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Exhibit 10.2
CO-HOSTING AGREEMENT
This Co-Hosting Agreement (the "Agreement") is made by and between
NETWORKS ASSOCIATES, INC., a Delaware corporation, doing business as Network
Associates, Inc., with its principal place of business at 0000 Xxxxxxx Xxxxxx,
Xxxxx Xxxxx, Xxxxxxxxxx 00000 ("NAI"), and XXXXXXXX.XXX CORPORATION, a Delaware
corporation, a.k.a. Xxxxxx.xxx, with its principal place of business at 0000
Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 ("Co-Host"). The Effective
Date of this Agreement (herein called the "Effective Date") is September 21,
1998.
RECITALS
WHEREAS, Co-Host owns various Internet locations, including the location
set forth in Part 1 of Exhibit "A" hereto (the "Co-Host Site") and markets
software and computer hardware products from the Co-Host Site (herein referred
to as the "Goods").
WHEREAS, Co-Host, as successor of Cybersource Corporation, and NAI are
parties to an Electronic Software Distribution Agreement, dated as of September
1, 1997 regarding the electronic distribution of NAI's Goods (the "ESD
Agreement").
WHEREAS, NAI has developed various Internet locations (the "NAI Internet
Sites") (with separate URL designations issued to NAI by InterNIC) (said
designations being herein referred to individually as an "URL") comprised of
one or more file servers, with an Internet access at the applicable URL. Those
portions of the NAI Internet Site or any future Internet locations developed by
NAI which are accessible by members of the general public are referred to
herein as the "Originating Locations." NAI permits the maintenance of "hot
links" from the Originating Locations to other Internet locations, whereby the
end user can transfer from the NAI Internet Sites to the Co-Host Site by
clicking the pointing device on highlighted text or images. "Originating
Locations" does not include the McAffee Mall (as defined in Part 2 of Exhibit
"A") or web servers within a firewall or accessable only by passwords or other
similarly restricted URLs (the "Restricted Sites"); provided, however, that the
term Restricted Sites shall not include sites accessable only through online
services (such as AOL) and other portals generally accessable to the public.
WHEREAS, NAI and Co-Host desire to place a Co-Host "hot link" for the
Goods at the Originating Locations and NAI and Co-Host desire to enter into
certain additional agreements regarding such marketing opportunities through
the Originating Locations.
THEREFORE, in consideration of the foregoing, and of the mutual covenants
and agreements hereinafter set forth, Co-Host and NAI have entered into the
agreements hereinafter set forth.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the Effective Date.
XXXXXXXX.XXX CORPORATION
(a.k.a. Xxxxxx.xxx)
ADDRESS FOR NOTICES
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
By: /s/ XXXXX X. LUSSIOR
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Name: Xxxxx X. Lussior
-----------------------------------
Title: Vice President Business Operations
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Date: 9/21/98
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NETWORKS ASSOCIATES, INC.
ADDRESS FOR NOTICES
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Vice President
Legal Affairs
By: /s/ XXXXXXX X. XXXXX
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Name: Xxxxxxx X. Xxxxx
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Title: CFO
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Date: September 21, 1998
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TERMS AND CONDITIONS OF AGREEMENT
1. LOCATION. During the Term (as defined in Section 6 (a) below), NAI shall
provide the following marketing considerations to Co-Host:
(a) Co-Hosting Rights. Co-Host shall be permitted to maintain on the
Online Service Page (as defined in Part 2 of Exhibit "A") of the
Originating Locations in the manner set forth on Exhibit "B" hereto
(and on such other positions as are set forth on Exhibit "B" or as the
parties may mutually agree upon in writing from time to time) a hot
link to Internet locations specified by the Co-Host (the
"Destination") from which Goods (other than Competitor's Goods
(hereinafter defined)) may be sold. The web pages at the Destination
shall be maintained in accordance with the requirements of this
Agreement, including without limitation, Section 2 hereof.
"Competitor's Goods" as used herein shall mean the Goods of any of the
persons or entities described on Part 1 of Exhibit "C" attached hereto
and made a part hereof. The Destination shall not contain any links to
any third party sites for the purchase of Competitor's Goods; provided
that the Destination will link to the Co-Host Site (which will sell
Competitor's Goods).
(b) Exclusive Positioning. Co-Host shall be the exclusive reseller of
software products ("Software") at the Originating Locations. The
preceding sentence shall not prohibit NAI from (i) reselling Software
including NAI Goods (hereinafter defined) from the McAfee Mall; (ii)
referencing and linking to sites of strategic partners (other than
competitors of Co-Host listed on Part 2 of Exhibit "C") which may also
be involved in the resale of Software from such sites; provided that
no Software may be purchased on the page of such site which is linked
to any Originating Location and further provided that the references
and links to the sites of strategic partners shall not be placed on
the Online Service Page; and (iii) advertising Software with banners,
buttons and other forms of online advertising; provided that any link
from such advertising takes the end user to the publisher of the
Software and not a reseller of Goods (other than Co-Host). For
example, an advertising banner or button for the Windows 98 software
program may link back to the website of Microsoft Corporation but not
the website of Dell Computer Corporation which is reselling the
program. Without limitation on the foregoing, NAI may co-host a
comparative shopping service on the Originating Locations. NAI will
obtain a written covenant that the comparative shopping co-host will
present sellers of Software in a neutral manner and upon request of
Co-Host will require removal or alteration of presentations by such
co-host on such co-hosted facility which Co-Host reasonably deems to
be non-neutral; provided, however, that, notwithstanding the
foregoing, Co-Host may be the featured or most prominent Software
reseller on any such service.
(c) Short Term Product Exclusives. For a period of fourteen (14) days
following release of any new NAI Goods or major version releases
(i.e., version 3.0 to 4.0) of existing NAI Goods, Co-Host shall be the
exclusive online seller of any such
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release released during the Term. "NAI Goods" as used herein shall
mean retail desktop software products offered by NAI under the
"McAfee" brand or other NAI owned brand, which NAI makes available for
resale through distributors and resellers via the Internet.
(d) Reference Site. Co-Host may refer to the Originating Locations as a
Co-Host customer location and to NAI as a Co-Host customer hereunder
provided all such references shall be subject to the prior review and
approval of NAI, which approval will not be unreasonably withheld.
(e) Links to Online Service Page. Any end user accessing the principal
URLs of NAI (e.g., xxxxxx.xxx, xxxxxxxxxx.xxx, xxx.xxx, xxx.xxx) shall
be taken to the Online Service Page. Any end user accessing a "buy"
button on any of the Originating Locations shall be taken to the
Online Service Page. NAI shall not sell retail desktop consumer
products, including without limitation, NAI Goods from the NAI
Internet Sites (other than the McAfee Mall).
NAI reserves the right to change the URL of the Originating Locations
from time to time and agrees to give Co-Host as much notice of any
such change as is practicable.
2. MARKETING AND SALES.
(a) Placement of Order. In consideration of the Co-Hosting Fee set forth
in Part 3 of Exhibit "A", NAI shall provide the marketing
consideration identified in Section 1 during the Term of this
Agreement.
(b) Advertising Materials; Destination Operation. Co-Host shall provide to
NAI artwork and text materials with respect to the advertisement of
the Destination at the Originating Locations. Such artwork and
materials must be non-infringing, inoffensive, accurate, truthful and
otherwise comply with all applicable laws. Co-Host shall comply with
all applicable laws in connection with the operation of the
Destination, including without limitation, requirements regarding the
confidentiality of information concerning end users. NAI retains the
right, but not the obligation, to disapprove or remove any
advertisements or advertising materials it reasonably deems illegal,
inappropriate or otherwise inconsistent with the purposes of the
Originating Sites, without the consent of Co-Host.
(c) Use of Trademarks. Co-Host hereby grants to NAI a non-exclusive,
non-transferable, royalty-free license during the term of this
Agreement to use the trademarks, service marks and trade names of
Co-Host in connection with the advertising and promotion of the Goods
from the Originating Locations, provided that NAI complies with the
terms of Section 9(b) of the Web Site Services Agreement (as defined
below). Co-Host reserves the right to terminate the foregoing right,
after giving NAI notice and opportunity to cure the allegedly harmful
use, if in Co-Host's reasonable judgment, NAI's use of such
trademarks, service marks and trade names xxxxx the business, image or
goodwill of Co-Host.
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(d) Limited Duty of Promotion. NAI shall have no duty or obligation to
advertise or promote the Goods, other than as set forth in this
Section 2. Except as expressly set forth herein (including, without
limitation, as set forth in this Section 2(d)), NAI does not,
expressly or impliedly, guaranty or warrant any results or level of
sales or customer leads to Co-Host. NAI reserves the right to cease
publication of the Originating Locations for brief periods from time
to time for maintenance or other purposes; provided that the
Originating Locations will comply with the same "Uptime Requirements"
specified with respect to the "Managed Site" in the Web Site Services
Agreement.
(e) Marketing Promotions. During the Term, Co-Host and NAI will regularly
discuss and implement mutually agreed upon jointly funded marketing
promotions. NAI and Co-Host hereby agree that the marketing promotions
set forth on Exhibit "D" hereto will be implemented as set forth on
Exhibit "D".
(f) Distribution of Physical Products. NAI grants to Co-Host the right to
distribute physical copies of NAI's Goods to end users ordering from
the Managed Site, the Destination or Xxxxxx.xxx upon the terms set
forth in Exhibit "E" attached hereto and made a part hereof.
3. PAYMENT AND RECORDS.
(a) Fees. Subject to the provisions of Section 6 hereof, Co-Host shall pay
to NAI the amount designated in Part 3 of Exhibit "A" as the
Co-Hosting Fee upon the schedule set forth in such Part.
(b) Payment Terms. Except as set forth in such Part 3 of Exhibit "A",
payments from Co-Host to NAI shall be due thirty (30) days from the
date of invoice. All payments will be made in United States dollars,
free of any taxes then currently applicable, at the address designated
above by NAI. Late payments shall bear interest at the lesser of: (i)
the maximum rate permitted by law, and (ii) the rate of 1.5% per month
from the due date until paid.
4. EQUITABLE RELIEF. Each party acknowledges that any breach of its
obligations under this Agreement with respect to the proprietary rights or
confidential information of the other party will cause the other party
irreparable injury for which there are inadequate remedies at law, and
therefore such other party will be entitled to equitable relief in addition
to all other remedies provided by this Agreement or available at law.
5. PROPRIETARY RIGHTS. NAI retains ownership of the NAI Internet Site, the
Originating Locations, the trademarks and all intellectual property rights
in connection with the NAI Internet Site, including without limitation, its
URL designations and all rights from InterNIC in connection therewith.
Co-Host and its licensors retain ownership of all intellectual property
rights in the advertising materials provided, the trademarks and all
intellectual property rights in connection with the Destination and the
Co-Host Site, including, without limitation, its URL designations and all
rights from InterNIC in connection therewith, and all of its other
intellectual property rights.
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6. TERM AND TERMINATION.
(a) Term. This Agreement will commence on the Effective Date, and will
terminate on the third anniversary of the Effective Date (the "Term"),
unless earlier terminated as provided in this Agreement.
(b) Termination. A party may terminate this Agreement immediately: (i) if
the other party engages in any material unlawful business practice and
such practice continues uncured thirty (30) days following written
notice thereof, (ii) if the other party fails to perform any material
obligation, (which shall include, without limitation, the payment
obligations hereunder and compliance with the Uptime Requirements in
respect of the Originating Locations) or violates any material
restriction contained in this Agreement and such failure continues
uncured thirty (30) days following written notice thereof, (iii) by
such party if that certain Web Site Services Agreement between NAI and
Co-Host dated of even date herewith (the "Web Site Services
Agreement") or the ESD Agreement is terminated by the other party,
(iv) if a receiver is appointed for the other party or its property,
(v) if the other party makes an assignment for the benefit of
creditors, (vi) if the other party becomes the subject of any
proceeding under any bankruptcy, insolvency or debtor's relief law,
(vii) upon ninety (90) days prior notice in writing by Co-Host at any
time after June 30, 2000, if the term of the Web Site Services
Agreement has not been renewed for an additional term of one (1) year
or more pursuant to its terms or (viii) if the party terminates the
Web Site Services Agreement by reason of the other party's material
default thereunder.
(c) Effect of Termination. Upon the effective date of the termination, all
outstanding invoices and other invoicable amounts will become due and
payable. Co-Host's contractual right to the marketing consideration
shall cease immediately upon the effective date of the termination.
Termination or expiration of this Agreement if by reason of material
breach by Co-Host shall not affect any of Co-Host's payment
obligations, all of which survive termination of this Agreement;
provided that, in (i) the event of termination of this Agreement by
Co-Host due to a material default by NAI, NAI shall pay to the Co-Host
the Liquidated Damages Amount (as defined in Part 2 of Exhibit "A").
7. CONFIDENTIALITY. Confidential Information disclosed by either party in
writing and marked as "confidential," proprietary" or the like (or
disclosed verbally if a written summary is provided within thirty days),
including any information relating to such party's research, development,
proprietary technology, product and marketing plans, finances, personnel
and business opportunities will be considered confidential information.
Each party will not use the other party's confidential information except
as required to achieve the objectives of this Agreement and will not
disclose such confidential information except to employees, agents and
contractors who have a need to know in the discharge of their duties under
this Agreement. Such restrictions will not apply to information that
becomes public knowledge other than through the disclosing party, is
independently developed by the non-disclosing party, or is lawfully
required to be disclosed by any governmental agency or otherwise required
to be disclosed by law.
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Neither party will make any disclosure of, or statement covering, the terms
of this Agreement, including the financial terms, to any third parties
(other than its attorneys, accountants and professional consultants),
without obtaining the other's prior written consent, except as required by
court order or applicable regulatory authorities, including without
limitation, the rules and regulations of the Securities and Exchange
Commission, any stock exchange and the NASDAQ. The parties agree that under
their current understanding, disclosure of the financial terms of this
Agreement is not required under the foregoing rules and regulations. The
obligations of this Section 7 shall survive the termination of this
Agreement, under any circumstances. The parties shall make a joint press
release announcing the relationship, the timing and content of which shall
be subject to the mutual agreement of the parties.
8. RELATIONSHIP OF THE PARTIES. The parties are independent contractors and
not partners, joint venturers or agents, and neither party may obligate the
other to any warranty or other obligation. Neither NAI nor Co-Host is by
virtue of this Agreement authorized as an agent or other representative of
the other party.
9. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.
(a) Co-Host represents and warrants to NAI that Co-Host has all right,
title, ownership interest and/or marketing rights necessary to provide
the advertising materials to NAI, to perform its obligations hereunder
and to operate the Destination. Each party further represents and
warrants to the other that it has not entered into any agreements or
commitments which are inconsistent with or in conflict with the rights
granted or obligations incurred by the representing party in this
Agreement. Co-Host further represents and warrants that the
advertising materials supplied hereunder do not infringe any Covered
Country (hereinafter defined) copyright, trademark, or trade secret
right. Covered Country shall mean the United States of America and any
member state of the European Economic Union. Co-Host agrees that, if
notified promptly in writing and given sole control of the defense and
all related settlement negotiations, it will defend NAI, its
employees, officers and agents, against any claim based on an
allegation that (i) advertising materials supplied hereunder infringes
a Covered Country patent, copyright, trademark or state trade secret
right, or (ii) Co-Host violated any law, statute or ordinance or any
governmental or administrative order, rule or regulation with regard
to the advertising materials, the operation of the Destination or the
manufacture, possession, distribution, use or sale of the Goods.
Co-Host will pay any resulting costs, damages and attorneys' fees
finally awarded by a court, or agreed to in settlement by Co-Host,
with respect to any such claims. NAI agrees that, if the advertising
materials become, or in Co-Host's opinion are likely to become, the
subject of an infringement claim, NAI will permit Co-Host, at
Co-Host's option and expense, to, among other things, procure the
right for NAI to continue marketing and using the advertising
materials, or to replace or modify them so that they become
non-infringing.
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(b) NAI represents and warrants that NAI has all right, title, ownership
interest and/or marketing rights necessary to operate the Originating
Locations, provide the Products to Co-Host, and the Products shall be
free and clear of all liens and encumbrances. NAI further represents
and warrants that it has not entered into any agreements or
commitments which are inconsistent with or in conflict with the rights
granted to Co-Host in this Agreement. NAI further represents and
warrants that the Products supplied hereunder do not infringe any
Covered Country patent, copyright, trademark, or trade secret right.
NAI agrees that, if notified promptly in writing and given sole
control of the defense and all related settlement negotiations, it
will defend Co-Host, its employees, officers and agents against any
claim based on an allegation that (i) a Product supplied hereunder
infringes a Covered Country patent, copyright, trademark or trade
secret right, or (ii) NAI violated any law, statute or ordinance or
any governmental or administrative order, rule or regulation with
regard to a Product or its manufacturer, possession, use or sale. NAI
will pay any resulting costs, damages and attorneys' fees finally
awarded by a court, or agreed to in settlement by NAI, with respect to
any such claims to the extent of the compensation received under this
Agreement. Co-Host agrees that, if the Products in the inventory of
Co-Host, or the operation thereof, become, or in NAI's opinion are
likely to become, the subject of an infringement claim, Co-Host will
permit NAI, at NAI's option and expense, to, among other things,
procure the right for Co-Host to continue marketing and using such
Products, or to replace or modify them so that they become
non-infringing. If neither of the foregoing alternatives is available
on terms that XXX xxxxx reasonable, Co-Host will return such Products
on written request from NAI. NAI will grant Co-Host a credit equal to
the price paid by Co-Host for such returned Products, as adjusted for
discounts, returns and credits actually given, provided that such
returned Products are in an undamaged condition. NAI will have no
obligation to Co-Host with respect to infringement of patents,
copyrights, trademarks or trade secrets or other proprietary rights
beyond that stated in this Section 9(b).
(c) No Combination Claims. Notwithstanding Section 9(b), NAI will not be
liable to Co-Host for any claims to the extent they arise solely based
upon the combination, operation or use of any Product with equipment,
data or programming not supplied by NAI, or to the extent they arise
solely based upon the alteration or modification of the Products by
the Co-Host or the purchaser of such Products.
10. LIMITATION OF LIABILITY. EXCEPT FOR CLAIMS UNDER SECTION 9 HEREOF, THE
LIABILITY OF A PARTY TO THE OTHER FOR DIRECT DAMAGES SHALL NOT EXCEED
FIFTEEN MILLION DOLLARS. EXCLUSIVE OF ANY CLAIMS BY THIRD PARTIES FOR
INJURY OR DAMAGES TO PERSONS OR TANGIBLE PROPERTY DIRECTLY CAUSED BY ANY
PRODUCT, NEITHER PARTY'S LIABILITY WITH REGARD TO THIS AGREEMENT OR THE
ADVERTISING MATERIALS, IF ANY, WILL INCLUDE CONSEQUENTIAL, INCIDENTAL,
SPECIAL OR OTHER INDIRECT DAMAGES, SUCH AS LOST PROFITS, EVEN IF
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THE OTHER PARTY HAS KNOWLEDGE OF THE LIKELIHOOD OF SUCH DAMAGES.
11. FORCE MAJEURE. Neither party shall be liable for the failure to perform any
of its obligations under this Agreement, except for payment obligations, if
such failure is caused by the occurrence of any event beyond the reasonable
control of such party, including without limitation, fire, flood, strikes
and other industrial disturbances, failure of raw materials suppliers,
failure of transport, accidents, transmission difficulties, phone service
interruptions, riots, insurrections, acts of God or orders of governmental
agencies.
12. GENERAL.
(a) This Agreement, the Web Site Services Agreement and the certain ESD
Agreement between the parties set forth the entire agreement between
the parties on all subject matters and supercede all prior agreements
and understandings between the parties.
(b) This Agreement may not be changed, terminated or amended except in
writing. Whenever the consent of any party is required hereunder, such
consent may be given or withheld in such party's sole discretion and
with or without reason or cause, unless this Agreement states
otherwise.
(c) The parties agree that the terms and conditions of this Agreement
shall prevail over any contrary or additional terms in any purchase
order (unless agreed to in writing by both parties), sales
acknowledgment, confirmation or any other document issued by either
party affecting the purchase and/or sale of Goods. The terms of the
Exhibits to this Agreement shall be equal in importance to the terms
of the body of this Agreement.
(d) Either party's failure or delay in exercising any of its rights will
not constitute a waiver of such rights unless expressly waived in
writing. Neither party may assign this Agreement without the other's
prior written approval, except by operation of law or in connection
with the sale of substantially all of the assets of such party's
business or the acquisition of such party by a third party.
(e) This Agreement will be governed and interpreted according to the laws
of the State of California, without reference to principles of
conflicts of laws. Each party hereto expressly consents to the
personal jurisdiction of the state and federal courts located in Santa
Xxxxx County, California, and expressly waives any defense to any
action based on inconvenient forum, choice of venue, lack of personal
jurisdiction, sufficiency of service of process or the like.
(f) In the event of any litigation or arbitral proceeding between they
parties regarding this Agreement, the advertising materials or the
obligations of the parties hereunder, the party not prevailing therein
shall pay the reasonable attorneys' fees and court costs of the party
prevailing therein.
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(g) If a court of law finds any provision of this Agreement unenforceable,
the parties agree to modify such provision to the extent necessary to
make it legal and enforceable while preserving its intent and the
economic effect of the unenforceable provision.
(h) Any notices and demands provided hereunder must be in writing and will
be deemed given upon the earlier of actual receipt or two (2) days
after being sent by overnight Federal Express or Express Mail, return
receipt requested, to the appropriate address set forth above, as such
contacts and addresses may be changed by written notice to the other
party.
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EXHIBIT "A"
Additional Agreement Terms
(with location of first reference in Agreement)
1. Destination (Recitals)
xxx.xxx.xxx or any successor site, which shall be the page to which traffic
is directed from the public NAI URLs.
Co-Host Site
xxx.xxxxxx.xxx
2. Certain Definitions
1. "Aggregate Revenue" in any year of the Term shall mean the revenue
generated in such year by (i) the sale of Goods to customers entering the
Co-Host Site through the Destination,and (ii) sales of Goods from the Managed
Site (as defined in the Web Site Services Agreement).
2. "Liquidated Damages Amount" shall mean the difference between (i) the
aggregate amount of the Co-Hosting Fee paid by Co-Host (the "Aggregate Fee") and
(ii) the Aggregate Fee multiplied by a number the numerator of which shall be
the actual Aggregate Revenue through the effective date of termination of the
Agreement and the denominator of which shall be the aggregate of the Minimum
Revenue Targets through the effective date of the termination.
3. McAfee Mall shall mean the same thing as the Managed Site under the Web
Site Services Agreement.
4. Online Service Page shall mean the general reference page for the NAI
Sites established under the URL xxx.xxx.xxx or any successor URL.
5. "Minimum Revenue Targets" shall mean: (i) in the first (1st) year of the
Term, Aggregate Revenues of not less than Nine Million Dollars ($9,000,000) and
(ii) in the second (2nd) year of the Term, Aggregate Revenues of not less than
Twelve Million Dollars ($12,000,000).
3. Co-Hosting Fee (Section 2(a))
Co-Host shall pay to NAI a "Co-Hosting Fee" in the following amounts:
(a) A non-refundable initial payment of Two Million Five Hundred Thousand
Dollars ($2,500,000) payable as follows: $2,000,000 on or before
September 30, 1998, and the balance within sixty (60) days of the
execution of this Agreement.
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(b) Quarterly payments of $312,500 each, with the first payment being due
September 15, 1999, and on each December 15, March 15, June 15, and
September 15 thereafter during the Term unless (i) the Agreement is
terminated in accordance with Section 6 of the Agreement prior to such
date in which case no quarterly payments will be due following the
effective date of such termination or (ii) if the Minimum Revenue
Target (as defined in Part 2 of this Exhibit "A") for the first year
of the Term is not achieved by the first anniversary of the Effective
Date, in which case no quarterly payments are payable until such time
as the Minimum Revenue Target for the first year of the Term is
achieved at which point Co-Host will resume making future quarterly
payments on the schedule and in the amount set forth above for the
duration of the Term or (iii) if the aggregate Minimum Revenue Targets
(as defined in Part 2 of this Exhibit "A") for the first and second
year of the Term are not achieved by the second anniversary of the
Effective Date, then, even if the Minimum Revenue Target (as defined
in Part 2 of this Exhibit "A") for the first year of the Term has been
achieved prior to such second Anniversary, no quarterly payments are
payable during the second year of the Term until such time as such
aggregate Minimum Revenue Target is achieved at which point Co-Host
will resume making future quarterly payments on the schedule and in
the amount set forth above for the duration of the Term. The parties
hereby agree to renegotiate in good faith a downward adjustment to the
foregoing quarterly payments in the event that the Minimum Revenue
Target for year one (1) is not achieved in the first year of this
Agreement.
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EXHIBIT "B"
SPECIFICATIONS FOR HOT LINK FROM THE ONLINE SERVICE PAGE OF ANY
ORIGINATING LOCATION
The hot link to the Co-Host site shall be no less prominent (whether is size,
location or format) than any hot link to the McAfee Mall from the Online Service
Page. In addition, in the event that any hot links to the McAfee Mall are
located on any web page on the Originating Locations other than on the Online
Service Page, then a hot link to the Co-Host Site shall all be located on such
web page and shall be no less prominent (whether is size, location or format)
than any hot link to the McAfee Mall. Notwithstanding the foregoing, the hot
links to the Co-Host Site referred to above shall be no less prominent (whether
in size, location or format) than any third party hot link on the Online Service
Page or the Originating Locations.
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EXHIBIT "C"
COMPETITORS OF NAI
PART 1
Computer Associates International, Inc.
Symantec Corporation
Check Point Software
Internet Security Systems, Inc.
Cisco Systems (only with respect to firewall products)
Security Dynamics
COMPETITORS OF CO-HOST
PART 2
Microwarehouse
CompUSA
Insight
PC Connection
Best Buy
Circuit City
Cyberian Outpost
Digital River
Xxxxxxx.xxx
Programmers Paradise
Office Max Online Software Store
Office Depot Online Software Store
Staples Online Software Store
WalMart Online Software Store
XxxXxxxxx.xxx
Xxxxxx & Xxxxx Online Software Store
Xxxxxx.xxx Software Store
Dell Computer Online Software Store
Gateway 2000 Online Software Store
Software Street
Techwave and related companies
CDW Online Store
THE PARTIES AGREE TO ACT IN GOOD FAITH IN MODIFYING THE ABOVE LIST OF
COMPETITORS.
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EXHIBIT "D"
Joint Marketing Programs
PROGRAM: FUNDING:
1. NAI will make five e-mail promotions during the fourth quarter of 1998 for
NAI products which will contain links to the Online Service Page.
2. NAI will make available up to 500,000 impressions on the NAI Internet Sites
and ten percent (10%) of the impressions available on NAI's Upgrade/Update
site for advertising materials to promote Xxxxxx.xxx.
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EXHIBIT "E"
DISTRIBUTION ADDENDUM
WHEREAS, NAI owns and/or markets certain computer software and hardware
products set forth on Exhibit "A" ("Products").
WHEREAS, Co-Host is an independent reseller of computer products to end
users ordering products through web sites on the Internet operated by Co-Host.
WHEREAS, Co-Host distributes electronic copies of the Products pursuant to
the ESD Agreement.
WHEREAS, Co-Host desires to distribute the Products and NAI desires to make
the Products available to Co-Host for further distribution.
THEREFORE, in consideration of the foregoing, and of the mutual covenants
and agreements hereinafter set forth, NAI and Co-Host enter into the following
additional agreements regarding the Products:
1. APPOINTMENT. NAI appoints Co-Host as a non-exclusive distributor of the
Products to end users ordering the Products from the Destination or the
Co-Host Site, and Co-Host accepts this appointment. Co-Host shall
distribute the Products, as an independent reseller, at its own risk and
expense and subject to any such prices, contractual terms and conditions as
Co-Host may from time to time determine. Nothing in this Agreement shall
prohibit Co-Host from distributing competing products in the Territory. The
"Territory" as that term is used herein shall mean all countries in the
world except countries to which export or re-export of any Product, or the
direct products of any Product is prohibited by United States law without
first obtaining the permission of the United States Office of Export
Administration or its successor. Co-Host shall not have the right to assign
or otherwise transfer this Agreement or any rights herein granted to any
other person or entity, except by operation of law or in connection with
the sale of all of its assets, or the acquisition of the Co-Host by a third
party. Any such attempted assignment shall be void and the Agreement shall
remain in effect.
2. DISTRIBUTION. Co-Host has the right to market and distribute the Products
subject to the license agreement that accompanies such Product. Co-Host may
not engage in the rental of any of the Products. Co-Host shall not in any
event remove from or obscure upon any Products any labels placed thereon by
NAI containing statements of restrictions upon distribution, without the
prior written consent of NAI. NAI reserves the right in its sole discretion
and without liability to Co-Host to add additional Products, change the
prices for the Products pursuant to Section 5, modify the Products, change
the level of NAI's support for the Products and discontinue the
availability of any Product. Any addition or deletion from the list of
Products will be indicated by NAI's revision to the NAI price list, and NAI
will use reasonable efforts to provide Co-Host with thirty (30) days notice
prior to the effective date of such changes indicated on the NAI price
list.
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3. MARKETING.
(a) General. Co-Host will use commercially reasonable efforts to market
the Products it orders to the best of its ability, and to that end
will (i) conduct marketing activities authorized by NAI, (ii) support
special promotions initiated by NAI, and (iii) maintain a sound
financial condition. Co-Host will conduct its business in a manner
that reflects favorably upon the Products and NAI.
(b) Advertising; Use of Trademarks. Co-Host may advertise and promote the
Products in a commercially reasonable manner and, subject to the
provisions of Section 5 of the Co-Hosting Agreement, may use
trademarks, service marks and trade names provided by NAI in
connection therewith, provided that all such promotions and
advertising will be consistent with NAI's general quality standards
and the provisions of Section 5 of the Co-Hosting Agreement. Unless
otherwise agreed upon in writing by NAI, Co-Host will submit each
advertisement and promotion to NAI for trademark review and approval
prior to initial release, which approval will not be unreasonably
delayed or withheld. All such usage which was not expressly approved
by NAI must be terminated immediately upon receipt of notice from NAI
to that effect.
(c) Trademarks Rights. NAI owns any and all trademarks, trade names, and
service marks for the Products (as noted in Section 5 of the
Co-Hosting Agreement). Such trademarks, trade names, and service marks
shall include all product names, the names "Network Associates,"
logos, designs, and other designations or brands used by NAI in
connection with the Products. Co-Host acknowledges and agrees that NAI
is not granting to Co-Host any rights in any Product trademark, trade
name, or service xxxx in or outside of the Territory.
4. INSPECTIONS, RECORDS AND REPORTING.
(a) Sales Out Reports. Co-Host will provide to NAI within ten (10) days
after the end of each calendar month, a computer media data file in
the format established by NAI showing, for such month, Co-Host's total
sales, by customer and by Product from each location. If requested by
NAI, Co-Host shall provide such reports with respect to weekly periods
or bi-weekly periods prior to the end of the calendar month in which
such period occurs.
(b) Inventory Level Reports. Co-Host will provide to NAI on Monday of each
week, a computer media data file in the format established by NAI
showing Co-Host's current inventory levels of each Product (including
items in transit), and weekly runrate snapshots and the other
information reasonably requested by NAI.
(c) Records. For three (3) years after each calendar quarter during the
term of this Agreement, Co-Host will keep, at Co-Host's office, full
and accurate books of account and copies of all documents and other
materials for such quarter relating to this Agreement and Co-Host's
records, accounts and contracts relating to the distribution of the
Products.
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(d) Audit. NAI may inspect the records described in Sections 4(c) upon
demand from time to time. In addition, Co-Host agrees to allow NAI's
independent auditors to audit and analyze appropriate accounting
records of Co-Host from time to time (but not more than one every six
(6) months) to ensure compliance with all terms of this Agreement. Any
such audit shall be permitted by Co-Host within fifteen (15) days of
Co-Host's receipt of NAI's written request to audit, during normal
business hours. The cost of such an audit will be borne by NAI unless
a material discrepancy indicating inadequate record keeping or that
additional fees due to NAI are discovered, in which case the cost of
the audit shall be borne by Co-Host. A discrepancy shall be deemed
material if it involves payment or adjustment of more than five
percent of the amount reported in favor of NAI. Audits and inspections
shall not interfere unreasonably with Co-Host's business activities.]
5. ORDERING AND PAYMENT.
(a) NAI's Acceptance. Any order for delivery of physical product placed
with NAI is subject to acceptance by NAI within ten (10) days
following receipt by NAI. NAI may decline any order, in whole or in
part, and unless NAI accepts an order in writing, the order is
considered accepted only to the extent it is fulfilled.] The terms and
conditions of this Agreement and of the applicable NAI invoice or
confirmation will apply to each order accepted or shipped by NAI.
Electronic confirmation from an authorized NAI email address shall
have the same effect as a signed written confirmation. The provisions
of Co-Host's form of purchase order or other business forms will not
apply to any order notwithstanding NAI's acknowledgment or acceptance
of such order.
(b) Price to Co-Host. NAI will inform Co-Host as to its current suggested
retail price of the Products and standard discount or pricing granted
to NAI's traditional product distributors. During the term of this
Agreement, Co-Host will be invoiced on the basis of the discounts set
forth on Exhibit "A" of this Distribution Addendum. Discounts off
suggested retail price (SRP) for standard NAI Products shall exclude
tradeups, upgrade SKUs and special promotions, unless otherwise
indicated. NAI may change its SRP from time to time upon written
notice to Co-Host, which may take the form of a revised price list,
and NAI may notify Co-Host of a different discount from SRP in the
event NAI offers special promotional SRPs or Product prices in NAI's
discretion.
(c) Price Increase. If NAI increases its suggested retail price for any
Product (a product upgrade with a different part number will not be
the same Product) and there is a resulting increase in the price of
Products to Co-Host, NAI will give Co-Host thirty (30) days advance
notice of the effective date of any such increase and:
(i) NAI will honor the old price for any shipments of such Product
already in transit to Co-Host;
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(ii) All additional orders following such thirty (30) day period will
be shipped at the new price;
(iii) NAI has orders for such Product from Co-Host already booked into
NAI's order entry system at the time of such price increase or if
Co-Host orders additional Products during such thirty (30) day
period, then the price increase will not apply to that portion of
such orders which call for shipments of not more than the monthly
average quantity of such Products shipped to Co-Host in the three
month period preceding the date of the increase; and
(iv) Orders for such Product in NAI's order entry system in excess of
the quantity specified in (iii) above will be shipped at the new
price unless they are canceled by Co-Host by written notice to
NAI, provided that such notice is received by NAI no later than
fifteen (15) days prior to the date of shipment specified in such
order.
(d) Price Decrease. If NAI decreases its suggested retail price for any
Product (a product upgrade with a different part number will not be
the same Product), the decrease will apply to all units of such
Product in Co-Host's inventory and orders in transit to Co-Host from
NAI that are in an unopened, salable condition as of the effective
date of the decrease, provided that such Products had been shipped to
Co-Host no more than ninety (90) days prior to such effective date. To
be eligible for such price protection, Co-Host must deliver to NAI
written evidence, signed by Co-Host, of an inventory of such Products
showing the number and location of each unit of Product for which
Co-Host claims price protection eligibility hereunder within thirty
(30) days of receiving notice of such price decreases. Such reduction
will constitute a credit on Co-Host's account for future orders from
NAI under this Agreement (unless the Agreement has terminated or
expired in which case such reduction will be refunded to the extent
that Co-Host does not owe NAI money) in an amount equal to the
difference between the net invoice price at which each such unit in
inventory was provided to Co-Host and the current price then
applicable for shipments of such Product to Co-Host hereunder.
(e) TAXES.
(i) All amounts payable by Co-Host to NAI under this Agreement are
exclusive of any tax, withholding tax, levy, or similar
governmental charge that may be assessed by any jurisdiction in
or outside the Territory except income and similar taxes levied
on and payable by NAI. Such taxes, withholding taxes, levies, and
governmental charges (collectively "Taxes") include Taxes based
on sales, use, excise, import or export values/fees, value-added,
income, revenue, net worth, or may be the result of the delivery,
possession, or use of the Products, the execution or performance
of this Agreement or otherwise. Should any Taxes be due, Co-Host
agrees to pay such Taxes and indemnify NAI for any claim for
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such Taxes demanded. Co-Host shall make no deduction from any
amounts owed to NAI for any Taxes. Co-Host covenants to NAI that
all Products distributed hereunder will be in the ordinary course
of Co-Host's business, and Co-Host agrees to provide NAI with
appropriate information and/or documentation satisfactory to the
applicable taxing authorities to substantiate any claim of
exemption from any Taxes.
(ii) For all Taxes paid by Co-Host, Co-Host shall provide to NAI
within forty-five (45) days after the end of any quarter, a
certificate of tax payment documenting the payment and amount of
the Taxes paid during the preceding quarter.
6. SHIPMENT, RISK OF LOSS AND DELIVERY.
(a) Shipment. All the physical Products will be shipped by NAI, F.C.A.
(Incoterms 1990) place of shipment. Co-Host is responsible for paying
all freight charges, transportation expenses, insurance charges, all
applicable taxes, duties, import and export fees and similar charges
associated with the delivery of the Products to Co-Host. All shipments
will be made using either any carrier approved by both Co-Host and
NAI. Co-Host will not without NAI's prior written consent, submit any
order calling for the shipment of a Product to more than a single
redistribution site.
(b) Risk of Loss. All risk of loss of or damage to the Products will pass
to Co-Host upon delivery by NAI to the common carrier. Co-Host will
bear the risk of loss or damage in transit.
(c) Partial Delivery. Unless Co-Host clearly advises NAI to the contrary
in writing NAI, may make partial shipments on account of Co-Host's
orders which shall, to be separately invoiced and paid for when due.
7. RETURNS.
(a) Returned Merchandise Authorization. Notwithstanding anything to the
contrary herein contained, NAI will not issue credit to nor be
obligated to accept returns for any reason for any physical Products
unless NAI shall have previously issued a written Return Merchandise
Authorization ("RMA"). The preceding sentence governs whether or not
NAI is obligated to issue an RMA under this Agreement or applicable
law. RMAs must be in writing, signed by NAI and only authorize the
return of Products in good resalable conditions unless expressly
provided otherwise herein. If damaged goods are received pursuant to
an RMA, no credit shall be given by NAI with respect to such damaged
goods unless the RMA indicates otherwise. Co-Host shall be responsible
for all freight charges for goods returned pursuant to an RMA, unless
otherwise indicated herein or in the RMA.
(b) Customer Returns and Bad Box. Subject to Section 7 (a), Co-Host may,
during the term of this Agreement, obtain a credit against current or
future invoices from
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NAI, for Products which have been returned by end users as defective,
or pursuant to the warranty stated in NAI's end user license. Such
credit will be in an amount equal to the original invoice price less
any discounts or other credits previously received. Co-Host shall also
have the ability to return for credit Products which have boxes that
are or become damaged, unless such damage was caused by Co-Host. An
offsetting purchase order must be placed for all bad box returns. In
the event of claims by end users of incomplete Product, NAI, at its
discretion, may supply to Co-Host, at no charge, any and all missing
materials which are supposed to be provided with the current release
of such Products or replace the entire Products in such situation.
(c) Discontinued Products. Co-Host may, during the term of this Agreement,
obtain a credit for the price paid by Co-Host to be applied against
current or future invoices, for all versions of Products shipped by
NAI within the previous ninety (90) days that NAI discontinues or
which are removed from NAI's current retail price list. Such credit
will be equal to the price paid by Co-Host for such obsolete Products,
less discounts received under Section 5 of this Agreements. All such
discontinued Products will be counted and inspected at the Inspection
Site by NAI's employee, and upon NAI's acceptance thereof (which will
be a condition of Co-Host's eligibility for a credit hereunder) such
Products will be promptly and completely destroyed or, if requested by
NAI, such Products or any portion thereof will be returned to NAI as
it directs. No Product shall be deemed discontinued if a later version
of the Product is still being offered by NAI and end users may obtain
the current version of such Product from NAI electronically at no
additional charge.
(d) Freight. Co-Host will pay all costs (including freight) associated
with the return of the Products to NAI and back to Co-Host as provided
herein, except that NAI will be responsible for all freight costs
associated with (i) the return of Products under Section 7(b), (ii)
the return of any discontinued or obsolete Products under Section
7(c), and (iii) the return of other Product updates agreed upon by NAI
and Co-Host.
8. GENERAL.
(a) Co-Host agrees that it will not, directly or indirectly, export or
transmit the Product and technical data (or any part thereof) or any
process or service that is the direct product of the software and
documentation, to any group S or Z country specified in Supplement No.
1 of Section 770 of the Export Administration Regulations or to any
other country to which such export or transmission is restricted by
such regulation or statute, without the prior written consent, if
required, of the Office of Export Administration of the U.S.
Department of Commerce, or such other governmental entity as may have
jurisdiction over such export or transmission.
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(b) Co-Host acknowledges that some NAI Products hereto contain encryption
and some are export restricted (the "Restricted Software") by the U.S.
Department of Commerce's Bureau of Export Administration (BXA).
Co-Host further acknowledges that for this reason, the export of such
items may subject the Co-Host or its executives to fines and/or other
severe penalties. Unless all required permits and/or approvals have
been obtained, Co-Host shall not export or re-export the Restricted
Software outside of the United States, whether directly or indirectly,
and will not cause, approve or otherwise facilitate others such as
agents, subsequent purchasers, licensees or any other third parties in
doing so. The parties agree to cooperate with each other with respect
to any application for any required licenses and approvals. However,
Co-Host acknowledges it is their ultimate responsibility to comply
with all export laws with respect to the Restricted Software and that
NAI has no further responsibility after the initial sale to the
Co-Host within the United States.
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EXHIBIT "A" TO EXHIBIT "E"
1. PRODUCTS COVERED (RECITALS). Product(s) provided to Co-Host shall be all
NAI Goods as that term is defined in Section 1 (c) of the Agreement and no other
products.
2. PRICES AND DISCOUNTS (SECTION 5(a)).
The standard discount or pricing granted to NAI's traditional Product
distributors increased by four percentage points.
