EXHIBIT 10.23
EFFICIENT NETWORKS RESELLER AGREEMENT
The terms contained herein, along with the attachments and exhibits constitute
an AGREEMENT ("Reseller Agreement" or "Agreement") made this 21st day of
November, 1999 between Efficient Networks, Inc., a Delaware corporation with its
principal place of business at 0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 0000, Xxxxxx,
Xxxxx, U.S.A., and its subsidiaries (collectively "Efficient") and Cabletron
Systems, Inc., a Delaware corporation, with its principle place of business at
00 Xxxxxxxxxx Xxx, Xxxxxxxxx, Xxx Xxxxxxxxx, X.X.X. ("Reseller" or "Cabletron"),
and effective as of the closing of the merger contemplated by the Agreement and
Plan of Reorganization made and entered into as of even date herewith, among
Efficient, Reseller, Fire Acquisition Corporation, a California corporation and
a wholly-owned subsidiary of Efficient and Flowpoint Corporation, Inc., a
California corporation and a wholly-owned subsidiary of Reseller ("Flowpoint")
(such date referred to herein as the "Effective Date").
1. DEFINITIONS:
1.1. End User shall mean the ultimate customer that purchases Products for its
--------
internal use from Reseller.
1.2. Exhibits to this Agreement are:
Exhibit A Products
Exhibit B Technical Support Guidelines
Exhibit C Limited Exclusivity
Exhibit D Marketing Principles
1.3. Intellectual Property Rights shall mean all patents, copyrights,
----------------------------
trademarks, mask works and other intellectual property rights relating to
a Product.
1.4. Orders shall mean purchase orders for Products submitted to Efficient by
------
Reseller under the terms of this Agreement.
1.5. Parties shall mean Efficient and Reseller.
-------
1.6. Products shall mean those products set forth in Exhibit A to this
--------
Agreement, together with any product introduced by Efficient during the
term of this Agreement that enhances the functionality of, or replaces, a
product set forth in Exhibit A.
1.7. Product Specifications shall mean Efficient or Flowpoint's published
----------------------
specifications for the Flowpoint product current on date Efficient accepts
Reseller's Order and any additional specifications agreed to by the
Parties in writing.
1.8. Software shall mean software products and software or firmware
--------
incorporated in hardware Products.
1.9. Territory - Unless otherwise specified or agreed by the Parties in
---------
writing, the Territory is worldwide.
1.10. Warranty Period - Unless otherwise specified by Efficient or agreed by
---------------
the Parties, the Warranty Period shall be the shorter of twelve (12)
months from the date the Product is delivered to the End User or fifteen
(15) months from the date the Product is shipped to Reseller.
2. RELATIONSHIP:
2.1. Appointment - Efficient appoints Reseller as a non-exclusive reseller of
-----------
Products to be sold under Efficient and Reseller brands to End Users
within the Territory under the terms of this Agreement.
2.2. Limited Exclusivity - The parties agree that the limited exclusivity
-------------------
provisions set forth in Exhibit C shall apply to this Agreement.
2.3. Relationship Reviews - Efficient and Reseller will conduct reviews of
--------------------
their relationship and performance under this Agreement at least twice
during each year following the Effective Date. These reviews will
consider, among other things, new products, Product Specifications and
pricing, and Reseller's Product forecasts, purchases and payments under
this Agreement.
2.4. Marketing Principles - The parties recognize the need to coordinate their
--------------------
efforts with respect to sales opportunities for the products. The parties
agree that they shall act in good faith to follow their mutual intentions
as set forth in the Marketing Principles attached hereto as Exhibit D, and
further agree to abide by the issue resolution mechanisms set forth
therein.
3. PRODUCT BRANDING:
3.1 Existing Arrangements - Any Flowpoint product which Reseller, immediately
---------------------
prior to the Effective Date, was reselling under a Reseller brand, may, at
Page 1
Reseller's request, continue to be resold under such Reseller brand. For
purposes of rebranding, upgraded and enhanced versions of Products
rebranded prior to the Effective Date shall be deemed to be Products
entitled to rebranding. Such Products shall continue to be rebranded
substantially similarly to the way they were being rebranded prior to the
Effective Date. Any changes to the rebranding specifications shall be
agreed in writing by authorized representatives of each Party.
3.2 Rebranding of Additional Products - Provided that the parties agree to
---------------------------------
minimum purchase volumes for a particular additional Product, Reseller may
request that additional Products be rebranded to carry a Reseller brand.
In the event that the parties are unable to agree on minimum purchase
volumes, Reseller may require Efficient to rebrand such additional
Products provided Reseller pays Efficient's fully-loaded cost to effect
such rebranding.
3.3 Other Products - Except as provided in Sections 3.1 and 3.2, Reseller
--------------
agrees that all Products sold by Reseller hereunder shall bear the brand
marking and other labeling provided by Efficient. Reseller shall not
remove any such branding or labeling, nor shall Reseller add any Reseller
(or other) branding or labeling to any Product without the prior written
consent of Efficient.
4. RESELLER RESPONSIBILITIES:
4.1. Product Forecasts - On or before the Effective Date and during the first
-----------------
week of each calendar month after the Effective Date, Reseller shall
provide Efficient with a forecast of Reseller's expected demand for each
Product to be purchased and delivered during each month of the subsequent
twelve (12) month period.
4.2. Firm Orders - With respect to Products rebranded at Reseller's request,
-----------
the Product forecasts for the first two (2) months of each twelve (12)
month period shall constitute firm Orders for Products under this
Agreement that are subject to acceptance by Efficient and will be
accompanied by a purchase order by such amount.
5. PRODUCTS AND PRICING:
5.1. New Products - Products which constitute enhancements of or replacements
------------
for products listed on Exhibit A shall be added to Exhibit A by a writing
signed by the parties, and shall thereafter be deemed to be "Products" for
purposes of this Agreement. The parties acknowledge that the term Products
is intended to encompass only those products heretofore manufactured by
Flowpoint and any enhancements thereto or replacements therefor. To the
extent that the parties later agree to permit Reseller to sell any
products which were heretofore manufactured by Efficient (or are hereafter
developed by Efficient and do not fall within the definition of Products)
the right to resell any such products shall be the subject of a separate
written agreement between the parties.
5.2. Withdrawal of Products - Efficient shall have the right to cease
----------------------
production and withdraw any Product from Exhibit A, provided Efficient
gives Reseller a written "Product Withdrawal Notice" at least ninety (90)
days prior to the effective date of the withdrawal. Reseller may, within
forty-five (45) days after receipt of a Product Withdrawal Notice, submit
a single, non-cancelable "Last Buy" Order for the affected Product for
delivery within the subsequent three (3) months. Efficient shall not be
obligated to accept any Last Buy Order which exceeds fifty (50) percent of
the Product units that Reseller ordered during the twelve (12) month
period prior to the date of the relevant Product Withdrawal Notice.
5.3. Software and Firmware - All Products consisting of Software and Software
---------------------
incorporated in any Product shall not be sold but shall be provided to
Reseller and its customers subject to a use license.
5.4. Product Modifications - In the event Efficient intends to modify a Product
---------------------
Specification affecting its form, fit, interoperability or function,
Efficient shall notify Reseller of the modification in writing no later
than ninety (90) days prior to the effective date of the modification.
Based upon information from Reseller, Efficient will make reasonable
efforts to mitigate the impact of any modification on Reseller, including
consideration of changes to the modification and allowing Reseller to make
a final purchase of the unmodified Products, provided that Efficient shall
retain the sole right to make final decisions concerning the design of
Products and Product Specifications, and that the Order for any final
purchase of unmodified Products shall be placed at least thirty (30) days
prior to the effective date of the modification for delivery within sixty
(60) days.
5.5. [Intentionally Left Blank]
Page 2
5.6. Most Favored Pricing - During the term of this Agreement, Efficient will
--------------------
extend to Cabletron the best price it offers to third parties, for the
same or lower volume of Products.
5.7. Price Changes - Upon the written request of either Party, made at least
-------------
sixty (60) days prior to any anniversary of the Effective Date, Parties
shall meet to consider and negotiate in good faith requested changes in
Product prices.
5.8. Price Decreases - The Parties agree that Product prices may require
---------------
adjustment from time to time to allow Reseller to remain competitive, and
Efficient will consider in good faith any request by Reseller for a
reduction in the price of any Product. In the event Efficient determines
to lower the price of a Product, the price decrease shall apply to all
Products on order by Reseller but not shipped as of the effective date of
the decrease.
5.9. Price Terms - Prices for all Products are F.O.B. the shipping dock of the
-----------
Efficient manufacturing or distribution facility, with Reseller fully
responsible for all costs of transportation, insurance, taxes, customs
duties, landing, storage and handling fees, and documents or certificates
required for exportation or importation.
6. ORDERING & SHIPMENT:
6.1. No Conflicting Terms - No additional or different terms on the face or
--------------------
reverse side of any purchase order or other written or oral communications
between the Parties shall supercede or amend the terms of this Agreement,
unless such terms are agreed upon in advance, set forth in writing and
signed by an authorized representative of each Party.
6.2. Issuance and Acceptance - Each Order shall be dated, and shall contain:
-----------------------
(i) a complete list of the Products to be purchased specifying quantity,
type, description and price; (ii) shipment and delivery instructions;
(iii) branding requirements, where applicable; and (iv) any special terms
and conditions agreed to in writing by the Parties. Efficient agrees to
receive Orders placed by Reseller via electronic document transfer,
facsimile, or hard copy only. Verbal or telephone orders must be followed
promptly by one of the transmission means described above. All Orders are
subject to acceptance by Efficient, and Efficient may reject Orders in its
reasonable discretion.
6.3. Right to Reschedule - Reseller may reschedule the date of the shipment of
-------------------
any Order once without penalty provided that Efficient receives written
notice at least thirty (30) days prior to the scheduled shipment date
requesting shipment on a date within ninety (90) days after the original
shipment date.
6.4. Delivery Schedule - Efficient will endeavor to deliver all Products in
-----------------
accordance with the Product delivery date specified in the Reseller's
Order as accepted by Efficient, provided that Efficient reserves the
right, at its sole discretion, to make partial shipments. When Products or
component parts are in short supply, or on an industry wide allocation,
Efficient will allocate its available inventory and make deliveries on a
basis Efficient deems equitable, in its sole discretion, and without
liability to Reseller on account of the method of allocation chosen or its
implementation.
6.5. Quantities - [Intentionally Left Blank]
----------
6.6. No Right of Return - Reseller shall have no right to return and Efficient
------------------
shall have no obligation to repurchase Products sold under this Agreement.
6.7. Carrier & Risk of Loss - Products will be shipped by the carrier
----------------------
designated in writing by Reseller. In the absence of specific shipping
instructions from Reseller, Efficient may designate the carrier. In no
event, however, shall Efficient be liable for the shipment, nor shall the
carrier be deemed to be an agent or representative of Efficient. Title to
Products and risk of loss shall pass to Reseller upon Efficient's delivery
to the designated carrier.
6.8. Packing - Products shipped by Efficient will be packed and packaged
-------
according to Efficient's then current packaging methods. Special packaging
or packing requirements shall be quoted by Efficient and mutually agreed
to in advance.
7. SOFTWARE LICENSE TERMS:
7.1. License Grant - Efficient hereby grants Reseller a nontransferable,
-------------
nonexclusive license to use and distribute Software solely for use by End
Users in and in connection with their use of Products.
7.2. Protection of Software - Reseller agrees not to modify, decompile or
----------------------
disassemble Software except as expressly permitted by applicable law and
agrees not to lend, rent, lease, sublicense, or otherwise transfer
Software in any form to any
Page 3
person except in accordance with this Agreement. Reseller will use its
best efforts to protect Software and any copies or portions thereof from
unauthorized reproduction, publication, disclosure or distribution.
8. PAYMENT:
8.1. Payment Terms - Efficient's payment terms are net thirty (30) days from
-------------
the date of Efficient's invoice. Reseller shall promptly pay all invoices
and amounts due and maintain satisfactory credit arrangements with
Efficient. All payments shall be made in United States dollars.
8.2. Delinquency - If Reseller is delinquent in payment, Efficient may refuse
----------
to accept any new Orders, or may cancel or delay shipment on existing
Orders. Efficient may also rescind Reseller's credit terms and demand
payment on either a pre-paid or delivery basis. Unless there is a
legitimate dispute concerning an invoice, interest will accrue on
delinquent amounts at the lesser of the maximum rate permitted by law or
one and one half percent (1 1/2 %) per month from the due date.
9. WARRANTY TERMS:
9.1. Product Warranty - Efficient warrants that Products purchased under this
----------------
Reseller Agreement will conform to the Product Specifications applicable
as of the date of Reseller's Order throughout the Warranty Period.
9.2. Repair or Replacement - Efficient shall use commercially reasonable
---------------------
efforts to, at its option, repair, replace or issue a credit equal to the
purchase price for Products that fail to meet the applicable Product
Specifications during the Warranty Period.
9.3. Return, Repair or Replacement Procedures - Reseller shall pay all
----------------------------------------
transportation charges for Products returned to Efficient under these
product warranty terms, except that Efficient shall pay the transportation
charges for return of any Product that failed within thirty (30) days of
its initial use by an End User. Efficient will pay all transportation
charges back to the Reseller or End User. In the event that no warranty
repair or replacement is required, Efficient reserves the right to charge
Reseller for the transportation incurred by Efficient in returning the
Product.
9.4. Warranty Disclaimer - EXCEPT AS EXPRESSLY PROVIDED HEREIN, NO OTHER
-------------------
WARRANTY, EXPRESS OR IMPLIED SHALL APPLY. EFFICIENT SPECIFICALLY DISCLAIMS
ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. NO REPRESENTATION OR WARRANTY, INCLUDING BUT NOT LIMITED TO
STATEMENTS OF CAPACITY, SUITABILITY FOR USE OR PERFORMANCE, WHETHER MADE
BY EFFICIENT PERSONNEL OR RESELLER PERSONNEL SHALL BE CONSIDERED A
WARRANTY BY EFFICIENT, FOR ANY PURPOSE, OR GIVE RISE TO ANY LIABILITY OF
EFFICIENT WHATSOEVER.
9.5. Warranty Notice - All End Users shall be provided with a written notice of
---------------
the foregoing Product Warranty and Warranty Disclaimer either in a
contract or upon delivery of the Product. In the event that Reseller shall
modify or supplement the foregoing Product Warranty, Reseller shall
indemnify and hold Efficient harmless from all claims, damages and related
expenses, including attorneys' fees, incurred by Efficient during or after
the term of this Agreement as a result of any such modification.
10. SERVICE:
10.1. End User Support - Reseller shall provide all first and second level End
----------------
User customer support for Products, as defined below, in the same manner
Reseller provides similar support for other products. Efficient will
provide third level support, according to the Technical Support Guidelines
set forth in Exhibit B to this Agreement, solely to Reseller's designated
engineering personnel who are trained in the technical operation of the
Product. As used herein: (i) First Level Support shall mean the provision
of general product information, configuration support, collection of
technical problem identification information and screening of customer
support requests; (ii) Second Level Support shall mean First Level Support
plus problem isolation, defect determination and module or Product
replacement, lab simulation, interoperability testing and action plan
definition; and (iii) Third Level Support shall mean back-up technical
support by telephone and, where appropriate, the provision of hardware and
software "bug fixes" and work-arounds.
Page 4
10.2. Reseller's Efforts - Reseller shall use its best effort to resolve End
------------------
User support problem without Efficient's assistance and insure that all
Product problems and technical inquiries are reported in a standard
format. Reseller shall cooperate with Efficient in identification of "bug
fixes" and work-arounds and the provision of Level Three Support.
10.3. Technical Information and Training - Efficient will provide technical
----------------------------------
information and up to ___ days of training for ___ individuals with
regard to each Product to allow Reseller to provide Level One and Level
Two Support. Unless otherwise agreed by the Parties, all training shall
take place at Efficient's facility in Dallas, Texas. All costs and
expenses of Reseller's personnel in attending Efficient training shall be
borne by the Reseller.
10.4. Additional Support - Efficient may agree to provide Reseller with
-------------------
additional maintenance services and support pursuant to a separate
agreement between the Parties.
10.5. Non-Warranty Repair - Non-warranty repair services for Products may be
-------------------
provided by Efficient at a designated Efficient facility on a time and
materials basis under Efficient's then standard prices, terms and
conditions. Reseller shall also be responsible for all associated freight
and insurance charges.
11. INTELLECTUAL PROPERTY:
11.1. Ownership - Unless expressly stated, nothing in this Agreement shall
---------
grant Reseller a license to use or any other right, title or interest in
any Efficient Intellectual Property Right, and all such Intellectual
Property Rights shall remain the exclusive property of Efficient.
Reseller acknowledges that its unauthorized use or assertion of ownership
of any Efficient Intellectual Property Right will cause Efficient or its
Affiliates immediate and irreparable harm and shall entitle Efficient or
its Affiliates to obtain injunctive relief.
12. DURATION AND TERMINATION:
12.1. Term - The initial term of this Reseller Agreement shall be the three (3)
----
year period commencing on the Effective Date and terminating on the date
exactly three (3) years after the Effective Date unless earlier
terminated pursuant to the terms of this Agreement. This Agreement may be
renewed for additional one (1) year periods upon the same terms and
conditions as set forth herein upon the mutual written agreement of the
parties.
12.2. Termination for Cause - This Agreement may be terminated upon the
---------------------
occurrence of any of the following events: (i) by Efficient, upon ten
(10) days written notice, should Reseller fail to pay any sums due
hereunder within twenty (20) days of the due date thereof; or (ii) by
either Party should the other Party commit a material breach of any
obligation under this Agreement not specifically set out in this Section
or any other Agreement between the parties and fail to cure such material
breach within thirty (30) days after written notice to the defaulting
party (hereinafter the "Default Notice"); or (iii) by either party,
immediately, upon the insolvency of the other party, the appointment of a
liquidator, receiver, administrative receiver or administrator.
12.3. Termination on Change of Control - Notwithstanding the provisions of
--------------------------------
Section 18.4 (Assignment) of this Agreement, either party may, in its
sole discretion, terminate this Agreement immediately upon a change of
control of the other party; provided, however, that the election to
terminate must be made within thirty (30) days of the time that the
terminating party becomes aware of the change of control; and provided
further that any such termination shall not be effective for ninety (90)
days from the notice and that, during the ninety (90) day notice period,
this Agreement will remain in full force and effect. This restriction in
Exhibit C and D shall not apply to a person who acquires Reseller in a
change of control but shall continue to apply to Reseller and its
subsidiaries so long as Reseller and its subsidiaries continue using
Reseller's brand name(s) or until they legally cease to exist.
12.4. Effects of Termination - Upon any termination of this Agreement, Reseller
----------------------
shall: (i) refrain from submitting additional Product Orders; (ii)
promptly pay for any Products which Reseller has ordered but has not yet
paid Efficient; and (iii) allow Efficient, at its discretion, to
repurchase at the invoice price all or any portion of the Products in
Reseller's inventory. Products to be repurchased must be unused, in new
condition, and in Reseller's inventory (or in transit from Efficient) on
the day this Reseller Agreement ends. Reseller shall pay all shipping
charges for Products returned and for all Products rejected. If Efficient
chooses not to repurchase products from Reseller, Reseller may sell such
existing inventories to End Users.
Page 5
12.5. Limits of Liability for Termination - In the event this Agreement is
-----------------------------------
terminated, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR COMPENSATION,
REIMBURSEMENT OR DAMAGES ON ACCOUNT OF THE LOSS OF PROSPECTIVE PROFITS OR
ANTICIPATED SALES, OR ON ACCOUNT OF EXPENDITURES, INVESTMENTS, LEASES OR
COMMITMENTS IN CONNECTION WITH THE BUSINESS OR GOOD WILL OF EFFICIENT OR
RESELLER, OR FOR ANY OTHER REASON RELATING TO OR ARISING FROM SUCH
TERMINATION.
12.6. Post Termination Support - The termination of this Agreement shall not
------------------------
relieve Efficient of its Warranty obligations under Article 8 of this
Agreement with regard to Products sold by Reseller to End Users prior to
the date of termination, and Efficient shall continue to provide the
technical support described Article 9 of this Agreement for one (1) year
following the date of termination.
13. CONFIDENTIAL AND PROPRIETARY INFORMATION:
13.1. Disclosure of Information - It is expected that Efficient and Reseller
-------------------------
may each disclose to the other proprietary or confidential information.
For purposes of the following, the Party disclosing the Confidential
Information is the "Discloser" and the Party receiving the Confidential
Information is the "Recipient".
13.2. Confidential Information - "Confidential Information" shall mean any and
------------------------
all information of the Discloser that is not generally known by others
with whom it competes or does business, and any and all information,
publicly known in whole or in part or not, which, if disclosed would
assist in competition against Discloser. Confidential Information
includes without limitation such information relating to: (i) the
technical specifications of the Products; (ii) the development, research,
testing, marketing and financial activities of the Discloser; (iii) the
identity and special needs of the customers or suppliers of the
Discloser; and (iv) the people and organizations with whom the Discloser
has business relationships and those relationships.
13.3. Ownership and Non-Disclosure - All Confidential Information acquired by
----------------------------
Recipient or its employees or agents shall remain Discloser's exclusive
property, and Recipient shall use its best efforts (which in any event
shall not be less than the efforts Recipient takes to ensure the
confidentiality of its own proprietary and other confidential
information) to keep, and have its employees and agents keep, any and all
such information and data confidential, and shall not copy or publish or
disclose it to others, or authorize its employees, or agents or anyone
else to copy, publish, or disclose it to others, without Discloser's
prior written approval, and shall return such information and data to
Discloser at its request. Recipient shall only use any Confidential
Information in connection with its performance under this Agreement.
13.4. Exception - The confidentiality provisions in this Section will not apply
---------
to information which is or which becomes generally known to the public by
publication or by any means other than a breach of duty on the part of
the Reseller hereunder or is released by Efficient without restriction or
is released pursuant to judicial or governmental decree.
13.5. Post Termination - Except to the extent necessary to fulfill ongoing
----------------
product support obligations or as otherwise provided herein, upon
termination or expiration, the Reseller shall deliver to Efficient all
material furnished by Efficient and pertaining to Products, which is then
in the possession of Reseller, and shall not retain copies of the same.
Except as provided herein, upon termination or expiration, Efficient
shall deliver to Reseller all material furnished by Reseller, which is
deemed confidential hereunder.
14. INTELLECTUAL PROPERTY CLAIMS:
14.1. Indemnification by Efficient - Efficient shall defend, at Efficient's
----------------------------
expense, any claim brought against Reseller or End Users (a "Claim
Defendant") alleging that any Efficient Product acquired or licensed
under this Agreement infringes a U.S. patent, copyright, or mask work
right (hereinafter a "Claim"). Efficient shall pay all costs and damages
awarded or agreed to in settlement, provided that the Claim Defendant
gave Efficient prompt written notice of the Claim, reasonable assistance
and sole authority to defend or settle the Claim. Efficient shall obtain
for the Claim Defendant, the right to continue using the Product, replace
or modify the Product so it becomes non-infringing. If such remedies are
not reasonably available, Efficient shall grant Reseller
Page 6
a credit for the Product normally depreciated and have Reseller return
the Product to Efficient. Efficient shall not have any liability if the
alleged infringement is based upon the use, license or sale of the
Product in combination with other products, including software not
furnished by Efficient. This is Efficient's entire liability and
Reseller's exclusive remedy for intellectual property Claims.
14.2. Representation and Indemnification by Reseller - Reseller represents and
----------------------------------------------
warrants that it is the owner or licensee of all Reseller brands and
agrees that Efficient shall have no responsibility for the protection or
maintenance of Reseller's rights in Reseller brands. Reseller shall hold
Efficient harmless from and defend, at Reseller's expense, any claim
brought against Efficient alleging that any Reseller brand infringes the
trademark, trade name or any other intellectual property right of a third
party (a "Brand Claim"). Reseller shall pay all costs and damages awarded
or agreed to in settlement, provided that the Efficient gave Reseller
prompt written notice of the Brand Claim, reasonable assistance and sole
authority to defend or settle the Brand Claim.
15. LIMITATION OF LIABILITY:
15.1. Limitation of Liability - IN NO EVENT SHALL EITHER PARTY OR ITS
-----------------------
RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, AGENTS, OR EMPLOYEES BE
LIABLE TO RESELLER OR END USERS FOR ANY INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION, LOSS OF DATA OR
PROFITS OR ATTORNEY'S FEES, WHETHER CLAIMED BY REASON OF BREACH OF
WARRANTY, IN TORT OR OTHERWISE, AND WITHOUT REGARD TO THE FORM OF ACTION
IN WHICH SUCH CLAIM IS MADE. IN ANY EVENT, EACH PARTY'S LIABILITY SHALL
BE LIMITED TO ONE MILLION UNITED STATES DOLLARS ($1,000,000) OR THE
EQUIVALENT IN FOREIGN CURRENCY; PROVIDED, HOWEVER, THAT THIS LIMITATION
SHALL NOT APPLY TO RESELLER'S OBLIGATION TO PAY FOR PRODUCTS PURCHASED
HEREUNDER.
16. DISPUTE RESOLUTION:
16.1. Consultation and Review - The Parties shall make good faith efforts to
-----------------------
resolve all disputes arising under this Agreement through consultations.
If consultations are unsuccessful in resolving any dispute, either Party
may request a senior management review. Within ten (10) business days of
any such request, designated vice presidents of Efficient and Reseller
will meet in a mutually acceptable fashion to exchange relevant
information and attempt to resolve the dispute.
17. TRANSACTION RELATED ITEMS:
17.1. Merger Agreement. Reseller and Efficient have entered into an Agreement
-----------------
and Plan of Merger and Reorganization, dated as of November 21, 1999 (the
"Merger Agreement").
17.2. Indemnity Obligation. Under the Merger Agreement Reseller has agreed to,
--------------------
under certain circumstances, indemnify and hold Efficient harmless from
certain claims. Reseller and Efficient agree and acknowledge that nothing
express or implied in this Agreement (e.g. Article 14) shall limit or
modify any of Reseller's obligations under the Merger Agreement.
18. GENERAL TERMS:
18.1. Commercial Use - Products are manufactured by Efficient for standard
--------------
commercial use and are accepted and approved by Efficient following
qualified test procedures, processes and programs established by
Efficient prior to delivery to Reseller. Special acceptance criteria
established by Reseller shall be deemed by Efficient as a request for
custom Product and will be quoted on a case by case basis. Efficient
shall not be responsible for any damages caused by Products which are not
intended for use in critical safety systems or nuclear facilities.
18.2. Import and Export - Certain Products may be subject to export or import
-----------------
control laws and regulations of the U.S. government and other
governments. Reseller assures that Reseller and Resellers will comply
with those regulations at their expense whenever they export or re-export
controlled products or technical data obtained from Efficient or any
product produced directly from the controlled technical data. Reseller
shall hold harmless and indemnify Efficient from any damages, including
attorneys' fees, and any government sanctions resulting to Efficient from
a breach of this Section.
18.3. United States Government Restricted Rights - All Software shall be
------------------------------------------
licensed to End Users subject to
Page 7
the following: "The enclosed Product (a) was developed solely at private
expense; (b) contains "restricted computer software" submitted with
restricted rights in accordance with section 52.227-19 (a) through (d) of
the Commercial Computer Software-Restricted Rights Clause and its
successors, and (c) in all respects is proprietary data belonging to
Efficient and/or its suppliers. For Department of Defense units, the
Product is considered commercial computer software in accordance with
DFARS section 227.7202-3 and its successors, and use, duplication, or
disclosure by the government is subject to restrictions set forth
herein."
18.4. Assignment - This Agreement may not be assigned or transferred in whole
----------
or in part by Reseller without the prior written consent of Efficient.
Subject to each party's right to terminate this Agreement as provided in
Section 12.3, either party may, however, assign this Agreement without
the other party's consent to any person or entity that acquires
substantially all of the stock, assets or any major division, unit, or
subsidiary of the assigning party.
18.5. Waiver and Severability - A Party's failure to enforce any provision of
-----------------------
this Agreement shall not be deemed a waiver of that or any other
provision of this Agreement. If any provision of this Agreement has been
declared illegal, invalid or unenforceable, the provision shall be
construed to be enforceable to the maximum extent permitted and, if not,
shall be deemed deleted from this Agreement, provided that if such
construction or deletion substantially alters the commercial basis of
this Agreement, the Parties shall negotiate in good faith to amend the
provisions of this Agreement to give effect to their original intent.
18.6. Force Majeure - Except in the case of Reseller's failure to pay any
-------------
amounts due hereunder, neither Party shall be liable for any damages or
penalties for delay in delivery nor for failure to give notice when such
delay is due to the elements, acts of God, acts of the other Party, acts
of civil or military authority, fires, or floods, epidemics, quarantine
restrictions, war, riots, strikes, lockouts or other labor disputes,
delays in transportation, delays in delivery by vendors, or any other
causes, without limitation, which are beyond the reasonable control of
the delayed Party. The delivery date shall be considered extended by a
period of time equal to the time lost because of any delay that is
excusable under this provision.
18.7. Survival - Appropriate provisions of this Agreement, including but not
--------
limited to the following, shall survive the expiration or termination of
this Agreement: Definitions; Ordering and Shipment; Software Terms;
Payment; Warranty Terms; Intellectual Property; Duration and Termination;
Confidential and Proprietary Information; Limitation of Liability; Import
and Export; Confidentiality of Agreement, Waiver and Severability and
Laws.
18.8. Laws -This Reseller Agreement shall be governed by the laws of the State
----
of Texas, U.S.A., regardless of the laws that might otherwise govern
under applicable conflicts and choice of laws principles. Any Action
under this Agreement must be brought within twelve (12) months after the
cause of action arises.
18.9. Relationship of the Parties - Except as expressly provided in this
---------------------------
Agreement, Reseller shall not be, and will not hold itself out as, the
representative, agent, commission-sales agent, franchisee or employee of
Efficient for any purpose. This Agreement creates no relationship of
joint venture, franchise or partnership, and neither Party has any right
or authority to assume or to create any obligation or responsibility on
behalf of the other Party. All agreements relating to the sale of the
Products and Services provided by Reseller to its customers are
Reseller's exclusive responsibility. Reseller shall indemnify against and
hold Efficient harmless from, any and all claims, damages or legal
proceedings and associated costs of whatever nature, relating to the
performance by Reseller of this Agreement arising out of the acts or
omissions of Reseller, its employees, servants, Resellers or agents.
18.10. Entire Agreement - This Reseller Agreement, its Exhibits and
----------------
attachments, including all documents which are incorporated by reference,
constitute the entire and only understanding between the Parties with
regard to the subject matter hereof and thereof. Unless otherwise
provided herein, no modifications to this Agreement shall be binding on
either Party unless made in writing and signed by duly authorized
representatives of both Parties. In the event of any conflict between
this Agreement, and any Addendum, Exhibits, or other attachments, the
terms of this Agreement shall govern.
18.11. Third-Party Financing - In the event Reseller obtains financing in any
---------------------
form whatsoever for the
Page 8
purchase of Products under this Agreement and there is a conflict
between the provisions of any such financing agreement and this
Agreement, the terms of this Reseller Agreement (other than Payment)
shall govern.
18.12. Notices - Where electronic communication is available, Efficient and
-------
Reseller may communicate with each other by electronic means. Efficient
and Reseller agree that when electronic communications are used, they
are the equivalent of written and signed documents except for Notices
given under this Agreement which if transmitted electronically, shall
also be sent via facsimile transmission (with a copy by U.S. mail or
overnight courier (signature required)). Notices shall be deemed
effective upon receipt or refusal to accept delivery. Routine business
communications shall not be deemed to be Notices. All such notices shall
be in English and addressed as follows:
If to Efficient:
Efficient Networks, Inc.
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Facsimile Number: 000-000-0000
If to Cabletron:
Cabletron Systems, Inc.
00 Xxxxxxxxxx Xxx
Xxxxxxxxx, XX
Attention: __________________________
Facsimile Number: ____________________
IN WITNESS WHEREOF, the Parties have caused this Reseller Agreement to be
executed by their duly authorized representatives.
Efficient Networks, Inc. Cabletron Systems, Inc.
/s/ XXXX XXXXXXX /s/ XXXXXX XXXXX
By: _______________________________ By: __________________________________
Xxxx Xxxxxxx Xxxxxx Xxxxx
Name: _____________________________ Name: ________________________________
Chief Financial Officer President
Title: ____________________________ Title ________________________________
December 17, 1999 December 17, 1999
Date: _____________________________ Date: ________________________________
EFFICIENT NETWORKS RESELLER AGREEMENT
Exhibit A - Products
-------------------------------------------------------------------------
Product No. Description
-------------------------------------------------------------------------
FP128 ISDN Router SSR - 105 SSR - 103
-------------------------------------------------------------------------
FP144 IDSL Router
-------------------------------------------------------------------------
FP2025 ATM25 Router
-------------------------------------------------------------------------
FP2200 SDSL Router
-------------------------------------------------------------------------
FP2200V SDSL IAD
-------------------------------------------------------------------------
SSR245 Dual Ethernet Router
-------------------------------------------------------------------------
SSR250 ADSL Router
-------------------------------------------------------------------------
SSR255 ADSL Router
-------------------------------------------------------------------------
EFFICIENT NETWORKS RESELLER AGREEMENT
Exhibit B - Technical Support Guidelines
Nature of Technical Support - During the term of this Agreement, Efficient will
assist Reseller in the identification and resolution of Product performance
problems and errors. Efficient's technical support shall be Level 3 Support to
the Reseller in connection with its support of its Resellers and End Users.
Level 1 Support and Level 2 Support shall be the sole and exclusive
responsibility of the Reseller and its resellers. Level 3 Support shall be
provided by Efficient only to engineering personnel designated by the Reseller
who are trained in the technical operation of the Product. Efficient's support
will be provided in accordance with the following guidelines:
I. Technical Support
1. Availability - Efficient shall provide Level 3 Support via telephone,
------------
facsimile and electronic mail twenty-four hours per day, seven days
per week.
2. Response - Reseller shall use reasonable efforts to attempt to resolve
--------
End User support requirements for the Products. If Reseller cannot
successfully resolve an issue within a reasonable period of time,
Efficient's technical support staff will provide assistance. Efficient
will provide an initial response to all Reseller support requests
within two (2) hours, and Reseller and Efficient will mutually agree,
in good faith, what additional information or documentation will be
required for resolution of the problem. Efficient will provide a
problem report form for Reseller's use in reporting problems.
II. Error Correction
1. Error Definitions - "Error" means a reproducible that causes a Product
-----------------
not to function substantially in conformance with its specifications.
Errors are classified as follows:
Category 1: End User's network segment or management application is
down or experiencing a consistent, measurable performance impact with
no immediate resolution available.
Category 2: End User is experiencing intermittent failure, performance
degradation, or functionality of network or management applications.
Category 3: Issues that do not affect customer's normal network or
management application operation or questions concerning Product
functionality or usage.
2. Non-Emergency Technical Support - For End User or Reseller problems
-------------------------------
not deemed by Reseller to be an emergency, Efficient will use its best
efforts to address and resolve the problems as quickly as practicable
during normal business hours. If a particular problem is not resolved
within two (2) business days following the initial call to Efficient,
technical support managers and engineers for each Party, will discuss
and work in good faith to devise and implement a satisfactory
resolution. Problems regarded as non-emergencies include: (i)
installation and operation problems, i.e., routine questions that can
be resolved by following documentation; and (ii) deviations from
documentation, omissions and known workarounds, i.e. problems that
cannot be resolved by following the documentation or result from
reasonable misinterpretation of the documentation.
3. Emergency Technical Support - Efficient acknowledges that Category 1
---------------------------
and Category 2 Errors should be resolved quickly. During the
applicable Warranty Period, Efficient shall replace any defective
Products or correct Errors promptly following receipt of notice from
Reseller, not to exceed the following:
. Efficient shall provide an initial response to Errors reported by
Reseller during normal business hours within four (4) hours and
Reseller and Efficient shall promptly agree in good faith to any
additional information and documentation that may be required to
permit Efficient to resolve such errors. The error
correction period begins after Reseller has enough information to
profile the error and can recreate the error or has access to a
facility where the error can be recreated.
. Efficient shall use its best efforts to resolve Category 1 Errors
within two (2) working days of receipt of notice of such Error.
. Efficient shall use its best efforts to resolve Category 2 Errors
within five (5) working days of receipt of notice of such Error.
. Efficient shall use its best efforts to resolve Category 3 Errors
within fifteen (15) working days of receipt of notice of such
Error.
The prescribed Error correction periods above may be extended by
agreement of the Parties, e.g., if resolution of problem requires
hardware certification or test, or if resolution represents
significant risk to the primary Product functions.
4. Support Reports and Evaluation - Efficient shall provide a reporting
------------------------------
mechanism by which Reseller will regularly receive a detailed list of
the status of all Errors reported and resolved, including a list of
workarounds and bug-fixes. At least once during each calendar quarter,
the Parties shall hold management-level meetings to discuss
improvements in support.
III. Technical Support Hotline
Reseller shall make all requests for technical support to the following hotline
telephone or facsimile number, or via the Internet to the address indicated:
Efficient Technical Hotline contacts as follows:
Telephone No. __________________________
Facsimile No. ___________________________
Electronic Mail: ___________@______.com
Efficient may change contact telephone numbers, facsimile numbers, or Internet
addresses on ten day's notice.
EFFICIENT NETWORKS RESELLER AGREEMENT
Exhibit C - Limited Exclusivity
I. Reseller Non Exclusive Reseller - Reseller's appointment by Efficient
-------------------------------
as a Reseller under the Reseller Agreement is on a non-exclusive
basis. Efficient may appoint additional parties to sell Products and
may sell Products itself to all parties throughout the Territory.
II. Efficient Exclusive Supplier - Reseller agrees that it shall acquire
DSL and ISDN customer premises equipment ("CPE") for resale from
Efficient as provided herein.
. First Twelve Months - Reseller agrees that, for a period of twelve
(12) months from the Effective Date, it shall purchase for resale
CPE exclusively from Efficient. Reseller shall be relieved of this
obligation, and may purchase CPE for resale from other parties, in
the event that: (A) Efficient is unable to meet Reseller's
reasonable delivery requirements for CPE; or (B) Efficient CPE does
not substantially meet the specifications of Reseller or Reseller's
customer for the CPE and, after reasonable notice, Efficient is
unable or unwilling to modify its products to meet Reseller or the
customer requirements in the required timeframe; or (C) a third
party manufacturer of CPE is able to supply comparable CPE to
Reseller at prices which are equal to or less than ninety-five
percent (95%) of the price at which Efficient is offering
comparable CPE to Reseller; or (D) Reseller's customer makes a
specific request not solicited by Reseller for CPE manufactured by
a third party. Any exception to the general rule of exclusivity
will apply to the specific product or order presented by Reseller,
but will not result in a general release from the foregoing
exclusivity provisions.
. Subsequent Periods - Following the initial twelve month period of
the Reseller Agreement and for so long as the Reseller Agreement
remains in effect, Reseller agrees that Efficient shall be its
preferred supplier of CPE for resale and that Reseller shall
feature Efficient CPE as its lead CPE products.
III. Branding - For so long as the Reseller Agreement remains in effect,
--------
Reseller agrees that it will not rebrand any CPE as Reseller CPE,
other than (i) CPE so branded by Efficient pursuant to the Reseller
Agreement and (ii) CPE purchased from third parties as permitted by
paragraph II. To the extent that Reseller acquires a third party which
makes or sells CPE that is comparable to the Flowpoint CPE, Reseller
will not rebrand any such CPE as Reseller CPE for the longer of (A)
twelve (12) months from the date it acquires such third party; or (B)
that date on which it otherwise generally ceases to use the branding
of the acquired entity.
IV. Sales Force Training and Incentives - Reseller agrees that, for so
long as the Reseller Agreement remains in effect:
. Reseller shall provide Efficient with access to its sales personnel
on a regular basis in conjunction with regularly scheduled Reseller
sales force training events so that Efficient may provide training
on the Flowpoint CPE;
. Reseller shall not permit any third party CPE manufacturer to offer
similar training to Reseller sales personnel; provided, however,
that Reseller may permit third party manufacturers supplying CPE as
permitted by paragraph II to conduct limited training as reasonably
required;
. Reseller shall utilize marketing material provided by Efficient, or
jointly developed by Reseller and Efficient, as its exclusive
marketing material relating to CPE except with respect to third
party CPE permitted by paragraph II above;
. To the extent that Reseller elects to feature CPE at trade shows or
in general product marketing material, it shall feature Flowpoint
CPE substantially more predominantly at such shows or in such
material than it features any other third party CPE;
. Reseller shall include in Flowpoint CPE its product/commission
lists made available to its sales personnel and shall pay customary
commissions to its sales personnel on sales of Flowpoint CPE;
. Reseller shall not compensate (through commissions, rebates,
special incentives or any other means) its sales personnel for the
sale of third party CPE at rates more favorable than the rates at
which Reseller compensates its sales personnel for sales of
Flowpoint CPE; and
. Reseller shall not disseminate any press releases or similar
announcements relating to any non-Efficient CPE which Reseller may
sell nor with respect to any strategic relationship, joint or
cooperative marketing or similar arrangement with any third-party
supplier of CPE.
EFFICIENT NETWORKS RESELLER AGREEMENT
Exhibit D - Marketing Principles
These Marketing Principles set forth the intentions of the parties as it relates
to opportunities which may arise to sell DSL and ISDN customer premises
equipment (DSL and ISDN customer premises equipment are referred to herein as
"CPE."). In particular, the parties recognize that situations are likely to
arise where the sales force of each party may be presented with the same
business opportunity, or different opportunities within a single customer
enterprise. It is the parties intention that any such conflicts be resolved
through good faith discussions between the parties taking into account the
guidelines set forth herein.
I. General Statement - Efficient is primarily in the business of
-----------------
developing and selling CPE. Reseller is not primarily in the business
of developing or selling CPE, and intends to sell CPE only in
situations which may lead to sales by Reseller of other Reseller
products and services. It is the general intention and marketing
strategy of the parties that: (1) sales which primarily involve CPE
will be handled by Efficient and (2) sales which primarily involve
non-CPE Reseller products and services will be handled by Reseller. It
is the mutual goal of the parties to increase the level of CPE being
sold through all available sales channels and to optimize the use of
their respective sales resources.
II. Specific Accounts - In furtherance of the General Statement, the
-----------------
parties acknowledge that there are certain customers which require a
more specific statement of intention. These are as set forth in this
Article II.
1. Efficient Key Accounts - Efficient has existing customer
----------------------
relationships with each of the following parties and/or their
purchasing affiliates (the "Efficient Key Accounts"): America
Online; Concentric Networks; Covad Communications; Northpoint;
Rhythms; and SBC. The parties agree that Efficient will be the
preferred vendor of CPE into these accounts. Absent unusual
circumstances, Reseller will refrain from selling CPE into these
accounts, and will refer sales leads to Efficient.
2. Common Key Accounts - Efficient and Reseller each have existing
-------------------
customer relationships with the following parties and/or their
purchasing affiliates (the "Common Key Accounts"): AT&T; Xxxx
Atlantic; Xxxx South; Mindspring; and MCI/Worldcom. Both Efficient
and Reseller expect to continue to sell their respective products
and services into each of the Common Key Accounts. In order to
mitigate the potential for the inefficient duplication of sales
efforts with respect to the Common Key Accounts, promptly following
the Effective Date, representatives of Efficient and Reseller shall
meet and (1) inform the other party about the status of current and
prospective sales activities in each of the Common Key Accounts;
and (2) work in good faith to develop a plan of action to mitigate
any duplications of effort or other inefficiencies which may then
exist or may arise in the future. Efficient and Reseller further
agree that, for so long as the Reseller Agreement remains in
effect, they will keep the other party informed of current and
prospective sales activities in the Common Key Accounts and will
meet periodically to discuss any issues that may have arisen.
3. Other Accounts - Efficient and Reseller recognize that they are
--------------
likely to engage in selling activities with respect to customers or
potential customers that are not Efficient Key Accounts or Common
Key Accounts. As to all such other customers or potential
customers, it is the intention that the General Statement shall
apply.
III. Contacts and Dispute Resolution - The parties agree to appoint primary
-------------------------------
contact persons and to attempt to resolve in good faith any issues
that may arise under these Marketing Principles.
1. Contacts - The following persons shall be the initial contacts for
--------
resolving any issues under these Marketing Principles: for
Efficient, Xxxxx Xxxxxx; for Reseller, Xxxxxxx Xxxxxxx; for
Flowpoint, Xxxx Xxxxxx. Although the parties are free to change
their contact person in their discretion by notice to the other
parties, each party acknowledges and agrees that maintaining
continuity of the contacts and relationship will be beneficial to
all parties, and will make decisions to keep or change contact
persons with this in mind.
2. Dispute Resolution - Each party shall put into place appropriate
------------------
mechanisms such that conflicts that arise among their respective
sales forces will be brought to the attention to their contact
persons. In the event of any such dispute, the contact persons
shall promptly meet (in person or by phone) and shall attempt in
good faith to resolve any such controversies following the
principles set forth in these Marketing Principles. If, after
making reasonable efforts to resolve the controversy, the contact
persons are unable to arrive at a mutually satisfactory resolution,
the matter shall be elevated to the second level contacts within
the organizations. The second level contacts shall be: for
Efficient, [Xxxx Xxxxx]; for Reseller, [________________]; and for
Flowpoint, [Xxxxx Xxxxxxxx]. Each party is free to designate a
different second level contact. The second level contacts shall
attempt to resolve any controversies in the same manner as the
initial contacts act under these Marketing Principles.
