-out goals. CUSTOMER's performance for the first three months of the July -
December, 1996, semester will be measured against the first quarter Sales-out
goals. At the end of the first quarter, CUSTOMER will receive the percentage of
the eligible Rebates earned based on performance against the first quarter
goals. At the end of the Semester, CUSTOMER will be measured on their six-month
performance against the total Semester goals. Even if CUSTOMER does not meet one
hundred percent (100%) of the first quarter goals, CUSTOMER can still achieve
one hundred percent (100%) of the Semester goals provided that the Semester
goals are met at the end of the Rebate Period.
SALES-OUT DEFINITIONS/MEASUREMENT. MS Product Sales-out is defined as those MS
net Product units sold through CUSTOMER's outlet locations. CUSTOMER's full
packaged product, Microsoft Open License, and upgrade sales-out units will be
measured from the sales-out reported by CUSTOMER to MS. Licensing sales (Select,
Microsoft Maintenance) are captured and generated by MS' financial systems and
included in total sales-out used to measure product sales-out Rebate
performance.
Any Microsoft Select 2.x and 1.x and Microsoft Maintenance revenue credit is
granted as MS recognizes the revenue. This occurs when MS has received the
customer's license reporting. Following receipt of reporting, MS bills the
customer/reseller and simultaneously recognizes the revenue.
PAYMENT: At the end of the Semester, CUSTOMER will be paid Sales-out Rebates
based on performance against the Semester goals. If CUSTOMER achieves greater
than [*] percent [*] of each Semester Sales-out goal, CUSTOMER will receive
the exact achieved percentage of the eligible Sales-out Rebate up to one hundred
percent (100%). If CUSTOMER achieves less than [*] percent [*] of any Sales-
out Rebate goal, CUSTOMER will not receive any portion of that Sales-out Rebate.
* Confidential Treatment Requested
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE K5
Although MS pays the Sales-out Rebate ultimately based on performance against
the Semester Sales-out goal, Microsoft also pays a Sales-out Rebate at the end
of the first quarter based on performance against the first quarter goal.
Microsoft pays a portion of the Rebate after the first quarter to provide
incentive for CUSTOMER to focus on Sales-out throughout the entire Semester. The
scale for the first quarter payment is the same as the scale for the semester
payment. The first quarter payment amount will be subtracted from the final
semester payment for the Sales-out Rebate.
EXAMPLE: IF CUSTOMER HAS A QUARTERLY TOTAL SALES OUT GOAL OF $1,000,000 AND A
SEMESTER TOTAL SALES OUT GOAL $2,500,000, AND CUSTOMER SELLS $800,000 OVER THE
FIRST QUARTER PERIOD AND $2,600,000 OVER THE ENTIRE SEMESTER PERIOD, CUSTOMER
WILL RECEIVE THE FOLLOWING REBATE PAYMENTS:
---------------------------------------------------------------------------
PERIOD GOAL SELL-THROUGH PAYMENT
ACHIEVED
---------------------------------------------------------------------------
First Quarter $1,000,000 $800,000 80% of [*] eligible Rebate =
[*] of July - September sales.
---------------------------------------------------------------------------
Semester $2,500,000 $2,600,000 104% of [*] eligible rebate =
[*] of July - December sales
less first quarter payment. The
maximum allowable total sales
out Rebate is [*].
---------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL SALES-OUT REBATE PROGRAM
--------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible Rebate percentage achievable for the
Total Sales-out Rebate Program is [*] percent [*] of Qualified Sales for the
July - December, 1996 Semester.
CUSTOMER's Total Sales-out Rebate Program goals are as follows:
- Quarter 1 Goal (July - September, 1996): [*]
- Semester Goal (July - December, 1996): [*]
--------------------------------------------------------------------------------
DESKTOP APPLICATIONS DIVISION SALES-OUT REBATE PROGRAM
--------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible Rebate percentage achievable for the
Desktop Applications Division Sales-out Rebate program is [*] percent [*] of
Qualified Sales for the July - December, 1996 Semester.
CUSTOMER's Desktop Applications Division Sales-out Rebate Program goals are as
follows:
- Quarter 1 Goal (July - September, 1996): [*]
- Semester Goal (July - December, 1996): [*]
* Confidential Treatment Requested
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE K6
--------------------------------------------------------------------------------
INTERACTIVE MEDIA DIVISION (IMD) SALES-OUT REBATE PROGRAM
--------------------------------------------------------------------------------
REBATE PERCENTAGES: The total possible Rebate percentage achievable for the
Interactive Media Division Sales-out Rebate Program is [*] percent [*] of
Qualified Sales for the July - December, 1996 Semester.
CUSTOMER's Interactive Media Division Sales-out Rebate Program goals are as
follows:
- Quarter 1 Goal (July - September, 1996): [*]
- Semester Goal (July - December, 1996): [*]
--------------------------------------------------------------------------------
INVENTORY MANAGEMENT REBATE PROGRAM
--------------------------------------------------------------------------------
PROGRAM OBJECTIVE: The objective of the Inventory Management Rebate Program is
to provide an incentive to Partners to manage inventory so that the CUSTOMER's
top twenty (20) SKUs are [*] percent [*] in-stock and on outlet shelves at all
times.
MEASUREMENT: MS shall conduct quarterly retail audits, which shall include a
representative sampling of CUSTOMER's outlets. The results of all audits must
confirm CUSTOMER is in-stock on its top twenty (20) SKUs [*] percent [*] of
the time. CUSTOMER must submit compliant weekly EDI Inventory reporting in
order to receive any portion of the Inventory Management Rebate.
PAYMENT: At the end of the first quarter, CUSTOMER will receive the percentage
of the eligible Rebate earned based on CUSTOMER's in-stock performance during
the quarter. If CUSTOMER's in-stock performance is greater than [*] percent
[*], CUSTOMER will receive the Inventory Management Rebate as follows:
---------------------------------------------------------------------------
PERCENTAGE IN-STOCK REBATE PERCENTAGE
---------------------------------------------------------------------------
[*] percent [*] or greater [*] percent [*] of the
available [*] percent [*]
---------------------------------------------------------------------------
[*] percent [*] - [*] [*] percent [*] of the
percent [*] available [*] percent [*]
---------------------------------------------------------------------------
[*] percent [*] - [*] [*] percent [*] of the
percent [*] available [*] percent [*]
---------------------------------------------------------------------------
If CUSTOMER achieves less than [*] percent [*] in-stock, CUSTOMER will not
receive any portion of the Inventory Management Rebate.
* Confidential Treatment Requested
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE K7
SCHEDULE L
JULY - DECEMBER, 1996
OPEN LICENSE
REBATE PROGRAMS
PROGRAMS: Microsoft offers four (4) Open License Rebate programs for the July -
December, 1996 Rebate Period. The total available Rebate is divided as follows:
---------------------------------------------------------------------
MAXIMUM PERCENTAGE
REBATE INCENTIVE AVAILABLE
---------------------------------------------------------------------
---------------------------------------------------------------------
Achievement Program [*]
---------------------------------------------------------------------
Total Sales-out Program [*]
---------------------------------------------------------------------
Desktop Business Systems Program [*]
---------------------------------------------------------------------
Office Sales-out Program [*]
---------------------------------------------------------------------
TOTAL [*]
---------------------------------------------------------------------
All guidelines, including actual Rebate goals, shall be as outlined in
Schedule K, July - December, 1996, Rebate Program Guidelines.
* Confidential Treatment Requested
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE L1
SCHEDULE M
MONTHLY AMS REPORTING
Each month CUSTOMER will provide to MS an AMS Report by the 10th of the month
following the applicable reporting month. Reporting shall be Sell To sales in
the format as defined in AMS Reporting Guidelines attached hereto. AMS Reporting
shall be in accordance with the AMS Guidelines. If CUSTOMER has multiple
outlets, AMS Reporting shall be on an outlet and sales office basis and include
outlet or sales office designation (name and number), xxxxxx xxxxxxx, xxxx,
xxxxx, and zip code for each outlet or sales office. Reports must be TIMELY,
ACCURATE, and COMPLETE to MS' satisfaction. Reporting shall be transmitted in
electronic format and sent via modem to 0-000-000-0000, or on tape or diskette
to MS at the following address:
MICROSOFT
RESELLER REPORTING GROUP - 8N/2
XXX XXXXXXXXX XXX
XXXXXXX, XX 00000
"Timely" is defined as Microsoft receiving the AMS reporting by the 10th of each
month.
"Accurate" is defined as the AMS fields being correctly populated with accurate
information.
"Complete" is defined as the required AMS fields being populated.
AMENDMENT NO. 2 TO THE REBATE AND
MARKETING FUND ADDENDUM TO THE
MICROSOFT 1995/1996 CHANNEL AGREEMENT PAGE M1
