EXHIBIT 10.12
*** Portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and Exchange
Commission.
PRODUCT DISTRIBUTION AGREEMENT
Between
ACCORD NETWORKS, INC.
And
PICTURETEL CORPORATION
Date of Agreement: January 21, 2000
*** Portions of this Exhibit have been omitted based upon a request for
confidential treatment pursuant to Rule 406 under the Securities Act of 1933.
The omitted portions have been filed separately with the Securities and Exchange
Commission.
AGREEMENT
---------
This Agreement ("Agreement") dated January 21, 2000 ("Effective Date") is made
by and between Accord Networks, Inc., a Georgia corporation having an office at
0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX 00000 ("Accord") and PictureTel
Corporation, a Delaware corporation having an office at 000 Xxxxxxxxx Xxxx,
Xxxxxxx, XX 00000 ("PictureTel"). In consideration of the mutual promises
contained herein, the parties agree as follows:
1. Purpose and Scope of Agreement
------------------------------
A. This Agreement establishes the terms and conditions under which Accord will
sell and license and PictureTel will purchase, acquire and license Accord
Products, as defined in Section 3, for distribution and resale by PictureTel to
its customers, distributors or dealers and for use for demonstration, trade show
and testing purposes. Except as expressly provided in this Agreement,
PictureTel accepts no responsibility for any expenses, losses, or actions
incurred or undertaken by Accord as a result of work performed in anticipation
of purchase of said Products by PictureTel.
B. It is also the intent of the parties to utilize the proprietary PictureTel
features set forth on Exhibit 7 ("PictureTel Features") to differentiate
product in the marketplace for sales and marketing purposes. It is the intent
that all Accord MCUs that ship after [***] will be [***] enabled. Any hardware
capable of supporting [***] algorithm on MCU's shipped subsequent to [***] will
be provided by Accord at no additional charge over and above the original price
of the audio cards. In addition, it is the intent that all MCUs that ship after
[***] will be [***] enabled and will, at such time, include the necessary
hardware and software to support the said algorithms. Additional PictureTel
proprietary algorithms will be incorporated as set forth in Phase 2 of Exhibit
7. It is the intent that all such PictureTel proprietary algorithms will be
distributed as follows:
. If the end-user or reseller wants PictureTel Features, the reseller or
end-user will purchase the MCU from PictureTel (or its reseller).
. PictureTel and Accord sales management agree to mutually establish a
process, within 30 days of the Effective Date of this Agreement, to handle
situations where an end-user or reseller wants to purchase PictureTel
Features directly from Accord.
. If the end-user or reseller does not require or want PictureTel Features,
the end-user or reseller will, at its discretion, purchase the MCU from
either Accord (or its resellers) or PictureTel (or its resellers).
. An end-user who wishes to utilize PictureTel Features at some time after
the initial purchase may enable the MCU by registering with the PictureTel
web-site to download the software or using some other means to identify
the MCU as using the PictureTel features and by paying to PictureTel its
then standard license/enabling fees.
----------------------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
2
2. Effective Date and Term of Agreement
------------------------------------
Unless terminated sooner pursuant to Section 47, this Agreement shall remain in
effect for an initial term of thirty-six (36) months after the Effective Date,
and shall automatically continue thereafter for 2 renewal periods of 12 months
each, unless either party gives the other written notice of its intent not to
renew at least ninety (90) days prior to the expiration of the initial or either
renewal term. This Agreement shall, in any event, expire sixty (60) months after
the Effective Date unless further extended by written agreement executed by
both parties.
3. Products Covered by This Agreement
----------------------------------
A. The Products available for purchase and license by PictureTel under this
Agreement are generally described in Exhibit 1. The parties intend that
PictureTel will resell Accord existing and future multipoint conference unit
Product(s) and that Accord will further develop its existing Product to support
PictureTel's next generation of video teleconferencing features ("New
Features").
B. The parties, upon mutual written agreement, may replace, augment or modify
the list of Products in Exhibit 1 that are available for purchase by PictureTel
under this Agreement at any time. The term "Products" also includes all Product
components, spares, replacement parts, software, RTUs (Rights-to-Use), firmware
and related documentation that Accord chooses to offer separately for sale or
license. All Products under this Agreement are furnished exclusive of
installation and other services.
C. Accord agrees that upon incorporation of PictureTel Features, all Product
Accord sells pursuant to Section 3(b) above, to its customers, distributors,
original equipment manufacturers ("OEMs"), and resellers will be able to support
technology that enables said Product to interact with PictureTel's next
generation of video teleconferencing features as defined in Exhibit 7, unless
otherwise agreed to by both parties in writing.
4. Regular Meetings
----------------
A. The parties executive and regional sales managers will conduct regular
Quarterly Business Reviews. The parties will also hold joint meetings with
channels to help maximize channel distribution.
Quarterly Business Review topics will include, but not be limited to, the
following:
a) Review of key business indicators/drivers;
b) Review of stagger chart consisting of Rolling Forecast vs. Actual
Purchase Orders;
c) Product Roadmaps with reasonable definition to allow each party to plan
and transition its product plans that either party may acquire from
the other party for purposes of selling and/or licensing (e.g. end of
life of a component, short supply of a component, Upgrades) and
potential new products;
d) Joint development and other collaborative efforts;
3
e) Review of Service and Support problems, escalation, troubleshooting
techniques and customer experiences;
f) Review of Delivery Performance and Quality metrics. Quality metrics
will be as described in Exhibit 10;
g) Review of Pricing;
h) Review of actual and potential cost reduction activities;
i) Review of homologation, localization and type approval efforts; and
j) Review of joint marketing initiatives.
Additional meetings may be scheduled as needed.
B. Notwithstanding the foregoing, for each of the first six months of the
Agreement, the parties shall meet face to face on a monthly basis to facilitate
Agreement implementation.
5. Product/Marketing Launch and Channel Communication Plan
A. The parties agree to use reasonable efforts to develop a schedule, within 5
days of the Effective Date of this Agreement, in order to accomplish the tasks
and objectives identified in Exhibit 9, Product and Marketing Launch.
B. The parties agree to implement the Channel Communication Plan as described
in Exhibit 11.
C. The parties agree that the initial contact with NTT of Japan regarding the
sale of the Accord Products shall be accomplished though a joint sales call.
6. Prices, Discounts and Royalties
-------------------------------
A. PictureTel agrees to pay all applicable charges for the Products furnished
by Accord under this Agreement. Applicable charges include all charges such as
packaging, packing, shipping, customs duties imposed before passage of title,
and all applicable taxes except for sales, use, value added or other excise
taxes, however designated or levied, for which Accord will properly invoice
PictureTel as set forth in Section 10. Applicable charges will be calculated by
applying Product Discounts (as described in Section 6.B) to the Accord OEM
Product List Price (as set forth in Exhibit 4).
B. Product Discounts available to PictureTel are set forth in Exhibit 5.
Accord may not lower the Product Discounts during the initial twelve (12) months
of this Agreement. Thereafter, Accord, in its sole discretion, may review and
recalculate the Product Discount(s) annually, effective as of each year's
anniversary of the Effective Date and shall notify PictureTel in writing at
least ninety (90) days prior to any such change in the Product Discount(s)
taking effect. New Product Discount(s) will apply to all PictureTel orders
accepted by Accord after the effective date of the change, and to all
replacement parts after the effective date of the change. In addition, Accord
agrees to provide PictureTel with special promotional "trade-in" as set forth in
Exhibit 5.
4
C. Accord may not increase the prices as stated on the OEM Product List Prices
set forth in Exhibit 4 during the first twelve (12) months of this Agreement.
Thereafter, Accord may change the OEM Product List Prices set forth in Exhibit 4
as follows. If the change increases the price for a Product Accord will give
written notice to PictureTel not less than ninety (90) days prior to the
effective date of the price change. The new increased price will apply to all
PictureTel orders accepted by Accord after the effective date of the change, and
to all Product components furnished as replacement parts after the effective
date of the change. For price decreases, PictureTel is entitled to a price
reduction credit for an order if the shipment is within thirty (30) days before
the effective date of such decrease.
D. Accord represents and warrants that the prices and discounts it offers to
PictureTel for Products is and will be at least equivalent to the best terms
offered to other distributors or purchasers in comparable circumstances
considering volume commitments, and terms and conditions. Moreover, Accord
agrees to credit any excess amounts paid by PictureTel.
E. PictureTel agrees to pay Accord non-recurring engineering funding (NRE) for
development of PictureTel Features as set forth in Exhibit 7, based on a to be
agreed to calculation for determining the NRE. In no event shall the NRE exceed
[***] per quarter or [***] in total, unless otherwise agreed to in writing by
the parties. PictureTel will make an initial payment to Accord of [***], in
order to assure timely completion of the tasks outlined in Phase 1 and Phase 2.
If Accord does not deliver the Phase 2 features as set forth in Exhibit 7 prior
to [***], no further NRE payments will be due from PictureTel until Phase 2 is
completed.
The parties agree to determine and resolve other NRE issues and credits to
PictureTel within thirty (30) days of the Effective Date. If the parties fail to
so agree either party may immediately terminate this Agreement without further
obligation or liability.
7. Taxes
-----
A. Charges under this Agreement are exclusive of taxes. Any tax or related
charge resulting from this Agreement, or from the provision of Products, or from
any activities hereunder (other than taxes on net income) which Accord shall be
required to pay to or collect for any governmental authority, shall be billed to
and paid by PictureTel unless PictureTel furnishes to Accord a valid exemption
certificate and such other documentation as Accord may reasonably request.
B. PictureTel assumes the obligation for all present and future taxes (and any
related interest or penalties), including without limitation all sales, use,
excise, value added, gross receipts, or other taxes, customs duties and other
import taxes, and other charges of any kind imposed by, or payable to, any
governmental authorities, instrumentality's, or agencies, including without
limitation any tax which PictureTel is required to withhold or deduct from any
payment or reimbursement to Accord. If Accord is required to pay any tax or
other charge for which PictureTel assumes the obligation under this Section 7,
PictureTel shall reimburse Accord on demand.
----------------------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
5
8. Orders
------
A. The term "Purchase Order" shall mean PictureTel's written purchase order
form and any documents incorporated therein by reference. PictureTel may order
Products by submitting facsimile, or written Purchase Orders. Except for the
first forty-five (45) days following the Effective Date, for which a longer lead
time may be required, Accord will use its best efforts to accomplish the goal of
normally shipping the PictureTel product within [***] after receipt of a
PictureTel Purchase Order, but in any event (excluding force majeure events)
Accord will use its best efforts to accomplish the goal of shipment within [***]
business days of receipt of a PictureTel Purchase Order.
B. PictureTel's Purchase Orders shall state Accord's committed delivery dates
for Products.
C. Should PictureTel request a forecasted order pursuant to Section 36 and
Accord agrees to and meets a shipping lead time of less than [***] from receipt
of a PictureTel Purchase Order, then PictureTel, in those instances will agree
to issue payment within the same amount of time from the Ship Date that it took
Accord to Ship from receipt of the Purchase Order (for example, if Accord ships
within 24 hours from receipt of Purchase Order, PictureTel will issue payment
within 24 hours from the Ship Date), but in no event later than ten (10)
business days of the Ship Date.
D. Accord shall give prompt written notice by either email, fax or mail of any
proposed variance in Lead Time to PictureTel. Revisions to Lead Time shall
require written PictureTel authorization and may include appropriate quantity
adjustments. During PictureTel's consideration of the proposed variance, Accord
shall continue to ship Products according to the existing commitment.
E. PictureTel may make not cancel any order within [***] days of its scheduled
ship date.
F. If PictureTel cancels a Purchase Order more than [***] days prior to its
scheduled ship date, Accord shall make every reasonable effort to cancel all
deliveries of materials on open order with its suppliers. PictureTel will not
be responsible for any further costs of labor, overhead, or any other costs
including cancellation costs incurred by Accord with its subcontractor(s).
9. Credit Terms
------------
Each order is subject to credit approval in Accord's sole discretion. Accord
may change the amount of credit or terms of payment, or may withdraw credit, at
any time upon written notice to PictureTel. Initially, PictureTel' will be
extended credit in the amount of [***].
10. Invoices
--------
Accord will send invoices to the billing address in Exhibit 13. Each shipment
or partial shipment (partial shipments are subject to PictureTel's prior written
approval) of Products shall constitute a separate billable transaction.
----------------------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
6
11. Payments
--------
A. Payment shall not be due until PictureTel has received a correct invoice and
the conforming Products have been delivered, unless otherwise provided for in
Section 8 above. PictureTel shall issue payment net thirty (30) days from the
invoice date, unless otherwise provided for in Section 8 above.
B. All payments shall be made in United States Dollars via electronic funds
transfers or check.
C. If PictureTel fails to pay an undisputed invoiced amount within 15 days of
when due, then, in addition to all other rights and remedies at law or
otherwise, Accord may have the right to xxxx PictureTel, and PictureTel shall
have the obligation to pay, late payment charges equal to 1% per month or the
maximum legal rate per month, whichever is less, on the unpaid amount for the
period starting with the date payment was due and ending when full payment is
made.
D. Accord reserves the right to impose commercially reasonable credit terms or
to withhold shipments or service pending satisfaction of payment obligations or
credit terms. This clause will not be effective with regard to disputed
invoices.
12. Packaging
---------
It is the intention of the parties to finalize packaging terms within thirty
(30) days of the Effective Date, until such time the following shall apply:
A. In addition to Accord's standard packaging, Accord agrees to include serial
numbers for all Products and subassembly components in a manner consistent with
PictureTel's tracking requirements. This should allow for both full forward and
backward tracking.
B. Accord will utilize packaging material that has appropriate certifications of
acceptance. The boxes shall meet all construction requirements of the applicable
freight classification. Accord will supply PictureTel with the box
manufacturer's certificates of approval.
13. Shipping
--------
A. It is the intention that all Products are sold F.O.B. an Accord factory or
parts warehouse. However, Accord currently ships its Products Ex Works from
Israel. The contradiction in these positions will be resolved by mutual
agreement within thirty (30) days of the Effective Date. PictureTel will be
responsible for paying all applicable charges for shipping, handling, rigging,
brokerage, insurance, any other destination charges, and other taxes.
B. It is the intention of the parties to finalize packaging terms within thirty
(30) days of the Effective Date, until such time the following shall apply:
Accord will ship the Products, either from an ISO certified factory or from a
factory which has been quality approved by PictureTel, to an address designated
by PictureTel in the United States, Europe or Asia. This address may either be
to a PictureTel distribution center or directly to a PictureTel customer. Accord
will only engage
7
carriers approved by PictureTel. In addition, Accord shall meet the quality
requirements as defined in Exhibit 8.
C. Accord must receive prior written approval from PictureTel before it ships
any partial order.
14. This Section Intentionally Left Blank
15. This Section Intentionally Left Blank
16. Ship Date
---------
The date for shipment of Products ordered by PictureTel ("Ship Date") will be
established in the written acceptance of the order by Accord. Time and date of
shipment are of the essence of all purchases made under this Agreement and
Accord will use its best efforts (including, but not limited to Accord paying
for expedited shipment) to meet the Ship Date. If shipment is delayed
(including approved partial deliveries) by more than 20 business days after the
Ship Date due to causes not attributable to PictureTel or to Force Majeure (as
defined in Section 45), PictureTel may elect, at its option, to accept late
delivery or to cancel the order without incurring cancellation charges or other
penalties.
17. Testing
-------
A. Interoperability Testing. Accord shall be responsible, at its sole cost, to
------------------------
ensure that the Products interoperate, pursuant to Exhibit 10, with all of
PictureTel's then-current released videoconferencing products and conference
scheduling products. In addition, Accord will ensure that Products will be
backwards compatible (Accord Product to PictureTel product) of at least two
previous Product releases. PictureTel agrees to reasonably assist Accord in the
beta testing of Accord products, and will reasonably provide pre-release
PictureTel software and products for testing by Accord.
B. Software Quality Assurance Testing. Accord shall be responsible, at its
----------------------------------
sole cost, to ensure that the Products conform to the test requirements set
forth in Exhibit 10 and agrees that it will not provide Products to PictureTel
until all high severity software errors have been corrected.
C. Homologation and Type Approvals. Each party shall be responsible, at its
-------------------------------
sole cost, to complete type approvals in all the countries identified for
approvals pursuant to Exhibit 12.
18. Rejection of Nonconforming Products
-----------------------------------
A. With the exception of DOA products, to be effective, PictureTel's rejection
(or revocation of acceptance) of a nonconforming (i.e., not as ordered or does
not work in accordance with specifications) shipment must be made by written
notice to Accord and not later than 20 days after delivery of the Product to
PictureTel. Accord, at its option, may correct the nonconforming Products on
PictureTel's premises or may instruct PictureTel to return the nonconforming
Products for replacement without charge. If the Products are to be returned,
PictureTel will make the nonconforming Products available for pick-up by Accord
or its carrier within 10 days, and Accord will bear the shipping costs for the
returned Products and the replacement Products.
8
B. After the time periods allowed in Section 18.A for rejection and return of
nonconforming Products, PictureTel shall have recourse to the appropriate
warranty as its remedy for nonconformity.
19. Title and Risk of Loss
----------------------
Title and risk of loss for the Products (other than Licensed Materials, as
defined in Section 21) shall vest in PictureTel when the Products have been
shipped from the F.O.B. point at Accord.
20. Product Makeup and Changes
--------------------------
A. With the exception of replacements for DOA products, which must be new,
Accord, at its option, may use new, reconditioned, refurbished, or
remanufactured parts in the furnishing of spares, replacement parts, and repairs
under this Agreement.
B. PictureTel at any time may ask Accord to consider making changes to the
design, specifications, and features of the Products. If PictureTel's request
is made in writing, Accord will endeavor to respond within 30 days with a
statement of whether Accord may potentially be interested in implementing the
proposed changes.
21. Licensed Materials
------------------
A. The term Products may include software, RTUs, firmware, and related
documentation (collectively "Licensed Materials"). Notwithstanding anything to
the contrary elsewhere in this Agreement, or in any purchase order,
confirmation, or other communication in connection with this Agreement:
1.) PictureTel shall receive no right, title, or interest in Licensed
Materials, other than the license granted in Section 21.B; and
2.) all rights, title and interest in Licensed Materials (and all
copies thereof made by PictureTel, including without limitation
translations, compilations, and partial copies) are and shall remain
the property of Accord or its parent, subsidiaries or assigns.
3.) all right, title and interest in and to all trademarks, copyrights,
patents and other proprietary xxxx or notice, and the goodwill
connected therewith, are and remain the sole property of Accord and, if
applicable, any third party owner thereof.
B. Accord hereby grants PictureTel a personal, non-assignable, nonexclusive
license to use and license the Licensed Materials, in object code form, solely
for the purpose of proper operation of the particular Product for which such
Licensed Materials are furnished. Notwithstanding the above, PictureTel may
permit a third party contractor to use the Licensed Materials, for the benefit
of PictureTel, subject to this Section 21 provided such third party is subject
to non-disclosure obligations comparable to those contained herein.
C. PictureTel will not take any steps, nor will it permit third parties to take
any steps to print, copy, modify, translate (other than for human language
translations), alter, reverse assembly or reverse compilation or reverse
engineer to derive a source code equivalent of Licensed Materials. If
9
Licensed Materials are located in a member state of the European Economic
Community ("EEC") or PictureTel needs information about the Licensed Materials
to achieve interoperability of an independently created software program:
1.) PictureTel shall first request such information from Accord, and
Accord may charge a reasonable fee to provide such information; and
2.) if Accord elects not to make such information available, PictureTel
may decompile the Licensed Materials to the minimum extent necessary to
achieve such interoperability, subject to the limitations in Article 6
of the EEC Council Directive of May 14, 1991 on the legal protection of
computer programs.
D. In addition to copies made incidental to the operation of the Licensed
Material, PictureTel is permitted to make a single archive copy of software, and
shall not otherwise reproduce software furnished under this Agreement. All
copies of software must contain the same copyright notice and proprietary
marking as the original.
E. During the term of this Agreement, PictureTel shall have the right to
sublicense Licensed Materials to customers of PictureTel (and to customers of
PictureTel's dealers and distributors), provided that such sublicense is solely
in connection with a sale or lease of the corresponding Product for the proper
operation of such Product, pursuant to the "break the seal" End User Licnse
Agreement included with the Product. Accord will include the End User License
Agreement with the Products, and PictureTel will not remove or alter any such
agreements or any notifications or warning stickers attached thereto. This
license will terminate when this Agreement terminates.
F. Intentionally left blank
G. Accord may cancel, in whole or in part, any license granted under this
Section 21 if PictureTel fails to materially comply with the terms and
conditions of such license or this Agreement. PictureTel shall return to Accord
all copies of Licensed Materials covered by the cancelled license. Such
cancellation shall not affect the rights of PictureTel's customers under
sublicenses properly granted in accordance with Section 21.C prior to the date
of cancellation.
H. PictureTel shall cancel any sublicense if the sublicensee fails to
materially comply with the terms and conditions of the sublicense. PictureTel
shall cause the sublicensee to return to PictureTel all copies of Licensed
Materials covered by the cancelled sublicense.
22. Product Labeling/Branding
-------------------------
Product labeling and branding will be implemented in accordance with Exhibit 2.
23. Intentionally Left Blank
------------------------
10
24. Intentionally Left Blank
------------------------
25. Documentation
-------------
A. To the extent that Accord has completed preparation of user documentation
for any of the Products, including, but not limited to, administrator guides,
user guides, and installation and service guides ("Accord Documentation"),
Accord will furnish to PictureTel, at no charge, one copy of the final version
thereof with each shipment. Additionally, Accord will provide PictureTel with an
electronic copy of the documentation. Accord hereby grants to PictureTel a
personal, nontransferable, nonexclusive, royalty-free license to use, reproduce,
reformat, modify, and distribute Accord Documentation for the sole purpose of
distributing Products to PictureTel's customers. At PictureTel's option, Accord
will reproduce and distribute standard Accord Documentation at no additional
charge.
B. If the parties mutually agree to have Accord produce reformatted, modified,
or foreign language versions of Product documentation free of additional charge
for PictureTel, the terms, conditions, for this work will be agreed to at that
time. If PictureTel uses its own personnel or engages a third party contractor
to reformat, modify or translate Accord Documentation, PictureTel shall submit
the draft to Accord for review and approval prior to its use or distribution.
Accord shall retain copyright rights in the entire documentation except those
specific portions constituting original works of authorship by PictureTel or
such third party contractor.
C. PictureTel agrees to include the Accord copyright notice on any Accord
Documentation reproduced without change by PictureTel. If feasible under
applicable law without jeopardizing the copyright rights of Accord, PictureTel
may elect to place only PictureTel's own copyright notice on documentation that
PictureTel or its third party contractor has reformatted, modified, or
translated, in which event PictureTel's copyright notice shall be interpreted to
protect the underlying copyright rights of Accord.
D. Accord will use best efforts to provide to PictureTel, for each Product,
Release Bulletins of sufficient detail to allow PictureTel to service the to be
released Product at least sixty (60) days prior to the actual release of the
Product. In addition, Accord will its best efforts to instruct PictureTel in the
proper manner for servicing each new Product ("Transfer of Information") at
least thirty (30) days prior to the beginning of beta testing of the Product.
Such Transfer of Information shall include, but not be limited to, the delivery
of appropriate written service documentation.
E. Accord will provide to PictureTel on a regular basis (not less frequently
than monthly) an outstanding bug or issue list for each Product.
26. Marketing Collateral
--------------------
A. Accord will provide to PictureTel in both hard copy and in high resolution
digital image form (including electronic files and/or PDF files) appropriate
brochures, datasheets, application notes, primers, white papers, customer
presentations, Q&A's, etc. ("Marketing Collateral") in English or any other
language(s) currently being or in the future distributed by Accord. Accord
shall retain
11
copyright rights in the entire Marketing Collateral except those specific
portions constituting original works of authorship by PictureTel or such third
party contractor.
B. PictureTel agrees to include the Accord copyright notice on any Accord
Marketing Collateral reproduced without change by PictureTel. If feasible under
applicable law without jeopardizing the copyright rights of Accord, PictureTel
may elect to place only PictureTel's own copyright notice on Marketing
Collateral that PictureTel or its third party contractor has reformatted,
modified, or translated, in which event PictureTel's copyright notice shall be
interpreted to protect the underlying copyright rights of Accord.
C. Accord will work with PictureTel to grant reasonable access to Accord's
customer listings in order that PictureTel may more efficiently implement
marketing programs.
D. Accord shall create a link between Accord's website and PictureTel's website
for any user who may have an interest in video conferencing or collaboration end
products.
27. Warranty on Products
--------------------
A. Accord warrants to PictureTel that, for a period of 12 months from the date
of installation or 15 months from the Ship Date of Product shipment to
PictureTel, whichever is shorter (the "Warranty Period"), the hardware (i) shall
be free from defects in material and workmanship, (ii) are free of all liens and
encumbrances, and (iii) conform to Accord's published applicable specifications,
drawings, samples, and descriptions. Software Products (i) shall be free from
defects in material and workmanship, (ii) are free of all liens and
encumbrances, and (iii) conform to Accord's published applicable specifications,
drawings, samples, and descriptions for a period of ninety (90) days from
acceptance. Accord also warrants that for ninety (90) days from the date of
acceptance, all hardware, software and documentation that is held in stock at
the PictureTel stocking center that is not at the current shipping levels shall
be upgraded by the Accord to the current shipping revision at no cost to
PictureTel. Accord further warrants that it has the right to convey the
Products. These warranties shall survive any inspection, delivery, payment, or
termination of this Agreement.
Within thirty (30) days of the Effective Date the parties will agree on an
acceptable installation notification procedure.
B. Accord warrants that the date data contained in any product will (i)
accurately and unambiguously reflect the date, (ii) include an indication of
century in each instance, and (iii) not result in the abnormal termination of
any PictureTel software function. Accord will provide PictureTel with test
results that indicate that the products are Year 2000 Compliant (as define
below), and provide reasonable assistance as PictureTel requests. In addition to
Product warranties, Accord warrants that its internal IT systems relating to
manufacturing and ordering under the Agreement are Year 2000 Compliant and that
Accord has a contingency plan in place in the event such internal systems are
not Year 2000 Compliant so that the production, ordering or shipment of Products
to PictureTel will not be interrupted.
PictureTel defines Year 2000 Compliance as:
12
(i) No value for current date will cause any interruption in operation
(General Integrity).
(ii) Date-based functionality must behave consistently for dates prior to,
during, and after the year 2000 (Date Integrity).
(iii) In all interfaces and data storage, the century in any date must be
specified either explicitly or by unambiguous algorithms or inferencing
rules (Explicit/Implicit Century).
Year 2000 must be recognized as a leap year (Leap Year).
C. If the Products are not in conformance with this warranty, then PictureTel
shall notify Accord in writing, except that such notice may be verbal if the
Products are not in conformance with the Year 2000 warranty. Accord shall issue
a Return Materials Authorization ("RMA") number within 24 hours following
notification and correct defects in Products at Accord's facility. Accord shall
repair or replace all defective Products within fifteen (15) days following
receipt of such Products. In the event Accord does not repair or replace such
Products within such fifteen (15) day period, then title to the returned
Products shall revert to Accord and the RMA shall be deemed closed. PictureTel
will receive credit on future orders for the amount paid of Products under each
closed RMA. Accord shall bear all warranty costs including, without limitation,
labor, material, inspection, and shipping to and from PictureTel's facility. If
PictureTel incurs any such cost, it may recover them directly from the Accord.
Replacement parts or components will be new or equivalent to new and warranted
for the remainder of the original warranty period for the Products, but in no
event less than ninety (90) days. Accord or its agent agrees to perform repairs
upon Products which are no longer covered by warranty at a reasonable charge
within fifteen (15) days after notification by PictureTel. PictureTel may
request RMA numbers and return RMA material from any PictureTel organization and
the repaired or replaced RMA material will be returned by Accord to the
PictureTel organization that requested the RMA.
D. PictureTel shall obtain warranty support by isolating the failed component
whenever possible and returning it to Accord during the applicable Warranty
Period. Upon verifying that the returned component has failed and is eligible
for warranty coverage, Accord will repair or replace the component under the
warranty, and will ship the repaired or replacement component to PictureTel.
PictureTel will be responsible for installing the repaired or replaced component
in the Product, and for testing the Product to verify that it is operable.
PictureTel shall bear the cost and risk of loss for shipment of components to
Accord. Accord shall bear the cost and risk of loss for return shipment of the
replaced component to PictureTel unless Accord determines that the Product did
not fail or was not eligible for warranty coverage, in which event PictureTel
will pay for handling, inspection, repair, and transportation at Accord's then-
current rates, and PictureTel will bear risk of loss for return shipment. At
the PictureTel's request Accord shall arrange for overnight shipment of the
replacement component. In such case, PictureTel shall bear the cost and risk of
loss of shipment. Replacements for component that are "dead on arrival" or fail
within thirty days of delivery to the end user shall be shipped by Accord within
24 hours of Accord's receipt of the request for replacement of the "dead" or
failed component.
E. Replacement Products and components will be warranted for the remainder of
the applicable Warranty Period or for 90 days from the date of return shipment,
whichever is greater. Replaced Products and components will become the property
of Accord upon their return to Accord. All warranty support will be provided at
Accord's standard intervals unless the parties agree to expedited warranty
support at additional charge to PictureTel. If Accord fails to repair or
replace a
13
Product that is eligible for warranty coverage under this Section 27, and such
failure continues for thirty (30) working days after PictureTel gives written
notice thereof to Accord, PictureTel shall have the right, as its sole and
exclusive remedy, to return the Product for a refund of the purchase price.
28. Warranty Exclusions
-------------------
A. EXCEPT AS STATED IN SECTION 27, PRELUDE, ITS SUBSIDIARIES, AND THEIR
RESPECTIVE AFFILIATES, SUBCONTRACTORS, AND PRELUDES, MAKE NO WARRANTIES, EXPRESS
OR IMPLIED, AND SPECIFICALLY DISCLAIM ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. THE ABOVE WARRANTIES ARE SOLELY FOR THE BENEFIT OF
PICTURETEL.
B. PRELUDE DOES NOT WARRANT UNINTERRUPTED OR ERROR FREE OPERATION OF THE
PRODUCTS. PRELUDE DOES NOT WARRANT THAT THE PRODUCTS WILL PREVENT, AND PRELUDE
WILL NOT BE RESPONSIBLE FOR, UNAUTHORIZED USE (OR CHARGES FOR SUCH USE) OF
COMMON CARRIER TELECOMMUNICATION SERVICES OR FACILITIES ACCESSED THROUGH OR
CONNECTED TO PRODUCTS.
C. THE ABOVE WARRANTIES WILL NOT COVER DAMAGE RESULTING FROM (i) FAILURE TO USE
A PRODUCT PROPERLY AND IN ACCORDANCE WITH SPECIFICATIONS AND INSTRUCTIONS; (ii)
IMPROPER INSTALATION; (iii) ACCIDENTS, NEGLECT, ACTS OF GOD OR MISUSE; (iv)
CAUSES NOT ARISING OUT OF DEFECTS IN MATERIAL OR WORKMANSHIP; (v) FAILURE OR
DEFECT OF ELECTRICAL POWER, EXTERNAL ELECTRICAL CIRCUITRY, AIR CONDITIONING OR
HUMIDITY CONTROL; (vi) THE USE OF ITEMS NOT PROVIDED BY OR APPROVED BY PRELUDE;
OR (vii) FAILURE TO PROMPTLY INSTALL UPDATES.
29. Repairs Not Covered By Warranty
-------------------------------
Subject to the terms and conditions of Exhibit 6:
A. If a Product failure during the applicable warranty period is outside the
scope of warranty coverage, or if a Product failure occurs after the applicable
Warranty Period, Accord will repair the failed component, at PictureTel's
discretion, either in accordance with Exhibit 6 or under its then-current
standard pricing schedule (plus applicable taxes, insurance, shipping, and
handling charges.
B. Repaired or replaced components will be warranted for 90 days from the date
of return shipment. Replaced components will become the property of Accord.
C. In addition to any requirement of Exhibit 6, the following information needs
to be supplied for each Product:
a. PictureTel Part Numbers assigned to each Field Replaceable Unit (FRU);
b. All appropriate service related documentation;
14
c. Complete specifications;
d. Component Xxxx of Materials to the FRU level;
e. Regulatory compliance specifications;
f. Manufacturing Part Numbers;
g. Calculated, hypothetical Product Performance Data, including Mean Time
Between Failure ("MTBF") statistics at the FRU level to allow PictureTel
to reasonably calculate spare part stocking levels.
30. Continuing Availability of Product and Parts
--------------------------------------------
It is the intent of the parties to finalize negotiations on this section with
thirty (30) days of the Effective Date, in such regard Accord agrees to
research, in good faith, PictureTel's request to receive a license to "make and
have made" the Products and/or replacement parts, and for the delivery on a
confidential basis of all necessary documentation, specifications, drawings,
source code, object code, firmware, and other data, including its sources for
raw material necessary to make such Products and/or replacement parts. Unless
agreed to otherwise the following terms shall apply:
A. Accord may discontinue availability of Products by giving PictureTel
eighteen (18) months prior written notice, provided that, at PictureTel's
option, Company shall: (a) sell to PictureTel sufficient quantities of Products
as PictureTel deems necessary; or (b) grant to PictureTel a non-exclusive,
worldwide license to use, sell, or otherwise dispose of said Products.
B. Accord agrees to make replacement parts (or their functional equivalent)
available for the Products until the earlier of 5 years after the Product has
been discontinued or 5 years after expiration or termination of this Agreement
or for as long as Accord makes the Products available to any of its customers.
Design, specifications, and features of such parts are subject to change
pursuant to Section 20. During the term of this Agreement, prices for such
parts will be determined in accordance with Section 5. After expiration or
termination of this Agreement, prices for such parts will be based on Accord
then-current list prices unless the parties otherwise agree. Following the five
(5) year period set forth above, Accord may discontinue availability of Products
by giving PictureTel eighteen (18) months prior written notice, provided that,
at PictureTel's option, Accord shall: (a) Grant to PictureTel a royalty-free,
non-exclusive, worldwide license to use, sell, or otherwise dispose of said
Products; or (b) Sell to PictureTel sufficient quantities of Products as
PictureTel deems necessary.
31. Regulatory Directives
---------------------
A. Before distributing a Product in any country or jurisdiction, Accord shall
ensure that the Product satisfies all applicable regulations, statutes,
directives, orders, standards, and other requirements (collectively "Regulatory
Directives") of that country or jurisdiction, including without limitation
telecommunications type approvals, safety standards, and electromagnetic
compatibility standards.
15
B. Exhibit 12 identifies, by Product, the countries and jurisdictions where
Accord represents and warrants that it has satisfied, or will satisfy according
to the schedule set forth in Exhibit 12, the applicable Regulatory Directives
for distribution of each Product. Accord shall be responsible for any and all
costs or expenses incurred with regard to obtaining or maintaining any such
certification for Tier I and Tier II countries. With regard to Tier III
countries the party first intending to make an installation into said country is
responsible for the cost or expense of obtaining such certification and is
required to extend the benefit of such certification to the other party at no
additional cost, provided, however, that should Accord make an installation in a
Tier III country (either directly or through a Accord reseller other than
PictureTel), Accord shall be responsible for maintaining the certification in
that country regardless of which party incurred the original certification
expense.
32. ISO Certification
-----------------
Accord has obtained ISO 9002 Certification from its suppliers.
33. Relationship of the Parties
---------------------------
A. The parties acknowledge that, other than as expressly provided herein,
neither has an exclusive right to obtain or market Products, and no franchise is
granted herein. Both parties expressly reserve the right to market products,
obtained from any source, in competition with the other.
B. The relationship of the parties under this Agreement shall be, and at all
times remain, one of independent contractors and not that of franchiser and
franchisee, joint venturers, or principal and agent. Neither party shall have
any authority to assume or create obligations on the other's behalf, and neither
party shall take any action which has the effect of creating the appearance of
its having such authority.
C. Neither party is, or shall hold itself out to be, the representative of the
other. PictureTel shall market Products to customers on such terms, conditions,
and prices as PictureTel chooses, provided PictureTel does not violate this
Agreement.
D. All persons furnished by PictureTel shall be considered solely PictureTel's
employees or agents, and PictureTel shall be responsible for payment of all
unemployment, Social Security, and other payroll taxes including contributions
from them when required by law.
34. Training
--------
A. PictureTel agrees to establish a training program to instruct PictureTel's
sales, installation, maintenance, and technical personnel (and those of its
dealers and distributors) with respect to the Products. PictureTel shall ensure
that such personnel have been adequately trained before PictureTel begins
marketing Products to PictureTel's customers, distributors or dealers.
B. At no additional charge, Accord will provide 2 initial Product training
sessions for PictureTel's instructors and for PictureTel's Relationship Manager
(as defined in Section 48) for Products in Exhibit 1. One session will cover
Sales/Marketing issues and the other session will cover Technical issues
including installation and maintenance. Thereafter, Accord will offer additional
sales and sales engineering training at each major Product release or quarterly,
at no charge at a location
16
mutually agreed upon by the parties, and whenever Accord determines that further
instruction is needed. Customer support training will be provided pursuant to
Exhibit 6.
C. Accord, in its reasonable discretion, will determine the mutually agreed
upon duration, content, medium, date, and time for all training. Accord may
elect to furnish training in person or by means of distance learning technology.
If offered in person, the training will be at a location designated by Accord,
and PictureTel will bear all travel, lodging, and other costs incurred by its
personnel. Accord licenses PictureTel, on a royalty-free basis, to make a
reasonable number of copies of Accord's copyrighted training materials, provided
that each copy bears the same Accord copyright notice and proprietary rights
marking as the original, and provided further that PictureTel uses those
materials solely for the purpose of training PictureTel's employees in
connection with the Products.
D. Accord agrees to offer other training for PictureTel's personnel or
PictureTel's authorized third parties pursuant to Exhibit 6.
35. Accord Tier IV Support
----------------------
PictureTel will provide Tier I and Tier II support. Accord will provide Tier III
field level support pursuant to Exhibit 6. Accord will provide Tier IV (R&D)
interface support to the highest level tier of the PictureTel's service support
organization pursuant to Exhibit 6. Accord will designate one or more
individuals ("Tier IV Interface") to provide such support which will be provided
by telephone or email, at no charge, 24 hours a day. This Tier IV support
consists of Accord's last level of technical support for trouble resolution.
Tier 4 support will be sought only after PictureTel's service support
organization has exhausted all appropriate avenues for diagnosing and resolving
troubles (e.g. procedures contained in Product documentation, troubleshooting
directly with customers and/or dealers, verifying the trouble by replication)
prior to placing a call or sending email to the Accord Tier IV Interface.
36. Forecasts
---------
A. On a quarterly basis, PictureTel shall provide in writing to Accord a non-
binding rolling 12-month forecast of PictureTel's anticipated Product purchases,
itemized as follows:
- Projected total unit volume of each Product to be ordered during the
ensuing 12 months
B. The first such forecast shall be due within 45 days from the Effective Date.
Thereafter, an updated forecast shall be due not later than 30 days prior to the
start of each calendar quarter.
C. The projections in each forecast shall be based on good faith estimates, and
shall not obligate PictureTel to purchase that quantity of Products. If
PictureTel becomes aware of any changed circumstance, information, or plan that
could materially alter the projections set forth in PictureTel's most recent
forecast, PictureTel shall use reasonable efforts to notify the Accord
Relationship Manager.
37. Information Sharing
-------------------
A. PictureTel shall provide reasonable cooperation with efforts by Accord to
improve the functionality, quality, reliability, interoperability, and cost-
effectiveness of the Products. If
17
PictureTel becomes aware of any actual or suspected defects, safety problems,
customer complaints, or claims relating to any Product, PictureTel shall
promptly notify Accord.
B. At least quarterly, PictureTel shall furnish information reasonably
requested by Accord for the purpose of evaluating possible future development of
Products, including without limitation PictureTel's suggestions for
modifications or improvements to the Products.
C. At least quarterly, PictureTel shall furnish information reasonably
requested by Accord for the purpose of measuring and improving the quality of
Accord internal processes, including without limitation the provisioning,
maintenance, and billing processes.
D. On a regular basis, but in any event before beta testing begins, Accord will
inform PictureTel of any new product that Accord is intending to distribute. If
PictureTel determines that it desires to distribute said new product, then
Accord will negotiate with PictureTel, in good faith, in order to accomplish
said distribution.
38. Co-Marketing Funds
------------------
Within forty-five (45) days of the Effective Date of this Agreement, Accord and
PictureTel shall set up a Co-Marketing escrow fund, pursuant to a third party
escrow agreement, to support potential additional marketing issues between the
parties. The parties will within said 45 days mutually agree upon the use of
these funds. The sum contained in this escrow fund shall be funded in an amount
equal to [***] of the net price for each Product acquired by PictureTel under
this Agreement to a maximum of [***]. Any amount of funds not utilized or being
utilized at the end of the term of this Agreement as set forth in Section 2,
will be released from escrow to Accord.
39. Compliance with Applicable Laws
-------------------------------
PictureTel agrees to comply (and to cause its dealers and distributors to
comply) with all applicable requirements of law worldwide (including without
limitation federal, state, and local laws, ordinances, administrative rules, and
regulations) in every jurisdiction in which Products are marketed, sold,
purchased, licensed, shipped, or installed. In particular, and without limiting
the foregoing, PictureTel and its dealers and distributors shall comply with the
requirements of 47 CFR, Parts 2 (Subpart j), and the U.S. Export Administration
Regulations. To this effect, PictureTel and its dealers and distributors shall:
(1) require their respective customers to assume in writing the obligation not
to re-export Products, or parts thereof, in violation of such regulations; and
(2) be responsible for obtaining, and require their respective customers to
obtain, any and all necessary export licenses for Products; and (3) if requested
by Accord, sign written assurances and other export-related documents as may be
required for Accord to comply with U.S. export regulations. In those cases
where such customers are not permitted or able to obtain export licenses for any
country, PictureTel shall be responsible for obtaining such licenses on behalf
of such customers.
----------------------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
18
40. Sales to Government
-------------------
A. PictureTel shall take all necessary steps to ensure that the intellectual
property rights of Accord are not impaired through PictureTel's offer, sale,
lease, or license of a Product (either directly or through PictureTel's dealer
or distributor) to a governmental entity in the United States or abroad.
B. If PictureTel or its dealer or distributor furnishes Products to the United
States government or any agency, instrumentality, or contractor thereof,
PictureTel shall ensure that the applicable contract includes a restricted
rights clause satisfactory to Accord.
41. Infringement Indemnification by Accord
--------------------------------------
A. Notwithstanding any warranty provisions, Accord will defend or settle, at
its own expense, any action or claim brought against PictureTel, to the extent
that it is based on a claim that a Product (as such is defined in Exhibit 1)
provided under this Agreement infringes any patent, trademark, trade secret, or
copyright. In addition, Accord will pay all costs, expenses (including
attorneys' fees) and damages incurred by or against PictureTel or its dealers,
distributors, and customers in any such action or claim. Notwithstanding the
above, in no event shall Accord's liability exceed the actual amount paid by
PictureTel for the Accord Products. Each of the obligations of Accord under this
Section 42 is subject to the following conditions:
1.) PictureTel must promptly notify Accord of any such claim.
2.) Accord shall have sole control of the defense of any action on such
claim and of all negotiations for its settlement or compromise.
3.) PictureTel and its dealers, distributors, and customers shall
cooperate in every reasonable way to facilitate the settlement or
defense of such claim, and shall make no statement and take no action
which might hamper or undermine the defense or settlement by Accord.
4.) The claim must not arise from Product modifications not performed
by Accord, or from use or combination of the Products with software
and/or apparatus or equipment not supplied or specified by Accord.
5.) The claim must not arise solely from adherence to PictureTel's
instructions or from infringing items of PictureTel's origin, design,
selection, or authorship.
6.) Each of PictureTel's contracts to furnish any Product must require
the dealer, distributor, or customer (as applicable) to allow Accord to
eliminate or mitigate infringement by taking the reasonable actions
described in Section 42.B.
B. If any Product is or becomes the subject of a claim of infringement,
PictureTel shall allow (and PictureTel shall cause its dealers, distributors,
and customers to allow) Accord to take any or all of the following actions at
Accord's option and sole expense:
1.) to procure for PictureTel and its dealers, distributors, and
customers the right to continue using and marketing the Products, or
19
2.) to replace the infringing Product with a non-infringing Product
substantially complying with the infringing Product's specifications.
42. Insurance
---------
A. At all times during the term of this Agreement, Accord and PictureTel each
shall maintain Comprehensive General Liability (ISO 1988 or later) occurrence
form of insurance, including contractual liability, with limits of at least
$2,000,000 combined single limit for Bodily Injury and Property Damage liability
for each occurrence.
B. At all times during the term of this Agreement, PictureTel shall maintain
the following insurance coverage:
1.) Workers' Compensation insurance as prescribed by the laws of the
applicable states or other jurisdictions.
2.) Employer's liability insurance with limits of at least $500,000 each
occurrence.
3.) Automobile Liability insurance with limits of at least $2,000,000
combined single limit for Bodily Injury and Property Damage for each
occurrence.
C. At all times during the term of this Agreement, and for not less than 1 year
after expiration or termination of this Agreement, Accord and PictureTel each
shall maintain Products/Completed Operations insurance with limits of at least
$5,000,000 per occurrence.
D. At all times during the term of this Agreement, and for not less than 1 year
after expiration or termination of this Agreement, Accord shall maintain Errors
and Omissions or Professional Liability insurance in the amount of at least
$1,000,000 per claim and $2,000,000 in the aggregate.
E. Total per occurrence limits for Automobile Liability and Comprehensive
General Liability coverage may be satisfied with any combination of primary and
umbrella or excess liability policies totaling the amount of required insurance.
F. Accord's Comprehensive General Liability and Automobile Liability insurance
shall designate PictureTel, its affiliates and subsidiaries, and their
respective directors, officers, and employees as additional insureds. All such
Accord insurance policies should be primary and non-contributory, and shall
respond and pay prior to any other insurance or self-insurance available. Any
other coverage available to the PictureTel shall apply on an excess basis.
Accord agrees that Accord, Accord's insurers, and anyone claiming by, through,
under or in Accord's behalf shall have no claim, right of action, or right of
subrogation against PictureTel based upon any loss or liability insured against
under the foregoing insurance.
G. Each party, upon request of the other party, shall furnish a certificate of
insurance attesting to the coverage described in this Section 43. Each party
shall notify the other party in writing at least 30 days prior to cancellation
of or change in a policy. Insurance companies providing coverage will be rated
by A.M. Best with at least an A-rating.
20
43. Limitation of Liability
-----------------------
A. THE ENTIRE LIABILITY OF EACH PARTY AND ITS RESPECTIVE SUBSIDIARIES,
AFFILIATES, AND SUBCONTRACTORS, AND THE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
REPRESENTATIVES, SUBCONTRACTORS, AND SUPPLIERS OF EACH OF THEM, AND THE
EXCLUSIVE REMEDIES FOR ANY DAMAGES CAUSED BY ANY PRODUCT DEFECT OR FAILURE, OR
ARISING FROM THE PERFORMANCE OR NON-PERFORMANCE OF ANY WORK, OR OTHERWISE
ARISING IN CONNECTION WITH THIS AGREEMENT, SHALL BE:
1.) FOR INFRINGEMENT BY A PRELUDE PRODUCT, THE REMEDIES STATED IN SECTION
42.
2.) FOR PRODUCT DEFECT OR FAILURE DURING THE WARRANTY PERIOD, THE REMEDIES
STATED IN SECTION 27.
3.) FOR DELAYS IN THE DELIVERY DATE, PRELUDE SHALL HAVE NO LIABILITY UNLESS
THE DELIVERY OR IN-SERVICE DATE IS DELAYED BY MORE THAN 15 DAYS BY
CAUSES NOT ATTRIBUTABLE TO PICTURETEL, ITS CUSTOMER, DEALERS OR
DISTRIBUTORS, OR FORCE MAJEURE CONDITIONS, IN WHICH CASE PICTURETEL'S
SOLE REMEDY SHALL BE TO CANCEL THE ORDER WITHOUT INCURRING CANCELLATION
CHARGES.
4.) FOR DAMAGES TO REAL OR TANGIBLE PERSONAL PROPERTY OR FOR BODILY INJURY
OR DEATH TO ANY PERSON FOR WHICH THE OTHER PARTY'S NEGLIGENCE WAS THE
PROXIMATE CAUSE, THE DAMAGED PARTY SHALL HAVE THE RIGHT TO PROVEN
DAMAGES TO SUCH PROPERTY OR PERSON.
5.) FOR CLAIMS OTHER THAN SET FORTH ABOVE, EACH PARTY'S LIABILITY SHALL BE
LIMITED TO PROVEN DIRECT DAMAGES IN AN AMOUNT NOT TO EXCEED $500,000.
B. NOTWITHSTANDING ANYTHING TO THE CONTRARY ELSEWHERE IN THIS AGREEMENT,
NEITHER PARTY SHALL BE LIABLE FOR ANY OF THE FOLLOWING DAMAGES, IRRESPECTIVE OF
WHETHER THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES:
1.) INDIRECT OR INCIDENTAL; OR
2.) SPECIAL, PUNITIVE OR CONSEQUENTIAL (INCLUDING BUT NOT LIMITED TO LOST
PROFITS, SAVINGS, OR REVENUES OF ANY KIND); OR
3.) CHARGES FOR COMMON CARRIER TELECOMMUNICATION SERVICES OR FACILITIES
ACCESSED THROUGH OR CONNECTED TO PRODUCTS (TOLL FRAUD).
21
C. THIS SECTION 44 SURVIVES THE FAILURE OF ANY EXCLUSIVE REMEDY.
D. EACH PARTY SPECIFICALLY AGREES THAT THE LIMITATION OF LIABILITIES SET FORTH
IN THIS SECTION 44 SHALL APPLY REGARDLESS OF THE FORM OF ACTION, WHETHER IN
CONTRACT, TORT INCLUDING NEGLIGENCE, STRICT LIABILITY, OR OTHERWISE.
44. Force Majeure
-------------
Neither party shall be held responsible for any delay or failure in performance
of any part of this Agreement or an order to the extent such delay or failure is
caused by Force Majeure, which is defined to include fire, flood, explosion,
war, strike, embargo, government requirement, civil or military authority, act
of God, act or omission of carriers, computer failures, or other similar causes
beyond its control and without the fault or negligence of the delayed or non-
performing party or its subcontractors, whether or not similar to the foregoing.
45. Proprietary Information
-----------------------
A. In connection with this Agreement, each party may have occasion to disclose
its proprietary information to the other party. Any such information that has
been designated as proprietary or confidential pursuant to Section 46.B or
Section 46.C (hereinafter "Information") shall be subject to the provisions of
this Section 46. Such Information:
1.) may take the form of documentation, drawings, specifications,
prototypes, software, technical or engineering data, product or market
plans, forecasts, price lists, customer data, business information, and
other forms;
2.) may be communicated orally, in writing, by electronic or magnetic
media, by visual observation, and by other means; and
3.) also includes any copies, reports, analyses, studies, or other
materials, whether prepared by the receiving party or otherwise, that
contain or are based upon Information.
B. Except as otherwise provided in Section 46.C:
1.) when Information is furnished in a written form, the disclosing
party shall clearly xxxx the Information as proprietary or confidential
or otherwise subject to the limited distribution described in this
Agreement; and
2.) when Information is provided in an unwritten form, the disclosing
party shall, at the time of disclosure, clearly identify the
Information as being proprietary or confidential or otherwise subject
to the limited distribution described in this Agreement.
C. The following are hereby designated to be Information, and need not be
marked or identified as such pursuant to Section 46.B:
1.) The confidential prototypes, plans, and specifications for each
party's unannounced future products shall be deemed Information of that
party.
22
2.) The identities, locations, requirements, and communications systems
of each party's customers and prospective customers shall be deemed
Information of that party.
3.) The volumes of Products purchased by PictureTel shall be deemed
Information of PictureTel, but may be disclosed by Accord as part of
aggregated or general data that does not identify PictureTel's specific
purchasing volumes.
4.) The terms, conditions, prices, and discounts under which Accord
offers or provides Products to PictureTel shall be deemed Information
of Accord.
D. Throughout the term of this Agreement and for a period of three years after
any expiration or termination of this Agreement, the party to whom Information
is disclosed and its employees shall:
1.) hold the Information in confidence, exercising a degree of care not
less than the care used by such party to protect its own proprietary or
confidential information that it does not wish to disclose;
2.) restrict disclosure of the Information solely to those employees
with a need to know, and not disclose it to any other person;
3.) advise those employees of their obligations with respect to the
Information; and
4.) use the Information only for purposes of performing this Agreement,
except as may otherwise be mutually agreed upon in writing, and
reproduce such Information only to the extent necessary for such
purpose.
E. If Accord uses a contractor for the performance of any part of its duties
under this Agreement, Accord may disclose PictureTel's Information to such
contractor for that purpose, provided that the contractor has entered into a
confidentiality agreement with Accord. If any of PictureTel's contractors,
dealers, or distributors has a need to know Accord's Information in order to
market, configure, install, or service Accord Products on PictureTel's behalf,
PictureTel may disclose the Information to such person for that purpose,
provided such person has entered into a confidentiality agreement with
PictureTel.
F. Information shall be deemed the property of the disclosing party and, upon
request, the other party will return all Information received in tangible form
to the disclosing party or will destroy all such Information. If either party
loses or makes an unauthorized disclosure of the other party's Information, it
shall notify such other party immediately and use reasonable efforts to retrieve
the lost or wrongfully disclosed Information.
G. The party to whom Information is disclosed shall have no obligation to
preserve the proprietary nature of any Information which:
1.) was previously known to such party free of any obligation to keep
it confidential; or
2.) is or becomes publicly available by means other than unauthorized
disclosure; or
23
3.) is developed by or on behalf of such party independent of any
Information furnished under this Agreement; or
4.) is received from a third party whose disclosure does not violate
any confidentiality obligation.
H. In the event that the receiving party becomes compelled by lawful process
(such as interrogatories, subpoenas, or civil investigative demands) to disclose
any Information, the receiving party shall provide the disclosing party with
prompt written notice so that the disclosing party may seek a protective order
or other appropriate remedy, or both, or waive compliance with the provisions of
this Agreement. In the event that the disclosing party is unable to obtain a
protective order or other appropriate remedy, or if the disclosing party so
directs, the receiving party shall endeavor in good faith to obtain a protective
order or other appropriate remedy at the disclosing party's reasonable expense.
Failing the entry of a protective order or other appropriate remedy or receipt
of a waiver hereunder, the receiving party shall furnish only that portion of
the Information which it is advised by written opinion of its counsel is legally
required to be furnished and shall endeavor in good faith to obtain reliable
assurance that confidential treatment shall be accorded such Information.
I. Except as otherwise expressly provided elsewhere in this Agreement, neither
this Agreement nor the disclosure of Information hereunder shall be construed as
granting or conferring any rights by license or otherwise in any Information
disclosed, or under any trademark, patent, copyright, mask work, or any other
intellectual property right of either party.
J. The parties acknowledge that money damages might not be sufficient remedy
for breach of this Section 46. Accordingly, the parties agree that a non-
breaching party shall be entitled to seek specific performance and injunctive
relief as remedies for such breach of Section 46, which shall be in addition to
all other remedies available at law or equity, including money damages.
46. Termination
-----------
A. Either party may terminate this Agreement for default upon 30 days' prior
written notice if the other party has materially defaulted in performance or has
materially breached its obligations under this Agreement, and such breach or
default remains uncured for a period of 30 days following receipt of written
notice of such breach or default.
B. Either party may terminate this Agreement, without liability, except for the
payments of amounts then due and owing the other party, by notice in writing:
(i) if the other party makes an assignment for the benefit of creditors (other
than solely an assignment of monies due); or (ii) if the other party evidences
an inability to pay debts as they become due, unless adequate assurance of such
ability to pay is provided within thirty (30) days of such written notice. If a
proceeding is commenced under any provision of the United States Bankruptcy
Code, voluntary or involuntary, by or against either party, and this Agreement
has not been terminated, the non-debtor party may file a request with the
bankruptcy court to have the court set a date within sixty (60) days after the
commencement of the case, by which the debtor party will assume or reject this
Agreement, and the
24
debtor party shall cooperate and take whatever steps necessary to assume or
reject the Agreement by such date.
47. Relationship Manager
--------------------
The Relationship Manager for each party as of the Effective Date is identified
in Exhibit 14. Each party may unilaterally change the identity or address of
its Relationship Manager at any time by giving prior written notice to the other
party.
48. Notices
-------
A. The Receiver of Notices for each party as of the Effective Date is
identified in Exhibit 15. Each party may unilaterally change the identity or
address of its Receiver of Notices at any time by giving prior written notice to
the other party.
B. Any notice or demand which under the terms of this Agreement or under any
statute must or may be given or made by Accord or PictureTel shall be in writing
and shall be given or made by hand delivery or overnight courier; or by
certified or registered mail, addressed to the respective party's Receiver of
Notices. Such notice or demand shall be deemed to have been given or made when
received.
49. Assignments
-----------
A. Except as otherwise provided in Section 50.B, neither party may assign this
Agreement, or assign its rights or delegate its obligations under this
Agreement, without the express written consent of the other party.
B. Accord without restriction may assign its right to receive payments under
this Agreement. In addition, either party may assign this Agreement, and may
assign its rights and delegate its obligations under this Agreement, to any
present or future parent, subsidiary, or affiliate. Upon such assignment and
delegation, the assigning/delegating party shall be released and discharged, to
the extent of the assignment and delegation, from all further duties under this
Agreement as to Products. Notwithstanding the foregoing, each party is expressly
authorized to assign this Agreement to any of its current or future majority
owned subsidiaries, provided said subsidiary is reasonably capable of fulfilling
its obligations hereunder.
50. Governing Law
-------------
The parties expressly intend and agree that the construction, interpretation,
and performance of this Agreement and all transactions under it shall be
governed by the laws of the Commonwealth of Massachusetts, excluding its choice
of law rules and excluding the Convention for the International Sale of Goods.
Each party agrees to submit to the jurisdiction of any court in either
Massachusetts or Georgia wherein an action is commenced against such party based
on a claim under this Agreement.
25
51. Intentionally left blank
------------------------
52. Survival
--------
A. The obligations of the parties under this Agreement and any order issued
pursuant to this Agreement, which by their nature would continue beyond the
termination, cancellation, or expiration of this Agreement or any order,
including, by way of illustration only and not limitation, those in Sections 11,
21, 30, 31, 40, 41, 42, 43, 44, 46 and 51 shall survive termination,
cancellation, or expiration of this Agreement or any order hereunder.
B. In addition to the survival provisions of Section 53.A, if this Agreement
expires or is terminated during the Warranty Period for any Product sold
hereunder, all terms and conditions pertaining to the warranty shall survive for
the remainder of such Warranty Period.
53. No Waiver
---------
The failure of either party at any time to enforce any right or remedy available
to it under this Agreement or any order, or otherwise with respect to any breach
or failure by the other party, shall not be construed to be a waiver of such
right or remedy with respect to any other breach or failure by the other party.
54. Titles
------
The headings of the clauses in this Agreement are inserted for convenience only
and are not intended to affect the meaning or interpretation of this Agreement.
55. Severability
------------
If any provision or part hereof shall be held to be invalid or unenforceable for
any reason, then the meaning of such provision or part hereof shall be construed
so as to render it enforceable to the extent feasible. If no feasible
interpretation would save such provision or part hereof, it shall be severed
from the Agreement, but without in any way affecting the remainder of such
provision or any other provision contained herein, all of which shall continue
in full force and effect unless such severance effects such a material change as
to render the Agreement unreasonable.
56. Integration
-----------
This Agreement (including the annexed Exhibits, which are incorporated by
reference herein and made a part hereof) supersedes all prior oral or written
understandings between the parties and constitutes the entire Agreement between
the parties as to the subject matter of this Agreement. Except for preexisting
confidentiality agreements between the parties, which shall continue to govern
if more restrictive than the terms of this Agreement, there are no
understandings or representations, express or implied, not expressly set forth
in this Agreement. Except as otherwise provided herein, this Agreement shall
not be modified or amended except by a writing signed by both parties, and no
changes or additions to this Agreement shall be binding on a party unless signed
by an authorized representative (vice president level or higher) of the other
party.
26
IN WITNESS WHEREOF, each party has caused this Agreement to be executed by its
authorized representative on the date(s) indicated.
PICTURETEL CORPORATION ACCORD NETWORKS, INC.
By: /s/ [Illegible Signature] By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------- ----------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxxxx
------------------------- --------------------------
Title: VP and CFO Title: VP-Business Development
------------------------ -------------------------
Date: 1/21/00 Date: 1/26/00
------------------------- -------------------------
27
EXHIBIT 1
---------
GENERAL DESCRIPTION OF PRODUCTS
-------------------------------
Product Description
-------------------
The MGC-100 is a Next Generation ITU-compliant Multipoint Control Unit
(MCU)/gateway solution. It enables live, interactive multimedia communication
between two or more audio, video and/or data endpoints from ISDN, IP and/or ATM
networks.
[Graphical Depiction of MGC-100]
The MGC-100
The MGC-100 is the first MCU to combine a robust telecom architecture that
includes a super-fast 256 Mbps backplane, front-accessible hot-swappable
modules, redundancy, on-line software downloads and comprehensive diagnostics -
with the ease of use of a user-friendly, powerful reservation and management
system. The MGC comes in a single-shelf model which supports the highest
capacities in the industry. Participants from ISDN, IP, and/or ATM networks can
all connect to the same MCU for seamless interconnectivity and centralized
management.
1. Key Attributes
--------------
The MGC's Advanced Continuous Presence represents a breakthrough in terms of
viewing flexibility and conference interaction. It offers multiple viewing
modes: 2 symmetrical sites, 4 symmetrical sites, 5+1 mixed view images (5
small images arranged around one larger image) and 9 symmetrical sites.
[Graphical depiction of five different viewing modes: (a) two screens with one
on top of other, (b) two screens side by side; (c) four screens with two screens
on top of two screens; (d) six screens with one large screen in top left corner
with five smaller screens on right side and across bottom of screen; and (e)
nine symmetrical screens.]
The MGC's Multiway Transcoding automatically identifies the bit rate, frame
rate, video resolution, audio compression and T.120 transfer rate for each
endpoint and performs any necessary translations "on the fly". Not only does
this capability make set-up fast and seamless for both point-to-point and
multipoint calls but it also ensures that each endpoint operates at all of its
optimal capabilities.
28
Designed with a powerful Telecom Architecture, allowing redundant modules and
power supplies, a universal slot chassis and automatic resource allocation, the
MGC provides continuous multipoint service for all calls, even in the most
rigorous conferencing environments.
The MGC Manager is a Windows95/NT-based application that provides the entire
interface necessary to manage conferences, make reservations for multi-point
conferences and provide maintenance and monitoring functions into the MGC-100.
The MGC Manager that runs on a customer-provided PC quickly and easily connects
to and manages multiple MGC-100s via the Internet, LAN, dial-up modem, or RS-232
interface.
System Components
The MGC is comprised of several key components, or building blocks, that can be
combined and recombined in a variety of different configurations to suit a wide
range of user needs. They are:
. Control Unit: performs conference set-up, conference tear-down, resource
allocation and controls the flow of audio, video and data between the modules
connected to the high speed bus. It is packaged as a front-removable, plug-in
element for easy service during operation.
. Redundant Power Supply Units: each provides power to the MGC using 110/220
volts AC - 50/60 Hz.
. Network Interface: interfaces between the MGC and the customer network.
. Video/Mux Processor: (H.221 and IMUX bonding mode 1): Multiplexes and
demultiplexes audio, video, data and control information and performs channel
aggregation.
. Audio Module: performs audio compression for X.000, X.000, X.000 xxx X.000
xxxxxxxxxx.
. Video Module: performs Dynamic Continuous Presence and Multiway Transcoding.
. T.120 Module: performs data routing to support the T.120 standard.
29
EXHIBIT 2
BRANDING
If PictureTel is distributing the Accord product without PictureTel-specific
enhancements, the phrase "A PictureTel Visual Collaboration Solution" should be
used. For the Accord product, this wording will be on the chassis of the
product beneath the manufacturer's name and product model number. Accord must
obtain PictureTel's written approval for this representation of this phrase on
the Accord product.
INGREDIENT BRANDING
If PictureTel technology is included in the product, PictureTel's ingredient
brand must be used. The ingredient brand is "PictureTel Powered" and is
represented below. The ingredient brand should be included in the
documentation, on the MCU chassis in the lower left corner, on the software
wallpaper, and on the UI mainscreen. Accord must obtain PictureTel's written
approval for the representation and placement of the PictureTel Powered brand.
[Graphical Depiction of PictureTel brand]
The PictureTel Powered logo is comprised of three elements: The PictureTel
corporate signature formatted vertically above a red swish and the word
`powered'. The PictureTel logo must be used as defined in this exhibit.
To maximize the impact and visibility of the corporate insignia when positioned
alongside text or graphics, the signature should always be surrounded by a space
margin. This margin is equal to the height of the screen (x) in the PictureTel
symbol, and should be maintained above, below and to either side of the
PictureTel insignia. No words, symbols or illustrative matter should intrude
into this area.
The minimum size of the vertical corporate signatures is .5 inches (13mm) wide
Because the corporate signature has been carefully designed to provide the
greatest visibility and harmony for it's elements, in order to distinguish the
corporate signature as a legal trademark, never:
. separate the symbol from the logotype
. recreate or alter proportions or rearrange the elements under any
circumstances,
. incorporate the logo into a sentence or use it in a possessive form,
. fill the screen or eye area with any graphic elements inside the screen area
. fill the screen or eye area with color
. substitute another typeface for the logotype, or
. substitute another name or use another name in conjunction with the symbol.
C O L O R S
The PictureTel corporate identity system is made up of two colors that have been
chosen for their visibility, positive interaction, and boldness - PMS (Pantone
Matching System) 199 red and black. If the signature is being used against a
dark background color, such as black, the signature may be reproduced using PMS
199
30
red and white. The screen, camera swish and base are always red and the camera
eye and logotype are always the same color - either black or white.
Additionally, it is preferred that actual spot color (PMS 199) be used to
reproduce the red color of the corporate signature. If only process colors
(CMYK) are available, the Pantone-certified formula for PMS 199 red is
100%M/65%Y.
The corporate signature may also be produced using one color. This is
recommended when size or printing technique may result in unclear reproduction
or use of the wrong PMS color. Permitted options include all black or all white
reversed out of a dark background; in a neutral color such as silver or gold; or
tone-on-tone effects achieved through the use of varnishes or embossing. Never
reproduce the signature in any color or combination other than those specified
here.
31
EXHIBIT 3 -
---------
LICENSE PERMITTING USE OF THE TECHNICAL INFORMATION
---------------------------------------------------
License Granting Accord the right to include PictureTel Features. The parties
will mutually agree upon the terms of license within 45 days of the Effective
Date.
32
EXHIBIT 4 - PRICE LIST
--------- ----------
PictureTel Price List
Unit Disc
Part Number Item Description Price Class
Base Units
SYS0152 Base Unit-16;Rack 16-slot chassis with control unit $22,300 A
PWR0549 Power Supply supports 320W (approximately 9 modules) $ 2,300 D
ASY0182 Control Unit performs control functions for a single chassis $12,000 A
Hardware
BRD0898 Video/MUX-8 for initial 8 sites; module supports 8 sites at up to
768 kbps or 4 sites at T1/E1 $10,900 A
BRD0445 Video/MUX-16 supports 16 sites at up to 384 kbps, 8 sites at
448-768 kbps or 4 sites at T1/E1 $17,000 A
KIT1086 N/I T1-2 supports up to 2 T1 PRI or Leased Line connections $ 8,400 A
KIT1085 X/X X0-0 supports up to 2 E1 PRI or Leased Line connections $ 8,400 A
KIT1155 NET-2 PRI** supports up to 2 PRI or Leased Line connections $ 8,400 A
KIT1156 NET-4 PRI** supports up to 4 PRI or Leased Line connections $16,000 A
KIT1157 NET-8 PRI** supports up to 8 PRI or Leased Line connections $28,000 A
KIT1423 NET-8 Leased supports up to 8 Leased Line connections $15,000 A
KIT1338 MPI - 4 Module** supports up to 4 V.35, RS449, RS366 or EIA-530 connections $ 6,000 A
KIT1337 MPI - 8 Module** supports up to 8 V.35, RS449, RS366 or EIA-530 connections $12,000 A
CON2012 V.35 Adapter V.35 physical interface adapter mini-cable $ 0 D
CON2013 RS-530 Adapter RS-530 physical interface adapter mini-cable $ 0 D
CBL1357 1M MPI Cable Cable connecting the MPI module with MPI Box, up to
4 cables per Box $ 0 D
CBL2010 5M MPI Cable Cable connecting the MPI module with MPI Box, up to
4 cables per Box $ 0 D
KIT2010 MPI-8 Box supports up to 16 RS-449 serial connections + 16 RS-366
dialing ports $ 0 D
KIT1158 ATM 25 Mbps supports up to 60 B channels of ISDN over ATM $15,000 B
KIT1159 ATM 155 Mbps supports up to 120 B channels of ISDN over ATM $30,000 B
KIT1160 MG323 supports up to 12 H.323 sites at up to 384 Kbps $15,000 A
BRD1046 Audio Module - 12 supports up to 12 sites $15,700 A
KIT1109 Greet & Guide Package h/w for one audio module, operator software + upgrade
price for installed MCUs $20,000 A
SYS1246 TTCM-4 Touch Tone Conference Management server; 4 ports $18,000 B
SYS1247 TTCM-8 Touch Tone Conference Management server; 8 ports $30,000 B
SYS1248 TTCM-16 Touch Tone Conference Management server; 16 ports $55,000 B
BRD0899 T.120 Module - 12 supports T.120 for up to 12 (H.320/H.321) sites $ 9,300 A
BRD0537 TX/CP Mod - 6 supports continuous presence and/or transcoding
for up to 6 sites $18,000 A
BRD0630 TX/CP Mod - 12 supports continuous presence and/or transcoding
for up to 12 sites $36,000 A
Software
SWL0697 H.320/ATM Ports 1-8 Port License for 1-8 H.320 or ATM sites No Charge A
SWL0698 H.320/ATM Ports 9-16 Port License for 1-16 H.320 or ATM sites $30,000 A
SWL0699 H.320/ATM Ports 17-20 Port License for 1-20 H.320 or ATM sites $65,000 A
SWL0749 H.320/ATM Ports 21-28 Port License for 1-28 H.320 or ATM sites $75,000 A
SWL0700 H.320/ATM Ports add. 4 Per additional 4 H.320 or ATM sites after initial 28 $10,000 A
33
Unit Disc
Part Number Item Description Price Class
SWL0901 MGC-Manager Includes scheduler, conference manager, CDR and full
MCU resource display. Accessible via modem, RS-232 direct
line, LAN or remote Internet. No Charge A
SWL0701 BONDING License-8 for initial 8 sites $13,500 A
SWL0702 BONDING License-16 per 16 sites $21,000 A
SWL0703 T.120 (H.320) License License per T.120 (H.320/H321) site $ 830 A
SWL0704 Cont. Pres. Lic. - 6 software license per 6 sites of H.320/H.321 Continuous
Presence $ 5,000 A
SWL0705 TX Lic. - 6 software license per 6 sites of H.320/H.321 Transcoding $ 5,000 A
SWL0707 High Bit Rate CP/TC-6 software license per 6 sites of H.320/H.321 CP and TC
at rates up to E1 $ 5,000 D
SWL0900 SDK-API Software Developers' Kit - Application Programming
Interface: a programming environment for creating specific
software applications for the MCU. $ 8,000 D
SWL0706 Operator workstation per station; requires Xxx00, Xxx00 or Win NT PC,
license at least 16MB RAM, 30MB free disk space, Ethernet card,
3.5" floppy drive or CD ROM. $ 450 A
Shipping includes shipping, insurance & handling; Delivered Duty Unpaid (DDU)
MGC-100 Chassis and Cards each) $ 1,600 D
Functional Modules 1 - 2 Modules (each shipment) $ 150 D
Functional Modules 3 to 5 Modules (each shipment) $ 200 D
Control Module 1 Module (each shipment) $ 200 D
Power Supply 1 Supply (each shipment) $ 200 D
Discount Classes: A = [***]
B = [***]
D = [***]
** MPI 8 availability - Q1 '00
NET2/4/8 is currently in beta; homologation started
---------------------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
34
EXHIBIT 5
DISCOUNTS
1. Discount
PictureTel's purchases of the Products listed in Exhibit 1 will be eligible for
a Discount of [***] off the OEM Product List Price based on the following
schedule: A = [***], B = [***], D = [***].
2. Trade-In Discount
TRADE-IN PROGRAM FOR MONTAGE AND PRISM TO PRELUDE MCU
-----------------------------------------------------
Configuration** List [***] [***]
Price PictureTel Trade-In
Discount Discount
Voice Switching Only
12 @ 128Kbps $ 96,150 [***] [***]
16 @ 128Kbps $111,850 [***] [***]
24 @ 128Kbps $181,450 [***] [***]
32 @ 128Kbps $207,150 [***] [***]
36 @ 128Kbps $234,150 [***] [***]
48 @ 128Kbps $291,850 [***] [***]
12 @ 384Kbps w/ Bonding $124,750 [***] [***]
16 @ 384Kbps w/ Bonding $152,450 [***] [***]
24 @ 384Kbps w/ Bonding $235,450 [***] [***]
32 @ 384Kbps w/ Bonding $269,550 [***] [***]
36 @ 384Kbps w/ Bonding $317,550 [***] [***]
48 @ 384Kbps w/ Bonding $382,850 [***] [***]
CP/TX -
12 @ 128Kbps - 6 $124,150 [***] [***]
12 @ 128Kbps - 12 $152,150 [***] [***]
16 @ 128Kbps - 12 $167,850 [***] [***]
16 @ 128Kbps - 18 $195,850 [***] [***]
24 @ 128Kbps - 24 $295,750 [***] [***]
32 @ 128Kbps - 30 $377,450 [***] [***]
36 @ 128Kbps - 24 $348,450 [***] [***]
36 @ 128Kbps - 36 $404,450 [***] [***]
48 @ 128Kbps - 48 $520,450 [***] [***]
-----------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
35
12 @ 384Kbps-Bond - 6 $152,750 [***] [***]
12 @ 384Kbps-Bond - 12 $180,570 [***] [***]
16 @ 384Kbps-Bond - 12 $208,450 [***] [***]
16 @ 384Kbps-Bond - 18 $236,450 [***] [***]
24 @ 384Kbps-Bond - 24 $349,750 [***] [***]
32 @ 384Kbps-Bond - 24 $383,850 [***] [***]
32 @ 384Kbps-Bond - 32 $439,850 [***] [***]
36 @ 384Kbps-Bond - 24 $431,850 [***] [***]
36 @ 384Kbps-Bond - 36 $487,850 [***] [***]
48 @ 384Kbps w/ Bonding $583,450 [***] [***]
(42 cp/tx)
** Configurations have non-redundant power. Power Supplies are not
discountable.
Highlighted Continuous Presence configurations recommended for selected port
counts.
48+ port configurations are available for trade-in but will be configured
case-by-case.
. Program will run for an initial period of 6 months renewable for another 6
months by mutual written agreement of the parties.
. Any Montage, Prism or M-8000 MCU can be traded-in for a Accord MCU of 12
ports or more.
. A Trade-In Discount of [***] applies to the entire MCU purchased under the
Trade-In program based on the discount schedule above.
. The P.O. must reference the serial # of the Montage/Prism being traded-in.
The old unit must be returned to PictureTel under the RMA process within 45
days of the shipment of the Accord unit.
-----------------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
36
EXHIBIT 6
SERVICE AND SUPPORT
SECTION I - SUPPORT SERVICES
Accord shall provide to PictureTel the following Product support services
and materials sufficient to allow PictureTel to provide similar services
directly to its end users or through PictureTel's authorized service and
product reseller channels, including, without limitation, OEMs, VARs,
Service Providers, resellers, distributors and channels ("Support
Services").
1.0 PHONE SUPPORT
-------------
Accord will maintain telephone support that will be staffed by qualified
support engineers Monday through Friday, except Accord holidays, between
the hours of 8:00 a.m. and 6:00 p.m., Eastern Standard Time. Per mutual
agreement, both parties will continue to work off-hours and provide on-site
support as needed during critical situations. Accord will provide to
PictureTel, Web Site Access for PictureTel support personnel at all times
in order for PictureTel to be able to communicate with Accord 24 hours per
day with respect to maintenance and support of the PictureTel Product.
2.0 TRAINING
--------
a. Accord agrees to provide an initial technical training class to
PictureTel personnel at PictureTel facilities in Andover and Slough
free of charge, not to exceed ten (10) students. For initial training
at other locations, Accord will invoice PictureTel for travel and
expenses only.
b. In addition, training of the types described within the advertised
offerings of Accord shall be provided pursuant to Accord's then current
Price List to PictureTel personnel at Accord facilities.
c. Accord will provide all current and future training materials,
including student workbooks, pertinent to the instruction of the Accord
Products as described above, pursuant to Accord's then current Price
List.
d. For each Accord Product included in this Agreement, Accord will assist
PictureTel in the development of an audio/visual tape that will
instruct PictureTel Field Service Engineers in the installation and
maintenance of such Products.
e. Accord shall provide to PictureTel, a person technically knowledgeable
in the installation and maintenance for the specific Product subject
for a period not to exceed 3 working days, at no charge. PictureTel
agrees to pay travel incurred by such Accord personnel while
developing training material at PictureTel facilities.
3.0 DOCUMENTATION
-------------
Accord will provide, in both a pre-printed and fully packaged and mutually
agreed upon electronic form, one documentation set for Support Services
free of any additional charges. Accord grants to
37
PictureTel a worldwide, royalty-free right to copy, develop, modify,
translate and distribute all documentation, including Products, service
and training materials, and PictureTel will own all such modified copies of
documentation, except that Accord will at all times maintain all right,
title and interest in any copyright, trademark, service xxxx or other
intellectual property.
a. In addition, Accord will provide ten (10) sets of this documentation,
at no charge, to PictureTel Corporate Support personnel to be used as
support reference material. This material should be shipped to:
PictureTel Corporation
Distance Learning Center
Training Coordinator
000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
b. Accord agrees to provide PictureTel with a reproduction license for
duplication of existent or developed material to be used for training,
maintenance and support purposes only and not for resale.
c. Accord agrees to provide PictureTel Enterprise Service Division with
copies of all Field Change Notices ("FCO") and technical service
information within thirty (30) days of publication by Accord.
d. FCO notification will occur between Accord and PictureTel in cases of
service safety, defective design and other pertinent changes of form,
fit, or functionality and/or compatibility. These FCO's will include
affected part description, effectively date and notice of applicability
to PictureTel purchased parts, not excluding installation and
verification procedures and any pertinent changes to diagnostic
software and/or procedures if applicable. All such information should
be mailed to:
PictureTel Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attn:
e. Training material mutually developed by both Accord and PictureTel is
to be used for the training of Accord and PictureTel personnel ONLY and
is not for sale or distribution to third parties without the express
written consent of both parties
4.0 HARDWARE SUPPORT
----------------
4.1 DIAGNOSTICS
-----------
At no charge to PictureTel, Accord shall make available all diagnostics and
remote access tools which would enable PictureTel to diagnose problems down
to the Field Replaceable Unit ("FRU") level. PictureTel and its service
channels define specify your channels shall have unlimited right to use
such tools internally within their organizations in support of all
PictureTel and its channel customers, products or services.
4.2 ENGINEERING CHANGE ORDERS
-------------------------
After a Product Engineering Change Order ("ECO") implementing any Upgrade
or Update [or hardware ECO] is approved by Accord using its then-current
ECO process, a copy of the ECO
38
will be sent to PictureTel Engineering using 1 day overnight delivery.
PictureTel has ten (10) working days from the date of receipt to review and
accept or reject the ECO. No response by PictureTel within 10 working days
will be considered an ECO acceptance. If PictureTel rejects the ECO within
the 10 working day review period, Accord will continue to ship Product to
PictureTel at the previous ECO level until the ECO is accepted by
PictureTel. Accord will bear reasonable expense for all hardware, and
software needed to implement all safety related ECO's.
4.3 FIELD CHANGE ORDERS
-------------------
a. All FCO's released by Accord will be supplied to PictureTel at no
charge.
b. All safety related FCO's are to be provided to PictureTel WITHIN SEVEN
(7) DAYS OF RELEASE BY Accord at no charge.
c. All FCO's should be provided within thirty (30) days of publication.
d. Material and labor costs of FCO's that address safety of servicing or
design flaws to bring the affected Product to a functioning level per
its design specification are to be borne by Accord, unless otherwise
agreed to in writing by the parties.
e. In addition, FCO's that affect purchased stock, consigned field kits or
purchased field material are to be implemented by Accord via a mutually
agreed upon update process at no charge to PictureTel, unless otherwise
agreed to in writing by the parties.
5.0 SOFTWARE SUPPORT
----------------
For purposes of this Section, the term "Update" means minor enhancements,
corrections or modifications to any software included in or with the
Products ("Software"). The term "Upgrade" means Software containing major
new functionality or capabilities.
PictureTel will provide first and second level telephone support for
Products. PictureTel will attempt to resolve all support issues or errors.
If PictureTel cannot resolve the support issue or error, Accord will
provide central site assistance to PictureTel to resolve such support
issues and/or errors as well as quality performance issues through Accord's
support hot-line. Accord agrees to correct errors, defects and
malfunctions in Products and in all related documentation identified,
classified and reported to Accord by PictureTel as a software problem
report ("SPR") in accordance with the following criteria ("Error
Classification"):
Error
Classification Type Criteria
X Fatal Error A critical bug that crashes the
system, causes the system to hang
or destroys data
A Major Error Major Function does not work and
an easy workaround is not possible
B Function Error Function does not work and an easy
workaround is available
C Minor Error Minor problem or nuisance in the
Product that does not inhibit
progress
D Documentation Documentation error or change
Error request
39
Upon Accord's receipt of an SPR from PictureTel's support personnel that
must included the following: Unit S/N, Configuration including all H/W
revision and serial number, faults file, CDR files, Relevant trace file,
end points type vendor name, model s/w version, writing information
describing the scenario and what was done before the failure happened,
network diagram, procedure to reproduce the problem, Accord will track the
SPR using tracking reference numbers and will correct the SPR within the
time frames outlined below According to the type of Error Classification
assigned by PictureTel.
PictureTel
Classification Accord Response
-------------- ------------------------------------------------------------------
1st Level 2nd Level Final Level
X 4 Hours Constant effort until Constant effort until
relief provided relief provided
A 2 Days 10 Days 45 Days
B 5 Days 45 Days 90 Days
C 30 Days 90 Days As mutually agreed
D 30 Days 90 Days As mutually agreed
A "Day" means a business day.
Response
Level Description
-------- ----------------------------------------------------------------------
1st Level: Confirmation of SPR.
2nd Level: workaround, temporary fix conditional to customer awareness regarding
the testing and the stability of the software,
Final Level: Final Fix, Update or new Release including updated documentation.
A "Final Fix" will mean an official fix whereby Accord has conducted tests
and performance measurements on the finally corrected Product that
sufficiently demonstrate that each reproducible reported error is remedied
and, as remedied, continues to meet the applicable functional and
performance requirements, free of the reported error. Accord will deliver
the results of such tests and performance measurements to PictureTel along
with the Final Fix, Update or Release. Accord will make all corrections to
both the source code materials and the object code. Object code only
corrections are prohibited. Accord will supply a master (object code) copy
of the final fix, with rights to PictureTel to reproduce and distribute.
Accord shall provide error corrections on each Major Release of Software
for the longer of (i) 1.5 years from the initial release date, or (ii) the
release of two succeeding Major releases.
Accord will provide a monthly or more frequent, written status report on
all outstanding SPRs and/or provide electronic access to such data at no
charge to PictureTel. Also at no charge, Accord shall provide PictureTel
with electronic access to Accord's problem database.
Accord shall prepare and release without charge to PictureTel bug fixes and
error corrections similar to those provided to users of or incorporated
into the Standard Version for the Product.
40
SECTION II - LOGISTIC SERVICES
Accord will sell or otherwise make spares available for Products for a
period of 5 years and will sell or otherwise make Updates/Upgrades
available for a period of five 5 years (i) after termination or expiration
of this Agreement, or (ii) after discontinuance of a Product. Accord will
notify PictureTel one year prior to any discontinuance of any Product.
1.0 INVOICING/PAYMENT
-----------------
Fees for Accord Support Services shall be as set forth in Attachment A.
Invoices submitted to Logistics/Planning should contain at least the
following information: Repair cost/unit, PictureTel part number, serial
number, RMA number (if applicable), and PictureTel P.O. number.
Invoices are due and payable 30 days following date of invoice.
2.0 REPAIRS
-------
For Product which is covered by the repair provisions set forth in Addendum
A, Accord shall negotiate in good faith repair cost structure in compliance
to a fair market value. Accord shall provide repair of parts and
components which Accord generally considers repairable, not to exceed 20%
of PictureTel's Spare price. Accord shall repair such parts and components
at Accord's plant and return to such location defined by PictureTel. Accord
shall make available standard repair pricing and overnight exchange.
Shipment and components may contain recycled, refurbished and
remanufactured parts which are equivalent to new parts. Replaced parts or
components shall become the property of PictureTel. Accord shall use its
best efforts to deliver on time repair performance at 98% level per
quarter[see section 8.0 below]. Accord will provide repaired material
According to the prescribed weekly PictureTel schedule of repair parts
needs and quantities. PictureTel may at anytime adjust the forecast
requirements. All repaired returns must conform to U.S., and International
specifications.
If applicable, defective Product will be returned to Accord via a return
material authorization process ("RMA") as set forth in Section 3.0.
4.0 DEAD ON ARRIVAL (DOA)
---------------------
At no additional charge to PictureTel, Accord shall provide overnight
replacement of all Products, parts or components that are delivered Dead on
Arrival ("DOA") in the America and EMEIA and as soon as is practical in
AP/Japan. In the event that the rate of DOAs is unacceptable, Accord will
work with PictureTel to eliminate the cause of such DOA.
41
5.0 FREIGHT AND SHIPMENT
--------------------
Freight charges for repair activities are paid by the sender.
Accord will generate a packing list for returning repaired Product
referencing the applicable RMA number and PictureTel Purchase Order Number.
Each repaired part will be listed as a separate line item that includes
part number and serial number.
Accord will at PictureTel's request, ship repaired Product direct to a
PictureTel, and will provide tracking number to PictureTel when available.
Accord xxxxx, at PictureTel's request, accept product for repair direct
from an end user.
6.0 REPORTING
---------
PictureTel collects and analyzes repair information using data collected
from Repair Tags and the actual repair. This is useful for detecting
trends and long term failure histories for specific Products. PictureTel
will provide Accord with a spreadsheet format of specific information that
should be collected for each repair and Accord is expected to input this
data as each repair is completed. Accord will then forward this
information to PictureTel Logistics and Planning on a quarterly basis. As
a minimum, the following information will be collected:
a) Part Number, Serial Number, and Repair Tag RMA Number
b) Failure Code and Repair Code (includes DOA, No Problem Found ("NPF")
codes, and Warranty codes)
c) Component Designator of replaced components
d) Received Date and Completed Date
7.0 QUALITY
-------
A DOA rate occurrence in excess of 1% of a month's return shipments as
reported by PictureTel will result in an immediate proactive improvement
plan to reduce the excess back to within the specified goal of 1% on the
part of Accord.
Material repaired by Accord that is received DOA will result in no repair
charge to PictureTel for such repair.
PictureTel will implement a prescreen process for the Product that
minimizes returns to Accord of only failed units.
Accord will strive to meet on time repair goals at a 98% rate or better per
quarter.
8.0 METRICS
-------
Accord and PictureTel will establish metrics suitable for the Accord
Products during the first six months of the Agreement.
9.0 SERVICE CONTACT(S)
------------------
Accord and PictureTel will provide the name(s), title, and telephone
number(s) of a designated point(s) of contact responsible for Accord and
PictureTel Product(s).
42
ATTACHMENT A
PictureTel will enter into a support agreement with Accord for only those
systems that have a support agreement purchased from a PictureTel customer or a
reseller. The price for such support agreements shall be 5.5% per year of
Accord's then current List Price of each system under a support agreement.
PictureTel may opt to pay a mutually agreed upon fee for all systems per year,
whereby every system purchased by PictureTel would be covered. Pricing is in
effect for one (1) year from the signing of the Agreement, after which both
parties shall renegotiate the pricing.
North America and European Regions
For covered systems:
. Accord will provide Tier 3 and Tier 4 Technical support to PictureTel, who
will perform Tier 1 and Tier 2 support for its customers.
. Accord will drop ship replacement parts (same day shipment if the order is
placed prior to 7:00 PM Eastern Standard Time in North America or the
equivalent in the United Kingdom) to the customer site for arrival by 10:30
AM the next business day (Priority One), with prepaid return shipment.
PictureTel will be responsible for returning the replaced part to Accord.
. Accord will have materials in stock in order to deliver parts the next day on
average of 95% of the time.
. Software updates and upgrades are included.
For systems not covered by this Agreement, all work will be performed ala carte,
and billed per the spares, repair, installation, training and service fee
schedule below.
Asia Pacific/Japan Regions (Rest of the World)
For covered systems:
. Accord will provide Tier 3 and Tier 4 Technical support to PictureTel, who
will perform Tier 1 and Tier 2 support for it's customers.
. Accord will consign spare parts to PictureTel for Asia Pacific and Japan
based on Accord's standard spare policy for covered systems. Accord will make
materials available to PictureTel to deliver next day delivery on an average
of 95% of the time, based on usage patterns provided by PictureTel. Depending
on the locations in which the units are sold, PictureTel may be required to
place parts in 3 or more locations, e.g., Singapore, Australia and Japan.
. PictureTel will drop ship replacement parts to the customer site. PictureTel
will be responsible for returning the replaced part to Accord.
. Accord will repair the failed unit and return it to PictureTel within 15 days
of receipt by Accord. In the event that an order is placed upon stock that
has been depleted, Accord will use its best efforts to make an emergency drop
shipment.
. Software updates and upgrades are included.
43
For systems not covered by this Agreement, all work will be performed ala carte,
and billed per the spares, repair, installation, training and service fee
schedule below.
The following is to be mutually agreed to by the parties within 30 days of the
Effective Date:
* Logistics Material Handling and Standard Operating Process (SOP) to cover the
details of parts ordering and RMA contacts and locations.
B. PictureTel Spares Prices
--------------------------------------------------------------
Item Spare Price
--------------------------------------------------------------
Chassis [***]
--------------------------------------------------------------
Control Unit [***]
--------------------------------------------------------------
Power Supply [***]
--------------------------------------------------------------
Video/MUX module [***]
--------------------------------------------------------------
N/I T1 module [***]
--------------------------------------------------------------
N/I E1 module [***]
--------------------------------------------------------------
NET-8 Leased [***]
--------------------------------------------------------------
ATM-25 Mbps module [***]
--------------------------------------------------------------
ATM-155 Mbps module [***]
--------------------------------------------------------------
Audio Module [***]
--------------------------------------------------------------
Music and Message Board [***]
--------------------------------------------------------------
T.120 Module [***]
--------------------------------------------------------------
Transcoding/CP Module - 6 [***]
--------------------------------------------------------------
Transcoding/CP Module - 12 [***]
--------------------------------------------------------------
MG323 [***]
--------------------------------------------------------------
PictureTel Repair Prices
--------------------------------------------------------------
Item Repair Price
--------------------------------------------------------------
Control Unit [***]
--------------------------------------------------------------
Power Supply [***]
--------------------------------------------------------------
Video/MUX module [***]
--------------------------------------------------------------
N/I T1 module [***]
--------------------------------------------------------------
N/I E1 module [***]
--------------------------------------------------------------
NET-8 Leased [***]
--------------------------------------------------------------
ATM-25 Mbps module [***]
--------------------------------------------------------------
ATM-155 Mbps module [***]
--------------------------------------------------------------
Audio Module [***]
--------------------------------------------------------------
Music and Message Board [***]
--------------------------------------------------------------
T.120 Module [***]
--------------------------------------------------------------
Transcoding/CP Module - 6 [***]
--------------------------------------------------------------
Transcoding/CP Module - 12 [***]
--------------------------------------------------------------
MG323 [***]
--------------------------------------------------------------
------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
44
Installation Prices
II. Installation and Training III. Price
------------------------------------------------------------------------------
1 day installation* + 2 days on-site Basic Course [***]
------------------------------------------------------------------------------
Installation only [***]
------------------------------------------------------------------------------
* Installation duration and prices may vary based on site requirements.
Training Courses and Prices
IV. Name V. Content VI. Audience VII. Duration & Price VIII. Prerequisites
--------------------------------------------------------------------------------------------------------------------
Basic Course: Scheduling, Conference Operators and 2 days None.
Management Marketing [***] at Accord* or
personnel [***] at customer**
----------------------------------------------------------------------------------------------------------------
Intermediate Course: Swap modules, Install Technical 1 day Basic course.
software updates, personnel [***] at Accord* or
Modify MCU [***] at customer**
configurations
----------------------------------------------------------------------------------------------------------------
Advanced Course: Install new systems, Technical 2 days Intermediate
Provide hot-line and personnel [***] at Accord or course.
on-site support for [***] at customer**
end-users, Administer
Basic and Intermediate
training to end-users
----------------------------------------------------------------------------------------------------------------
* All trainees shall be responsible for their own transportation, meals and
lodging.
** For training courses that take place at Customer's site, Customer shall
provide all necessary training equipment, telecom infrastructure, and a
classroom environment as specified by Accord. Up to 8 students per session.
Individual service charges for customers
Not covered by support packages or system warranty
IX. Individual Service X. Charge
-------------------------------------------------------------------------------------------------
[***]
-------------------------------------------------------------------------------------------------
Telephone hotline support 8AM to 5PM; Monday - Friday [***] per hour (minimum 1 hour)
-------------------------------------------------------------------------------------------------
Telephone hotline support 8AM to 5PM; Saturday, Sunday and [***] per hour (minimum 1 hour)
Holidays
-------------------------------------------------------------------------------------------------
API support [***] per hour
-------------------------------------------------------------------------------------------------
On-site service [***} per day + expenses
-------------------------------------------------------------------------------------------------
Module repair service See Repair Schedule
-------------------------------------------------------------------------------------------------
------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
45
EXHIBIT 7
PRODUCT ROADMAP
This exhibit defines the organizational expectations, development plan, and
development process for reselling the Accord product and enhancing that product
with specific additional features.
Organizational Expectations:
1. PictureTel will provide one (1) technical program manager to provide
detailed specifications for features, provide technical consulting
throughout the program on implementing PictureTel proprietary technology,
facilitate product introduction, and hold periodic reviews. PictureTel will
involve other appropriate personnel (e.g. engineers, support) as required.
2. Accord will add engineers to support the PictureTel program. It is estimated
that an additional 10 - 15 engineers will be required during the development
period. Accord will deliver PictureTel's required capabilities in the 4
release development plans shown below.
3. Accord and PictureTel by mutual agreement may modify the development roadmap
as the parties move through the development process.
Development Plan:
The following is intended to represent 4 consecutive releases of the Accord
product where Release 1 involves PictureTel reselling the existing Accord
product as is after testing requirements have been met. For subsequent
releases, Accord will incorporate and test the features listed and deliver the
product on or before the dates indicated. The features listed in any given
release are to be supported by all Accord products in subsequent releases.
. Release 1 - [***]
. Release 2 - [***]
. Release 3 - [***]
. Release 4 - [***]
* Note: Inclusion of these features in the timeframes indicated are on a best
effort basis in accordance with resource expectations indicated above and
Development Process described below.
Development Process:
The Accord program will generally follow the PictureTel's Product Life Cycle
Process (PLCP) Execution Plan (PEP) as described in this section. The Product
Life Cycle Process has 8 phases, including those described below. The following
outlines the questions that should be asked and answered at each Phase Exit.
Phase 1 - Tactical Concept Development
What problem are we trying to solve?
How well does this product solve the problem? How doable is this product?
How much $ will it cost to make? How much $ will it sell for?
What is the schedule?
What are the issues and risks and what are the plans to address them?
------------
*** Omitted information is the subject of a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933 and has been filed
separately with the Securities and Exchange Commission.
46
S.W.O.T. (Strengths, Weaknesses, Opportunities, and Threats)
Who else is in this space? How are we distinguished from them?
What are the critical success factors?
Exit criteria: Execution of this agreement.
Phase 2 - Project Planning
Revisit all Phase 1 questions
How are the features described in Phase 1 to be developed?
Functional specification - See details below.
Project plan - See details below.
Exit criteria: PictureTel's approval of development specifications supplied by
Accord.
Phase 3 - Project Development
Revisit all Phase 1 questions
Beta Planning questions
What sites are selected?
Is the plan reviewed and approved?
Vendor contracts signed?
Has the team delivered everything in the specs and are they verified and do
they work?
Is the team ready to start Phase 4?
Test cases written?
Test plans written or revised?
Exit criteria: PictureTel's approval of the Test Plan (See Exhibit 10)
supplied by Accord.
Phase 4 - Initial Manufacturing and Beta
Revisit all Phase 1 questions
Are all P1 and P2 bugs addressed satisfactorily? Is testing satisfactorily
complete?
What are the risks with shipping at this time?
Exit criteria: PictureTel's approval of Test Results (See Exhibit 10)
supplied by Accord.
The following specifications must be supplied by Accord and reviewed and
approval by PictureTel for Releases 2-4 described above. PictureTel shall
provide example documents for the specifications and plans indicated above. The
Accord team will use these example documents to develop comparable (e.g.,
specificity, coverage, format) specifications and plans for this program.
Product Functional Specification
A high-level description of the main product feature set and overall technical
plan.
- Authored: Accord Program Manager (or designated Accord engineers)
- Reviewed: PictureTel Program Engineering Manager (or designated PictureTel
engineers)
- Note: PictureTel will supply specifications for PictureTel proprietary
features.
Engineering Project Plan(s)
Resources, staff assignments, dependencies, and schedule for developing the
product features set.
- Authored: Accord Program Manager (or designated Accord engineers)
- Reviewed: PictureTel Program Engineering Manager (or designated PictureTel
engineers)
Bi-weekly joint engineering meetings will be held to review the status of the
engineering effort. The following table will be reviewed and updated at each
such meeting.
47
TABLE 1: BI-WEEKLY REPORTING FORMAT FOR PRELUDE COMPANY
Responsible Completion Date Approval Date
Event Individual Initial/(Actual) Initial/(Actual) Status
------------------------------------------------------------------------------------------------------
Release 1 Test Plan
Release 1 BETA
Release 1 FCS
Release 2 Functional Spec
Release 2 Project Plan
Release 2 Test Plan
Release 2 ALPHA
Release 2 BETA
Release 2 FCS
Release 3 Functional Spec
Release 3 Project Plan
Release 3 Test Plan
Release 3 ALPHA
Release 3 BETA
Release 3 FCS
Release 4 Functional Spec
Release 4 Project Plan
Release 4 Test Plan
Release 4 ALPHA
Release 4 BETA
Release 4 FCS
NOTES FOR TABLE 1:
Initial dates are estimates given prior to detailed analysis of the task being
completed. Initial dates, once established, remain unchanged. Actual dates will
be the projected date of completion at any moment in time until completed.
Completion will be identified in the status section of this reporting memo as
well as "weeks slipped" from original estimates. Resp. is the person
responsible for completing the task.
Product ALPHA is defined when all features have been implemented by engineering
but not fully tested.
Product BETA is defined when product is deemed ready for customer testing.
Product FCS (First Customer Ship) is defined when the product has been approved
by both the PictureTel and Accord engineering teams and is "quality ready to
ship" based on Engineering quality metrics and Manufacturing process
readiness/validation completion.
Program Reviews
Either party may request an in-depth program review. The review shall take
place within 14 days of the request. A new request shall not be issued within 2
months of a previous request by the same party.
48
EXHIBIT 8 -
SUPPLIER QUALITY REQUIREMENTS
1. Purpose
This document outlines all of the generic quality objectives and
requirements for product and process that should be achieved by Accord
throughout the course of development and production of any PictureTel
product. It however does not represent the total quality requirements of
any particular PictureTel program/product as manufactured by Accord.
This document is a living document and will be incorporated and represented
in the Distribution Agreement with Accord. As such it is subject to agreed
upon changes during the course of the development and production of
PictureTel products by both PictureTel and Accord.
2. Quality Goals and Metrics
The PictureTel Quality level of the Accord product will be measured through
the use of the following metrics:
. Perfect Order Fulfillment Rate - PictureTel to supply a reasonable
definition of a "perfect order" within 30 days of the Effective Date
. Hardware/Software Installation DOA Rate
3. Product Acceptance
A. After a Product Engineering Change Order ("ECO") implementing any
Upgrade or Update [or hardware ECO] is approved by Accord using its
then-current ECO process, a copy of the ECO will be sent to PictureTel
Engineering using 1 day overnight delivery. PictureTel has ten (10)
working days from the date of receipt to review and accept or reject
the ECO. No response by PictureTel within 10 working days will be
considered an ECO acceptance. If PictureTel rejects the ECO within the
10 working day review period, Accord will continue to ship Product to
PictureTel at the previous ECO level until the ECO is accepted by
PictureTel. Accord will bear reasonable expense for all hardware, and
software needed to implement all safety related ECO's.
B. PictureTel will not accept product that has critical defects. (see
section IV)
4. Defect Classification
A) Critical
1) Safety, EMC or Telecommunications regulatory violations
2) Epidemic failures preventing the product from being used for its
intended purpose requiring product to be recalled or placed on stop
ship.
B) Major
1) Failures preventing the product from being used for its intended
purpose.
49
2) Incipient process or component defects resulting in a 5 percent or
greater field failure rate within one year after delivery to
PictureTel.
C) Minor
1) Cosmetic or workmanship errors that do not prevent the unit from
performing its intended function but require repair to meet
requirements.
50
5. Quality Reporting
A. Accord will collect and analyze repair information of PictureTel
product using data collected from repair tags and related information
to detect trends and long term failure histories for specific products.
This data should be used to monitor trends and develop Corrective
Action plans for identified problems.
B. Accord will record the RMA number, part number, revision, serial
number, defect found and root cause analysis of all PictureTel RMA
material.
C. PictureTel may request the failure data on all RMA material.
D. Repair tags or repair paperwork shall not accompany any repair product
that is returned to PictureTel from Accord.
6. Dead On Arrival (DOA)
A. A DOA is defined as any failure within the first 30 days after product
installation within the warranty period of the product. A DOA rate
occurrence in excess of 1% as reported by PictureTel will result in an
immediate duty for Accord to create and implement a proactive
improvement and corrective action plan.
B. The PictureTel DOA rate is based upon a 3 month rolling average of
units installed into PictureTel customer sites computed against the
failed installations for that period.
C. DOA product returned to Accord is considered the property of Accord. It
is assumed a new replacement has been sent to PictureTel to satisfy the
DOA.
7. Corrective Action
A. Formal Corrective Action may be requested by PictureTel and Accord will
be expected to respond within 10 working days with a written corrective
action plan.
B. All corrective actions initiated by PictureTel will be documented and
monitored through PictureTel's Corrective Action Request database.
8. Request for Intervention (RFI)
A. A RFI is defined as a request for intervention. This request is
necessary to escalate the severity of a quality issue with the
performance of the Accord product. Accord is expected to respond within
2 working days with a written corrective action plan.
B. Accord shall use due diligence in disclosing known hardware and
software quality issues within the Accord product.
9. Serialization, and Tracking [CHECKING WITH ISRAEL]
A. Accord shall part number and serialize each board and chassis that is
orderable for PictureTel.
B. Accord will record and track the part number and serial number of all
board and chassis that are orderable for PictureTel.
10. Bar Code Labeling
It is PictureTel's intent that the following be accomplished. The parties will
agree within 30 days as to the appropriate method for accomplishing the bar
coding requirements:
A. Accord shall label each box shipped with a Bar Code label that reflects
the PictureTel part number.
B. Bar Code labeling procedures will be provided to Accord Manufacturing.
51
EXHIBIT NINE
ACCORD MARKETING/PRODUCT LAUNCH PLAN
COMMUNICATIONS PLAN
1. Press release
2. 1-hour video briefing for WW PictureTel employees
2. Marketing Bulletin (WW internal)
4. Channel Newsletter (WW channels)
5. Mailing to PictureTel User Group customers
6. Briefings for selected distribution partners
7. Briefings for federal customers
8. Briefings for selected strategic partners
PRODUCT LAUNCH
1. WW Product Launch
. Press release
. Analyst and press briefings
. Electronic Launch Kit to include:
Product collateral
Sales presentation
Form channel letter for installed base
Product Information Bulletin
Pricing and ordering
Trade-in program overview
Competitive overview
Q&A
Contact List
. Readiness of the PictureTel demonstration centers
SALES TRAINING PLAN
1. PictureTel Learning Channel 2-hour internal/channel sessions to include:
. Messaging/positioning
. Servers strategy
. Product features and differentiation
. Product road-map
. Configurations and packaging
. Automated quoting tool
. Competition
. Sales tools
. Marketing initiatives, i.e. letter to installed base, seminars, road-show,
etc.
. Available support organization
2. WW Systems Engineer Training
. Series of videoconferencing sessions for each region, i.e. Americas, EMEIA
and APJ.
. Hands-on product training at Accord regional offices
3. Streamed broadcast sessions
52
EXHIBIT 10 -
SQA TESTING AND INTEROPERABILITY
For each release, Accord will perform all testing of the MCU product.
PictureTel will review any testing specifications, generate test specifications
for new features, and review SQA and interoperability/compatibility reports.
I. Development Phase
. PictureTel shall review the current MCU SQA test plans and specifications.
They will be received by PictureTel no later than 14 days from the signing of
the contract.
. Any concerns, comments about the specifications will be made within 30 days
of the receipt of the specifications/test plans.
. For each incremental release, PictureTel shall receive updated SQA test plans
and specifications, detailing any additional testing procedures required for
validation of the new features. The documents must be received at least 14
days before the start of the testing phase.
. Any concerns, comments about the additional information will be made within
14 days of the receipt of the specifications/test plans.
II. Testing Phase
. PictureTel and Accord shall exchange documents detailing defect
classification, so that there is little ambiguity involved when describing
defect tracking and resolution. Accord shall also provide a document
describing the bug tracking process which is used for the MCU. These
documents will be exchanged no later than 14 days from the signing of the
contract.
. PictureTel and Accord shall be involved in weekly (or otherwise agreed upon
interval) bug meetings, once testing has begun.
. According to PictureTel criteria, all X and A defects (as defined in Exhibit
6) must be addressed by Accord before shipping the product, otherwise the
product will not be accepted.
III. Interoperability and Compatibility Phase
Interoperability is defined as interworking with non-PictureTel products.
Compatibility is defined as interworking with PictureTel products
. Accord will be responsible for all Interoperability and Compatibility
testing. A prioritized list of products required for testing before first
customer shipment is attached. This list may be updated for each subsequent
release.
. Accord will be responsible for gaining access to the list of equipment. In
some cases, testing can be done using PictureTel's interoperability and
compatibility laboratories. However, PictureTel cannot guarantee unlimited
access to the equipment, as it is a shared resource, however, with regard to
initial testing, PictureTel will use best reasonable efforts to make such
equipment available to Accord.
. Interop/Compatibility is achieved per IMTC, and SQA Templates, also attached.
IV. Post Release Issues
. Compatibility problems encountered with the MCU will be given priority within
Accord engineering for resolution.
. Compatibility problems encountered with PictureTel products will be given
priority within PictureTel engineering for resolution.
53
PictureTel Products XXXX Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 0
-----------------------------------------------------------------------------------------------------------------------
Concorde 6.50 I* x
-----------------------------------------------------------------------------------------------------------------------
Concorde 6.70 (FCS Feb '00) x
-----------------------------------------------------------------------------------------------------------------------
Venue 1.3 x
-----------------------------------------------------------------------------------------------------------------------
Venue 1.4 x
-----------------------------------------------------------------------------------------------------------------------
SwiftSite II 1.0 x
-----------------------------------------------------------------------------------------------------------------------
SwiftSite II 1.1 (FCS Jan '00) x
-----------------------------------------------------------------------------------------------------------------------
SwiftSite 1.3 A** x
-----------------------------------------------------------------------------------------------------------------------
Live 200 1.5 I,A x
-----------------------------------------------------------------------------------------------------------------------
Live200 NT 1.1 x
-----------------------------------------------------------------------------------------------------------------------
Live LAN 3.0 x
-----------------------------------------------------------------------------------------------------------------------
Live LAN 3.1 x
-----------------------------------------------------------------------------------------------------------------------
Onwan 250 1.0 x
-----------------------------------------------------------------------------------------------------------------------
Onwan 350 1.0 I x
-----------------------------------------------------------------------------------------------------------------------
PictureTel 550 1.1 I x
-----------------------------------------------------------------------------------------------------------------------
PictureTel 550 1.2 (FCS Jan '00) x
-----------------------------------------------------------------------------------------------------------------------
Net Conference 2.0 x
-----------------------------------------------------------------------------------------------------------------------
Live Gateway 3.1 x
-----------------------------------------------------------------------------------------------------------------------
Portal 240 2.0 x
-----------------------------------------------------------------------------------------------------------------------
Live Manager 4.0 x
-----------------------------------------------------------------------------------------------------------------------
Venue with PictureTel 210 x
-----------------------------------------------------------------------------------------------------------------------
Concorde With PictureTel 210 x
-----------------------------------------------------------------------------------------------------------------------
Montage 6.1 x
-----------------------------------------------------------------------------------------------------------------------
Montage 6.2 x
-----------------------------------------------------------------------------------------------------------------------
TeamStation 4.0 A x
-----------------------------------------------------------------------------------------------------------------------
TeamStation 4.0a x
-----------------------------------------------------------------------------------------------------------------------
TeamStation 5.0 A x
-----------------------------------------------------------------------------------------------------------------------
Proshare 2.0 I,A x
-----------------------------------------------------------------------------------------------------------------------
Proshare 2.1 I x
-----------------------------------------------------------------------------------------------------------------------
ProShare 500 x
-----------------------------------------------------------------------------------------------------------------------
Vendor End Points
-----------------------------------------------------------------------------------------------------------------------
Aethra Xxxx 384 2.0 x
-----------------------------------------------------------------------------------------------------------------------
Polycom ViewStation 4.0 I x
-----------------------------------------------------------------------------------------------------------------------
Polycom ViewStation MP I x
-----------------------------------------------------------------------------------------------------------------------
Tandberg 2000 3.3B A x
-----------------------------------------------------------------------------------------------------------------------
Tandberg 2000 1.0 x
-----------------------------------------------------------------------------------------------------------------------
Tandberg 8000 1.0 x
-----------------------------------------------------------------------------------------------------------------------
Sony 1000 x
-----------------------------------------------------------------------------------------------------------------------
Sony 5100 v2.11 x
-----------------------------------------------------------------------------------------------------------------------
Sony 5100 4.0 x
-----------------------------------------------------------------------------------------------------------------------
Sony 5100 Plus x
-----------------------------------------------------------------------------------------------------------------------
RSI Video Flyer 3.0 x
-----------------------------------------------------------------------------------------------------------------------
Vcon Armada 384 3.01 I x
-----------------------------------------------------------------------------------------------------------------------
Vtel wg 500 x
-----------------------------------------------------------------------------------------------------------------------
Vtel TC 2000 2.2 I x
-----------------------------------------------------------------------------------------------------------------------
54
PictureTel Products XXXX Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 0
-----------------------------------------------------------------------------------------------------------------------
Vtel Galaxy x
-----------------------------------------------------------------------------------------------------------------------
Vtel Smartstation 5.0 x
-----------------------------------------------------------------------------------------------------------------------
Vtel Settop 250 x
-----------------------------------------------------------------------------------------------------------------------
Numonics Personal x
-----------------------------------------------------------------------------------------------------------------------
Numonics Whiteboard x
-----------------------------------------------------------------------------------------------------------------------
NetMeeting 3.0 I x
-----------------------------------------------------------------------------------------------------------------------
Vcon 8000 x
-----------------------------------------------------------------------------------------------------------------------
Vcon MediaConnect 8300 I x
-----------------------------------------------------------------------------------------------------------------------
Vcon QuickConnect2L I x
-----------------------------------------------------------------------------------------------------------------------
Vcon 150 I x
-----------------------------------------------------------------------------------------------------------------------
Vcon 75 I x
-----------------------------------------------------------------------------------------------------------------------
Vcon 25 I x
-----------------------------------------------------------------------------------------------------------------------
Landesk Conf Mgr x
-----------------------------------------------------------------------------------------------------------------------
H.323 Gatekeepers
-----------------------------------------------------------------------------------------------------------------------
Radvision GK-3233 I x
-----------------------------------------------------------------------------------------------------------------------
VS Encounter Gatekeeper 1.2 x
-----------------------------------------------------------------------------------------------------------------------
Cisco Multimedia Manager I x
-----------------------------------------------------------------------------------------------------------------------
H.320 Gateways
-----------------------------------------------------------------------------------------------------------------------
Radvision X0X-000 Xxxxxxx x
-----------------------------------------------------------------------------------------------------------------------
VS Encounter NetGate 1.2 x
-----------------------------------------------------------------------------------------------------------------------
First Virtual V-Gate323 x
-----------------------------------------------------------------------------------------------------------------------
Intel Gatekeeeper x
-----------------------------------------------------------------------------------------------------------------------
Ericsson Gatekeeper x
-----------------------------------------------------------------------------------------------------------------------
Cisco Gatekeeer x
-----------------------------------------------------------------------------------------------------------------------
H.320 MCUs
-----------------------------------------------------------------------------------------------------------------------
Lucent 5.0 x
-----------------------------------------------------------------------------------------------------------------------
H.323 MCUs
-----------------------------------------------------------------------------------------------------------------------
VS Encounter Netserver 1.2 x
-----------------------------------------------------------------------------------------------------------------------
Radvision MCU-323 I x
-----------------------------------------------------------------------------------------------------------------------
White Pine Meeting point x
-----------------------------------------------------------------------------------------------------------------------
H.323 Firewalls
-----------------------------------------------------------------------------------------------------------------------
Check Point Fire Wall-1 x
-----------------------------------------------------------------------------------------------------------------------
Axent/paptor Firewall 6.0 x
-----------------------------------------------------------------------------------------------------------------------
Secure Computing NT x
-----------------------------------------------------------------------------------------------------------------------
Cisco Pix Firewall x
-----------------------------------------------------------------------------------------------------------------------
* I Testing completed by Accord Israel.
** A Testing completed by Accord Atlanta.
55
EXHIBIT 11
CHANNELS COMMUNICATION PLAN
1. Immediately prior to the announcement of the Agreement, a joint letter from
the PictureTel Executive Sales Management and Accord's Senior Sales
Management will be sent to each channel that currently has a distribution
agreement with both PictureTel and Accord. The objective of this
communication is to move these channels towards acquiring the Accord product
from PictureTel, since the Accord unit with the PictureTel value-added
features will initially only be available from PictureTel.
2. Accord will not actively solicit for distribution any channels that
currently only has an exclusive endpoint distribution agreement with
PictureTel. PictureTel will supply a list of such distributors within 30
days of the Effective Date.
3. Accord management will participate in joint calls with PictureTel to
facilitate clear communications to key channels and customers.
4. A series of video training sessions will be offered to PictureTel's
worldwide channels within 15 days after the product launch. Accord will
participate in delivering the product training.
5. PictureTel and Accord will agree to non-discriminatory, mutual guidelines of
engagement for selling to the end-users and service providers.
6. Accord will disclose to PictureTel their target list of the prospective IP
channel partners.
7. Accord will continue to facilitate discussions for guidelines of engagement
between XXX.xxx and PictureTel.
56
EXHIBIT 12 -
COUNTRY HOMOLOGATION APPROVALS
Homologation and Type Certification Schedule
Accord will pay all fees and supply appropriate resources to facilitate
homologation and type approval of the product in Tier 1 and 2 countries as
defined by PictureTel. PictureTel will pay all fees and supply appropriate
resources to facilitate homologation and type approval in Tier 3 countries.
Tier 1. Accord is responsible for completing the homologation process in
the following countries by the time of the launch:
. United States - completed
. Japan
. United Kingdom - completed
. Germany - completed
. France - completed
. Australia
. China
. Canada
Tier 2. Accord will complete the homologation process in the following
countries within 3 months of the product launch:
. Argentina
. Belgium - completed
. Brazil
. Finland - completed
. Holland - completed
. Hong Kong
. India
. Israel
. Italy - completed
. Korea
. Mexico
. Singapore
. South Africa
. Spain - completed
. Sweden - completed
. Switzerland - completed
. Taiwan
Tier 3. The first party delivering a Product to a Tier 3 country will be
responsible for the completion of any homologation efforts. The following
countries are defined as Tier 3:
. Austria
. Chile
. Columbia
. Denmark
. Hungary
. Ireland
. Malaysia
. New Zealand
. Norway
. Xxxx
00
. Xxxxxxxx
. Xxxxxx
. United Arab Emirates
. Venezuela
The parties agree to reasonably provide consulting assistance to each other as
they engage in the homologation effort.
58
EXHIBIT 13 -
PICTURETEL'S ADDRESS FOR BILLING
Billing Address
Attn.: Accounts Payable
PictureTel Corporation
000 Xxxxxxxxx Xxxx
XXXXXXX, XX 00000
59
EXHIBIT 14 -
RELATIONSHIP MANAGERS
For PictureTel:
---------------
x
x
PictureTel Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxxx Xxxxxx of America
Telephone:
Facsimile:
Email:
For Accord:
-----------
Xxx Xxxxxx
Accord Networks, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Xxxxxx Xxxxxx of America
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
60
EXHIBIT 15 -
RECEIVERS OF NOTICES
For PictureTel:
---------------
W. Xxxxxx Xxxxxxxxx, Xx.
General Counsel
PictureTel Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxxx Xxxxxx of America
Telephone: 000-000-0000
Facsimile: 000-000-0000
Email: xxxxxxxxxx@xxxxxx.xxx
For Accord:
-----------
Xxxx X. Xxxxxx
Corporate Counsel
Accord Networks, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Xxxxxx Xxxxxx of America
Telephone: 000-000-0000
Facsimile: 000-000-0000
Email: xxxx.xxxxxx@xxxxxxxxxxxxxx.xxx
61
