1
Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
CONFIDENTIAL TREATMENT
EXHIBIT 10.29
WILTEL COMMUNICATIONS,
L.L.C.
&
NORTHERN TELECOM INC.
DISTRIBUTORSHIP AGREEMENT
2
TABLE OF CONTENTS
ARTICLE ONE
ESTABLISHMENT OF DISTRIBUTORSHIP
Section 1.1 DEFINITIONS: Page 1
Section 1.2 EFFECTIVE DATE Page 5
Section 1.3 TERM, RENEWAL, REPLACEMENT, AND EXPIRATION Page 5
Section 1.4 GRANT OF DISTRIBUTION RIGHTS Page 6
Section 1.4.1 EXISTING DISTRIBUTORS Page 6
Section 1.4.2 RESERVATION OF RIGHTS Page 6
Section 1.5 NON-EXCLUSIVE RELATIONSHIP Page 6
Section 1.6 AFFILIATES OF DISTRIBUTOR Page 7
Section 1.7 NO FAVORED DISTRIBUTOR Page 7
ARTICLE TWO
OBLIGATIONS OF THE PARTIES
Section 2.1 DISTRIBUTOR'S OBLIGATIONS Page 8
Section 2.1.1 DISTRIBUTION STANDARDS Page 8
Section 2.1.1.1 DISTRIBUTION TO OTHER THAN END USERS Page 9
Section 2.1.1.2 SPECIFIC ACCOUNT PROGRAM (a) Page 10
Section 2.1.2 MINIMUM DISTRIBUTION LEVEL Page 11
Section 2.1.3 ADVERTISING AND PROMOTION Page 12
Section 2.1.4 USE OF MARKS Page 12
Section 2.1.5 OPERATING REQUIREMENTS Page 13
Section 2.1.5.1 SERVICE CENTERS Page 13
Section 2.1.5.2 SERVICE STANDARDS Page 13
Section 2.1.5.3 RIGHT TO ENSURE SERVICE Page 13
Section 2.1.5.4 RIGHT TO INSPECT INSTALLATIONS Page 14
Section 2.1.6 RECORD KEEPING AND REPORTING Page 14
Section 2.1.7 SUBCONTRACTING TO THIRD PARTIES Page 14
Section 2.1.8 SALES AGENT AUTHORIZATION Page 15
3
ARTICLE THREE
OBLIGATIONS OF NORTEL
SECTION 3.1 SUPPORT OF DISTRIBUTOR BY NORTEL Page 17
SECTION 3.2 ACCOUNT DIRECTOR/MANAGER Page 18
SECTION 3.3 TRAINING Page 18
SECTION 3.4 PRODUCT CATALOG Page 18
SECTION 3.5 NORTEL SUPPORT IN EVENT OF CATASTROPHE Page 18
SECTION 3.6 PROGRAMS OF SUPPORT Page 19
SECTION 3.7 PROTECTION AGAINST POTENTIAL LIABILITIES Page 19
ARTICLE FOUR
PROVISION OF PRODUCTS
SECTION 4.1 PRODUCT SPECIFICATIONS Page 19
SECTION 4.1.1 DRAWINGS AND SPECIFICATIONS Page 19
SECTION 4.1.2 FCC REGISTRATION Page 19
SECTION 4.1.3 RFE/EMI STANDARDS Page 19
SECTION 4.1.4 CHANGES IN DESIGN OR MANUFACTURE Page 20
SECTION 4.1.5 RETROFITS Page 20
SECTION 4.1.6 OCCUPATIONAL SAFETY AND HEALTH Page 21
SECTION 4.2 SALE AND PURCHASE OF PRODUCTS Page 21
SECTION 4.2.1 FORECAST OF ORDERS Page 21
SECTION 4.2.2 DELIVERY; TITLE; RISK OF LOSS; SECURITY INTEREST Page 21
SECTION 4.2.3 NET DISTRIBUTOR PRICE; TAXES; CHANGES IN PRICE Page 22
SECTION 4.2.4 PAYMENT TERMS Page 23
SECTION 4.3 SOFTWARE LICENSES Page 23
SECTION 4.4 LIMITED WARRANTIES Page 25
SECTION 4.4.1 LIMITED WARRANTY OF TITLE Page 25
SECTION 4.4.2 LIMITED HARDWARE AND SOFTWARE WARRANTIES; NO
SERVICE WARRANTY Page 25
SECTION 4.4.3 CONDITIONS PRECEDENT Page 25
SECTION 4.4.4 LIMITATION ON WARRANTIES Page 26
SECTION 4.4.5 POST WARRANTY SUPPORT Page 26
SECTION 4.4.6 LONG TERM SOFTWARE SUPPORT Page 27
SECTION 4.4.7 CESSATION OF MANUFACTURE; CHANGES IN DESIGN;
ALLOCATION OF PRODUCT; RELEASE OF NEW PRODUCTS Page 27
4
ARTICLE FIVE
PROPRIETARY INFORMATION
SECTION 5.1 DISCLOSURE OF PROPRIETARY INFORMATION 18
SECTION 5.2 APPLICATION OF RESTRICTION 18
SECTION 5.3 SURVIVAL OF RESTRICTION 18
ARTICLE SIX
COMPLIANCE WITH LAWS: GRATUITIES AND INSURANCE
SECTION 6.1 COMPLIANCE WITH LAWS 18
SECTION 6.2 GRATUITIES 18
SECTION 6.3 INSURANCE COVERAGE 18
SECTION 6.4 MISCELLANEOUS OBLIGATIONS
SECTION 6.4.1 RIGHT OF ACCESS/HARMONY 19
SECTION 6.4.2 PLANT AND WORK RULES 19
SECTION 6.4.3 PERSONAL RELEASES VOID 19
ARTICLE SEVEN
BREACH OF AGREEMENT: TERMINATION
SECTION 7.1 BREACH OF THIS AGREEMENT 19
SECTION 7.2 TERMINATION OF DISTRIBUTOR 19
SECTION 7.3 TERMINATION FOR STATED CAUSES 19
SECTION 7.4 SUPPORT OF DISTRIBUTOR AFTER TERMINATION 20
SECTION 7.5 FORCE MAJEURE 20
ARTICLE EIGHT
GENERAL TERMS AND CONDITIONS
SECTION 8.1 LIMITATION OF LIABILITIES 21
SECTION 8.2 GENERAL INDEMNITIES 21
SECTION 8.3 INTELLECTUAL PROPERTY INFRINGEMENT 21
SECTION 8.4 ENFORCEMENT OF INDEMNITIES
SECTION 8.4.1 NOTICE OF CLAIMS 22
5
ARTICLE NINE
MISCELLANEOUS
SECTION 9.1 ASSIGNMENT AND DELEGATION 23
SECTION 9.2 NOTICES 23
SECTION 9.2.1 ADDRESS FOR NORTEL 23
SECTION 9.2.2 ADDRESS FOR DISTRIBUTOR 23
SECTION 9.3 SURVIVAL OF SOFTWARE LICENSES AND SUBLICENSES 23
SECTION 9.4 ANNEXES INCORPORATED 24
SECTION 9.5 GOVERNING LAW 24
SECTION 9.6 PRINCIPLES OF INTERPRETATION
SECTION 9.6.1 SEVERABILITY 24
SECTION 9.6.2 HEADINGS FOR CONVENIENCE ONLY 24
SECTION 9.6.3 WAIVERS OR AMENDMENTS 24
SECTION 9.6.4 SURVIVAL OF OBLIGATIONS 24
SECTION 9.7 PRODUCT REFERENCE GUIDE AND PRODUCT CATALOG 24
SECTION 9.8 ENTIRE AGREEMENT 25
6
DISTRIBUTORSHIP AGREEMENT
This Distributorship Agreement ("Agreement") is entered into by and between
Northern Telecom Inc., a corporation created and existing under the laws of the
State of Delaware ("Nortel"), and WilTel Communications, L.L.C., a limited
liability company created and existing under the laws of the State of Delaware
("Distributor").
Nortel desires to obtain assistance in the sale, installation, and maintenance
of its products covered by the terms of this Agreement within specified portions
of the United States.
Distributor desires to become one of Nortel's distributors, and to sell,
install, and maintain Nortel's products which are covered by the terms of this
Agreement within those specified portions of the United States.
Therefore, the Parties agree:
ARTICLE ONE
ESTABLISHMENT OF DISTRIBUTORSHIP
Section 1.1 DEFINITIONS:
For the purpose of this Agreement certain terms have been defined below:
"Affiliate" or "Affiliates": shall mean certain legal entities related to
Distributor and agreed to in writing in Annex C to this Agreement.
"Class A Corrective Retrofits": shall mean retrofits to Products shipped
pursuant to this Agreement which are designed to correct electrical or
mechanical conditions rendering the Product functionally inoperable or creating
a significant safety hazard.
"Class B Corrective Retrofits": shall mean retrofits to Products shipped
pursuant to this Agreement which are designed to correct conditions or
performance deficiencies not requiring a Class A Corrective Retrofit.
"Commercial List Price": shall mean the price or license fee in U.S. dollars
specified in the Product Catalog for the ordered Products, Software and/or
Services in effect on the date the order is accepted by Nortel.
"Designated Hardware": shall mean the Hardware for which specific Software was
supplied.
"Disclosing Party": shall mean that party to this Agreement which, in any
particular instance, discloses Proprietary Information to the other party.
"Distribute" or "Distribution": shall mean the offer or sale, lease, or rent of
Hardware, or the offer or transfer of a license to use Software in connection
with Designated Hardware as an agent for Nortel or Nortel's suppliers, to End
Users.
"Distributorship Agreement": shall mean this Agreement plus the version of the
Product Reference Guide, in effect from time to time, for Products made
available to Nortel Authorized Distributors under this Agreement. Nortel from
time to time may have contractual arrangements for the distribution of other
products or other terms and conditions, which will not be deemed subject to or
available under this Agreement.
"Distributor Discount": shall mean the amount in U.S. Dollars calculated by
multiplying the Commercial List Price by the distributor discount percentage
specified in the product Catalog for that particular Product.
"Effective Date": shall mean the date on which this document shall first become
an effective and binding obligation on the parties. The Effective Date shall be
determined as provided in Section 1.2.
"End User" or "End Users": shall mean a customer or customers buying, leasing,
or renting Hardware, and/or acquiring the right to use Software, for its own
use, or for the use of a related entity specifically identified to Distributor
in writing and for which the customer is acting, without charge, as a purchasing
agent. Lessors appearing in the chain of Distribution of the Product solely as
an incident of the provision of financing for the Distribution of the Product
shall be considered End Users but only for so long as only the lessor or the
lessee under such lease, but not both, shall have all rights against, and duties
to,
Page 1
7
Distributor and/or Nortel, as a result of the Software licensing procedures
permitted or required under this Distributorship Agreement. Except as provided
above, no customer buying in anticipation of Distributing such Products can be
an End User.
"Formal Notice": shall mean notice as defined in Section 9.2.
"Gross Distributor Price": shall mean the amount, in U.S. dollars, resulting
from the subtraction of the Distributor Discount from the Commercial List Price
for an order of a particular Product.
"Hardware": shall mean any physical portion of a Nortel or third party Product,
including money circuits and media upon which Software may be delivered, but
excluding Software.
"Xxxx": shall mean the trademarks, trade names and service marks now owned by,
licensed to, or hereafter obtained by Nortel or its suppliers for Products or
services or any portion thereof.
"Minimum Distribution Level": shall mean an amount of a particular Product,
measured at the Net Distributor Price, paid to Nortel, and established each year
by Nortel for each Product, as a measure of the minimum acceptable effectiveness
of Distributor in Distributing that Product within the Territory during a
specified period.
"Net Distributor Price": shall mean the amount, in U.S. dollars, resulting from
the subtraction of any applicable Other Discount from the Gross Distributor
Price for an order of a particular Product, and which a Distributor must pay to:
(1) acquire title to specific Hardware; or (2) acquire specific Software for
Distribution purposes or internal use purposes pursuant to a Software License.
"Nortel Authorized Distributor": shall mean, with respect to any particular
Product, any business entity with which Nortel shall have executed a
Distributorship Agreement for Distribution of that Product in the Territory
described in the Distribution Agreement.
"Other Discount": shall mean an amount, in U.S. dollars, calculated by
multiplying a designated percentage which may be specified from time to time by
Nortel in the Product Catalog or by other appropriate written notification to
Distributor. The concept of Other Discounts is intended to provide a means by
which Nortel management may, from time to time and at its discretion, institute
discounts on a Product in addition to the Distributor Discount. Other Discounts
are generally limited in time, location, purpose or type of intended End User.
"Product" or "Products": shall mean either Hardware or Software which
Distributor is authorized to Distribute pursuant to the terms of this Agreement.
"Product Catalog": shall mean that version of a Product Catalog, whether in hard
copy, or software on tangible media, or made available through on-line services
provided to authorized Distributors for Nortel Products, as the prime source of
pricing and ordering information which is in effect on the date of order
acceptance.
"Product Reference Guide": shall mean that version of a Product reference guide
that is provided to authorized Distributors as a source of Product information
and a reference guide to additional Product documentation which is in effect on
the date of order acceptance.
"Proprietary Information": shall mean any of: (1) information or data, in any
form (including but not limited to Software), which is either a trade secret of
the Disclosing Party or any of Nortel's suppliers, or in which the Disclosing
Party or any of Nortel's suppliers, holds any form of intellectual property
right, whether or not conspicuously marked to indicate its confidential or
proprietary nature; or (2) general business information, in any form not readily
available to the public which is of a nature that a reasonably prudent
businessperson would normally consider confidential, regarding the conduct of
business of the parties, and/or between the parties, and/or between the other
party and any End User (whether or not marked to indicate its nature); or (3)
any information regarding actual or potential future business and/or Product
plans of the other party (whether or not marked to indicate its nature) which is
not considered by all parties to this Agreement to be in the public domain.
Page 2
8
"Receiving Party": shall mean that party to this Agreement which, in any
particular instance, receives Proprietary Information.
"Regulatory Retrofits": shall mean retrofits to Products shipped pursuant to
this Agreement and which are designed to comply with changes in applicable
requirements imposed by appropriate governmental authority.
"Sales Agent": shall mean an individual or business entity with written
authorization from Distributor to act for Distributor in accordance with
Section 2.1.8 of this Agreement.
"Service Center": shall mean an appropriate physical facility, permanently
staffed with employees of Distributor, and meeting the Nortel requirements
specified in the Product Reference Guide.
"Significant Ownership Change": With regard to a Distributor, Significant
Ownership Change shall mean a transfer of a direct or beneficial interest (as
that term is defined for purposes of compliance with the regulations of the
U.S. Securities and Exchange Commission) in the control or profits of a
Distributor: (1) of 20% or greater; or (2) of any amount sufficient to cause a
change in majority ownership; whichever is leSection With regard to an
Affiliate, Significant Ownership Change shall mean a reduction of a direct or
beneficial interest (as that term is defined for purposes of compliance with
the regulations of the U.S. Securities and Exchange Commission) in the control
or profits of the Affiliate directly or indirectly held by Distributor or
Distributor's parent: (1) of 20% or greater; or (2) of any amount sufficient to
cause such beneficial interest to fall from a majority to less than a majority;
whichever is leSection
"Software": shall mean any set of one or more computer programs which is
composed of routines, subroutines, concepts, processes, algorithms, formulas,
ideas, know how, model, generated code, source code, and/or related
documentation, some or all of which are trade secrets and/or are copyrighted or
patented, in whole or in part, severally owned by or licensed to Nortel and/or
one or more of Nortel's suppliers, regardless of the particular delivery medium
in or on which such intangible assets licensed under this Agreement may be
embodied. The term Software shall also include any corrections, patches,
updates, or revisions to Software originally Distributed.
"Software Documentation": shall mean publications supplied with Software, which
may be in various media, to explain the construction, operation, and/or use of
the Software by the End User.
"Software License": shall mean the Nortel software license in Annex D of this
Agreement or as appropriate any applicable third party software license.
"Standard Lead Time": shall mean Nortel's most recent publicly announced
estimated interval between acceptance of an order for a particular Product by
Nortel and the expected date of shipment of that order to Distributor.
"Standard Price Item": shall mean any merchandise or service, other than
Hardware or Software, offered or provided to Distributor by Nortel in
furtherance of the purposes of this Distributorship Agreement.
"System": shall mean Hardware and Software necessary to deliver a particular
functioning configuration of Product to an End User specified by Nortel in the
applicable Product Catalog.
"Territory": may be described as: (1) a geographic area lying within the
boundaries of states and/or counties and/or cities; or (2) a geographic area
coextensive with a regulated utility serving area; or (3) a class list of
customers, or any combination of the three. Territory may consist of more than
one discrete geographical area and may be different for each authorized Product.
For purposes of this Agreement, "Territory" shall mean the Distributor's
authorized Territory for each authorized Product specified in Annex A to this
Agreement.
"United States": shall mean the fifty (50) states of the United States of
America and the District of Columbia.
"UTAM": shall mean the Unlicensed PCS (UPCS) Ad Hoc Committee for 1.9 GHz
Transition and Management. UTAM is designated by the FCC as the coordinator of
deployment of UPCS devices and relocation of incumbent microwave equipment in
the UPCS band.
Page 3
9
Section 1.2 EFFECTIVE DATE
This Agreement shall become effective on January 1, 1998 or the date this
Agreement is executed by a duly authorized Nortel representative, whichever is
later. The effective date for Territory and Product authorizations shall be the
effective dates specified in the relevant Annex A and Annex B to this Agreement.
Furthermore, Distributor agrees to be bound by the Product specific terms and
conditions in the Product Reference Guide that is in effect on the date the
Product order is accepted by Nortel.
Section 1.3 TERM, RENEWAL, REPLACEMENT, AND EXPIRATION
The term of this Agreement shall begin on the Effective Date and shall expire at
midnight, Central Time, December 31, 2000, unless sooner terminated in
accordance with the termination provisions of this Agreement, or renewed as
provided below. On or before October 1 of the year prior to the last calendar
year of an initial or renewal term, Nortel shall provide Formal Notice to
Distributor of Nortel's intention: (1) to renew this Agreement for an additional
three years from the end of the then current term; or (2) to replace this
Agreement, at the expiration of the then current term, with a different
Agreement (in which case Nortel shall attach a copy of the new Agreement to the
Formal Notice); or (3) to allow this Agreement, and the Distributor
relationship, to expire at the end of the then current term. Failure of Nortel
to provide such Formal Notice shall be deemed an election by Nortel of option
(1). If either option (1) or (2) is unacceptable to Distributor, or if Nortel
shall elect option (3), then the last calendar year of the then current term
shall be considered a "wind-down" or "disengagement" period. Distributor shall
notify Nortel within sixty (60) days of receipt of Nortel's Formal Notice of
Nortel's intent to pursue either option (1) or (2) if either option (1) or (2)
is unacceptable to Distributor.
Section 1.4 GRANT OF DISTRIBUTION RIGHTS
Nortel hereby grants to Distributor, for use only during the Term and only
within the Territory, a personal, non-transferable, non-exclusive right to: (1)
purchase Hardware in one or more of the product groups ("Product Groups") set
forth in Annex B from Nortel; (2) thereafter retain the Hardware for its own
use, for inventory purposes or to distribute the Hardware; (3) use Software for
Distributor's internal purposes pursuant to the terms and conditions of a
Software License; and (4) Distribute Software. Distributor's right to Distribute
Software shall include the right to order Software and retain same in inventory
solely for Distribution purposes.
The relationship of the parties under this Agreement shall be, and shall at all
times remain, one of independent contractors and not that of franchiser and
franchisee or joint venture. For the purpose of software licensing only, the
relationship of principal and agent is established. All persons furnished by
either party to accomplish the intent of this Agreement shall be considered
solely the furnishing party's employees or agents.
Section 1.4.1 EXISTING DISTRIBUTORS
Distributor acknowledges that Nortel has an existing network of
Distributors, some or all of which may have authorization to Distribute
within the Territory one or more of the Products covered by the terms
of this Agreement. Upon request, Nortel will provide Distributor with a
list of Nortel Authorized Distributors, sorted by state and county, and
the authorized Territory and Products of each.
Section 1.4.2 RESERVATION OF RIGHTS
Nortel may appoint additional Nortel Authorized Distributors, and may
itself and/or through any direct or indirect parent, subsidiary,
subsidiary of a parent, representative or agent Distribute the Products
covered by this Agreement, within the Territory and in competition with
Distributor, irrespective of the grant of rights to Distributor
contained within this Agreement.
Section 1.5 NON-EXCLUSIVE RELATIONSHIP
This Agreement is non-exclusive and, except as specifically provided otherwise
herein, shall not be construed: (1) to require Distributor to purchase only
from Nortel (except to the extent that new Nortel Products for resale may only
be purchased from Nortel, or in limited circumstances as described in Section
2.1.1.1 from other Nortel Authorized Distributors); (2) to require Distributor
to purchase any specific amount of Product from Nortel (except to the extent
that failure to purchase may result in termination of this Agreement); (3) to
require Nortel to sell all or any specific proportion of its output to
Distributor; or (4) to require Nortel to refrain from selling all or any
portion of its output to any other entity.
Page 4
10
Section 1.6 AFFILIATES OF DISTRIBUTOR
Affiliates initially agreed to by the parties are listed in Annex C. Provided
Distributor: (1) causes each Affiliate to agree in a writing addressed to Nortel
to be bound by all of the provisions of this Agreement (or if it does not obtain
such writing, shall be deemed to warrant that it has full rights, power to and
does sign this Agreement on behalf of itself and each named Affiliate), each of
which shall be bound by all of the provisions of this Agreement, and (2)
specifies and obtains Nortel's written authorization as to a Territory for each
named Affiliate, which Territory may extend no further than the boundaries of
Distributor's Territory, except to the extent restricted by the guaranteeing
Distributor in Annex C, then each such Affiliate shall have all rights of a
Nortel Authorized Distributor under this Agreement. By agreeing to list an
entity as an Affiliate, Distributor hereby guarantees the performance of its
Affiliates' obligations to Nortel and/or Nortel's suppliers. The provisions of
this Agreement shall apply to each Affiliate individually, but termination (by
either party) of this Agreement between Nortel and Distributor shall cause an
automatic termination with respect to all Affiliates. Affiliates may be added to
or deleted from Annex C by mutual written agreement.
Section 1.7 NO FAVORED DISTRIBUTOR
It is the intention of Nortel to execute a Distributorship Agreement with each
Nortel Authorized Distributor which, except for Territory, Affiliates, Products
and Sales Agents, is identical in substance to the Distributorship Agreement
between Nortel and every other Nortel Authorized Distributor. To that end,
Nortel shall promptly inform Distributor of al substantive differences between
this Agreement and any Distributorship Agreement executed by Nortel with any
other Nortel Authorized Distributor. Nortel and Distributor shall then execute a
new Agreement to replace this Agreement, and such new Agreement shall embody all
such changes which, in the reasonably exercised opinion of Distributor, do not
adversely affect Distributor's rights and obligations under this Agreement.
Nothing in this contractual provision shall be deemed to require either
Distributor or Nortel to renew or replace, or refrain from renewing or
replacing, this Agreement. Renewal or replacement shall be governed by the
provisions of Section 1.3.
ARTICLE TWO
OBLIGATIONS OF THE PARTIES
Section 2.1 DISTRIBUTOR'S OBLIGATIONS
Distributor hereby accepts appointment as a Nortel Authorized Distributor and
agrees, in accordance with the following standards, to devote all commercially
reasonable efforts to diligently promote the Distribution of the Products within
its authorized Territory and to satisfy the needs of its End Users within that
Territory.
Section 2.1.1 DISTRIBUTION STANDARDS
(a) DISTRIBUTOR SHALL:
(1) perform or comply with the required Product
training, pricing and support services specified in
the Product Reference Guide; and
(2) offer to all of its End Users a warranty for each
Product sold which is substantially as comprehensive
as the warranty extended to Distributor by Nortel
for the same Product; and
(3) be responsible for that portion of any warranty to
any End User which exceeds, whether in time or
scope, that provided for the applicable Product to
Distributor by Nortel under the terms of this
Agreement, and which was expressly granted or
implied to that End User by Distributor; and
(4) provide Nortel, upon Nortel's written request, with
a copy of an audited or certified financial
statement of Distributor, including a balance sheet,
income statement, and statement of changes in
financial position, for the most recent fiscal year
of Distributor ending not less than ninety days
before the date of Nortel's request; and
(5) comply with all federal, state and municipal laws
and regulations applicable to Distributor's
performance as a Distributor of the Product and
related services under this Agreement. Additionally,
Distributor shall comply with instructions given by
UTAM with respect to Distribution and deployment of
Products in the Unlicensed PCS Spectrum.
Page 5
11
(b) DISTRIBUTOR SHALL NOT:
(1) except as expressly allowed under Section 2.1.1.1,
Distribute Products to anyone whom Distributor knows
or reasonable should know are not End Users; or
(2) except as expressly allowed under Section 2.1.1.2
Distribute Products for installation outside the
Territory; or
(3) Distribute Products at locations within the
Territory at which Distributor is unable to provide
the service required by this Agreement; or
(4) convert, adjust, alter or modify Products, except to
the extent such action is in strict accord with the
provisions of the applicable Product Reference
Guide, or is authorized in writing by Nortel; or
(5) remove, alter, disconnect or negate any of the
safety features incorporated into Products; or
(6) Distribute any Product which is represented to an
End User to be a genuine, new and unused Product
unless it is known to Distributor to be, in fact,
genuine, new and unused because it was acquired from
Nortel by Distributor pursuant to this Agreement; or
(7) Distribute Software to anyone from whom Distributor
has not received and retained in its files a
properly executed Software License; provided,
however, that in the event Distributor installs
Software for an End User which requires acceptance
of the software license by opening a sealed package
or acceptance of an electronic software license
during installation, Distributor shall require End
User to accept such software license in the manner
indicated prior to installing the Software; or
(8) take any action which could reasonably be foreseen
to cause a material adverse effect upon the goodwill
of Nortel and/or the quality and functionality of
Nortel Products.
Section 2.1.1.1 DISTRIBUTION TO OTHER THAN END USERS
(a) Nortel recognizes that instances may arise in which
Distributor may wish to engage in forms of
Distribution not allowed by this Agreement, such as
some form of joint venture with or subcontract from
parties other than Nortel or another Nortel
Authorized Distributor, for the Distribution of a
limited amount of Products to a particular End User
in a transaction in which the contract signed by the
End User will be with an entity other than
Distributor or an Affiliate. If Distributor wishes
to engage in such Distribution, it shall submit to
Nortel a written request specifying: (1) the
proposed End User; (2) the party proposing to
contract with the End User; (3) the particular
configuration of Product involved; (4) the
installation location; (5) that Distributor will be
contractually bound, and contractually entitled, to
install the Products and to maintain them through
the end of the warranty period; (6) that Distributor
will offer to maintain the Product for the period
following the warranty period specified in the
Product Reference Guide, and, if Distributor intends
to subcontract the obligations of Section
2.1.1.1(a)(5) and Section 2.1.1.1.(a)(6) as allowed
by Section 2.1.7, then (7) the identity of the
subcontractor which will be used. Within ten
business days of receipt of such a request, Nortel
will notify Distributor of whether Nortel will
approve a deviation from the terms of this Agreement
based upon the information provided.
(b) In each instance in which Distributor is engaging in
activities contemplated by Section 2.1.1.1(a) and
provides Nortel with Formal Notice which would
constitute: (1) a representation that the value of
the portion of the prime contract with the End User
which is being subcontracted to Distributor
constitutes less than 33% of the total value of such
prime contract; (2) a representation that
Distributor will not further subcontract its
obligations to any entity except to Nortel or
another Nortel Authorized Distributor within that
Distributor's Territory and only if such other
Distributor has a service center appropriately
located to provide, at the installation location,
the level of service required by this Agreement; and
(3) representations providing to Nortel the
information requested bySection 2.1.1.1(a)(1)
throughSection 2.1.1.1(a)(7); then Nortel will not
object to such Distribution activity, and approval
may be considered automatic upon Nortel's receipt of
the required Formal Notice.
Page 6
12
Section 2.1.1.2 SPECIFIC ACCOUNT PROGRAM
(a) From time to time, Nortel may specify a limited
number of End User accounts which may be called
premier accounts, national accounts, major accounts,
large accounts, or other appropriate name, which
appear likely to purchase Nortel Products for
installation in widely dispersed geographic
locations within the United States. If Distributor's
Territory encompasses less than the entire United
States, then, at the request of such an account,
and/or at the request of Distributor, Nortel, in its
sole discretion, may name Distributor as authorized
to distribute to that End User account without
regard to the restrictions of Distributor's
Authorized Territory, but nevertheless only within
the United States. Any such designation shall only
be effective if made to Distributor, in writing, by
Nortel.
(b) Nortel will consider accounts for such designation:
(1) if the principal place of business of the End
User is within the Territory and (2) if Distributor
provides Nortel with a copy of a written request to
Distributor from the account demonstrating a
relationship and asking that Distributor offer to
provide the Products to the account wherever the
account may have operations within the United
States. If Distributor is designated by Nortel as a
supplier to such an account, then notwithstanding
Section 1.4, Distribution to that account will be
deemed to occur at the address of the principal
place of business of the account within the
Territory. However, for any Distribution of the
Products to that account by Distributor for
installation outside the Territory, the provisions
of Section 2.1.7(a)(3) shall not be available to
Distributor, and Distributor must either install the
Product itself or subcontract the installation to
Nortel or to a Nortel Authorized Distributor.
Establishment by Distributor of a Service Center
outside the Territory in order to service such a
specific account shall not be construed to authorize
Distribution to any other accounts outside the
Territory, except such other accounts as may be
specifically designated by Nortel pursuant to this
Section 2.1.1.2.
(c) Nortel may, in its discretion, appoint an account
manger for any account so designated, who shall be
responsible for coordinating Distributor sales to
that account, and who, in the course of such
coordination, shall engage in such direct contact
with the End User as may be reasonably necessary.
(d) Nortel may, in its sole discretion, revoke its
authorization to Distribution pursuant to
this Section 2.1.1.2 or its designation of any
account as a specific account at any time and for
any reason. Upon receipt of Formal Notice of such
revocation, Distributor shall immediately cease
Distributing to that account outside the Territory.
In such instance, Distributor may honor any formal
proposals for individual and specific installations
which had already been offered to the account as of
the date of receipt of the Formal Notice. In the
event of such a revocation, Nortel will offer to
Distributor Nortel's Support Agreement to allow
Distributor to continue to support those
installations of Products Distributed to the account
by Distributor outside its Territory during the
period the account was designated to be within the
scope of this section.
Section 2.1.2 MINIMUM DISTRIBUTION LEVEL
Nortel may establish, in writing, on or before October 1 of each year,
or subsequent to such date as appropriate, a product line ("Product
Line") and associated Minimum Distribution Level for that Product Line.
For ease of administration, the Minimum Distribution Level shall be
stated and measured in terms of the dollar value of each Product Line
for which Distributor shall have paid Nortel during the applicable
period or any pro rata portion thereof. In the event that Distributor
fails to meet the Minimum Distribution Level established by Nortel for
a particular year, Nortel shall have the right, in its sole discretion,
with or without other cause (1) to terminate this Agreement; or (2) to
terminate Distributor's right to Distribute Products for which Minimum
Distribution Levels have not been met; or (3) to assess **** in order
for Distributor to continue as a Nortel Authorized Distributor for the
remainder of the year following the year in which the Minimum
Distribution Level was not met.
------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
Page 7
13
Section 2.1.3 ADVERTISING AND PROMOTION
Distributor shall not advertise or promote the Products outside the
Territory. Distributor shall not hold itself out within the Territory
as a Nortel Authorized Distributor or other than those Products as to
which Distributor has been authorized to Distribute in Annex B to this
Agreement. Distributor and Nortel shall regularly discuss planned
advertising and promotional efforts with respect to the Products.
Except as otherwise expressly agreed in writing, Distributor shall bear
all promotional, display and operating expenses incurred by it with
respect to the Distribution of the Products. Nothing contained in this
Section 2.1.3 shall imply any right in Nortel to pre-approve or screen
Distributor's advertising and/or promotional efforts. However, Nortel
shall have the right to prohibit the continued use by Distributor of
specific advertising and/or promotional materials which Nortel
reasonably believes will damage Nortel's reputation. Nortel shall not
use Distributor's name, tradename, or trademark in any advertising or
promotion without Distributor 's prior written consent.
Section 2.1.4 USE OF MARKS
(a) Distributor shall Distribute Products only under the Marks
used by Nortel and/or Nortel's suppliers, as appropriate.
Distributor shall make no use of the Marks which use would
imply that Distributor was a Nortel Authorized Distributor of
any products other than those Products as to which Distributor
has been authorized to Distribute in Annex B, hereto.
(b) From time to time, by use of the Products Catalog, or other
appropriate written notification, Nortel shall notify
Distributor of current Marks and any changes thereto.
Distributor shall not alter, obliterate, cover or remove any
Marks, serial number, or other symbols, characteristics or
legends appearing on any Product (including any associated
packaging, labels, manuals, and/or documentation). All Marks
are proprietary to Nortel or Nortel's suppliers, as the case
may be.
(c) This Section 2.1.4 shall not be construed to grant to
Distributor, or any End User, any general license to use such
Marks. Distributor shall not use or display any Marks except
in connection with the advertising, promotion or Distribution
of the Products within the Territory and in accordance with
the provisions of this Agreement. Distributor shall not use or
claim any Xxxx which is identical, or confusingly similar, to
any of Nortel's or Nortel's suppliers' Marks. Except as
expressly allowed by this Agreement, Distributor shall not
affix any different or additional Xxxx or other publicly
visible identifying Xxxx, symbol, logo or characteristic to
any Product. Distributor, in any of its advertising or
quotations to potential End Users which includes references to
any Xxxx, shall, at least once in a prominent place in each
such reference clearly indicate by the use of "(TM)", or
"(R)", as appropriate, that the particular Xxxx is that of
Nortel or of the particular Nortel supplier, as the case may
be. Upon termination or expiration of this Agreement
Distributor's privilege to use the Marks shall expire, and
Distributor shall immediately discontinue the active use of
same in connection with any business conducted by Distributor,
except for such use directly related to final disposal of any
inventory of Products held by Distributor on the date of
termination or expiration.
Section 2.1.5 OPERATING REQUIREMENTS
Section 2.1.5.1 SERVICE CENTERS
Distributor agrees to comply with the requirements for the
establishment and maintenance of Service Centers, service
standards and response time standards for each authorized
Product as specified in the Product Reference Guide.
Section 2.1.5.2 SERVICE STANDARDS
Nortel Products shall be Distributed, installed and maintained
in a manner which will neither damage the quality or
functionality of the Products or the reputation of Nortel nor
require extraordinary technical support from Nortel in order
to resolve installation and/or maintained problems.
Page 8
14
Section 2.1.5.3 RIGHT TO ENSURE SERVICE
In the event that Nortel shall have received a written
complaint from an aggrieved End User under warranty from
Distributor or maintenance contract with Distributor, which
compliant includes representations that the End User is not in
breach of its contract with Distributor and which leads Nortel
to reasonably believe that Distributor has failed to comply
with service standards and response standards as specified in
the Product Reference Guide, then Nortel may elect to provide
the required service itself or through such contractor or
contractors as Nortel may reasonably choose. Before acting on
an election under the preceding sentence, Nortel: (1) shall
notify Distributor of such election; and (2) shall notify
Distributor of Nortel's intention to wait 24 hours from the
time of such notice for Distributor to take corrective action
before itself taking any such action, except in circumstances
in which Nortel believes that failure to act immediately may
endanger life and/or property. Except to the extent that
Nortel is able to require the complaining End User to pay for
services Nortel chooses to provide, such services shall be
provided at Distributor's expense. In such case, Distributor
shall have no claim of any kind against Nortel.
Section 2.1.5.4 RIGHT TO INSPECT INSTALLATIONS
Subject to receipt of permission from the affected End User,
Nortel shall have the right, at any time and with reasonable
written notice to Distributor, to inspect any installation of
Products by Distributor, in order to ensure that the
requirements of this Agreement are being met. Upon receipt of
written request from Nortel, Distributor shall make all
commercially reasonable efforts to obtain any necessary
permission from the affected End User for such inspection and
to arrange a time permitting Distributor personnel to
accompany Nortel if Distributor so wishes. Nortel shall advise
Distributor of the results of any such inspection.
Section 2.1.6 RECORD KEEPING AND REPORTING
Distributor shall maintain a record of its Distribution of the Products
in order to comply with the requirements imposed upon Nortel by
Nortel's suppliers of Software and for Distributor's and Nortel's
protection in the event that products liability, copyright
infringement, trade secret misappropriation, or intellectual property
misuse claims related to the Products should arise. Such records shall
include: (1) documentation of Distributor's purchases of Hardware; (2)
documentation of Software ordered and received from Nortel from
Distribution and internal use purposes; (3) documentation of
Distributor's Distribution of Products to End Users; and (4) copies of
Software Licenses executed by each End User to which Software is
licensed. Distributor shall retain a copy of those records specified in
subsection (4) above and shall use all commercially reasonable efforts
to retain a copy of the records specified in subsections (1) (2) and
(3), for at least ten years from the date of Distribution of the
Product and such obligation shall survive the termination of this
Distributorship Agreement. Distributor may, upon termination of this
Agreement, satisfy the requirement to retain such records by delivering
complete and accurate copies of such records to Nortel and formally
assigning to Nortel all of Distributor's rights under all then
effective Software Licenses. Nortel, and any of Nortel's suppliers of
Software Distributed through Distributor which have ben identified to
Distributor in writing by Nortel and which are accompanied by Nortel
personnel, shall have a limited right, upon reasonable notice to
Distributor, to examine Distributor's records regarding the
Distribution of such Nortel or Nortel supplier generated Software
pursuant to the terms of this Agreement. Distributor will cooperate
fully with Nortel or any of its Software suppliers in the defense or
prosecution of any suit in which the existence or non-existence of a
Software License is either an issue or any aspect of such Software
License is in question.
Section 2.1.7 SUBCONTRACTING TO THIRD PARTIES
Distributor's obligations under this Agreement may be subcontracted
only as follows:
(a) Distributor may subcontract the installation, warrant period
maintenance, and post-warranty period maintenance of a Product
for which Distributor may contractually obligate itself, only
to: (1) Nortel; or (2) another Nortel Authorized Distributor
within that Distributor's Territory if such other Distributor
has a Service Center appropriately located to provide the
level of service required by the Product Reference Guide; or
(3) any other third party with the prior written approval of
Nortel, which approval may be withheld for any reason solely
in Nortel's discretion.
Page 9
15
(b) No subcontract shall relive Distributor of primary
responsibility to Nortel for the performance of Distributor's
obligations under this Agreement.
Section 2.1.8 SALES AGENT AUTHORIZATION
(a) If Distributor is authorized in Annex B to use Sales Agents in
the Distribution of a particular Product, then Distributor,
with Nortel's prior authorization with respect to each
proposed agent and subject to the provisions of subsections
2.1.8(b) through (f) below, may appoint Sales Agents for the
purpose of selling Products within the scope of the
Distributor's Product Authorization and Territory.
(b) Contracts between Sales Agents and the Distributor shall not
grant or purport to grant the right for Sales Agents to use
Nortel's trademarks, tradename or logos.
(c) Authorization by Nortel for Distributor to establish Sales
relationships by Nortel shall not constitute any release or
waiver by Nortel of any Distributor's covenants, obligations,
duties or indemnities under the Agreement.
(d) Distributor shall not give, disclose, provide copies or
otherwise make Nortel's Product Catalog, price manuals, price
lists, electronic pricing aids, or any other such forms of
documentation containing Nortel's prices or discounts to its
Sales Agents.
(e) When using Sales Agents, Distributor shall:
(1) Purchase all Products from Nortel. Nortel will not
accept any orders from a Sales Agent. Distributor
must pass title to Products (other than Software)
directly to the End User, and the Sales Agent may
not be in the chain of title. Distributor will be
responsible for assuring that each End User executes
appropriate Software Licenses as described elsewhere
in this Agreement.
(2) Remain responsible to the End User for the quality
and timeliness of all functions and work performed
by a Sales Agent.
(3) Place calls or other requests for support to Nortel.
Nortel support will be provided only to
Distributor's own employees. Nortel will not accept
calls or other requests for support from Sales
Agents.
(4) Appoint Sales Agents only pursuant to written
contracts reflecting fully the requirements of the
terms and conditions set forth in this Section 2.1.8
and, to the extent applicable, the terms and
conditions of this Agreement, and make them
available to Nortel for inspection upon request.
Further, such contracts shall prohibit Sales Agents
from altering or modifying Nortel Products.
(5) Provide adequate Product training to Sales Agents in
order to ensure they are fully capable of fulfilling
all requirements for which they are authorized.
(6) Require Sales Agents to participate in completing
Nortel's Customer Satisfaction Surveys.
(7) Provide to Nortel a monthly report or orders for
Products sold by each Sales Agent.
(8) Provide in contracts with Sales Agents that the
Sales Agents shall indemnify and hold Nortel
harmless from any liabilities, proceedings, damages
or costs arising out of or related to any
misrepresentation made about Nortel or the Products
to anyone or any act or omission related to or
arising from any failure to comply with the terms
and conditions of its contract with Distribu tor, or
its obligations related to this Agreement.
(9) Ensure Sales Agents are authorized to sell only
Products sold by Distributor within Distributor's
authorized Territory.
Page 10
16
(10) Provide in contracts with Sales Agents that their
appointment will terminate upon the earliest of
termination or expiration of this Agreement, or
Nortel's revocation of Distributor's right to
appoint Sales Agents.
(11) Indemnify, defend and hold Nortel harmless from any
claims, suits or proceedings, damages, liabilities,
and costs (including, without limitation, reasonable
attorneys' fees) which are attributable to any act
or omission of a Sales Agent, including, but not
limited to, any which arise from injury to or death
to persons or loss of or injury to property, which
are in any way connected with Sales Agent's
performance related to this Agreement or its
contract with Distributor.
(12) Remain responsible for all warranty obligations to
the End User and for all Product returns from the
End User in accordance with the terms and conditions
of this Agreement.
(13) Disclose to the End User that a Sales Agent may
perform the sales function only and may not perform
installation, diagnostic or maintenance services, or
work on-site.
(14) Advise the Sales Agent of all the limitations
imposed on Sales Agents by this Agreement
(including, without limitation, Nortel's right to
require the termination of a Sales Agent's
authorization).
(f) Nortel reserves the right to require Distributor to terminate
its relationship with a Sales Agent within thirty (30) days
following Formal Notice. Circumstances wherein Nortel in its
sole discretion may invoke such a right shall include, but are
not limited to:
(1) Failure of the Distributor or the Sales Agent to
abide by the terms and conditions specified herein;
or
(2) Failure of the Sales Agent to achieve satisfactory
ratings on Nortel's Customer Satisfaction Surveys;
or
(3) Misrepresentations by the Sales Agent to End Users,
potential End Users or others about the Products,
services and/or warranties available, or the
relationship the Sales Agent has with the
Distributor or Nortel; or
(4) Any other reason that in the sole judgment of Nortel
is necessary to achieve Nortel's distribution
strategy or to comply with the law.
ARTICLE THREE
OBLIGATIONS OF NORTEL
Section 3.1 SUPPORT OF DISTRIBUTOR BY NORTEL
Nortel shall provide Distribution and promotional support to Distributor as
provided in the following sections. Each item and type of support, except
provision of a Product or Product Catalog, is considered a Standard Price Item.
Nortel reserves the right: (1) to discontinue offering any Standard Price Item;
(2) to add any Standard Price Item; (3) to institute, raise or lower price for
any Standard Price Item; and (4) to announce and/or change the terms and
conditions upon which Standard Price Items are offered. Nortel will give
Distributor thirty (30) days prior Formal Notice of any such changes. In the
provision of such support, Nortel shall not take any action, other than as
authorized in this Agreement, which could reasonably be foreseen to cause a
material adverse effect upon the goodwill of the Distributor. A Standard Price
Item is not eligible for Distributor Discount or Other Discount.
Section 3.2 ACCOUNT DIRECTOR/MANAGER
Nortel shall appoint one or more Account Directors and/or Account Managers who
shall be responsible for providing administrative support and coordination to
Distributor. An Account Director or Manager may provide support to one or more
Distributors in connection with the Distribution of the Products. The Account
Director/Managers shall have no authority to interpret or vary the terms of this
Agreement or other notices or programs issued in support of this Agreement.
Page 11
17
Section 3.3 TRAINING
Nortel will provide access to Nortel's Training Centers for various forms of
training for employees of Distributor. Training shall be offered and provided on
such terms and conditions as Nortel may specify in technical training catalogs
or other appropriate forms of written notice to Distributor and, unless
otherwise specified by Nortel in the applicable technical training catalog,
shall be strictly limited to bona fide employees of Distributor and/or bona fide
employees of Distributor's subcontractors authorized by Nortel in accordance
with Section 2.1.7 and Section 2.1.8. In all cases in which Distributor wishes
Nortel to accept employees of subcontractors for training, Distributor shall
identify such employees, and Nortel shall invoice Distributor, which shall be
responsible for paying for such training.
Section 3.4 PRODUCT CATALOG
Nortel shall provide Distributors with a reasonable number of Product Catalogs,
as the price source of pricing and ordering terms and conditions on either paper
or electronic media. Each Product Catalog is considered proprietary and is
provided to Distributor as a loan. Upon termination of this Agreement,
Distributor shall promptly return all Product Catalogs to Nortel.
Section 3.5 NORTEL SUPPORT IN EVENT OF CATASTROPHE
Nortel will make all commercially reasonable efforts, at its then usual charges
(including, without limitation thereto, charges for overtime), to assist
Distributor in recovering from the effects of a catastrophic occurrence upon
Distributor's installed base of Products within the Territory. Nothing in this
Agreement shall require Nortel to maintain inventories or stand in any state of
readiness to assist Distributor. In the event of a catastrophe affecting the
installed base of Products of more than one Nortel Authorized Distributor,
Nortel may divide its support efforts among the affected Distributors as deemed
by Nortel to be most reasonable. In each instance in which Distributor requests
support in event of catastrophe, Distributor shall notify Nortel of the
existence or lack of written contractual Agreements between Distributor and the
End User needing such support which contract protects Nortel against liability
to such End Users for incidental, special and/or consequential damages arising
out of Nortel's performance. Nortel reserves the right to deny support in the
absence of such protection.
Section 3.6 PROGRAMS OF SUPPORT
From time to time, Nortel may announce programs of support to Distributors of
End Users. All of such programs are subject to all limitations of liability
contained in this Agreement.
Section 3.7 PROTECTION AGAINST POTENTIAL LIABILITIES
In any case in which Distributor requests and accepts any form of pre-sale or
post-sale support, which support involves direct contact between Nortel and an
End-User, Distributor shall obtain a written agreement with that End User which
includes both warranty and general contractual disclaimers as to any direct
Nortel liability for warranties or for any incidental and consequential losses,
damages or claims of that End User, or failing to do so shall indemnify and hold
Nortel harmless from such claims, demands or damages.
ARTICLE FOUR
PROVISION OF PRODUCTS
Section 4.1 PRODUCT SPECIFICATIONS
Section 4.1.1 DRAWINGS AND SPECIFICATIONS
Drawings and technical specifications for Products which are available
to Authorized Distributors are identified in the Product Reference
Guide.
Section 4.1.2 FCC REGISTRATION
Nortel represents and warrants that any Product sold to Distributor
pursuant to this Agreement which is subject to, and not exempted by,
Part 68 of the Rules and Regulations of the Federal Communications
Commission in effect at the time of such sale ("Part 68"), is
registered under and complies with Part 68, including (without
limitation
Page 12
18
thereto) all labeling and customer instruction requirements. In the
event of a breach of the warranty of this Section 4.1.2, a condition
precedent to any duty on the part of Nortel to remedy the breach and to
the indemnity stated herein, shall be that the Product was installed
within the Distributor's Territory in accordance with the terms of the
Agreement.
Section 4.1.3 RFE/EMI STANDARDS
Nortel represents and warrants that any Product sold to Distributor
pursuant to this Agreement which is subject to, and not exempted by,
Part 15, Subpart A & B of the Rules and Regulations of the Federal
Communications Commission in effect at the time of sale, will comply
with the requirements in Part 15, Subpart A & B of the Rules and
Regulations of the Federal Communications Commission. In the event of a
breach of the warranty of this Section 4.1.3, a condition precedent to
any duty on the part of Nortel to remedy the breach and to the
indemnity stated herein shall be that the Product was installed within
the Distributor's Territory in accordance with the terms of this
Agreement.
Section 4.1.4 CHANGES IN DESIGN OR MANUFACTURE
(a) Any Product shipped by Nortel in fulfillment of an accepted
order shall not contain any change from those design and/or
manufacturing specifications in place on the date the order
was accepted. For the purposes of this provision, a change is
defined as an action which materially, adversely, and
measurably impacts reliability, form, fit, or function.
(b) Nortel shall give Distributor thirty (30) days written notice
of Nortel's intent to commence accepting orders for Products
containing any change in the design and/or manufacture which
materially, adversely, or measurable impacts reliability,
form, fit, or function. For all changes in design and/or
manufacture of Products, Nortel shall provide Distributor with
revisions to the applicable Northern Telecom Practices manual
or other specifications as promptly as is reasonably possible.
Section 4.1.5 RETROFITS
If Nortel shall determine that a need exists to make either Class A
Corrective Retrofits or Class B Corrective Retrofits, then Nortel shall
so notify Distributor within thirty (30) days of the date of such
determination by means of appropriate documentation. Nortel shall use
all commercially reasonable efforts to develop required Corrective
Retrofits and, when and if such Corrective Retrofits are developed,
shall provide to Distributor without charge, one Corrective Retrofit
kit for each affected item of Product delivered to Distributor pursuant
to this Agreement. Nortel will install all Class A Corrective Retrofit
kits with its own personnel, or such personnel as it may contract and
at its own expense, provided Distributor first: (1) obtains permission
from the affected End User for Nortel personnel to work on the End
User's affected Product during normal business working hours and at
such time as is reasonably convenient to both Nortel and the End User;
and (2) when necessary, obtains the affected End User's permission to
take the affected Product out of service during the time necessary to
install the Class A Corrective Retrofit kit; and (3) has obtained from
the End User a written Agreement protecting Nortel against liability
for any incidental, special and/or consequential damages to such End
User as a result of performance by Nortel. Installation of Class B
Corrective Retrofit kits at affected End User sites shall be the
responsibility and obligation of Distributor, at Distributor's
expense, unless Nortel is providing post-warranty maintenance to the
affected Product under contract to the affected End User, in which case
Nortel will install the Class B Corrective Retrofit kit at Nortel's
expense. If Nortel shall determine that a need exists to make
Regulatory Retrofits, then Nortel shall notify Distributor by means of
appropriate documentation. When a Regulatory Retrofit kit is developed,
Nortel shall offer, at such price as it may announce, and on its then
standard terms and conditions, to provide such Regulatory Retrofit kit
for all affected Products delivered to Distributor pursuant to this
Agreement.
Section 4.1.6 OCCUPATIONAL SAFETY AND HEALTH
When required by the Occupational Safety and Health Act, Nortel shall
provide to Distributor appropriate documentation for any Product
shipped to Distributor by Nortel.
Page 13
19
Section 4.2 SALE AND PURCHASE OF PRODUCTS
Section 4.2.1 FORECAST OF ORDERS
In order to assist Nortel in keeping the Products' price competitive in
the marketplace, the Distributor, on or before February 1, May 1,
August 1, and November 1 of each year, shall prepare and submit a
written "rolling" forecast of Distributor's anticipated orders of each
Product for the 12-month period beginning two months after the forecast
due date (i.e., beginning April 1, July 1, October 1, and January 1,
respectively).
Section 4.2.2 DELIVERY; TITLE; RISK OF LOSS; SECURITY INTEREST
(a) The Net Distributor Price of any ordered Products is based
upon delivery on board the carrier, which may be either a
carrier, which may be either a common carrier or may be
Nortel, at Nortel's factory or warehouse of origin, or for
Products imported from Nortel's factories located outside the
United States, at the United States port of entry. Title to
Hardware shall pass to Distributor, and tender and acceptance
shall occur when Nortel duly surrenders possession to the
common carrier, or if Nortel is acting as carrier, upon
departure from the factory or warehouse of origin loading dock
or port of entry as the case may be. Risk of loss to Product
shall pass to Distributor upon delivery at the destination
specified in Distributor's order. Provided Nortel shall
promptly make a replacement shipment of Products for any
Products lost for more than five business days or damaged in
shipment, Nortel shall have no liability to Distributor for
non-delivery or late delivery in such circumstances. Unless
otherwise requested by Distributor, Nortel will normally ship
all Products to Distributor by "best way" surface freight.
Nortel will prepay the common carrier, or if it acts as the
carrier will itself initially bear the cost of shipping, and
will in all cases invoice Distributor for all shipping charges
incurred in addition to the Net Distributor Price. If Nortel
acts as the carrier, Nortel may charge and invoice freight
charges not to exceed the then available comparable commercial
rates for the shortest usual commercial route from the
shipping point or port of entry to the point of destination
for such carriage, and shall assume all risks of carriage as
if it was a common carrier. If requested by Distributor,
Nortel will ship by air or other available means, but reserves
the right to assess and invoice additional handling charges
for non-standard shipment methods; such additional handling
charges shall be a Standard Price Item and will be listed in
the Product Catalog or Product Reference Guide or quoted to
Distributor in advance of shipment. Nortel reserves the right
to reject any order or portion thereof for any reason. If
Nortel is unable to fill an order in full, partial shipment
may be permitted. Provided Distributor authorizes a partial
shipment, then Nortel shall invoice Distributor for the
Products contained in the partial shipment and Distributor
will not withhold payment of such invoice because of the
remaining unfilled portion of the order.
(b) Upon request, Distributor shall grant to Nortel, in writing, a
security interest in all Products to be delivered to
Distributor pursuant to this Agreement, and any proceeds
thereof, to secure payment of the purchase price, and shall
sign appropriate financing statements naming Distributor as
debtor and Nortel as secured party, as may be necessary for
Nortel to perfect its security interest under Article 9 of the
Uniform Commercial Code. Upon receipt of payment in full of
the purchase price of the Product as to which the security
interest was granted, Nortel shall promptly file a
satisfaction of any financing statement filed with respect
thereto. Refusal or failure of Distributor to grant any
requested security interest and/or to sign any requested
financing statement shall entitle Nortel to refuse to ship any
order.
Section 4.2.3 NET DISTRIBUTOR PRICE; TAXES; CHANGES IN PRICE
(a) The Net Distributor Price for any order of Products shall be
calculated as follows: (1) the Commercial List Price in effect
on the date Nortel accepts the order less the applicable
Distributor Discount equals the Gross Distributor Price; (2)
The Gross Distributor Price less any Other Discounts equals
Net Distributor Price. All discounts will be stated in
percentage terms. The Net Distributor Price does not include
any applicable handling charges, interest charges, freight
charges, insurance charges, cancellation charges, or
rescheduling charges, or any applicable sales, use, and/or
privilege taxes, all of which will be invoiced to Distributor
in addition to the Net Distributor Price.
(b) Nortel shall not invoice Distributor for any federal or state
sales, use, value added or privilege tax if Distributor has
provided Nortel with a valid exemption certificate from the
state imposing the tax (which usually will be the state to
which the order is shipped).
Page 14
20
(c) Nortel reserves the right to change the Commercial List Price,
and/or change or eliminate discounts.
Section 4.2.4 PAYMENT TERMS
(a) Except as otherwise stated in the Product Reference Guide or
Product Catalog, Nortel will invoice Distributor as of the
date that a full or partial shipment is made, or for services
upon completion thereof but no less often than monthly if
services continue from month to month. Any invoiced amount
shall be due and payable thirty days after the date of the
invoice. If an invoice contains one or more amounts which are
disputed, as well as one or more amounts which are not,
Distributor agrees it will not withhold any amount(s) which
are not disputed. All amounts past due shall accrue interest
from the thirty-first day following the date of the invoice at
the rate of one percent (1%) per month (or such lesser rate as
may be the maximum permissible rate under applicable law).
Nortel reserves the right to refuse to grant credit to
Distributor at any time and for any reason and to insist upon
cash on delivery or cash-in advance transactions.
(b) Notwithstanding the above, Nortel will invoice Distributor the
purchase price for any Meridian SL-100 system as follows:
10% upon execution of the "Meridian SL-100 Installation
Subcontract" and acceptance of Distributor's order by
Nortel; and
80% upon shipment of the central processor unit of the
system; and
10% upon in-service date or 60 days from the completion of
testing, whichever occurs first.
Section 4.3 SOFTWARE LICENSES
(a) Distributor's failure to fully abide by all of the software
provisions of this Agreement shall be deemed in breach of this
Agreement and Nortel or an aggrieved Nortel supplier through
Nortel may, upon its election and in addition to any other
rights and remedies that it may have, require the termination
of Distributor's right to Distribute Software under this
Agreement. Such election may be made with respect to all
Software or only the affected Software supplied to Distributor
pursuant to this Agreement. Exercise of such option shall
require that Nortel give Distributor written notice of such
breach with no less than thirty days in which to cure,
specifying with reasonable particularity the nature of the
claimed breach and the Software with respect to which the
election is made.
(b) If Distributor's right to Distribute Software under this
Agreement shall have been terminated, then within thirty days
of such termination, Distributor shall deliver all affected
Software in Distributor's possession (including all back-up
copies) to Nortel for credit at a price equal to the price
paid by Distributor to Nortel, render unusable all portions of
the affected Software placed in any storage apparatus under
Distributor's control and certify such destruction to Nortel
in writing, and provide Nortel with originals of the Software
License for all copies of the affected Software previously
Distributed by Distributor. Distributor's obligations under
this Section 4.3 shall survive the expiration or termination
of this Agreement, regardless of the cause of such expiration
or termination.
(c) Nortel expressly reserves the right to modify the Nortel
Software License. Such modified Software License shall apply
to all Software transactions between Nortel and Distributor
and/or between Distributor and End User occurring after the
Formal Notice of the modification. Any such modification shall
not require the replacement of currently effective Software
Licenses until such time as such End Users order additional
Software.
(d) Distributor must Distribute Software only to End Users which:
(1) acquire from Distributor the title to the accompany
Hardware which was obtained by Distributor from Nortel by
means of a particular order issued pursuant to this Agreement
and installed within the authorized Territory; or (2) hold
title to Hardware acquired other than from Distributor but
installed within the authorized Territory; and (3) execute the
Nortel Software License. Distributor shall pay Nortel the
license fee designated in the Product Catalog. Distributor may
choose to absorb the majority of the fees charged by Nortel
and/or Nortel's suppliers or to pass those fees on to the End
User/Licensee, in part, unchanged, or marked-up, as
Distributor may see fit. However, Distributor must obtain
consideration for use of the Software.
Page 15
21
(e) Distributor shall maintain a properly executed Software
License from each End User ordering Software from Distributor.
Distributor shall use all commercially reasonable efforts to
ensure that each End User complies with all of the
requirements of the Software License. If Distributor becomes
aware of an End User breaching the Nortel Software License,
then Distributor shall promptly advise Nortel in writing of
the identity of such End User and the nature of the breach.
Distributor shall cooperate, in any commercially reasonable
manner requested, at the expense of Nortel and/or Nortel's
suppliers, in any legal action or potential legal action by
them against the End User in material breach, related to that
breach. Distributor shall indemnify and hold Nortel harmless
from any claims, demands or damages if Distributor violates
any provisions of this section.
Section 4.4 LIMITED WARRANTIES
Nortel warrants the Hardware and/or Software supplied to Distributor and
installed within the authorized Territory in accordance with the following
provisions and any additional Product specific warranty provisions in the
Product Reference Guide.
Section 4.4.1 LIMITED WARRANTY OF TITLE
Nortel warrants that it will deliver good title to all Hardware sold to
Distributor pursuant to this Agreement, free and clear of any claims,
liens, encumbrances, or security interests of any kind except any
security interest obtained from Distributor by Nortel pursuant to
Section 4.2.2(b). The exclusive remedy of Distributor for breach of the
warranty contained in this Section 4.4.1 shall be to require Nortel,
without cost to Distributor, to promptly clear the title to the
Hardware.
Section 4.4.2 LIMITED HARDWARE AND SOFTWARE WARRANTIES; NO SERVICE
WARRANTY
The Hardware and Software Limited Warranties, and exclusive remedies
with respect to each of them, are set forth in detail in the Product
Reference Guide by applicable Product Group.
Nortel provides no warranty in connection with or for any service
provided by it to Distributor.
Section 4.4.3 CONDITIONS PRECEDENT
In addition to any conditions precedent contained in the sections of
the Product Reference Guide describing each warranty, conditions
precedent to any obligation upon Nortel to remedy any breach of
warranty shall be that:
(a) Nortel shall not have declared a termination of this
Agreement;
(b) the particular item of Product with respect to which the
warranty is being invoked shall have been Distributed in
compliance with all requirements of this Agreement without
respect to the question of materiality to the whole of this
Agreement;
(c) the Product in question shall not have been altered, or
repaired by any party other than Nortel, and if a System is
involved, the System shall not have been maintained by any
other party other than Nortel, Distributor or another Nortel
Authorized Distributor, qualified with respect to that System
and under subcontract to Distributor, without Nortel's prior
written consent;
(d) Hardware defects, or Software failures shall not have been the
result of mishandling, abuse, misuse, improper storage,
improper installation, improper maintenance, or improper
operation (including use in conjunction with equipment
electrically or mechanically incompatible) by any party other
than Nortel;
(e) the Product shall not have been damaged by fire or explosion
(other than fire or explosion directly attributable to a
Product defect), power failure, lightning or other induced
power surge, act of God, or any other cause whatsoever not
attributable to Nortel;
(f) Nortel shall have received from Distributor, prior to the
expiration of the warranty period, written notice stating with
reasonable particularly the claimed breach of warranty;
Page 16
22
(g) The burden upon Distributor to prove compliance with the above
conditions precedent shall not arise unless and until Nortel
shall notify Distributor in writing that Nortel believes that
one or more of such conditions has not been met. Such notice
shall specify with reasonable particularity the alleged
failure to meet these conditions precedent.
Section 4.4.4 LIMITATION ON WARRANTIES
THE WARRANTIES AND REMEDIES CONTAINED IN THIS AGREEMENT AND THE PRODUCT
REFERENCE GUIDE CONSTITUTE THE ONLY WARRANTIES WITH RESPECT TO THE
PRODUCTS PROVIDED TO DISTRIBUTOR PURSUANT TO THIS AGREEMENT AND
DISTRIBUTOR'S EXCLUSIVE REMEDIES IF SUCH WARRANT TIES ARE BREACHED. THE
STATED WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, WRITTEN OR ORAL,
STATUTORY, EXPRESS, OR IMPLIED, INCLUDING, WITHOUT LIMITATION THERETO,
THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE. THERE ARE NO WARRANTIES WITH RESPECT TO SERVICES
PROVIDED BY NORTEL. NORTEL SHALL NOT BE LIABLE TO OR THROUGH
DISTRIBUTOR FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY
NATURE OR FOR ANY REASON, ARISING OUT OF THIS AGREEMENT, EVEN IF NORTEL
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE NET
DISTRIBUTOR PRICE DESCRIBED ELSEWHERE IN THIS AGREEMENT IS BASED UPON
AND IS IN PARTIAL CONSIDERATION FOR THIS LIMITATION ON WARRANTIES AND
REMEDIES.
Section 4.4.5 POST WARRANTY SUPPORT
Nortel shall provide, at its then current prices, support for Nortel
Products for which the warranty period shall have expired in accordance
with the Product Reference Guide. For Products manufactured by third
parties, the manufacturer may discontinue their Products. Nortel makes
no guarantee as to the availability of any of these Products, whether
for new system sales or for installed base sales or whether the
Products are available in the U.S. Market. However, Products may be
returned for repair at prices established by Nortel if they are
repairable items for which necessary components are available to
Nortel.
Section 4.4.6 LONG TERM SOFTWARE SUPPORT
Long term software support shall be provided for each Product Group to
the extent defined in the then current Product Reference Guide.
Section 4.4.7 CESSATION OF MANUFACTURE; CHANGES IN DESIGN; ALLOCATION
OF PRODUCT; RELEASE OF NEW PRODUCTS
Nortel expressly reserves the following rights with respect to the
offer of Products to Distributor: (1) to cease manufacturing,
distributing, supporting, except as provided in the "Life Cycle
Support" provision in the Product Reference Guide, any Products not
constituting an entire line of Products, upon **** written notice to
Distributor; and (2) to cease manufacturing, distributing, supporting,
except as provided in the "Life Cycle Support" provisions in the
Product Reference Guide, an entire line of Products upon **** written
notice to Distributor; (3) except as provided in Section 4.1.4,
"Changes in Design or Manufacture", to alter the design specifications,
configuration, construction, material, or manufacturing methods
applicable to any Product, without notice, provided that such
alteration does not materially and adversely affect the performance of
the Product; and (4) to allocate limited supplies of Product among all
Nortel Distributors as reasonably seems most equitable to Nortel in
light of all information then available to it; and (5) to release new
Products and Product improvements only pursuant to a controlled release
program, and under such program to allocate such Products to and among
such Nortel Distributors as Nortel, in its sole discretion, may
determine.
------
**** Confidential material has been omitted and filed separately with the
Securities and Exchange Commission.
Page 17
23
ARTICLE FIVE
PROPRIETARY INFORMATION
Section 5.1 DISCLOSURE OF PROPRIETARY INFORMATION
Except as permitted otherwise by law, the Receiving Party shall keep
confidential Proprietary Information of the Disclosing Party and Nortel's
suppliers using the same degree of care that it uses to safeguard its own
Proprietary Information of a similar nature, but not less than reasonable care,
and shall not disclose Proprietary Information of the Disclosing Party or of
Nortel's suppliers, to any but its own employees with a need to know the
Proprietary Information in furtherance of the purposes of this Agreement. With
respect to Software, this obligation may be expanded, amplified or modified by
the terms of the Software License; in the event of a conflict between a Software
License and this Article 5, the Software License shall control.
Section 5.2 APPLICATION OF RESTRICTION
The restrictions of this article shall not apply: (1) to Proprietary Information
which enters the public domain without fault of the Receiving Party; or (2) to
Proprietary Information which the Receiving Party can prove was rightfully in
its possession prior to disclosure from the Disclosing Party or from Nortel's
supplies; or (3) to Proprietary Information which is independently developed by
the Receiving Party; or (4) if such restrictions would prevent required
compliance with applicable law, applicable governmental regulation, or an order
of a court of competent jurisdiction. A Receiving Party invoking exception (4)
above shall use all commercially reasonable efforts to notify the Disclosing
Party of any intended disclosure as far in advance of the date of required
compliance as is practicable and shall not make such disclosure in advance of
the date of required compliance, so that the Disclosing Party may have an
opportunity to take such steps as it deems appropriate to defend its interests;
provided, however, that in the event the Receiving Party invokes exception (4)
above and the Proprietary Information is that of a Nortel supplier, such
notification shall be made to Nortel.
Section 5.3 SURVIVAL OF RESTRICTION
Distributor's confidentiality obligations shall survive the termination of this
Agreement, regardless of the cause, and shall extend to the earlier of such
times as Proprietary Information and/or Software enters the public domain
through no fault of Distributor, or for Proprietary Information other than
Software, ten (10) years following the expiration or termination of this
Agreement.
ARTICLE SIX
COMPLIANCE WITH LAWS: GRATUITIES AND INSURANCE
Section 6.1 COMPLIANCE WITH LAWS
Nortel and Distributor shall comply with all applicable federal, state and local
laws and regulations regarding the general conduct of business whether or not
specifically related to the design, manufacturing, transportation, sale, lease,
installation, or maintenance of the Products. Additionally, Distributor shall
comply with instructions given by UTAM with respect to Distribution and
deployment of Products in the Unlicenced PCS Spectrum.
Section 6.2 GRATUITIES
Each party to this Agreement represents to the other that it has not offered or
given, and will not offer or give, to any employee of the other, any gratuity
with a view toward securing any business from the other or toward influencing
such person with respect to the terms, conditions or performance of this
Agreement. The foregoing provision shall not apply to any publicly announced
Nortel sales incentive plan in which Distributor may allow its employees to
participate.
Section 6.3 INSURANCE COVERAGE
Both Nortel and Distributor shall maintain, during the term of this Agreement,
all insurance and/or bonds required by any applicable law, including but not
limited to: (1) workers' compensation insurance as prescribed by the laws of all
states in which work pursuant to this Agreement is performed; (2) employer's
liability insurance with limits of at least $5 million per occurrence; (3)
comprehensive general liability insurance (including products liability
coverage, contractual liability,
Page 18
24
advertising liability, and comprehensive automobile liability coverage) with
each coverage having limits of at least $5 million per occurrence. Either party
shall furnish certificates or other adequate proof of such insurance to the
other upon written request. Proof of a program of self-insurance acceptable to
the requesting party (which shall not be unreasonably withheld) shall satisfy
any such request. Both Nortel and Distributor shall require any subcontractors
and Sales Agents involved with the performance of work pursuant to this
Agreement, to agree to maintain insurance coverage and to furnish certificates
or other adequate proof thereof to both Nortel and Distributor upon written
request.
Section 6.4 MISCELLANEOUS OBLIGATIONS
Section 6.4.1 RIGHT OF ACCESS/HARMONY
In order to carry out the intent of this Agreement, Nortel and
Distributor shall each have reasonable access, upon reasonable prior
notice, to the premises of the other during normal business hours and
at such other times as may be agreed upon. Whenever the employees
and/or agents of either party are working on the premises of the other
party, or on the premises of an End User, the employing party shall be
responsible for ensuring that such employees work in harmony with all
other individuals on such premises.
Section 6.4.2 PLANT AND WORK RULES
Whenever the employees and/or agents of either party are on the
premises of the other party, or on the premises of an End User, they
shall comply with all site rules and regulations (including, where
required by government regulations, submission of satisfactory
clearance from the U.S. Department of Defense and/or any other
governmental authorities concerned).
Section 6.4.3 PERSONAL RELEASES VOID
Neither Nortel nor Distributor shall require representatives of the
other any waivers or releases of any personal right in connection with
visits to its premises. Even if obtained, no such waivers or releases
shall be pleaded by either party in any action or proceeding.
ARTICLE SEVEN
BREACH OF AGREEMENT: TERMINATION
Section 7.1 BREACH OF THIS AGREEMENT
A material breach and default of this Agreement shall be deemed to have occurred
whenever: (1) one party shall have violated any material provision of this
entire Agreement; and (2) the violating party shall have received Formal Notice
from the other party stating the nature of the violation with reasonable
particularity and stating that the other party objects to the violation; and (3)
the violating party shall have failed to cure or correct the violation within
thirty (30) days of the receipt of such Formal Notice if the violation is
amenable to immediate correction; or (4) the violating party shall have failed
to commence cure or correction of the violation within thirty (30) days of the
receipt of such Formal Notice or to thereafter diligently pursue such cure or
correction, if the violation is not amenable to immediate correction. The date
of a breach shall be deemed to be the date on which the violating party
received the Formal Notice required under this Section 7.1. The non-breaching
party shall have the right to suspend performance of any executory obligation
under this Agreement from the date of such Formal Notice until the breach is
cured.
Section 7.2 TERMINATION OF DISTRIBUTOR
Distributor expressly recognizes the valid business need for, and hereby agrees
to, the termination provisions set forth below. Further, Distributor agrees
that it shall not be entitled to payment or compensation of any kind upon
termination of this Agreement under the provisions of Section 7.3 for: (1)
Distributor's prior efforts in promoting or creating goodwill for the Products
and/or for Nortel; (2) any of Distributor's costs incurred in the performance
of this Agreement; (3) any of Distributor's costs incurred because of the
termination; and (4) any loss of profit and/or potential profit caused by
termination.
Section 7.3 TERMINATION FOR STATED CAUSES
(a) Either party may unilaterally terminate this Agreement,
immediately but with Formal Notice to the other party, in the
event that the other party: (1) becomes insolvent or makes a
general assignment for the benefit
Page 19
25
of creditors; or (2) admits, in writing, its inability to pay
debts as they come due; or (3) has a trustee or receiver
appointed by any court with respect to it or any substantial
part of its assets; or (4) has bona fide action taken by or
against it under bankruptcy or insolvency laws; or (5)
transfers or assigns, or attempts to transfer or assign any of
its rights under this Agreement without obtaining the prior
written consent of the other party; or (6) except as expressly
authorized in this Agreement, delegates or attempts to
delegate any of its duties under this Agreement; or (7)
causes, agrees to, or suffers a Significant Ownership Change;
or (8) grants or makes, or attempts to grant or make, any
illegal or improper consideration or payment, including,
without limitation thereto, any bribe, inappropriate
commission, "pay-off", "kick-back" or payment of similar
nature in conjunction with the Distribution of any Product
under this Agreement; or (9) accepts, receives, or solicits
any illegal or improper consideration or payment, including,
without limitation thereto, any bribe, inappropriate
commission, "pay-off", "kick-back" or payment of similar
nature in conjunction with the Distribution of any Product
under this Agreement; or (10) makes payment of any fees for
services which are not actually rendered or pays any fees in
excess of the fair value of any services rendered, in
conjunction with the Distribution of any Product under this
Agreement. Any party becoming aware of evidence tending to
indicate the possible occurrence of any of the events
described in Section 7.3(a)(1) through Section 7.3(a)(10), and
involving its own employees or the employees of the other
party, shall cause its attorneys to notify the other party's
attorneys of such evidence, and, if appropriate, to request
that the other party's attorneys conduct and/or cooperate in
an investigation of the evidence in anticipation of
litigation. No such notification shall be deemed an admission
of the occurrence of any such event or of any possible
complicity therein. Nortel's rights with respect to situations
as provided above may be exercised, at Nortel's option, to
terminate some contractual provisions without terminating
others.
(b) Certain possible failures of Distributor to abide by the terms
of this Agreement are of sufficient importance to Nortel that
Nortel wishes to have the right to terminate this Agreement,
in whole or part, or portions thereof relating to specific
Product authorizations, or otherwise extend this Agreement
beyond the expiration of the Term, in any such case without
regard to an inquiry as to whether such failure might be
considered by a court as a material breach of the Agreement as
a whole. Accordingly, occurrence of any of the following
possible failures of Distributor to comply with this Agreement
shall afford Nortel the complete and unrestricted right to
declare a breach and default in accordance withSection 7.1,
without regard to the materiality requirement ofSection 7.1,
and to thereafter terminate this Agreement, and any subsequent
renewal agreement which may have been offered underSection
1.3, for breach, or to refuse to renew or otherwise extend
this Agreement beyond the expiration of the Term: (1) failure
to comply with the requirements ofSection 2.1.1: (2) failure
to meet, within the Territory, the Minimum Distribution Level
during any calendar year; (3) failure to comply with the
requirements ofSection 2.1.6: (4) failure to comply with the
requirements ofSection 4.3 (including all subsections
thereof).
(c) The enumerations of failures presumed material for purposes of
termination which are contained in Section 7.3(b) shall not be
deemed to exclude the possibility that other failures not
enumerated may be found to be material for purposes of
termination and/or for any other purpose. Invocation or
admission of any of the above failures shall not be deemed an
admission of materialtiy for any other purpose and in
particular for purposes of adjudication of any claim damages.
Section 7.4 SUPPORT OF DISTRIBUTOR AFTER TERMINATION
Nortel will not provide any post termination support to a Distributor if this
Agreement is terminated by Nortel in accordance with the provisions of Section
7.3. In the event of a termination of this Agreement by Distributor pursuant to
Section 7.1, or in the event of expiration of the Term of this Agreement, Nortel
will provide the Product specific level of support specified in the Product
Catalog.
Section 7.5 FORCE MAJEURE
Neither party shall be responsible for delays or failures in performance of this
Agreement resulting from: (1) acts or occurrences beyond the reasonable control
of such party (including, without limitation thereto, fire, explosion, power
failure, lightning, severe weather, acts of God, war, revolution, civil
commotion, infection of Products or tools by a software virus, any law, order,
regulation, ordinance, or requirement of any government or legal body (or any
representative of any such government or legal body)); or (2) labor unrest
(including, without limitation thereto, strikes, slowdowns, picket-lines, and
boycotts whether primary or secondary, and without regard to whether such labor
unrest could have been settled by acceding to the demands of a labor
organization). In such event, the party whose performance is directly affected
by any such
Page 20
26
circumstances shall be excused from such performance on a day-for-day basis to
the extent of the interference. If such excuse of the performance of the
directly affected party shall prevent related performance by the other party,
then the performance of the other party shall also be excused on a day-for-day
basis to the extent of the indirect interference. In the event that any such
event of force majeure shall continue for more than thirty days, then the
parties shall enter into good faith negotiations directed toward a mutually
acceptable resolution of outstanding obligations. If the event of force majeure
shall continue for more than sixty days, then any order by Distributor may be
considered terminated without any penalty to Distributor or Nortel.
ARTICLE EIGHT
GENERAL TERMS AND CONDITIONS
Section 8.1 LIMITATION OF LIABILITIES
NEITHER NORTEL NOR DISTRIBUTOR SHALL BE LIABLE TO THE OTHER FOR ANY
SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY NATURE OR FOR ANY
REASON, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, NOR, EXCEPT
TO THE EXTENT EXPLICITLY PROVIDED FOR HEREIN, FOR ANY CLAIMS AGAINST
THE OTHER BY ANY THIRD PARTY. DISTRIBUTOR HEREBY WAIVES ANY CLAIMS IT
MAY ACQUIRE BY VIRTUE OF THIS AGREEMENT AGAINST NORTEL'S SOFTWARE
SUPPLIERS FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES
WHATSOEVER, ARISING OUT OF THE LICENSING OF SOFTWARE FOR THE
DISTRIBUTOR'S OWN USE OR DISTRIBUTION OF SOFTWARE BY DISTRIBUTOR AS
AGENT FOR NORTEL OF LICENSES TO END-USERS PURSUANT TO THIS AGREEMENT.
Section 8.2 GENERAL INDEMNITIES
(a) In addition to those indemnities set forth in Section 2.1.8(e)(11),
Section 3.7, and Section 4.3, each party shall indemnify the other with
respect to any third party claims, as follows:
(1) claims, suits, or proceedings threatened or brought alleging
bodily injury, including death, or damage to tangible property, to
the extent any damage is caused by the negligence or willful
misconduct of the indemnifying party (except that in all cases
Distributor shall indemnify Nortel with respect to any claim that
the installation or placement of a telephone instrument, console or
other device intended to be used by an individual user, including
any wires connected to it, caused the injury or damage);
(2) all other third party claims, suits, or proceedings threatened
or brought alleging damages, losses, costs or expenses arising out
of or related to the failure of the party against whom
indemnification is sought to properly and fully perform any
affirmative obligation undertaken by it in this Agreement (so long
as no corresponding and concurrent duty to perform the same
obligation, at the time of the act or omission complained of, by the
party seeking indemnification also exists in this Agreement), except
that with respect to intellectual property infringement claims,
Nortel's sole obligations shall be as defined in Section 8.3 below.
(b) The Receiving Party shall indemnify the Disclosing Party against
measurable economic loss proximately caused by the breach of the
provisions of Article Five of this Agreement by the Receiving Party.
Section 8.3 INTELLECTUAL PROPERTY INFRINGEMENT
(a) The following terms shall have the definitions indicated herein for the
purposes of this Section 8.3 only:
"Software" shall mean any set of one or more Nortel proprietary
computer programs which is composed of routines, subroutines, concepts,
processes, algorithms, formulas, ideas, know how, model, generated
code, source code, and/or related documentation, some or all of which
are trade secrets, severally owned by Nortel. The term Software shall
also include any corrections, patches, updates or revisions to Software
originally Distributed.
"Hardware" shall mean only Nortel proprietary physical portions of
Nortel Product, including memory circuits and media upon which Software
and/or Licensed Software may be delivered, but excluding Software and
Licensed Software.
Page 21
27
"Licensed Software" shall mean any set of one or more third party-owned computer
programs which are composed of routines, subroutines, concepts, processes,
algorithms, formulas, ideas, know how, model, generated code, source code,
and/or related documentation, some or all of which are trade secrets. The term
Licensed Software shall also include any corrections, patches, updates or
revisions to Licensed Software originally Distributed.
"Third Party Hardware" shall mean only third party owned physical portions of a
Product, including memory circuits and media upon which Software and/or
Licensed Software may be delivered, but excluding Software and Licensed
Software in which Nortel has Distribution rights.
(b) Nortel will indemnify and/or defend, as the case may be, claims of
infringement of intellectual property rights of third parties for only
those Products and Product components specifically identified as being so
covered in the Product Catalog. If a Product or Product component is
identified in the Product Catalog as being covered by a duty to indemnify
and/or defend, the following shall apply:
(1) For Software and Hardware: Nortel will indemnify and defend, at its
own expense, Distributor from and against any action brought against
Distributor by a third party, to the extent that such action is based
on a claim that the normal manufacture, use or sale of such Software
and/or Hardware infringes any United States patent, trademark or
copyright or misappropriates the trade secret rights of that third
party.
(2) For Licensed Software and Third Party Hardware: Nortel will defend, at
its own expense, any action brought against Distributor by a third
party, to the extent that such action is based on a claim that the
normal manufacture, use or sale of such Licensed Software and/or Third
Party Hardware infringes any United States copyright or
misappropriates the trade secret rights of that third party.
(c) The conditions precedent to the duties set forth herein shall be that: (1)
Distributor, in the applicable instance, shall have complied with the
requirements of this Agreement with respect to retention of, transfer of,
and/or license of the right to use Software and/or Licensed Software; (2)
Distributor shall have given Nortel Formal Notice of such claim promptly on
receipt of same; (3) such claim does not arise from modifications to
Hardware, Software, Licensed Software or Third Party Hardware not
authorized in writing by Nortel; (4) such claim does not arise from use or
combinations of Hardware, Software, Licensed Software or Third Party
Hardware with other products not provided by Nortel wherein the
infringement arises from such combination and such use or combination is
not authorized in writing by Nortel; (5) such claim does not arise from
Hardware, Software, Licensed Software or Third Party Hardware supplied in
accordance with any design or special instructions provided by Distributor
on its behalf or on behalf of an End User; and (6) should Hardware,
Software, Licensed Software or Third Party Hardware become, or in Nortel's
sole opinion, be likely to become, the subject of such claim of
infringement, Distributor shall permit Nortel, at Nortel's option and
expense, either to (i) procure the right to continue using such Hardware,
Software, Licensed Software or Third Party Hardware; (ii) replace or modify
(at Nortel's option) such Hardware, Software, Licensed Software or Third
Party Hardware while maintaining the functionality of such Hardware,
Software, Licensed Software or Third Party Hardware; or (iii) refund to
Distributor the purchase price or fee paid less a reasonable amount for
use, damage and obsolescence, whereupon Distributor shall return to Nortel
all Hardware, Software, Licensed Software or Third Party Hardware for which
such amount is paid by Nortel.
(d) In no event shall Nortel's portion of such defense costs under Section
8.3(b)(2) exceed the aggregate purchase price or fee paid by Distributor
for the alleged infringing Licensed Software or Third Party Hardware.
Section 8.4 ENFORCEMENT OF INDEMNITIES
Section 8.4.1 NOTICE OF CLAIMS
(a) A party choosing to invoke an indemnity in a third
party claim situation shall provide Formal Notice to
the other party of the existence and basic nature of
the claim, suit, or proceeding against the invoking
party.
Page 22
28
(b) The party seeking indemnification must immediately turn
over full defense and settlement of the claim to the
party against whom indemnification is sought, and
cooperate fully with such party. The party against whom
indemnification is sought will not be liable for
indemnification of amounts settled or compromised
without its consent, or for judgments, decrees or
orders issued by a court or administrative agency of
competent jurisdiction to the extent it was not given
full defense of the matter.
ARTICLE NINE
MISCELLANEOUS
Section 9.1 ASSIGNMENT AND DELEGATION
Distributor may not assign any rights or delegate any duties arising out of this
Agreement without the prior written consent of Nortel. Any such attempted
assignment and/or delegation shall be void.
Section 9.2 NOTICES
Routine correspondence between the parties to this Agreement shall be in writing
and sent by appropriate mail, telegram, courier service, electronic communicator
or electronic mail system to the addresses specified in this Agreement. Formal
Notice shall be given whenever required by a provision of this Agreement. Formal
Notice shall be in writing, sent by certified or registered U.S. mail, or
express courier service, with postage prepaid, return receipt requested, to the
addresses listed below. Formal Notice shall be deemed delivered as of midnight,
Central Time, on the date mailed. In addition, any notice to be given may also
be given by facsimile or other electronic format provided that the party giving
the notice obtains acknowledgment by facsimile or other electronic format that
such notice has been received by the party to be notified. Notice given in this
manner shall be effective upon delivery of the Formal Notice.
Section 9.2.1 ADDRESS FOR NORTEL
MAILING ADDRESS STREET ADDRESS
NORTHERN TELECOM INC. NORTHERN TELECOM INC.
Distribution Management Distribution Management
X.X. Xxx 000000 0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000-0000 Xxxxxxxxxx, XX 00000-0000
Section 9.2.2 ADDRESS FOR DISTRIBUTOR
MAILING ADDRESS STREET ADDRESS
WilTel Communications, L.L.C. WilTel Communications, L.L.C.
0000 Xxxxxx Xxxxx, Xxxxx 000 0000 Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000 Xxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxxx Attn: Xxxxx Xxxxxx
Title: Vice President of Title: Vice President of Marketing
Marketing
Section 9.3 SURVIVAL OF SOFTWARE LICENSES AND SUBLICENSES
If Distributor was a Distributor under a prior version (Version 2.00, 2.10,
3.00, 3.10) of this Agreement, and pursuant to that version granted licenses or
sublicenses of Software in conformance with the terms and conditions then in
effect, such terms and conditions of the prior version of this Agreement with
respect to such licensing or sublicensing shall survive and remain in full force
and effect for all licenses or sublicenses duly made and executed. However, all
Software replacements and/or upgrades shall be governed by the Nortel Software
License in Annex D to this Agreement and the other license terms of this
Agreement.
Page 23
29
Section 9.4 ANNEXES INCORPORATED
The following Annexes to this Agreement are incorporated herein by this
reference as if they had been fully set out within the main body. Each Nortel
Product which may be authorized for Distribution pursuant to this Agreement is
so authorized only pursuant to a duly executed Annex B.
Annex A: Territory
Annex B: Authorized Products
Annex C: Affiliates of Distributor
Annex D: Software License
Section 9.5 GOVERNING LAW
This Agreement shall be construed under, and enforced in accordance with, the
laws of the State of Texas (with the exception of such laws governing conflict
of law questions).
Section 9.6 PRINCIPLES OF INTERPRETATION
Section 9.6.1 SEVERABILITY
If any provision of this Agreement shall be found by a court of
competent jurisdiction to be invalid or unenforceable, such finding
shall not affect the validity and/or enforceability of the Agreement
as a whole or of any other part of the Agreement. In such case, the
parties will substitute a valid provision which most closely
achieves the intent of the invalid provision, and this Agreement
shall be construed and enforced as if it did not contain the invalid
and/or unenforceable provision.
Section 9.6.2 HEADINGS FOR CONVENIENCE ONLY
The Article and Section headings contained in this Agreement are
inserted for convenience only and shall not be considered to affect
the meaning of the provisions of the body of the Agreement.
Section 9.6.3 WAIVERS OR AMENDMENTS
No failure to enforce any provision, assert any right, or insist on
performance of any obligation under this Agreement, in any instance,
shall be deemed a waiver of the ability to enforce such provision,
assert such right, or insist on the performance of such obligation
in the future. No course of dealing, or informal communication of
any kind, shall be deemed to amend this Agreement. Except as stated
herein with respect to the Product Reference Guide, etc., this
Agreement may be amended only by a formal written amendment signed
by a duly authorized representative of both parties, and any oral
amendment shall be deemed void.
Section 9.6.4 SURVIVAL OF OBLIGATIONS
The provisions of any section of this Agreement which, by their
sense and context, appear to be intended to survive the termination
or expiration of this Agreement shall so survive.
Section 9.7 PRODUCT REFERENCE GUIDE AND PRODUCT CATALOG
The Product Reference Guide and the Product Catalog are both documents which are
intended to be modified and changed from time to time. References in this
Agreement to prices, descriptions, specifications, warranties, programs, or
other terms and conditions contained in either such document shall always be
deemed to apply to that version of the product Reference Guide or the Product
Catalog which is in effect on the date Nortel accepts an order for a Product or
service from the Distributor or Affiliate with respect to matters related to
that specific Product or service order. Certain programs may have defined
periods of effectiveness or applicability or may be terminated with a notice to
Distributor pursuant to their terms as defined in the document. Nortel reserves
the right to amend the Product Reference Guide and Product Catalog at any time
and from time to time.
Page 24
30
Section 9.8 ENTIRE AGREEMENT
This Agreement, together with the Product Reference Guide and other written
notifications from Nortel, shall constitute the entire Agreement between the
parties with respect to the contemplated Distribution relationship and
supersedes all previous negotiations, proposals, commitments, writings,
advertisements, publications, agreements and understandings of any nature
whatsoever related to the contemplated Distribution relationship. Except for
forms included in or referenced in this Agreement, provisions on either party's
forms used in conjunction with transactions pursuant to this Agreement shall not
be deemed to modify or add to this Agreement or to govern the transactions in
which used.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized representatives.
NORTHERN TELECOM INC. WILTEL COMMUNICATIONS, L.L.C.
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXXX
--------------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. XxXxxxx
------------------------------------ ------------------------------
Title: AVP, Distribution & Contracts Mgmt. Title: President & COO
----------------------------------- -----------------------------
Date: October 20, 1997 Date: November 3, 1997
----------------------------------- ------------------------------
Page 25
31
ANNEX A
TERRITORY
TO BE COMPLETED FOR DISTRIBUTOR AND EACH AFFILIATE SEPARATELY WHENEVER THE
TERRITORY OF EACH AFFILIATE IS NOT IDENTICAL TO DISTRIBUTOR'S TERRITORY. TO BE
COMPLETED FOR EACH PRODUCT SEPARATELY WHENEVER THE TERRITORY FOR ALL PRODUCTS
CARRIED IS NOT IDENTICAL. SEE ANNEX B FOR AUTHORIZED PRODUCTS.
Name of Distributor: WilTel Communications, L.L.C.
DEFINITION OF AUTHORIZED TERRITORY SHALL BE DEFINED AS FOLLOWS:
For M1, Meridian Safe for M1, TSAPI, Open IVR, VISIT Messenger,
SL-100, Meridian Safe for SL-100, Residential/Business Terminals,
Norstar, VISIT Voice/Video, National ISDN, COMPANION, Galileo,
911 CTI and MBA:
The fifty states of the United States and the District of Columbia.
For Meridian Digital Centrex, the Authorized Territory shall be
defined as that area in which WilTel Communications, L.L.C. or
its authorized Affiliates provide dial tone to the End User: (i)
through a central office owned and operated by WilTel
Communications, L.L.C., or (ii) as an agent for a local exchange
provider, or (iii) pursuant to interconnection agreements under
the Communications Act, as amended by the Telecommunications Act
of 1996.
Any failure to achieve the Minimum Distribution Level for a given
calendar year shall entitle Nortel to invoke its right to
terminate the Distributorship Agreement pursuant to the terms of
Section 2.1.2.
THIS ANNEX IS EFFECTIVE AS OF JANUARY 1, 1998
----------------------------
NORTHERN TELECOM INC. WILTEL COMMUNICATIONS, L.L.C.
By: /s/ XXXXX X. XXXXXXX By: /s/ XXXXX X. XXXXXXX
----------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxx X. XxXxxxx
--------------------------------- ------------------------------
Title: Dir. Market Xxxxxxxx Development Title: President & COO
& Distribution Contracts -----------------------------
--------------------------------
Date: October 20, 1997 Date: November 3, 1997
--------------------------------- ------------------------------
Annex A
Page 1
32
ANNEX B
AUTHORIZED PRODUCT(S)
Name of Distributor: WilTel Communications, L.L.C.
DEFINITION OF AUTHORIZED PRODUCT(S) SHALL BE DEFINED AS FOLLOWS:
Each Nortel Product which may be authorized for Distribution pursuant
to this Agreement is part of a Nortel Product Group. The following
matrix identifies the Products which have been authorized by Nortel
for Distribution, the applicable Product Group for the authorized
Product, the date each Product was authorized for Distribution, the
applicable Software License, Sales Agent authorization and the
applicable Product Catalog.
PRODUCT DATE SOFTWARE SALES
PRODUCT GROUP AUTHORIZED LICENSE AGENT PRODUCT CATALOG
---------------------------- ------- ---------- ------------------ ------ -----------------------------------
Residential/Business A 01/01/98 Not Required Yes Residential/Business Sets
Terminals
National ISDN A 01/01/98 Not Required Yes National ISDN
Meridian Digital Centrex B 01/01/98 Not Required Yes Meridian Business Sets
Meridian 1 (M1) C 01/01/98 Nortel's SW License No Meridian 1
Norstar C 01/01/98 Nortel's SW License Yes Norstar
COMPANION C 01/01/98 Nortel's SW License No COMPANION
Galileo C 01/01/98 Nortel's SW License No Galileo
Meridian Safe for M1 D 01/01/98 Nortel's SW License No Meridian 1
and Original Section : System Administration
Manufacturer's Products (Meridian Safe)
SW License
NetWare Telephony D 01/01/98 Nortel's SW License No Meridian 1
Services (TSAPI) Section : System Administration
Products-NetWare Telephony
Services (TSAPI)
Open IVR D 01/01/98 Nortel's SW License No Meridian 1
Section : Message Processing
Applications (Open IVR)
VISIT Messenger D 01/01/98 Nortel's SW License No Meridian 1
Section : Message Processing Applications
(VISIT Messenger)
VISIT Voice/Video D 01/01/98 Nortel's SW License No VISIT Multimedia Applications
Annex B
Page 1 of 2
33
ANNEX B
AUTHORIZED PRODUCT(S)
(CONTINUED)
SALES
PRODUCT DATE SOFTWARE SALES AGENT PRODUCT CATALOG
-------------------- ------- ---------- --------------------- -------- -----------------------
CC MIS D Nortel's SW License No SL-100
Section : CC MIS
911 CTI D 01/01/98 Nortel's SW License No 911 Computer Telephony
Integrated Solutions
Multimedia Business D 01/01/98 Nortel's SW License No Multimedia Business
Applications (MBA) and Original Applications
Manufacturer's SW
License
Meridian Safe for SL-100 E 01/01/98 Nortel's SW License No SL-100
and Original
Manufacturer's SW
License
SL-100 E 1/01/98 Nortel's SW License No SL-100
NORTHERN TELECOM INC. WILTEL COMMUNICATIONS, L.L.C.
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXXX
----------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. XxXxxxx
--------------------------------- ------------------------------
Title: AVP, Distribution & Contract Title: President & Coo
Mgmt. -----------------------------
--------------------------------
Date: October 20, 1997 Date: November 3, 1997
--------------------------------- ------------------------------
Annex B
Page 2 of 2
34
ANNEX C
AFFILIATES OF DISTRIBUTOR
Name of Distributor: WilTel Communications, L.L.C.
LIST OF AUTHORIZED AFFILIATES:
None.
This Annex is effective as of __________________.
NORTHERN TELECOM INC. DISTRIBUTOR
By: By:
--------------------- -----------------------
Name: Name:
--------------------- -----------------------
Title: Title:
--------------------- -----------------------
Date: Date:
--------------------- -----------------------
35
ANNEX D
TO DISTRIBUTION AGREEMENT 4.01
SOFTWARE LICENSE
NORTHERN TELECOM INC. ("NORTEL") TELECOMMUNICATIONS PRODUCTS
--------------------------------------------------------------------------------
THIS LEGAL DOCUMENT IS A LICENSE AGREEMENT ("License") BETWEEN YOU, THE END-USER
("CUSTOMER"), AND NORTEL. BY ACQUIRING A SYSTEM, AN UPGRADE TO AN EXISTING
SYSTEM OR SOFTWARE PRODUCTS FROM NORTEL OR A NORTEL DISTRIBUTOR, YOU, THE
CUSTOMER, AGREE TO BE BOUND BY THE TERMS OF THIS LICENSE.
--------------------------------------------------------------------------------
Subject to the terms hereinafter set forth, NORTEL grants to CUSTOMER and/or its
representatives, with a "need to know", a personal, non-exclusive license (1) to
use the licensed software, proprietary to NORTEL or its suppliers and (2) to use
the associated documentation. CUSTOMER is granted no title or ownership rights,
in or to the licensed software, in whole or in part, and CUSTOMER acknowledges
that title to and all copyrights, patents, trade secrets and/or any other
intellectual property rights to and in all such licensed software and associated
documentation are and shall remain the property of NORTEL and/or NORTEL's
suppliers. The right to use licensed software may be restricted by a measure of
usage of applications based upon number of lines, number of ports , number of
terminal numbers assigned, number of users, or some similar measure. Expansion
beyond the specified usage level may require payment of an incremental charge or
another license fee.
NORTEL considers the licensed software to contain "trade secrets" of NORTEL
and/or its suppliers. Such "trade secrets" include, without limitation thereto,
the specific design, structure and logic of individual licensed software
programs, their interactions with other portions of licensed software, both
internal and external, and the programming techniques employed therein. In order
to maintain the "trade secret" status of the information contained within the
licensed software, the licensed software is being delivered to CUSTOMER in
object code form only.
NORTEL or any of its suppliers holding any intellectual property rights in any
licensed software, and/or any third party owning any intellectual property
rights in software from which the licensed software was derived, are intended
third party beneficiaries of this License. All grants of rights to use
intellectual property intended to be accomplished by this License are explicitly
stated. No other grants of such rights shall be inferred or shall arise by
implication.
CUSTOMER warrants to NORTEL that CUSTOMER is not purchasing the rights granted
by this License in anticipation of reselling those rights.
CUSTOMER shall:
o Hold the licensed software in confidence for the benefit of NORTEL and/or
NORTEL's suppliers using no less a degree of care than it uses to protect
its own most confidential and valuable information; and
o Keep a current record of the location of each copy of licensed software
made by it; and
o Install and use each copy of licensed software only on a single CPU at a
time (for this purpose, single CPU shall include systems with single
processing units); and
o Affix to each copy of licensed software made by it, in the same form and
location, a reproduction of the copyright notices, trademarks and all other
proprietary legends and/or logos of NORTEL and/or NORTEL's suppliers,
appearing on the original copy of such licensed software delivered to
CUSTOMER; and retain the same without alteration on all original copies;
and
o Issue instructions to each of its authorized employees, agents and/or
representatives to whom licensed software is disclosed, advising them of
the confidential nature of such licensed software and to provide them with
a summary of the requirements of this License: and
o Return the licensed software and all copies through an Authorized
Distributor to NORTEL at such time as CUSTOMER chooses to permanently cease
using it.
CUSTOMER shall not:
o Use licensed software (i) for any purpose other than CUSTOMER's own
internal business purposes and (ii) other than as provided by this License;
or
o Allow anyone other than CUSTOMER's employees, agents and/or representatives
with a "need to know" to have physical access to licensed software; or
o Make any copies of licensed software except such limited number of object
code copies in machine readable form only, as may be reasonably necessary
for execution or archival purposes only; or
o Make any modifications, enhancements, adaptations, or translations to or of
licensed software, except as may result from those CUSTOMER interactions
with the licensed software associated with normal use and explained in the
associated documentation; or
o Attempt to reverse engineer, dissemble, reverse translate, decompile, or in
any other manner decode licensed softwares in order to derive the source
code form or for any other reason; or
o Make full or partial copies of any documentation or other similar printed
or machine-readable matter provided with licensed software unless the same
has been supplied in a form by NORTEL intended for periodic reproduction of
partial copies; or
o Export or re-export licensed software an/or associated documentation from
the fifty states of the United States and the District of Columbia.
o NOTE: Notwithstanding the above restrictions, if CUSTOMER has licensed the
licensed software under a "site license" option as set forth in CUSTOMER's
purchase agreement, CUSTOMER is authorized to make a limited number of
copies of the licensed software and documentation to support additional
users as specified in CUSTOMER's purchase agreement.
CUSTOMER may assign collectively its rights under this License to any subsequent
owner of the associated hardware, but not otherwise, subject to the payment of
the then current license fee for new users, if any. No such assignment shall be
valid until CUSTOMER has delegated all of its obligations under this License to
the assignee; and (2) has obtained from the assignee an unconditional written
assumption of all such obligations; and (3) has provided Nortel a copy of such
assignment, delegation and assumption; and (4) has transferred physical
possession of all licensed software and all associated documentation to the
assignee and destroyed all archival copies. Except as provided, neither this
License nor any rights acquired by CUSTOMER through this License are assignable.
Any attempted assignment of rights and/or transfer
Annex D - Page 1
36
of licensed software not specifically allowed shall be void and conclusively
presumed a material breach of this License.
If NORTEL (i) claims a material breach of this License, and (ii) provides
written notice of such claimed material breach to CUSTOMER and (iii) observes
that such claimed material breach remains uncorrected and/or unmitigated more
than thirty (30) days following CUSTOMER's receipt of written notice specifying
in reasonable detail the nature of the claimed material breach, then CUSTOMER
acknowledges that this License may be immediately terminated by NORTEL and
CUSTOMER further acknowledges that any such termination shall be without
prejudice to any other rights and remedies that NORTEL may have at law or in
equity.
EXPRESS LIMITED WARRANTIES FOR ANY ITEM OF LICENSED SOFTWARE, IF ANY, WILL BE
SOLELY THOSE GRANTED DIRECTLY TO CUSTOMER BY DISTRIBUTOR. OTHER THAN AS SET
FORTH THEREIN, THIS LICENSE DOES NOT CONFER ANY WARRANTY TO CUSTOMER FROM OR BY
NORTEL.
THE LICENSED SOFTWARE IS PROVIDED BY NORTEL "AS IS" AND WITHOUT WARRANTY OF ANY
KIND OR NATURE, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING (WITHOUT
LIMITATION) THE IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A
PARTICULAR PURPOSE.
THIS LIMITATION OF WARRANTIES WAS A MATERIAL FACTOR IN THE ESTABLISHMENT OF THE
LICENSE FEE CHARGED FOR EACH SPECIFIC ITEM OF SOFTWARE LICENSED.
IN NO EVENT WILL NORTEL AND/OR NORTEL'S SUPPLIERS AND THEIR DIRECTORS, OFFICERS,
EMPLOYEES OR AGENTS BE LIABLE TO OR THROUGH CUSTOMER FOR INCIDENTAL, INDIRECT,
SPECIAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES OF ANY KIND, INCLUDING
LOST PROFITS, LOSS OF BUSINESS OR BUSINESS INFORMATION, BUSINESS INTERRUPTION,
OR OTHER ECONOMIC DAMAGE, AND FURTHER INCLUDING INJURY TO PROPERTY, AS A RESULT
OF USE OR INABILITY TO USE THE LICENSED SOFTWARE OR BREACH OF ANY WARRANTY OR
OTHER TERM OF THIS LICENSE, REGARDLESS OF WHETHER NORTEL AND/OR NORTEL'S
SUPPLIERS WERE ADVISED, HAD OTHER REASON TO KNOW, OR IN FACT KNEW OF THE
POSSIBILITY THEREOF.
THE RIGHTS AND OBLIGATIONS ARISING UNDER THIS LICENSE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS.
-------------------------------------------------------------------------------
CUSTOMER HEREBY AGREES TO ADHERE TO THE TERMS AND
CONDITIONS OF THIS SOFTWARE LICENSE AGREEMENT:
CUSTOMER SIGNATURE:
------------------------------------------------------------
PRINTED NAME: DATE:
-------------------------------------- --------------------
COMPANY NAME: TELEPHONE NUMBER:
------------------------------ ------------------
DISTRIBUTOR NAME:
--------------------------------------------------------------
-------------------------------------------------------------------------------
XXXXXXX X. XXXXX
AVP, CONTRACTS AND MARKET CHANNEL MANAGEMENT
NORTHERN TELECOM INC.
Annex D - Page 2
