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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 1997
REGISTRATION NO. 333-41517
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VISUAL NETWORKS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
2092 GAITHER ROAD
ROCKVILLE, MARYLAND 20850
(301) 296-2300
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
3576
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
52-1837515
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
SCOTT E. STOUFFER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VISUAL NETWORKS, INC.
2092 GAITHER ROAD
ROCKVILLE, MARYLAND 20850
(301) 296-2300
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF AGENT FOR SERVICE)
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Copies to:
EDWIN M. MARTIN, JR., ESQUIRE
NANCY A. SPANGLER, ESQUIRE
PIPER & MARBURY L.L.P.
1200 19TH STREET, N.W.
WASHINGTON, D.C. 20036
(202) 861-3900
MARK G. BORDEN, ESQUIRE
DAVID SYLVESTER, ESQUIRE
HALE AND DORR LLP
1455 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004
(202) 942-8400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE(3)
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Shares of Common Stock, par value $.01...................... 4,025,000 shares $11.00 $44,275,000 $0
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(1) Includes 525,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(a) under the Securities Act.
(3) A registration fee of $13,061 was paid at the time of the initial filing of
this registration statement.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
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1.1 Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Registrant.
3.2 Restated By-Laws of the Registrant.
4.1 Specimen stock certificate for shares of Common Stock of the Registrant.
5.1 Opinion of Piper & Marbury L.L.P. regarding legality of securities being
registered.
10.1 1994 Stock Option Plan.
10.2 1997 Omnibus Stock Plan.
10.3 1997 Directors' Stock Option Plan.
10.4 Third Amended and Restated Stockholders and Registration Rights Agreement,
dated as of September 19, 1996, by and among the Company and certain
stockholders.
10.5*+ Reseller/Integration Agreement, dated August 29, 1997, by and between the
Company and MCI Telecommunication Corporation.
10.6*+ Master Reseller Agreement, dated as of August 23, 1996, between
Sprint/United Management Company and the Company.
10.7*+ General Agreement for the Procurement of Equipment, Services and Supplies
and the Licensing of Software, dated as of December 3, 1997, between the
Company and AT&T Corp.
10.8 Lease Agreement, dated December 12, 1996, by and between the Company and
The Equitable Fire Assurance Society of The United States.
10.9 Lease Amendment, dated September 2, 1997, by and between the Company and
The Equitable Fire Assurance Society of The United States (relating to
Exhibit 10.8).
10.10 Loan and Security Agreement dated April 5, 1996, by and between Silicon
Valley Bank and the Company.
10.11 Revolving Promissory Note issued by the Company on April 5, 1996, to
Silicon Valley Bank.
10.11.1 Equipment Term Note No. 1 issued by the Company on April 5, 1996, to
Silicon Valley Bank.
10.11.2 First Amendment to Loan and Security Agreement dated November 8, 1996, by
and between Silicon Valley Bank and the Company (relating to Exhibit
10.10).
10.11.3 Second Amendment to Loan and Security Agreement dated February 27, 1997,
by and between Silicon Valley Bank and the Company (relating to Exhibit
10.10).
10.12 Standby Letter of Credit Agreement, dated December 10, 1996 by and between
the Company and Silicon Valley Bank.
10.12.1 Amendment No. 1 to Standby Letter of Credit Agreement dated September 5,
1997, by and between the Company and Silicon Valley Bank (relating to
Exhibit 10.12).
10.13 Employment Agreement dated December 15, 1994, by and between the Company
and Scott E. Stouffer, as amended.
10.14 Employment Agreement dated December 15, 1994, by and between the Company
and Robert Troutman, as amended.
10.15 Terms of Employment dated June 11, 1997, by and between the Company and
Peter J. Minihane, as amended.
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II-1
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10.16 Terms of Employment dated March 5, 1997, by and between the Company and
Henri A. Cheli, as amended.
10.17 Terms of Employment dated November 12, 1996, by and between the Company
and Gregory J. Langford, as amended.
11.1 Statement of computation of loss per share.
16.1 Letter regarding change in certified accountants.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Piper & Marbury L.L.P. (included as part of Exhibit 5.1
hereto).
24.1 Power of Attorney (included in signature pages).
27 Financial Data Schedule.
</TABLE>
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* Filed herewith. All other exhibits previously filed.
+ Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Registrant's Application
Requesting Confidential Treatment under Rule 406 of the Act, filed on December
22, 1997.
(B) FINANCIAL STATEMENT SCHEDULES
II-2
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Rockville,
Maryland, on the 22nd day of December, 1997.
VISUAL NETWORKS, INC.
By: /s/ SCOTT E. STOUFFER
------------------------------------
Scott E. Stouffer
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
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SIGNATURE TITLE DATE
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/s/ SCOTT E. STOUFFER President, Chief Executive December 22, 1997
- ---------------------------------------- Officer and Director
SCOTT E. STOUFFER (Principal Executive Officer)
/s/ PETER J. MINIHANE Executive Vice President, December 22, 1997
- ---------------------------------------- Chief Financial Officer
PETER J. MINIHANE and Treasurer
(Principal Accounting
and Financial Officer)
* Director December 22, 1997
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GRANT G. BEHRMAN
* Director December 22, 1997
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MARC F. BENSON
* Director December 22, 1997
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THEODORE R. JOSEPH
* Director December 22, 1997
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TED H. MCCOURTNEY
* Director December 22, 1997
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THOMAS A. SMITH
* Director December 22, 1997
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WILLIAM J. SMITH
* By: /s/ EDWIN M. MARTIN, JR.,
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EDWIN M. MARTIN, JR.
ATTORNEY-IN-FACT
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EXHIBIT INDEX
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EXHIBIT NO.
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1.1 Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Registrant.
3.2 Restated By-Laws of the Registrant.
4.1 Specimen stock certificate for shares of Common Stock of the Registrant.
5.1 Opinion of Piper & Marbury L.L.P. regarding legality of securities being
registered.
10.1 1994 Stock Option Plan.
10.2 1997 Omnibus Stock Plan.
10.3 1997 Directors' Stock Option Plan.
10.4 Third Amended and Restated Stockholders and Registration Rights
Agreement, dated as of September 19, 1996, by and among the Company and
certain stockholders.
10.5*+ Reseller/Integration Agreement, dated August 29, 1997, by and between the
Company and MCI Telecommunication Corporation.
10.6*+ Master Reseller Agreement, dated as of August 23, 1996, between
Sprint/United Management Company and the Company.
10.7*+ General Agreement for the Procurement of Equipment, Services and Supplies
and the Licensing of Software, dated as of December 3, 1997, between the
Company and AT&T Corp.
10.8 Lease Agreement, dated December 12, 1996, by and between the Company and
The Equitable Fire Assurance Society of The United States.
10.9 Lease Amendment, dated September 2, 1997, by and between the Company and
The Equitable Fire Assurance Society of The United States (relating to
Exhibit 10.8).
10.10 Loan and Security Agreement dated April 5, 1996, by and between Silicon
Valley Bank and the Company.
10.11 Revolving Promissory Note issued by the Company on April 5, 1996, to
Silicon Valley Bank.
10.11.1 Equipment Term Note No. 1 issued by the Company on April 5, 1996, to
Silicon Valley Bank.
10.11.2 First Amendment to Loan and Security Agreement dated November 8, 1996, by
and between Silicon Valley Bank and the Company (relating to Exhibit
10.10).
10.11.3 Second Amendment to Loan and Security Agreement dated February 27, 1997,
by and between Silicon Valley Bank and the Company (relating to Exhibit
10.10).
10.12 Standby Letter of Credit Agreement, dated December 10, 1996 by and
between the Company and Silicon Valley Bank.
10.12.1 Amendment No. 1 to Standby Letter of Credit Agreement dated September 5,
1997, by and between the Company and Silicon Valley Bank (relating to
Exhibit 10.12).
10.13 Employment Agreement dated December 15, 1994, by and between the Company
and Scott E. Stouffer, as amended.
10.14 Employment Agreement dated December 15, 1994, by and between the Company
and Robert Troutman, as amended.
10.15 Terms of Employment dated June 11, 1997, by and between the Company and
Peter J. Minihane, as amended.
10.16 Terms of Employment dated March 5, 1997, by and between the Company and
Henri A. Cheli, as amended.
10.17 Terms of Employment dated November 12, 1996, by and between the Company
and Gregory J. Langford, as amended.
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EXHIBIT NO.
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11.1 Statement of computation of loss per share.
16.1 Letter regarding change in certified accountants.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Piper & Marbury L.L.P. (included as part of Exhibit 5.1
hereto).
24.1 Power of Attorney (included in signature pages).
27 Financial Data Schedule.
</TABLE>
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* Filed herewith. All other exhibits previously filed.
+ Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Registrant's Application
Requesting Confidential Treatment under Rule 406 of the Act, filed on December
22, 1997.
<PAGE> 1
EXHIBIT 10.5
RESELLER/INTEGRATION AGREEMENT
This Agreement is entered into as of August 29,1997 ("Effective
Date") by and between Visual Networks, Inc. with offices at 2092 Gaither Road,
Rockville, MD 20850 ("Systems Provider") and MCI Telecommunication Corporation
with offices at Six Concourse Parkway, Atlanta, GA 30328 ("MCI").
Whereas, Systems Provider is in the business of providing information
technology Products to its customers and MCI is in the business of, among other
things, providing systems integration, network management, technology
deployment, and outsourcing Services to its clients;
Whereas, both parties desire to profitably expand their business;
Whereas, MCI desires to propose, bid and deliver Systems Provider's
information technology Products, when it deems appropriate, as part of its
integrated business solutions or to purchase such Products for its own use.
Now, therefore, in consideration of the premises and mutual agreements
contained herein, the parties agree as follows:
1. DEFINITIONS
1.1 The term "Agreement" includes these Terms and Conditions; all
specifications, drawings, documents and addendum made a part of this Agreement,
or incorporated herein by reference; and any amendments to this Agreement.
1.2 The term "Affiliates" of MCI as hereinafter defined may elect to
purchase Products from Systems Provider under this Agreement by such Affiliate
issuing its own purchase order to Systems Provider. As used herein,
"Affiliate" of a named party or other entity shall mean a corporation,
partnership, joint venture or other entity controlling, controlled by or under
common control with such party or other entity. The dollar value of purchases
by Affiliates shall be included in the aggregate volume of Product purchases.
The Affiliate will have primary responsibility for charges incurred in
connection with such purchase order. A list of participating Affiliates as set
forth in Exhibit "C" will be provided by MCI to Systems Provider upon the
signing of this Agreement, and will be updated whenever a change is made. Any
Affiliate included on the list shall be deemed to have agreed in writing to be
bound by all the terms and conditions of the Agreement before Systems Provider
can accept any order(s) from an approved Affiliate under this Agreement. An
Affiliate shall be separately and legally bound by the terms and conditions of
this Agreement, and shall not in any way bind MCI.
1.3 The term "ASE" means Analysis Service Element.
1.4 The term "CPE" means Customer Premise Equipment.
1.5 The term "Delivery" means the receipt of the Product pursuant to the
terms and conditions of this Agreement by Systems Provider at the MCI
designated site, at the time(s) and place(s) specified in the Article of this
Agreement entitled "Delivery".
1.6 The term "DATANOC" shall mean Data Network Operation Center.
1.7 The term "Integrated Business Solutions" shall mean computing and
telecommunications systems installed by MCI consisting of some or all of
hardware and software Products manufactured by Systems Provider and/or other
suppliers, and associated project management, systems design, application
development, systems integration, network management, data center management,
systems support and/or maintenance Services.
1.8 The term "MSNOC" shall mean the Managed Service Network Operations
Center.
<PAGE> 2
1.9 "Net Revenues" shall mean revenues accruing to a customer of MCI from
sale or licensing of Products, excluding maintenance, consulting fees, and
rebates, and after any discounts on Products.
1.10 The term "Non-Standard Product" shall mean all Products as referenced
in Exhibit B, except for "Standard Products" as defined in article 1.18.
1.11 The term "PAM" shall mean Performance Archive Manager.
1.12 The term "Patent" means patents for inventions and similar forms of
statutory protection, domestic or foreign, such as utility models and
registered designs.
1.13 The term "Products" are all Products and maintenance Services
described in Exhibits A and B, and the related documentation, including updates
and modifications thereto as may be made generally available by Systems
Provider to its customers during the term hereof.
1.14 The term "Purchase Order" shall mean the standard purchase order form
as utilized from time to time by MCI, or an MCI Affiliate, as applicable, which
has been properly signed by a representative of the procurement function of the
purchasing entity authorized to execute such purchase order on behalf of the
entity and shall include all exhibits and attachments incorporated as part of
the purchase order. The term "Purchase Order" shall further include change
orders thereto and delivery orders.
1.15 The term "SDAR" shall mean the Strategic Data Account Representative.
1.16 The term "Services" shall mean the associate maintenance and warranty
services to be provided in support of any hardware and software Products
purchased under this Agreement
1.17 The term "Software" shall mean the Software Products and related
documentation, and any and all updates, modifications and enhancements thereto
furnished by Systems Provider.
1.18 The term "Standard Product" shall mean a csu/dsu, which includes an
ethernet interface as described in the attached Products, and Services exhibit.
1.19 The term "Territory" means the territories of North America, the
United States, and Canada.
1.20 The term "Work" shall mean the services that will be delivered by
Systems Provider or its sub-contractors.
1.21 The term "VTAC" shall mean Visual Technical Assistance Center.
2. ORGANIZATION
2.1 Each party shall appoint a Relationship Director and Technology
Expert. The Relationship Director and Technology Expert may be changed from
time to time at the appointing party's discretion. As of the Effective Date of
this Agreement, Systems Provider' Relationship Director is Ernie Stockton_and
MCI's Relationship Director is Jimmy Davis. As of the Effective Date of this
Agreement, MCI's Technology Expert shall be determined sixty days (60) after
the execution date of this Agreement. Systems Provider's Technology Expert is
Peter Luff.
2.2 Subject to appropriate security provisions and restrictions on use for
solicitation, in order to facilitate communication each Relationship Director
and Technology Expert shall provide their Internet address and allow to be
publicized within the other party.
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3. MARKETING AND SALES EFFORTS
3.1 Subject to client confidentiality considerations, each party may
identify prospects for the sale of the other party's Products and Services.
Upon notification by one party to the other of such an opportunity and the
provision of information adequate to assess such opportunity, the other will
use all commercially reasonable efforts to respond within five business days
regarding its intent. Any such opportunities will be considered the disclosing
party's confidential information. A standard teaming agreement to be developed
may be used on such opportunities if the requirements for Systems Provider's
pre-sales support go beyond that normally provided under this Agreement per
Section 7.1.
3.2 Each party shall develop standard descriptions of itself and of its
Products and Services for inclusion in the other party's sales material as
deemed appropriate by the other party, including responses to Request For
Information (RFI's) and Request For Proposal (RFP's).
3.3 MCI and Systems Provider will work to develop a marketing plan within
sixty (60) days from the execution of this Agreement which will include
announcements, press releases, training program efforts for internal MCI
technical consultants and SDAR's, and branch rollouts to include technical
consultant's and SDAR's and sales personnel
3.4 Upon execution of the Agreement, ***cities will be selected and
mutually agreed upon by both parties to serve as the initial Product launch
cities, with a mutually agreed upon press release to be issued thereafter by
both parties. The Product rollout will be predicated on the acceptance of
System Providers products within the CPE catalogue. System's Provider will
establish a fund to support all related expenses incurred by MCI up to ***
related to the initial Product launch and associated roadshow. These will
include, but will not be limited to, expenses incurred for travel and marketing
accommodations while traveling in support of the marketing of System Providers
Products.
3.5 Systems Provider will establish a mutually agreed upon pool of funds
for MCI to support marketing activities in support of System Providers Products
3.6 Systems Provider, at its expense, will provide funding for the testing
of Systems Providers Products within the MCI Labs at a not to exceed amount of
*** per Product.
4. INFORMATION EXCHANGE
4.1 Systems Provider will regularly inform MCI, with the coordination of
MCI's Technology Expert, of Systems Provider's product direction and will
solicit MCI's views on the appropriateness of that direction. Any direction
taken by Systems Provider based upon such direction shall be entirely at
Systems Provider's discretion. Such a preview will be provided not less than
twice each year.
4.2 Systems Provider may provide, at its discretion, MCI's Technology
Expert with Systems Provider's evaluations of products competitive to Products
including benchmarks. Unless express written permission is granted, MCI will
not copy such evaluations nor permit the evaluations to be distributed or
circulated within or external to MCI.
4.3 Subject to client ownership and/or confidentiality requirements, MCI
will use reasonable efforts to keep Systems Provider informed as to problems
encountered and resolutions developed and to communicate to Systems Provider
any and all material modifications, design changes or improvements to the
Products suggested by any customer, or any employee or agent of MCI. Systems
Provider's may use all such information without obligation of
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*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
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any nature to MCI. Systems Providers use of such information shall be at its
own risk. Not withstanding the foregoing, MCI may from time to time, develop
tools, including software, that are complementary to Products; such tools
shall, as between Systems Provider and MCI, remain the exclusive property of
and in the sole possession of MCI.
4.4 Systems Provider will provide telephone support to counsel and advise
MCI's Technology Expert on the use and maintenance of the Products at no charge
to MCI. MCI's Technology Expert will act as the contact with Systems Provider
for purposes of coordination and provision of support under this Agreement.
All requests for support shall be made through the Technology Expert.
4.5 Systems Provider will give MCI's Technology Expert access at no charge
(except for network charges, which shall be the responsibility of MCI) to
Systems Provider's bulletin board of Products' defects and fixes when this is
available. This access will be at least equivalent to that given to Systems
Provider's field engineering force. MCI may provide such fixes to its clients
where the clients have current maintenance agreements with Systems Provider.
4.6 Systems Provider shall provide MCI with one copy of the then current
generally available technical documentation for the Products. MCI shall have
the right to copy such documentation for internal use only. When requested by
MCI, Systems Provider shall provide *** copy of its documentation in
electronic form for internal use by MCI on MCI's internal electronic bulletin
board at *** to MCI; MCI may make such copies as it requires for such purpose
at no charge.
4.7 The Relationship Director of each party shall broadly distribute
within their company an announcement of the intent and features of this
Agreement. This announcement will be made within two (2) months of the
Effective Date of this Agreement.
5. TRAINING
5.1 MCI's Relationship Director or assignee may receive the same technical
training received by Systems Provider's field sales force at no cost to MCI
other than the transportation and living costs associated with the attendance
of MCI personnel at such training.
5.2 Systems Provider will provide at *** to MCI, *** full days of training
to MCI's DATANOC and MSNOC located in Cary, North Carolina. This will include,
but is not limited to *** days of operations training to MCI's DATANOC and
MSNOC and *** days of training on the PAMS and System Providers Software to
three (3) representatives of the DATANOC and MSNOC. This will also include ***
days of follow-up training at a date to be mutually agreed upon by both
parties. Systems Provider will also include *** days of training that will be
specifically developed for the needs of either the DATANOC or the MSNOC..
5.3 Systems Provider will provide, at ***, *** days of training for
representatives of MCI's SDAR organization. This will consist of pre-sales
training and will be provided at a location specified by MCI. If requested by
MCI, Systems Provider will split the training into a one-(1) day session at
field locations agreed to by both Systems Provider and MCI.
5.4 Systems Provider agrees to provide *** days of training to the Network
Services Organization. This training will consist of an overview of the ASE
units and installation procedures.
5.5 Systems Provider's self-study material on the Products, if any, shall
be made available to MCI personnel within a reasonable period of time. Request
from MCI personnel for use of such material shall be channeled
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 5
through MCI's Relationship Director.
5.6 If Systems Provider certifies personnel in the use of its Products,
Systems Provider shall permit MCI personnel to take tests for such
certification at no charge to MCI, other than travel, to the testing locations.
The opportunity to take such tests shall not be contingent upon the completion
of Systems Provider courses.
6. APPOINTMENT OF RESELLER STATUS
6.1 During the term of the Agreement, MCI shall have a non-exclusive
right to resell the Products and Services in the Territory specified in this
agreement. Systems Provider hereby appoints MCI a non-exclusive reseller of
Systems Provider Products directly to end users within the specified Territory,
and MCI hereby accepts such appointment. MCI understands that it will be
deemed a material breach of this Agreement should Systems Provider discover
that MCI has resold Products outside of the Territory and that Systems Provider
may terminate the Agreement in accordance with Section 18 of this Agreement.
6.2 Systems Provider shall represent that MCI is qualified to use Systems
Provider's Products in the development of Integrated Business Solutions. Such
representation may not be exclusive and shall not constitute a warranty of
MCI's performance.
7. PRE AND POST SALES SUPPORT
7.1 MCI shall provide pre and post-sales support to its customers
regarding all aspects of the Products available through this Agreement.
7.2 MCI's Technology Expert or other MCI qualified personnel for the
Products shall provide pre-sales and technical support to MCI personnel
regarding all aspects of the Products available through this Agreement.
7.3 Systems Provider shall provide support to MCI's post-sales support
team if the post-sales support team, in working with a customer, diagnoses a
problem with the Products.
7.4 Upon receipt of an order for *** sites or more, MCI's Technology
Expert and pre and post-sales support personnel may gain the assistance of the
Systems Provider technical assistance center (VTAC) by telephone for six months
following thereafter. VTAC personnel will participate with MCI in delivering
technical assistance. After six months MCI support personnel will be
self-sufficient in providing pre and post-sales support.
7.5 No more than *** MCI project interface personnel, including MCI's
Technology Expert, may be authorized to request assistance from the VTAC. MCI
will provide Systems Provider with a written list of those persons who are
authorized to contact the VTAC on behalf of MCI. MCI may make substitutions to
the list at any time by communicating this in writing to Systems Provider.
7.6 Systems Provider will provide proposal support to MCI by supplying
appropriate boilerplate material and telephone support to answer technical
questions. MCI shall identify a point of contact that acts as the focal point
for Systems Provider proposal material in support of MCI proposal teams.
7.7 MCI is responsible for delivering software upgrades to its customers.
Systems Provider will provide to MCI at no additional cost, a "master" copy of
the latest Software release. It is MCI's responsibility to replicate this
Software and distribute to its customers. MCI may provide a customer address
list and have Systems Provider perform this service for an agreed upon charge
as referenced in Exhibit B of this Agreement.
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
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<PAGE> 6
7.8 At its discretion, MCI may assist its clients in arranging for Systems
Provider or third parties to provide post-sales technical support services for
Products sold to its customers. Such services may include system
certification, installation, maintenance and training. Nothing herein shall be
construed as precluding MCI from providing services of any nature to its
clients, including, without limitation, services regarding the Products.
7.9 Systems Provider shall provide maintenance Services for the Products
as set forth on Exhibit A, attached hereto and incorporated herein.
8. PRODUCT LOANS
8.1 Systems Provider will provide up to *** demonstration sets, consisting
of *** ASE's and the applicable Software, along with upgrades to those Products
to selected MCI operating locations, including MCI's Technology Competence
Centers, for MCI's use in developing client prototypes of Integrated Business
Solutions, at either MCI or client sites at *** to MCI. As Systems Provider
provides the above demonstration sets to MCI, MCI will provide the necessary pc
hardware in conjunction with these samples. Subject to client-confidentiality
considerations, MCI will discuss with Systems Provider the nature of the
business opportunity and the revenue potential, if any, for Systems Provider.
The parties shall execute a mutually agreeable loan agreement. At Systems
Provider's request, MCI shall be responsible for distributing the loaned
Products to the MCI operating locations and for duplicating any software to be
distributed.
8.2 MCI may use the loaned Products for comparative analyses with other
products, but not in conjunction with or on behalf of a provider of products
competitive to System Providers Products. At Systems Provider's request, MCI
shall allow Systems Provider to review and comment upon any such comparative
analyses that are intended for general publication outside of MCI in either
print or other durable formats.
8.3 MCI will be given the opportunity to act as a beta site for selected
Systems Provider's Products. A mutually agreeable Beta Site agreement will be
separately signed for each such Product.
8.4 Systems Provider may from time to time develop software, videotapes,
presentation scripts, and other materials to demonstrate the features and
functions of the Products. Systems Provider shall provide such materials to
MCI upon request for use by MCI in training or in the sales and marketing of
Integrated Business Solutions.
8.5 Systems Provider may, from time to time, develop application software
to assist its field sales and engineering personnel in the modeling,
configuration and testing of Products. Such software may be operated on
workstations or accessed remotely while running on a mainframe or
mini-computer. Systems Provider shall make such software available for use by
appropriately trained MCI personnel at no charge.
9. PRODUCTS AND PRICE
9.1 MCI may purchase the Products at the prices and discounts set forth on
Exhibit "B", attached hereto and incorporated herein.
9.2 When requested by MCI, Systems Provider shall provide a quote for the
Products to be included in a proposed Integrated Business Solution. Such quote
shall be valid for the mutually agreed period of the proposal and shall only be
withdrawn if the project is awarded to someone other than MCI or the project is
cancelled.
9.3 MCI will supply Products directly to end-users or to MCI's prime
contractor if MCI is a subcontractor. MCI will not sell Products to any
customer for the purpose of further resale by such customer unless such
customer is MCI's prime contractor for the development of an Integrated
Business Solution. The price charged by MCI to any customer for the Products
shall be solely within the discretion of MCI.
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*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
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9.4 The prices and discounts referenced in Section 9.1 shall also apply to
purchases for internal use by MCI. Support required from Systems Provider for
internal purchases, including post-sales technical support, shall be provided
at Systems Provider's then prevailing rates.
9.5 The prices and discounts referenced in section 9.1 shall also apply to
purchases by MCI for use under MCI's outsourcing contracts. Characteristically
MCI, and not the end-user, would be the licensees or owners of the Products.
For the purposes of this Agreement the outsourcing transactions will be treated
as similar to sales and delivery of Integrated Business Solutions for
end-users.
9.6 Unless otherwise agreed, all prices quoted are payable in U.S. funds
and shall be exclusive of taxes (including without limitation any added value,
use, sales, or similar tax). Unless MCI has provided an approved tax exemption
certificate proving exception status, MCI shall pay any and all such taxes and
shall hold Systems Provider harmless therefrom, provided that if Systems
Provider at its sole discretion, chooses to make any such payment, MCI shall
reimburse Systems Provider in full. All transactions pursuant to this
Agreement shall be considered taxable unless MCI provides Systems Provider with
appropriate verification of exemption as stated herein in this Article. All
prices quoted shall likewise be exclusive of any import duties imposed by the
country of final destination upon shipments from Systems Provider to MCI.
9.7 Systems Provider represents and warrants that the prices set forth in
Exhibit B shall be no higher than the current Systems Provider price to any
other customer for the same quantity of Products purchased over a similar
period of time and under like conditions. Systems Provider further agrees that
in the event prices for the same quantity for such Products under like
conditions are lowered, Systems Provider shall notify MCI in writing of the new
prices and Exhibit B shall be adjusted by written amendment.
9.8. Systems Provider may sell to MCI at prices lower than those cited
herein on a case-by-case basis, and such sales shall not have the effect of
lowering the prices generally offered under this Agreement. Systems Provider
shall notify MCI in writing and the prices for special cases shall be adjusted
by written amendment to this Agreement.
9.9 Each party shall prepare and maintain, at its expense, complete and
accurate books and records documenting financial transactions. Under this
Agreement such books and records shall be maintained for a period of three (3)
years after the date of termination or expiration of this agreement.
9.10 During the initial term and any subsequent renewal periods, and for a
period of *** years after the termination or expiration of this Agreement, each
party shall have the right, at its expense and upon reasonable notice to the
other party, to examine or have examined by its authorized representatives the
Purchase Orders, Packing Slips, and Invoices on record as related to this
Agreement.
10. PAYMENT TERMS AND CONDITIONS OF SALE
10.1 All orders by MCI require a written Purchase Order or similar
documentation and are subject to acceptance and acknowledgment by Systems
Provider. Systems Provider acknowledges that any Purchase Orders received from
MCI shall be null and void unless issued by an MCI Procurement Department
representative. During the term of this Agreement, except where such
provisions are expressly agreed to, the terms and conditions of this Agreement
shall supersede all different or conflicting terms on MCI's Purchase Orders or
on Systems Provider's order acknowledgment forms. Systems Provider will
provide MCI with notice of acceptance or rejection of purchase order within ***
business days of receipt of the purchase order by Systems Provider. At the time
of acceptance of the order Systems Provider shall also accept MCI's requested
delivery date where the date complies with the delivery schedule commitments
described in section 12.1 of this Agreement, or propose a different delivery
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Securities and Exchange Commission.
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date to MCI; if Systems Provider proposes a different delivery date, the
parties shall agree on the delivery date before the order is deemed accepted.
If no notice of rejection is received within *** business days then the
Purchase Order will be deemed accepted.
10.2 Each Purchase Order shall specify the Services and/or Products to be
delivered, and/or will include quantity, price, delivery date, destination, and
other pertinent details. All Products shipped by Systems Provider to the site
designated by MCI on the applicable Purchase Order will be F.O.B destination
with shipping pre-paid by Supplier and added to the invoice. Title and risk of
loss will transfer once Products have reached its designated destination
10.3 Systems Provider shall comply with MCI bar coding requirements, which
include the following documents:
MCI Telecommunications Corporation bar code label
specification equipment labels, issue 4, dated November
15, 1991
MCI requirements for bar code labeling of shipping containers
and product packaging, dated November 15, 1991
TCIG shipping and receiving transaction bar code label
specification, issue 2, dated December 5, 1989.
Details of these guidelines will be provided to Systems Provider by MCI at a
later date.
10.4 In the event of any conflict as to the terms and conditions between
the pre-printed terms of the Purchase Order and this Agreement, this Agreement
shall take precedence.
10.5 Terms of payment are *** discount for payment within *** days of the
Product delivery date, otherwise payment in full within *** days after the
Product delivery date. In no event shall MCI be required to submit payment for
any Products prior to delivery and acceptance of the same. On the anniversary
date of the Agreement, both parties will review and evaluate the above
mentioned payment terms, and if necessary shall adjust accordingly and upon
mutual agreement between both parties.
10.6 Delivery will be F.O.B. Destination. Systems Provider shall ship the
ordered Products to such locations as MCI shall indicate on its ordering
documentation. Unless specifically authorized by MCI, Systems Provider shall
not ship partial orders to MCI. MCI will be responsible for the payment of all
shipping charges as referenced on the final invoice unless mutually agreed to
otherwise by both parties. All shipments will be made Federal Express, two-day
air using the MCI corporate Federal Express number, once it is supplied to
Systems Provider for this purpose.
10.7 MCI has a period of thirty (30) days after receipt of the Product
within which to notify Systems Provider in writing of any discrepancies between
the Products shipped and the applicable Purchase Order. No payment will be due
to Systems Provider by MCI until such discrepancies are resolved to the
satisfaction of both parties.
10.8 Shipments of Products scheduled under this Agreement may be deferred
or cancelled by MCI upon written notice to Systems Provider. In the event MCI
requests cancellation of any order for Standard Products within *** days of a
scheduled shipment date and Systems Provider accepts such cancellation, MCI
will pay to Systems Provider a cancellation charge as follows:
No. of Days Written
Notice Received Prior to Percentage of Order
Scheduled Shipment Date Price Due
----------------------- ---------
*** or more days: ***%
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*** days: ***%
*** days: ***%
11. PRICE CHANGES
11.1 All Products whose price has been "increased or decreased" will be
"price protected" under this paragraph if the following conditions are met:
11.1.1 Products are in MCI's stock or are in transit on the
effective date of the price decrease, are unopened and were
shipped to MCI *** days prior to the effective date of price
decrease.
11.1.2 1 Products are in MCI's stock or are in transit on
the effective date of the price increase, are unopened and
were shipped to MCI *** days prior to the effective date of
price increase
12. DELIVERY AND EXPORT
12.1 If Purchase Orders are received specifying shipment dates of less than
*** days on Standard Product, up to *** units per Purchase Order, and *** days
on Non-Standard Products, up to *** units per Purchase Order, Systems Provider
will use best efforts to meet such dates and may apply an expedite charge to
Purchase Orders requiring fulfillment in less than *** business days. Except as
provided above, if Systems Provider deliveries fail to meet the committed
schedule, MCI, without limiting its other rights or remedies as specified
herein, may reserve the right to reschedule the delivery of the Products,
direct expedited routing with Systems Provider paying for any excess costs
incurred thereby, or cancel the order in its entirety. MCI shall not be liable
for Systems Provider commitments or production arrangements in excess of the
amount, or in advance of the time, necessary to meet MCI's delivery schedule.
Products which Systems Provider delivers more than *** days in advance of
schedule may, at MCI's option, either (a) be returned at Systems Provider
expense for proper delivery, (b) have payment therefore, withheld by MCI until
the date that Products are actually scheduled for delivery or (c) be placed in
storage on Systems Provider account until the delivery date specified herein.
MCI may delay, at no cost to MCI, the delivery and invoicing of Products or
Services for a period of up to *** days; provided, however, that MCI notifies
Systems Provider at least *** days prior to the scheduled delivery date.
Delay(s) beyond *** days shall be deemed a change in accordance with the
Article of this Agreement entitled "Changes".
12.2 Systems Provider shall convey good title, free from any claim or
encumbrance, to MCI for all Products delivered under this Agreement. Title to
all such Products shall pass to MCI at the shipping point. Any loss or damage
to such items prior to passing of title shall be at Systems Provider risk.
12.3 MCI shall not export to or use Products in any country if (a) the
export of any such Product to such country is prohibited by the laws of the
United States; or (b) the import of any such Product into such country is
prohibited by the laws of such country; (c) MCI does not possess the proper
import certificate(s) required by the laws of such country for the lawful
importation of any such Product; or (d) if Systems Provider has previously
notified MCI that export of any such Product to such country is prohibited by
restrictions contained in contracts between Systems Provider and any Systems
Provider authorized reseller located in any such country.
12.4 After receipt of Products at the designated site as referenced on the
MCI Purchase Order, MCI shall promptly inspect the Products received. Within
ten (10) days days after such inspection, MCI shall notify Systems Provider in
writing of those damaged items or the incomplete shipment of the Products,
which could include but is not limited to, cables, power supplies,
documentation, and software. Remedy of damaged items or incomplete shipments
shall be made within twenty (20) days by Systems Provider at its expense, which
shall include all related costs for repair or replacement of the rejected
item(s) in accordance with Article 14, WARRANTIES AND
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INDEMNIFICATIONS, and all applicable shipping charges.
12.5 If Systems Provider fails to remedy any such damaged item(s), MCI may
elect either (i )to have any or all such damaged item(s) remedied through other
means as stated in Article 14.3, in which event Systems Provider shall pay the
reasonable costs of so remedying such damaged item(s).
13. REPORTS & AUDITS
13.1 Each quarter & year MCI shall provide Systems Provider a forecast of
its total dollar purchases from Systems Provider, including purchases for
internal use by MCI and by MCI's customer's. Forecasts shall be submitted to
Systems Provider's Relationship Director. Forecasts are non-binding and are
for planning purposes only.
13.2 Systems Provider shall submit monthly, a detailed report of all
purchases under this Agreement. Report shall include, but will not be limited
to, equipment purchased by Product and the associated stocking number,
cancellations, Purchase Order number, price invoiced, and delivery date.
Report is due to MCI within 15 days of reporting month and shall be in
Microsoft Excel format; version 6.0.
14. WARRANTIES AND INDEMNIFICATIONS
14.1 Systems Provider warrants that MCI end users shall acquire good title
to the hardware Products purchased under the terms of this Agreement free and
clear of all liens and encumbrances and that all hardware Products provided
hereunder with the exception of third party equipment, will be free from
defects in material and workmanship for a period of five (5) years under normal
operating conditions from the date of delivery to the end user. This warranty
will apply to all repaired or replaced Products for the unexpired period of the
original warranty or for ninety (90) days following delivery of the Product to
end user, whichever is longer. Systems Provider understands Products are
intended for standard commercial uses.
14.2 Systems Provider warrants that the diskette(s) on which the software
is provided will be free from defects in materials and workmanship under normal
use for a period of ninety (90) days from delivery to end user. Systems
Provider warrants that the Products will materially conform to the
specifications set forth in the relevant Product documentation then in effect,
when used without modification and in accordance with the then current user
documentation. Systems Provider assumes no responsibility for selection of the
Software to achieve the end user's intended results nor for the installation,
use and results obtained from the Software. Systems Provider does not warrant
a) that the functions contained in the Software will meet the end user's
requirements, b) that the Software will operate in the hardware or software
combinations that the end user may select, c) that the operation of the
Software will be uninterrupted or error free, or d) that all defects in the
operation of the Software will be corrected.
14.3 Should a hardware or Software Product fail within this warranty
period, Systems Provider will replace the defective Product when it is returned
to Systems Provider, shipping prepaid. Replacement Products may be refurbished
or contain refurbished materials. If Systems Provider, by its sole
determination, is unable to replace the defective Product, it will refund the
purchase price of the Product. Proof of date of delivery of the returned
Product is required.
14.4 This warranty does not apply if the Product fails or is damaged after
delivery due to shipment, handling, storage, abuse or misuse, has been used or
maintained in a manner not conforming to applicable Product manual
instructions, or modified in any way, or has any serial number removed or
defaced. Repair by anyone other than Systems Provider or an approved agent
will void this warranty.
14.5 THE WARRANTIES AND REMEDIES STATED ABOVE IN ARTICLE 14.1 THROUGH 14.4,
ARE EXCLUSIVE AND IN LIEU OF ALL OTHERS, ORAL OR WRITTEN, EXPRESS OR IMPLIED.
ANY AND
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ALL OTHER WARRANTIES, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, ARE EXPRESSLY EXCLUDED.
14.6 Systems Provider warrants that the Products do not infringe upon the
patent, trademark, copyright or other proprietary interest of any third party
and that it has the right to make the Products available to MCI as provided
herein:
a.) System Provider shall, at its own expense, defend or settle
any suit or proceeding that is instituted against MCI to the extent such suit
or proceeding alleges that any Product sold by System Provider hereunder
infringes any duly issued patent or copyright of the United States or the
Territory and shall pay all damages awarded therein against MCI or agreed upon
in settlement by System Provider; provided that MCI (i) gives System Provider
immediate notice in writing of any such suit, proceeding or threat thereof,
(ii) permits System Provider sole control, through counsel of System Provider's
choice, to defend and/or settle such suit and (iii) gives System Provider all
the needed information, assistance and authority, at System Provider's expense,
to enable System Provider to defend or settle such suit.
b.) The above provision shall not apply to and System Provider
shall have no liability or obligation for any infringement arising from: (a)
any modification, servicing or addition made to the Product by anyone other
than System Provider, (b) the use of such Product as a part of, or in
combination with, any devices, parts or software not provided by System
Provider, (c) compliance with MCI's design requirements or specifications, (d)
the use of other than the then current unaltered release of the software
Product available from System Provider or (e) the use of such Product to
practice any method or process which does not occur wholly within the Product.
The above exclusions apply to the extent that the infringement would have been
avoided but for such modifications, combinations, compliance with
specifications, use of other than the current release or practice of such
method or process.
c.) In the event the use or sale of any Product purchased from
System Provider is enjoined, or in the event System Provider wishes to minimize
its potential liability hereunder, System Provider may, at its sole option and
expense: (i) procure for MCI the right to use or sell such Product; (ii)
substitute a functionally equivalent, non-infringing unit of the Product; (iii)
modify such Product so that it no longer infringes but is substantially
equivalent in functionality; or (iv) if none of the foregoing are commercially
feasible, take back such Product and refund the purchase price paid by MCI for
such Product depreciated over a three (3) year period using the straight line
method. System Provider shall in no event be obligated to accept new orders
for Products, which are subject to a claim of infringement covered under this
Section.
d.) THIS SECTION STATES SYSTEM PROVIDER'S TOTAL RESPONSIBILITY AND
LIABILITY, AND MCI's SOLE REMEDY, FOR ANY ACTUAL OR ALLEGED INFRINGEMENT OF ANY
INTELLECTUAL PROPERTY RIGHT FOR ANY PRODUCTS DELIVERED HEREUNDER OR ANY PART
THEREOF AND IS IN LIEU OF AND REPLACES ANY AND ALL OTHER EXPRESS, IMPLIED OR
STATUTORY WARRANTIES OR CONDITIONS REGARDING INFRINGEMENT.
14.7 Systems Provider agrees to indemnify MCI, MCI's customers, or any such
party to whom MCI distributes Products hereunder against any claim that the
Products (or any Product) infringe, any patent, copyright, trademark or other
proprietary right, provided that MCI or its customers (1) give Systems Provider
prompt written notice of any claim, (2) grant Systems Provider control of the
defense and settlement of such claim, and (3) assist fully in the defense so
long as Systems Provider pays the out-of-pocket expenses. Systems Provider
shall, at its option and expense, (1) procure the right to continue using the
Product, (2) replace or modify the Product so that it becomes non-infringing or
(3) if neither option (1) nor (2) are reasonably practical, accept return of
the product and refund the amount paid for the Product.
14.8 Systems Provider shall have no liability or obligation for any
infringement claim based upon (1) modifications of the Products by parties
other than Systems Provider or use of such modified Product or (2) use of the
Products in combination with materials or Products not supplied or approved by
Systems Provider.
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14.9 THE ABOVE STATES THE ENTIRE LIABILITY OF SYSTEMS PROVIDER AND IS THE
SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO CLAIMS OF INFRINGEMENT OF PROPRIETARY
RIGHTS OF ANY KIND.
14.10 MCI shall not alter or enlarge the representations or guarantees of
the warranty in any way beyond those expressly set forth above. MCI shall hold
harmless and indemnify Systems Provider for any expenses, claims, damages or
liability arising from or related to any unauthorized guarantees, warranties or
representations made by MCI, including without limitation, attorneys' fees. To
receive the foregoing indemnity, Systems Provider must notify MCI in writing of
a claim or suit promptly after its occurrence and provide MCI with reasonable
cooperation and full authority to defend or settle the claim or suit. MCI
shall not indemnify Systems Provider under settlement made without Systems
Provider's written consent.
14.11 Systems Provider shall hold harmless and indemnify MCI for any
expenses, claims, damages or liability arising from or related to any
unauthorized guarantees, warranties or representations made by Systems Provider
about MCI, including without limitation, attorneys' fees. To receive the
foregoing indemnity, MCI must notify Systems Provider in writing of a claim or
suit promptly after its occurrence and provide Systems Provider with reasonable
cooperation and full authority to defend or settle the claim or suit. Systems
Provider shall not indemnify MCI under settlement made without MCI's written
consent.
14.12 Without limiting MCI's obligations under 14.7, Systems Provider agrees
to indemnify and hold MCI and its customers harmless against any third party
claim based upon Systems Provider breach of this Section 14. To receive the
foregoing indemnity, MCI or its customer must notify Systems Provider in
writing of a claim or suit promptly after its occurrence and provide Systems
Provider with reasonable cooperation and full authority to defend or settle the
claim or suit. Systems Provider shall not indemnify MCI or its customer under
settlement made without Systems Provider's written consent.
14.13 Systems Provider agrees to indemnify MCI against any claim arising out
of or resulting from the Products or this Agreement, provided that any such
claim (1) is attributable to bodily injury or death or to injury to or
destruction of physical property and (2) is caused by a negligent act or
omission of Systems Provider. This obligation on the part of Systems Provider
shall exist only if MCI (1) gives Systems Provider prompt written notice of any
such claim, (2) grants Systems Provider control of the defense so long as
Systems Provider pays the out-of-pocket costs. Systems Provider shall have no
liability for any settlement or compromise made without its prior written
consent.
14.14 Systems Provider, at its expense, will maintain adequate insurance
coverage to protect against its liabilities under this Agreement. This
insurance will include (1) worker's compensation insurance, (2) comprehensive
general liability insurance, including coverage for product liability, bodily
injury and property damage,. Upon request, Systems Provider will furnish the
applicable certificate of insurance.
14.15 MCI may at its discretion extend the warranties and indemnification's
given in Sections 14.1, 14.2, 14.3, 14.5, 14.6, 14.7, 14.11, 14.13, and 14.19
to its customers.
14.16 For Products that fail after the warranty period has expired, MCI may
return parts to Systems Provider for replacement after obtaining a Return
Material Authorization ("RMA") number. MCI must provide a Purchase Order for
the replacement part. MCI will be invoiced for the replacement part upon
shipment by Systems Provider.
14.17 Spare parts will be available for a period of five (5) years after the
last date of this Agreement. Spare parts may consist of one part or a set of
parts. In some cases, where Products have been discontinued, the original part
may not be available but a functional, equivalent part or a set of parts would
be substituted for the failed part or a set of parts which includes the failed
part.
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14.18 Upon MCI's request, Systems Provider shall certify that Products
purchased by MCI are new.
14.19 (a) Systems Provider warrants and represents that the Products,
including without limitation all incorporated or related hardware components as
well as all computer code whether in object code, executable, firmware,
microcode or other form, and whether such computer code is resident on or in
the hardware components within the Products or separately licensed by Systems
Provider for use with the Products, will:
(i) provide accurate processing of date and date
dependent data (including, but not limited to, calculating,
comparing and sequencing operations, as well as the
transmitting and receiving of date and date dependent data to,
from and through the Products) for all dates through the year
2100, including without limitation all leap year instances,
and
(ii) express all date and date dependent data passed to,
from or through the Products through the use of fully
complimented 4 digit years in a single field in the format
"CCYY", where "CC" stands for the century and "YY" stands for
the year.
(b) Systems Provider further agrees both that it will within five
(5) business days after MCI's request provide sufficient evidence through
adequate testing of the Products or otherwise to demonstrate compliance with
this warranty, and that the requirements of this warranty shall be part of the
specifications applicable to the Products.
DOCUMENTATION
Systems Provider shall supply MCI with originals of all documentation
available, solely for MCI's internal use, to support and maintain the Products
provided by Systems Provider to MCI under this Agreement, as well as grant a
limited rights license to MCI, at no charge, to reproduce this documentation in
quantities required for its internal. Other documentation which may be
requested pursuant to this Article at the request of MCI shall include:
(a) Installation, Operation and Maintenance (IOM) Manuals
Installation, operation and maintenance manuals, including
packing and unpacking instructions, general descriptions, tables of
specifications, theory of operation, installation procedures,
maintenance procedures, trouble-shooting procedures and parts list.
(b) Engineering Documentation
Non-proprietary specifications, functional descriptions and
operating descriptions.
(c) Acceptance Test Plan/Procedure
This documentation shall be sufficiently comprehensive to
ensure that Products subject to acceptance testing complies with the
requirements of this Agreement. Systems Provider shall develop such
test plans to include at a minimum:
i. Reference to specification
ii. List of the test equipment to be used
iii. Environmental conditions
iv. Initial condition of item being tested, (e.g.
profile, switch position, etc.)
v. Brief description of each test, in the sequence they
are to be performed including a list of parameters
to be measured
vi. Block diagrams of the testing setups
vii. Failure reporting, correction and analysis
requirements
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(d) Factory Test Plan
This plan shall be sufficiently comprehensive to ensure that
upon shipment to MCI, the Products comply in all material respects
with the product specifications of this Agreement.
(e) Quality Assurance Documentation
This document shall describe the quality assurance program of
Systems Provider.
(f) Product Support Documentation
This documentation shall include all the information necessary to
support the continued operation of Products delivered by Systems Provider.
CHANGES TO PURCHASE ORDERS OR PRODUCT
16.1 MCI may request, by written change order or modification, and without
notice to any surety, changes within the general scope of this Agreement in
drawings, designs, specifications, methods of shipment or packaging/packing,
quantities, or time or place of delivery; require additional Work or direct the
omission of Work. In the event, and to the extent that such change modifies
or otherwise alters the scope of any of Systems Provider's obligations under
this Agreement, the Parties shall make best effort to negotiate an equitable
adjustment to the contract price and/or schedule as necessary. Changes to this
Agreement can only be mutually made by the duly authorized representatives of
the Parties.
16.2 Systems Provider shall submit a proposal for the contract adjustment
within thirty (30) days after receipt of written notice from MCI, which MCI
shall either accept or reject within thirty (30) days of receipt. After the
Parties have arrived at an equitable adjustment to the contract price and
schedule, nothing in this Article shall excuse Systems Provider from promptly
proceeding with this Agreement as changed.
16.3 MCI's personnel may from time to time render technical assistance or
give technical advice to, or effect an exchange of information with Systems
Provider personnel concerning the Work to be furnished under this Agreement.
However, Systems Provider shall not deviate from the requirements of this
Agreement by reason of such assistance or exchange of information, unless the
deviation is incorporated into and authorized by a change Purchase Order
issued. Systems Provider shall not, by reason of such assistance, advice or
exchange of information, delete or in any way modify any of MCI's rights or any
of Systems Provider obligations, express or implied, which are a part of this
Agreement.
16.4 Systems Provider may make or incorporate changes not affecting form,
fit, function, interface or interchangeability of the Product.
16.5 In the event certain changes become mandatory by reason of safety or
failure of the Products to perform in accordance with the requirements of this
Agreement, Systems Provider shall provide written notice to MCI and shall
proceed promptly to make the necessary change(s). Systems Provider shall bear
all costs and expenses relating to such retrofit or replacement of Products,
which are necessary for the Products to conform to the requirements of the
Agreement. Such retrofit or replacement applies only when attempting to
satisfy requirements in existence at the inception of this contract and do not
apply to new requirements, which come into existence at a later date.
16.6 Any mandatory changes to the Products, shall be compatible with all
Products in use (for a minimum of two releases backward) or on order pursuant
to this Agreement unless the Parties otherwise specifically agree. If any
mandatory change is not compatible, upward or downward as described, Systems
Provider, at MCI's option, shall retrofit such change(s) on all affected
installed Products ordered pursuant to this Agreement at no cost to MCI.
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17. SOFTWARE
17.1 Systems Provider grants to MCI a transferable, non-exclusive license
to distribute to end users, or, if MCI is a subcontractor to a prime contractor
for an Integrated Business Solution, to a prime contractor for the purpose of
distributing to an end user, under the terms of this Agreement, the Software.
Notwithstanding any provision hereunder MCI may distribute such Software
electronically. Systems Provider grants directly to the end user a
nonexclusive license as set forth in the End User Software License Agreement,
which accompanies the Software. The license granted by Systems Provider is not
a sale. Systems Provider retains all title and ownership of the Software and
documentation. Systems Provider acknowledges that it is solely responsible for
performing any of its obligations as may be described in the End User License
Agreement and that MCI shall have no obligation to Systems Provider or the end
user under such agreement.
17.2 The Software and documentation are protected under copyright laws.
All copyright notices must be reproduced and included with any copy of any
portion of the Software. MCI shall not translate any portion of the Software
or associated documentation into any other format or language without the prior
written consent of Systems Provider. Except as specifically provided elsewhere
in this Agreement, MCI may not transfer the Software or the licenses granted
herein to any third party. MCI shall not, nor authorize any third party, to
reverse engineer, disassemble, decompile, or otherwise attempt to obtain the
source code for the Software.
17.3 In connection with any proposals to and agreements with government
entities, MCI shall work with Systems Provider to ensure that Systems
Provider's proprietary rights receive the maximum protection available from
such government entity for commercial computer Software developed at private
expense. All software and documentation acquired directly or indirectly by or
on behalf of the United States Government shall be identified and marked by
Systems Provider as being licensed only with restricted rights, subject to the
restrictions set forth in subparagraph (c) (1) of the Commercial Computer
Software-Restricted Rights clause of FAR 52.227-19 or subparagraph (c)(1)(ii)
of the Rights in Technical Data and Computer software clause of DFARS
252.227-7013, whichever applicable.
17.4 In all jurisdictions where an enforceable copyright covering the
computer programs of the Software does not exist, the Software must be
accompanied by a written license agreement, signed by the end user, that is no
less restrictive than the terms of Systems Provider's End User software License
Agreement.
17.5 The license shall also extend and Software shall be deemed to include
any revisions to the Software as are supplied by Systems Provider and accepted
by MCI. MCI reserves the right to control the shipment of all version updates
to the Software under this Agreement.
17.6 Systems Provider grants MCI a license during the term of this
agreement to incorporate portions of Systems Provider's documentation in the
Integrated Business Solution's documentation at no charge, provided that MCI
properly incorporates and references Systems Provider's copyright in such
portion of the documentation.
18. TERM AND TERMINATION
18.1 This Agreement shall commence on the Effective Date and shall continue
for three (3) years from the Effective Date. It shall be renewed automatically
for successive one-(1) year terms unless either party gives written notice of
termination to the other sixty-(60) days prior to expiration, or unless
terminated pursuant to Section 18.2 or 18.5 of this Agreement.
18.2 Subject to Section 18.3, either party shall have the right to
terminate this Agreement as follows:
(a) Upon the breach by the other party of any material term of
this Agreement;
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<PAGE> 16
(b) Upon the issuance of an injunction by a court or regulatory
agency of competent jurisdiction enjoining continued
performance by the parties, under this Agreement;
(c) Upon the filing of voluntary or involuntary bankruptcy by the
other party or the declaration of insolvency, however
evidenced, by the other party which is not dismissed within
thirty (30) days after the date of filing;
(d) Upon change of control of the other party or of any division
or subsidiary of the other party that is relevant to
performance under this Agreement if such change can be
reasonably interpreted by the terminating party as
substantially detrimental to the relationship between the two
parties.
18.3 If a party wishes to terminate this Agreement under Section 18.2
above, such party shall give the other party written notice of its intention to
terminate under this section 18, specifying in reasonable detail the reason(s)
for such termination and in the event that the non-terminating party does not
cure the reason thirty (30) days after such notice, this Agreement shall, at
the option of the party giving notice, terminate.
18.4 If a party terminates this Agreement under Section 18.2 above, at
MCI's request Systems Provider will fulfill all orders accepted under Section
10.1 prior to the date of the receipt of notice given in Section 18.3. Systems
Provider shall also refund to MCI any unused portions of maintenance and
support Services fees paid by MCI associated with any returned Products.
18.5 Notwithstanding anything to the contrary contained herein, either
party may terminate this Agreement at any time for its convenience.
19. CONFIDENTIALITY
19.1 Each party agrees to treat all information and materials received from
the other party that are labeled "Confidential" or "Proprietary" as
confidential information ("Confidential Information") of the other party. Each
party further agrees to use at least the same degree of care to avoid
disclosure or dissemination of the other party's Confidential Information as it
uses to protect its own confidential materials, but in any event, at least a
reasonable degree of care. Neither party shall use the Confidential
Information of the other party for its own benefit or for the benefit of any
third party, except as expressly permitted in this Agreement.
19.2 Each party agrees to advise all of its employees, agents,
subcontractors or consultants that may have access to or otherwise receive the
Confidential Information of the other party of all obligations pertaining to
the protection of the Confidential Information of the other party under this
Agreement.
19.3 Neither party shall disclose Confidential Information of the other
party to any third party (other than independent contractors having a
"need-to-know") without the other party's prior written consent; provided,
however, that a party shall not be liable for disclosure of information
designated as "Confidential" or "Proprietary" by the other party if the same:
(a) is in the public domain at the time of disclosure; or
(b) becomes known to the other party from a third-party source
under no obligation to maintain confidentiality; or
(c) becomes publicly available through no fault or failure to act
by the receiving party in breach of this Agreement; or
(d) is already known by the receiving party when received, or is
independently
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<PAGE> 17
developed by the receiving party without reference to the
information provided by the other party, as established by
documentary evidence; or
(e) is required by a court or other governmental authority to be
disclosed (provided that the receiving party has used
reasonable efforts to make such disclosure subject to a
protective order or confidentiality agreement).
19.4 If, in order to fulfill the purposes of this Agreement, it is
necessary for the party receiving Confidential Information of the other party
to copy the same, in whole or in part, the receiving party may do so, but
solely for the purpose of enabling such party to perform under this Agreement.
19.5 Upon achieving the purpose(s) intended, or in the event of the earlier
termination of this Agreement, each party shall immediately return and/or
destroy all materials containing Confidential Information of the other party.
Each party shall further certify in writing to the other party that all copies
or partial copies of material containing Confidential Information of the other
party have been returned and/or destroyed.
20. TRADEMARKS, TRADE NAMES AND MARKETING
20.1 Except for any announcement intended solely for internal distribution
(i.e., to any party under this Agreement) or any disclosure required in the
opinion of discloser's legal advisors by legal, accounting, or regulatory
requirements, all media releases, public announcements, or public disclosures
for general distribution (including, but not limited to, promotional or
marketing material) by any party under this Agreement, or by any of their
employees or agents relating to this Agreement or its subject matter, other
than general statements that a contractual relationship exists between the
parties, shall be coordinated with and approved in writing by the other party
prior to the release thereof.
20.2 In the advertising and sale or distribution of the Products, MCI may
use Systems Provider's regular logos, corporate name, trade names and
trademarks (the "Trademarks"). For this purpose, Systems Provider grants MCI a
non-exclusive, royalty-free, limited license to use the Trademarks, provided
that MCI displays the symbol "TM" adjacent to each use of a Trademark the first
time a Trademark is used, or displays such other symbols and notices as may be
prescribed by Systems Provider. Systems Provider will provide MCI with a list
of its Trademarks and with a copy of its graphics standards manual, which shall
define the appropriate usage of such Trademarks.
20.3 MCI acknowledges that it has been advised by Systems Provider that
Systems Provider is the exclusive owner of the Trademarks. The use of the
Trademarks by MCI does not convey to MCI any right, title or interest in or to
the Trademarks. MCI may not register any Trademark in any jurisdiction unless
such registration is made on behalf and for the benefit of Systems Provider and
is expressly approved by Systems Provider in advance and writing.
20.4 MCI will not make or permit alteration of the goods or removal or
modification of any tags, proprietary notices, labels, or any other identifying
marks placed by Systems Provider or its agents on its Products or associated
literature.
20.5 MCI agrees not to use the Systems Provider corporate name, trademarks,
trade names and copyright legends with respect to any Products or materials not
provided by Systems Provider, or in the way which might result in confusion as
to Systems Provider and MCI being separate and distinct entities.
20.6 Notwithstanding Section 20.1, MCI may describe its relationship with
Systems Provider in MCI's proposals and statements of qualification issued for
specific MCI prospects or clients without obtaining Systems Provider's approval
and without submitting such description to Systems Provider.
20.7 Systems Provider agrees not to use MCI's corporate name, trademarks,
trade names, copyright legends or
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<PAGE> 18
other intellectual property without the prior written permission of MCI.
INSURANCE AND INDEMNITY
21.1 Insurance. During the term of this Agreement, the Systems Provider
shall maintain insurance, the kinds and in the amounts specified with insurers
of recognized responsibility, licensed to do business in the State(s) where the
work is being performed and having either: an A.M. best rating of A8, a
Standard & Poor's rating of AA, or Moody 's rating of Aa2. If any work
provided for or to be performed under this Agreement is subcontracted, the
Systems Provider shall require the subcontractor to maintain and furnish
insurance equivalent to that required of Systems Provider.
(a) Comprehensive or Commercial General Liability. In accordance
with the above, the Systems Provider and any subcontractor
shall maintain the following insurance: $1 million per
occurrence combined single limit, $2 million general
aggregate, and will include coverage for contractual
liability, use of independent Systems Providers and Products
and completed operations.
(b) Business Automobile Liability Insurance. Coverage or owned,
hired, leased, rented and non-owned vehicles in the amount of
$1 million combined single limit per occurrence for bodily
injury and property damage.
(c) Worker's Compensation & Employers' Liability Insurance.
Workers' Compensation in the maximum amount(s) and with
benefits required by the laws of the state in which the Work
is performed and the state(s) the employees are hired, if the
state(s) are other than that in which the Work is performed.
Employers' Liability with minimum limit of liability of:
<TABLE>
<S> <C>
Bodily Injury by Accident $1 million each accident
Bodily Injury by Disease $1 million policy limit
Bodily Injury by Disease $1 million each employee
</TABLE>
A combination of primary and excess/umbrella liability
policies will be acceptable, as a means to meet the limit
required under this Agreement. The required minimum limits of
the coverage shown above DO NOT limit or diminish the Systems
Provider's liability under this Agreement.
The Systems Provider will submit to MCI a standard "Accord"
insurance certificate for comparable form acceptable to MCI
signed by an authorized representative of such insurance
company(ies), certifying that the insurance coverage(s)
required hereunder is in effect for the purposes of this
Agreement. If the event Systems Provider fails to maintain
adequate coverage as outlined above in this Article, Systems
Provider will notify MCI of such a lapse. In addition, if
System Providers coverage lapses Systems Provider will have
thirty (30) days to obtain adequate coverage as outlined
herein.
The Systems Provider, its subcontractor and its insurers shall
waive all rights of recovery against MCI for any injuries to
persons or damage to property related to performance of this
Agreement.
The Systems Provider and its subcontractor shall ensure full
compliance with terms of the Occupational Safety and Health
Administration (OSHA) and all local jurisdiction's safety and
health regulations during the full term of this Agreement.
The Systems Provider shall submit to MCI certificates of
insurance evidencing the above coverage. Should the Systems
Provider at any time neglect or refuse to provide the
insurance required herein, or should such insurance be
canceled or non-renewed, MCI shall have the right to terminate
this contract, or secure substitute coverage whose cost shall
be deducted from payments owed the Systems Provider.
The Systems Provider, at its own expenses, shall indemnify and
hold harmless against any and all
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<PAGE> 19
claims, expenses (including attorneys' fees) from loss or
liability for damage to property including property owned,
leased or borrowed by MCI and injuries, including death, to
all persons to the extent arising out of Systems Provider's
performance of this Agreement, unless by reasons of any and
all acts or omissions or negligence by MCI, its agents or
employees.
21.2 Payment. Payment of any amounts due pursuant to any indemnity
contained in this Agreement shall be made to MCI within thirty (30) days of
receipt of notice of same day Systems Provider.
21.3 Attorneys' Fees and Court Costs. In the event, either party takes
action to enforce this Agreement or to recover damages for a breach by the
other party, each party will be responsible for their own fees, expenses and
court costs.
21.4 Indemnification. Systems Provider agrees to indemnify and hold
harmless MCI its affiliates, directors, officers and employees, from any and
all claims, damages, fines, penalties, attorneys' fees, court costs or other
consequences arising out of Systems Provider's breach of any covenant or
representation set forth herein or Systems Provider's failure to abide by the
terms of this Agreement.
22. LIENS
22.1 As MCI requires, before submitting any invoice for payment, or at any
other time that MCI requires, Systems Provider shall deliver to MCI a
satisfactory release of any and all liens for which System Provider has under
their control arising in connection with the Products and Work under this
Agreement.
22.2 Systems Provider shall dispose of any claim and defend any suit or
injunction brought to enforce any lien arising from the performance and/or use
of any Products and Work under this Agreement, and shall pay all expenses
associated with such proceedings.
22.3 MCI may withhold from any payment or consideration otherwise due
Systems Provider, any sum that MCI has reason to believe may be needed to
satisfy any lien arising out the Work under this Agreement. Prior to the time
of any such withholding, MCI shall notify Systems Provider in writing of the
nature of the lien and the amount of money to be withheld pursuant to this
Article and afford Systems Provider reasonable opportunity to satisfy the lien.
22.4 Systems Provider shall reimburse MCI for all monies, including all
costs and reasonable attorneys' fees, incurred by MCI in removing liens arising
out of the Work under this Agreement. Such reimbursement may be deducted from
any payment or consideration otherwise due Systems Provider. Systems Provider
shall, upon written request by MCI, promptly pay MCI any amounts due under this
Article.
23. GENERAL
23.1 Limitation of Liability: NEITHER PARTY SHALL BE LIABLE TO THE OTHER
PURSUANT TO THIS AGREEMENT FOR ANY AMOUNTS REPRESENTING LOSS OF BUSINESS OR
INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES OF THE OTHER PARTY EVEN IF ADVISED
OF THEIR POSSIBLE EXISTENCE.
23.2 Force Majeure: Neither party shall be held liable to the other for
failure to fulfill its obligations hereunder if, and to the extent, due to
causes beyond its control.
23.3 Costs and Expenses: Except as specifically provided herein, each party
shall bear its own costs and expenses.
23.4 Waiver: The failure by either party to enforce, at any time or for any
period, any one or more of the terms of this agreement, shall not constitute
waiver of these terms, or subsequently the parties right to enforce all terms
and conditions of this Agreement.
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<PAGE> 20
23.5 Unenforceable Provisions:
(a) If any provision of this Agreement is held to be invalid, illegal
or unenforceable by a court of competent jurisdiction, the validity, legality
and enforceability of the remaining provisions of this Agreement shall continue
in full force and effect.
(b) It is expressly agreed that each provision of this Agreement that
provides for a limitation of liability or remedies, disclaimer of warranties,
indemnification of a party or exclusion of damages or other remedies is
severable and independent of any other provision and is intended to be enforced
as such. Further, it is expressly agreed that in the event any remedy under
this agreement is determined to have failed its essential purpose, all
limitations of liability and exclusions of damages or other remedies set forth
in this Agreement shall remain in effect.
23.6 Independent Contractors: Nothing in this Agreement is intended to or
shall be deemed to create a partnership, joint venture or agency relationship
between the parties of any kind for any purpose. The parties shall be and
remain independent contractors at all times. Neither parties shall have any
authority to, nor shall either attempt to, bind or commit the other party for
any purpose. Neither party shall make representations or warranties concerning
the Products or Services of the others that are inconsistent with those made by
the other party in its then current published materials or with the obligations
under this Agreement. Each party is solely responsible for the supervision and
control of its personnel and for the terms of their employment, including, but
not limited to, work assignments, labor relations, hiring and discharging,
performance evaluations, wages, hours, Social Security and tax withholding,
workers' compensation, and unemployment insurance.
23.7 Nonexclusivity: it is expressly understood and agreed that this
Agreement does not grant to Systems Provider an exclusive right to provide to
MCI any or all of the Products and Services of the type provided by Systems
Provider and shall not prevent MCI from developing or acquiring from other
suppliers such Products and Services. Systems Provider agrees that
acquisitions by MCI pursuant to this Agreement shall neither restrict the right
of MCI to cease acquiring nor require MCI to continue any level of such
acquisitions. Estimates or forecasts furnished by MCI to Systems Provider
shall not constitute commitments. It is also understood and agreed that
nothing in this Agreement shall restrict Systems Provider in any way from
marketing and selling any Products to or through any third party including, but
not limited to, clients or competitors of MCI.
23.8 Limitation of Actions: Neither party may bring an action, regardless
of form, arising out of this Agreement, more than two years after such party
becomes aware of the facts giving rise to the cause of action. For
non-payment, neither party may bring an action more than two years after the
date the last payment was due.
23.9 Notices: Whenever one party is required or permitted to give notice to
the other pursuant to this Agreement, such notice shall be effective when hand
delivered to the party for whom intended against a signed receipt thereof, or
five (5) days following deposit of the same into the mail, registered or
certified, return receipt requested, postage prepaid, or when delivered by a
third party courier service where receipt is verified by the receiving party's
acknowledgment and addressed to the Relationship Director of the other party,
with a copy to General Counsel. If a notice is mailed, the sending party
promptly will confirm such mailing by sending a copy thereof via facsimile
transmission to the Relationship Director of the other party. During the term
of this Agreement, all notices regarding this Agreement and anything contained
herein, will be directed to the following addresses:
Originals: Visual Networks, Inc.
2092 Gaither Road
Rockville, MD 20850
Attn: Chief Financial Officer/Peter Minihane
301-296-2365
301-296-2308(fax)
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<PAGE> 21
MCI Telecommunications Corporation
6 Concourse Parkway
Atlanta, GA 30328
Attn: Gene Davidson/Procurement
770-284-3517
770-284-3466
Copies: MCI Telecommunications Corporation
6 Concourse Parkway
Atlanta, GA 30328
Attn: Jimmy Davis
770-284-1282
23.10 Governing Law: This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York.
23.11 Changes to Appendices: Subject to Article 11, Systems Provider
reserves the right to change list prices, Products offered, and other schedules
and programs, and MCI reserves the right to change the list of affiliated
organizations, as set forth in the appendices to this Agreement. At such
times, the party will issue a written revision to the applicable Appendix and
all such revisions automatically are incorporated as amendments to this
Agreement. For changes which, in, Systems Provider's opinion, may adversely
affect MCI, Systems Provider will provide at least thirty (30) days notice,
prior to the effective date of such change.
23.12 Assignment: The rights of either party under this Agreement may not be
assigned, in whole or in part, by operation of law or otherwise, without the
express written consent of the other party which such consent shall not be
unreasonably withheld or delayed, and any attempted assignment of rights,
duties or obligations hereunder without such consent shall be null and void.
Notwithstanding the foregoing, MCI may assign this Agreement to any affiliated
entity of MCI.
23.13 Arbitration: Any dispute or disagreement arising between the parties
in connection with this Agreement, which is not settled to the mutual
satisfaction of the parties within thirty (30) days (or such longer period as
may be mutually agreed upon) from the date that either party informs the other
in writing that such dispute or disagreement exists, shall be settled by
arbitration in accordance with the J.A.M.S./ENDISPUTE Arbitration Rules and
Procedures, as amended by this Agreement. The cost of the arbitration,
including the fees and expenses of the arbitrator(s), will be shared equally by
the parties unless the award otherwise provides. Each party shall bear the
cost of preparing and presenting its case. The parties agree that this
provisions and the arbitrator's authority to grant relief shall be subject to
the United States Arbitration Act, 9 U.S.C. 1-16 et seq. ("USAA"), the
provisions of this Agreement, and the ABA-AAA Code of Ethics for Arbitrators in
Commercial Disputes. The parties agree that the arbitrator(s)) shall have no
power or authority to make awards or issue orders of any kind except as
expressly permitted by this Agreement, and in no event shall the arbitrator(s)
have the authority to make any award that provides for punitive or exemplary
damages. The decision of the arbitrator(s) shall follow the plain meaning of
the relevant documents, and shall be final and binding upon the parties. The
award may be confirmed and enforced in any court of competent jurisdiction.
All post-award proceedings shall be governed by the USAA.
23.14 Entire Agreement: This instrument contains the entire Agreement
between the parties hereto and supersedes all prior negotiations,
representations or agreements, whether written or oral.
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<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
VISUAL NETWORKS, INC. MCI TELECOMMUNICATIONS, INC.
By: /S/ Peter J. Minihane By: /S/ B.R. Bagby
--------------------- --------------
Name: Peter J. Minihane Name: B.R. Bagby
Title: Sr V.P./CFO/Treas. Title: Director, Network Acquisition
Date: 9/16/97 Date: 10/3/97
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<PAGE> 1
EXHIBIT 10.6
CONTRACT NO.
MASTER RESELLER AGREEMENT
BETWEEN
SPRINT/UNITED MANAGEMENT COMPANY
AND
VISUAL NETWORKS
This MASTER RESELLER AGREEMENT ("Agreement") effective August 23, 1996
("Effective Date"), between Sprint/United Management Company, a Kansas
corporation, ("Sprint"), with offices located at 8140 Ward Parkway, Kansas
City, Missouri 64114 and Visual Networks, a Delaware corporation ("Supplier"),
with offices located at 2092 Gaither Road, Rockville, MD 20850.
BACKGROUND
Supplier designs, develops, manufactures, and sells electronic equipment
("Equipment") and firmware and software as further defined in Section 13, below
("Software"), (collectively, "Products"), including auxiliary installation,
training, and technical and marketing support services ("Services"); and
Sprint desires to purchase or license various Products and Services from
Supplier that Sprint expects to use itself, or resell or sublicense to others
solely in association with Sprint network Services provided to Sprint or
Sprint's customers ("Customers"), and Supplier is willing to sell and license
the Products to Sprint and provide Services subject to the terms of this
Agreement.
The parties agree as follows:
1.0 SCOPE
(a) This Agreement contains the terms that will apply to any
contract or purchase order("Order") that Sprint may place with
Supplier during the term of this Agreement for Products and
Services offered by Supplier more fully described in Exhibit
A, attached to and incorporated in this Agreement.
In addition, Sprint may issue a non-binding yearly Order
("Blanket Order") which will apply to Products ordered during
that year. During a given year, Sprint may amend from time to
time the Blanket Order. The parties agree that the Blanket
Order does not obligate Sprint to any dollar amount or volume
of purchases of Product and is only intended to facilitate in
order administration.
Under a Blanket Order, Sprint will issue a document for the
purchase of Product under it ("Release"). A Release commits
Sprint to the purchase of the specific dollar amount or
quantity set forth in that Release. In addition, a Release
commits Supplier to ship the Product identified in the Release
and invoice Sprint in accordance with this Agreement.
- 1 -
<PAGE> 2
CONTRACT NO.
(b) The terms of this Agreement control over any additional or
inconsistent terms found in any Order under this Agreement or
in any acknowledgment or other form used by Supplier, or any
exhibits attached to this Agreement.
(c) The Order becomes a binding obligation of the parties when
Supplier signs and returns to Sprint an acceptance copy of the
Order or begins performance of the Order, whichever occurs
first.
(d) This Agreement is entered into by Sprint on its own behalf and
for the benefit of all Sprint Corporation affiliated entities
("Sprint Affiliates") as set forth in Exhibit C. The term
Sprint Affiliate includes: a) controlled Sprint Affiliates,
meaning any entity in which Sprint Corporation or its
wholly-owned affiliates has practical management control over
the entity by virtue of majority stock ownership or an
equivalent ownership interest, b) uncontrolled Sprint
Affiliates, meaning any entity in which Sprint Corporation
directly or indirectly holds an equity or similar interest,
but the interest does not give practical management control,
or c) remote Sprint Affiliates, meaning parent entities of
joint ventures of which Sprint or Sprint Affiliates are a
part, telecommunications entities which have an affiliation
with those joint ventures, and business customers of Sprint of
Sprint Affiliates.
Any controlled Sprint Affiliate may automatically execute a
Contract Order under this Agreement. Subject to negotiation
and upon approval by Sprint's Material & Services Management
Department ("M&SM"), Supplier will accept any uncontrolled or
remote Sprint Affiliate Contract Order. All references to
Sprint refer equally to Sprint Affiliates executing Contract
Orders with terms in accordance with this Agreement. No
commitment is made by Sprint or any Sprint Affiliate, nor any
liabilities accepted, except that set forth in a properly
signed Contract Order. All communications and invoices must
be directed to the Affiliate issuing the Contract Order under
the instructions issued in the Contract Order. Services
performed on behalf of any Sprint Affiliate will be billed to
or collected from only that Affiliate. Only the Sprint
Affiliate issuing a specific Contract Order under this
Agreement will incur any obligation or liability to Supplier
for any claim which may arise from or relate to that Contract
Order.
(e) Sprint is not committed to purchasing any minimum Order or
aggregate dollar volume of Products or Services during the
term of this Agreement, however, Sprint may provide monthly
and yearly estimates of Product purchases ("Forecast") for
planning purposes. Any Forecast provided to Supplier by
Sprint is not a commitment on Sprint's part to purchase
certain dollar amounts or quantities.
- 2 -
<PAGE> 3
CONTRACT NO.
Pricing for Year One of this Agreement is as indicated in
Exhibit A, Pricing, Schedule I. If Sprint does not purchase
80% of the amount for the specific period as detailed below,
the pricing for the subsequent year will be as indicated in
Exhibit A, Pricing, Schedule II. If Sprint purchases 80% or
greater than the amount for the specific period, as detailed
below, then the pricing will be as indicated in Exhibit A,
Pricing, Schedule I, for the subsequent period.
Year One of Agreement: $ *** (net of applied discounts)
Year Two of Agreement: $ *** (net of applied discounts)
Year Three of Agreement: $ *** (net of applied discounts)
NOTE: Any purchases made, prior to this Agreement, against the
CUSTOMER-SPECIFIC INTEGRATOR PARTNER AGREEMENT between the
parties, # CSIP-SP-001, will be included toward Year One's
volume.
2.0 TERM & TERMINATION
(a) This Agreement begins on the Effective Date and will remain in
force for a period of 3 years unless terminated as provided in
this Agreement.
(b) Either party may terminate this Agreement upon 30 days' prior
written notice to the other party if the other party
materially breaches the Agreement and fails to cure the breach
within 30 days of written notice of the breach.
(c) Either party may terminate this Agreement upon written notice
to the other party, if the other party is placed in
liquidation or receivership, if a petition of voluntary or
involuntary bankruptcy is filed against it and if the petition
is not dismissed within 30 days, or if it fails to satisfy a
final and valid court judgment for payment of money.
(d) This Agreement, including any Order, may be terminated
immediately at any time by Sprint without penalty if there is
any change in control or ownership of Supplier to a direct
competitor of Sprint (as reasonably determined by Sprint). If
permitted under applicable securities law, Supplier must give
Sprint no less than 30 days written notice of any change in
control or ownership of Supplier. This subsection does not
apply in the event of Supplier's acquisition as a
publicly-traded company.
3.0 PRICE AND TERMS OF SALE
(a) Prices for the Products and Services for the Term of this
Agreement are set forth in Exhibit A.
- -------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
- 3 -
<PAGE> 4
CONTRACT NO.
(b) Supplier warrants that the terms of this Agreement and the
prices on Exhibit A are no less favorable than the terms given
to any third party that purchases or licenses similar Products
or Services from Supplier under similar terms and conditions.
If Supplier offers more favorable prices and terms to any
Customer during the term of this Agreement, the prices and
terms will be applicable to Sprint Orders. Supplier warrants
that the prices on Exhibit A are complete and include, but are
not limited to, purchase price, maintenance fees, taxes,
packaging, labeling, custom duties, storage and insurance. In
determining whether an agreement is of similar scope and the
consideration is less, all the terms of this Agreement and
that agreement will be analyzed as a whole.
(c) Post Term Maintenance. At Sprint's option at the end of the
Term, Supplier will offer maintenance Services under the terms
of this Agreement at an annual cost not to exceed ***% of the
cumulative sales of ASEs, PAMs, PACSs, & MICs, as defined in
Exhibit A.
4.0 INVOICING AND PAYMENT
(a) Invoices must show:
(i) the Contract number, Order number, and Release
number,
(ii) the date shipment was made and the shipping point for
Products;
(iii) that the line item on the Order matches the line item
on the invoice, including the price and description,
unless there has been a price decrease.
(b) Sprint may specify additional invoicing instructions on the
Order. Supplier may not invoice Sprint until Products are
shipped, or Services have been accepted by Sprint.
(c) Payment *** days after receipt of valid invoice for the first
12 months of this Agreement. Thereafter, payment is *** days
from receipt of valid invoice . A legible FAX invoice is
acceptable provided no other copy is provided.
(d) Sprint and Supplier may desire to facilitate certain commercial
transactions between them electronically in Electronic Data Interchange ("EDI")
format in substitution for conventional paper-based documents. EDI
transactions under this Agreement, may include transmitting and receiving EDI
data for ordering, invoicing and payment. Prior to initiating an EDI
transaction, Sprint and Supplier will separately execute Sprint's Trading
Agreement which will set forth the terms and conditions of the EDI transaction.
5.0 DELIVERY, TITLE, RISK OF LOSS
- -------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
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CONTRACT NO.
(a) Delivery of Products will be F.O.B. Origination Freight
collect, and title and risk of loss will pass to Sprint, upon
delivery to Sprint carrier. Supplier agrees to follow
Sprint's shipping instructions, as detailed in Exhibit B,
Sprint Transportation Routing Guide.
(b) If Supplier fails to meet the delivery date, Sprint may direct
expedited routing and excess costs will be debited to
Supplier's account, or, in accordance with Paragraph 7,
Cancellation for Cause, cancel all or part of the Order. If
Products are delivered ahead of the delivery date, Sprint may:
(i) return the Products at Supplier's expense for early
delivery; or
(ii) withhold payment for the Products until after the
specified delivery date; or
(iii) place Products in storage for Supplier's account
until the specified delivery date.
(c) *** days before each quarter, Sprint will provide to Supplier
a quarterly Forecast by Product, and upon Sprint's request,
Supplier agrees to deliver any amount of Product included
within that Forecast within ***days. On amounts exceeding
the prorated volumes, delivery will occur consistently within
*** days.
***
(d) The name, addresses and contact person of Supplier's
Affiliates and distributors, through which any Services may be
ordered by Sprint, are set forth in Exhibit C. Supplier will
notify Sprint, in writing, of any changes in the Affiliates
and distributors on Exhibit C.
6.0 INSPECTION, ACCEPTANCE AND QUALITY CONTROL
(a) Sprint may inspect Products according to an agreed upon
incoming inspection procedure and rejection rate. Products
that fail to meet inspection criteria will be returned to
Supplier, at Supplier's expense. Supplier will pay for
reshipping conforming Products to Sprint. Sprint may place a
hold on all pending Orders until Supplier has demonstrated
that the cause for rejection has been corrected. If the cause
for rejection is not corrected within 30 days after rejection,
Sprint may cancel outstanding Orders without further
obligation or liability. Sprint may conduct a site inspection
at Supplier's facility during business hours by providing 7
days notice to Supplier.
(b) If Supplier becomes aware of any problem with a Product that
is of a safety, regulatory compliance, environmental
compliance, or serious performance nature, and changes the
design or documentation related to the Product, Supplier must
implement the change in accordance with Exhibit D.
- -------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
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CONTRACT NO.
(c) In order for the Products to be connected to the Sprint public
communications network, the Products must pass Sprint's
certification tests. This includes any material modifications
made to any Products to ensure operability and backward
compatibility with Sprint's network. Such materiality shall
be determined by Sprint. Accordingly, Supplier will provide
Sprint units of Product at no charge, along with cables, and
Documentation, to enable Sprint to perform its certification
process.
7.0 CANCELLATION
(a) Cancellation for Cause. Sprint may cancel an Order, in whole
or in part, if Supplier fails or refuses to deliver Products
or Services as ordered on the delivery date, or if Supplier is
not performing in accordance with Supplier-published
specifications. Sprint's acceptance of all or any part of the
Products or Services will not waive claims which Sprint may
have for delays.
If Sprint cancels an Order in whole or in part for cause,
Sprint may procure similar Products or Services from a third
party, and Supplier must pay Sprint for the excess cost for
the replacement Products or Services to be capped at 200% of
Sprint's purchase price for that Order. If cancellation is
partial, Supplier must continue the performance of the
remaining portion of the Order
(b) Cancellation for Convenience:
(i) Prior to delivery, for Releases and orders under ***,
Sprint may, without penalty or other liability
reschedule or cancel a delivery. For Releases or
Orders over ***, Sprint may cancel a Release or Order
within *** days of the shipment date, or pay
reasonable inventory carrying costs until such
inventory is sold to Sprint.
(ii) After partial delivery, Sprint may cancel any or all
of the remaining portion of the Release or Order upon
written notice. Upon receipt of notice, Supplier
must discontinue work, preserve and protect
materials, work in progress and completed work and
conclude performance in accordance with Sprint's
instructions. Sprint will pay Supplier's costs
properly incurred (substantiated by documentation
satisfactory to Sprint) Supplier will not be entitled
to any additional damages on account of cancellation.
8.0 TERRITORY
- ------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
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CONTRACT NO.
The territory will be defined by the address of Sprint's network services
client. Supplier will ship Products only to United States locations at
Sprint's expense. Sprint will be responsible for shipment of Supplier's
Products outside of the United States, at Sprint's expense. Supplier's
Products shall be leased, resold or integrated only into Sprint network
services offerings for clients that are United States based, United States
based multinationals or United States based divisions of international
corporations.
9.0 WARRANTY
(a) Supplier warrants all Equipment against material defects in
material and workmanship and warrants that Equipment will
strictly conform with Supplier's written specification for 5
years from either the date of shipment (or installation if
applicable). Equipment that is repaired or replaced is
warranted by Supplier for the remaining period of the original
warranty, or for 90 days from date of shipment by Supplier,
whichever is longer. All Equipment must be new.
(b) If the Equipment is defective in material or workmanship or
fails to comply with the applicable Equipment specification
during the warranty period, Supplier will repair or replace
the Equipment at Supplier's facility or modify the Equipment
to comply with the Equipment specification. Sprint will
notify Supplier if Sprint requires the original Equipment to
be repaired and returned to Sprint. Sprint will pay the cost
of shipping the defective Equipment to Supplier. The repair
or replacement of the Equipment will be made within 10
business days of receipt by Supplier, at no charge to Sprint.
Shipment of the repaired Equipment to Sprint will be at
Supplier's expense. If Supplier is unable to repair or
replace the Equipment or to modify the Equipment within the 10
business days, Sprint may reject the Equipment and Supplier
will refund to Sprint all monies paid in connection with that
Equipment including but not limited to shipping..
(c) Supplier warrants that all Products, when delivered, conform
to all applicable laws and regulations.
(d) i) Supplier warrants all Software will be in
accordance with Supplier's specifications for a
period of 45 days, from Sprint's acceptance.
Supplier will, at its option, correct or replace any
defective Software version or update at Supplier's
expense, if the Software was installed properly and
used in accordance with Supplier's specification.
ii) Supplier has the full power and authority to grant
the license granted Sprint under this Agreement with
respect to the Software, and neither the license to
nor use by Sprint of the Software, as permitted under
this Agreement, will in any way constitute an
infringement or other violation of any copyright,
patent, trade secret, trademark, nondisclosure, or
any other intellectual property right, moral right,
or right of publicity. The
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CONTRACT NO.
Software licensed under this Agreement will be free
and clear of all liens and encumbrances.
iii) To the best of Supplier's knowledge, after
investigation, neither Supplier nor its personnel
performing Services under this Agreement has any
existing obligation that would violate or infringe
upon the rights of third parties, including property,
contractual, employment, trademark, trade secrets,
copyright, patent, proprietary information and non
disclosure rights, that might affect Vendor's ability
to fulfill its obligations under this Agreement.
iv) During Term or when Maintenance is provided after the
Term, Supplier guarantees that its maintenance and
technical support Services described in this
Agreement and the Schedule hereto will be available
for the then-current and immediately preceding
versions of the Software licensed under this
Agreement.
(e) Supplier warrants all Services provided will be performed in a
workmanship like and timely manner, in conformance with the
highest professional standards of the industry and to Sprint's
reasonable satisfaction. Defective or deficient Services will
be corrected, or, at Sprint's option, monies paid to Supplier
in connection with the Services will be refunded.
(f) Additional Supplier warranties and maintenance Services which
must be provided by Supplier are included in Exhibit D.
(g) The warranties are made solely to and for the benefit of
Sprint and its Customer. Supplier makes no other warranties
with respect to the products or any services and disclaims all
other warranties, . Sprint's sole remedy with respect to any
warranty or defect is as stated above.
10.0 SUPPLIER SUPPORT OBLIGATIONS
Supplier agrees to provide to Sprint the support Services detailed in
Exhibit E.
11.0 OWNERSHIP
(a) All Equipment, materials, drawings, Software or data of every
description that Supplier receives directly or indirectly from
Sprint or from a third party on behalf of Sprint, or that is
paid for in whole or in part by Sprint, is the property of
Sprint ("Sprint-owned"). Supplier must mark all such property
as Sprint-owned, and must return all Sprint-owned property to
Sprint upon Sprint's request, or upon the termination or
expiration of this Agreement, whichever is earlier. Supplier
is responsible and must account for all Sprint-owned property,
and bears the risk of loss while the property is in Supplier's
possession. Sprint-owned property may only be used in
Supplier's performance of this Agreement. Sprint may inspect
any
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<PAGE> 9
CONTRACT NO.
agreements and associated records, including invoices, by
which Supplier acquires Sprint-owned property.
(b) Supplier retains all ownership and unrestricted rights to the
Products. In the future, Sprint and Visual may conduct good
faith negotiations on future product enhancements to the
Products as part of a new and separate executed agreement.
The purpose of such agreement will be to define possible
specific developments unique to Sprint (for which Sprint would
pay for development) and possible specific, defined
restrictions on Supplier's distribution rights for those
developments.
12.0 PROPRIETARY INFORMATION
(a) Supplier and Sprint acknowledge that while performing this
Agreement they may have access to Supplier-owned or
Sprint-owned trade secrets including, but not limited to,
products, planned products, service or planned service,
suppliers, customers, prospective customers, data, financial
information, computer software, processes, methods, knowledge,
inventions, ideas, marketing promotions, discoveries, current
or planned activities, research, development or other
information relating to Sprint's or Supplier's business
activities or operations or those of either's customers or
suppliers ("Proprietary Information").
(b) This Agreement creates a confidential relationship between
Sprint and Supplier. Sprint and Supplier will keep
Proprietary Information confidential and, except as authorized
by Sprint or Supplier in writing, Supplier and Sprint may only
use Proprietary Information to perform the Services or provide
the Products as required under this Agreement, and may only
make copies necessary for performing or reselling the Services
or providing the Products. Supplier or Sprint will label all
Proprietary Information as proprietary or if disclosed in an
intangible format, confirm in writing within 30 days of
disclosure. Upon cessation of work, or upon Sprint's or
Supplier's request, Sprint or Supplier will return all
documents and other materials in their control that contain
or relate to Proprietary Information.
(c) Sprint may require signed non-disclosure agreements from
Supplier's employees, agents or subcontractors.
(d) Proprietary Information does not include information that
Supplier or Sprint can demonstrate by written documentation:
(i) is rightfully known to Supplier or Sprint prior to
negotiations leading to this Agreement;
(ii) is independently developed by Supplier or Sprint
without any reliance on Proprietary Information; or
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<PAGE> 10
CONTRACT NO.
(iii) is or later becomes part of the public domain or is
lawfully obtained by Supplier or Sprint from a third
party.
(e) Supplier and Sprint acknowledge that disclosure of Proprietary
Information by Supplier or Sprint will cause irreparable
injury to Sprint or Supplier, Sprint's Customers and other
suppliers, that is inadequately compensable in monetary
damages. Accordingly, Sprint or Supplier may seek injunctive
relief in any court of competent jurisdiction for the breach
or threatened breach of this Section 12, in addition to any
other remedies in law or equity.
13.0 LICENSE OF SOFTWARE
(a) "Software" means any program stored on any media, including
but not limited to, magnetic tape, semiconductor device, disk,
or other memory device, or computer memory and including
related items. Supplier grants to Sprint a non-exclusive,
fully paid-up, perpetual license to use the object code of the
Software with the right to sublicense the object code to its
Customers, provided that the object code will only be used in
connection with the Products for which it was acquired and by
Sprint's consultants and agents on a need-to-know basis. This
right to use and sublicense the object code is subject to
payment of applicable license fees.
(b) Sprint acknowledges that Supplier claims that the Software is
proprietary to Supplier and third parties from whom Supplier
has acquired license rights. Title to the Software will
remain with Supplier or the third-party owners. Sprint will
enter into a software license agreement with its Customers,
prior to providing the object code of the Software. The
software license will be either a separate agreement or a
master sublicense agreement under which various products are
sublicensed by Sprint and will contain provisions that are no
less restrictive than those of this Section 13.
(c) Sprint may copy the object code of the Software for the
purpose of distributing it to its Customers. Additionally,
Sprint, its distributors, Customers and prime contractors may
copy the object code of the Software for back-up or archival
purposes. Each copy of the Software made by Sprint, its
distributors, Customers, and prime contractors will include
the proprietary notice contained in the Software as delivered
by Supplier.
(d) During the Term of this Agreement or when maintenance is
provided following the Term, Sprint may distribute copies of
any Software correction, modification, or update provided to
Sprint or its Customers at no additional cost.
(e) Sprint will not, and will not assist any third party to,
modify, reverse assemble, reverse compile or reverse engineer
the Software.
(f) The expiration or termination of this Agreement will not
terminate the right of Sprint or its Customers to use the
Software.
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<PAGE> 11
CONTRACT NO.
(g) Supplier warrants, that it is not necessary for Sprint, or its
Customers to obtain a license from any third party in order to
use the Products, other than the license granted by Supplier
under Sections 13 and 15.
(h) Failure to comply with Section 13 is a material breach of this
Agreement.
14.0 ESCROW AGREEMENT
(a) Within 30 days after the Effective Date, Supplier and Sprint
will enter into an escrow agreement ("Escrow Agreement") with
an escrow agent. The Escrow Agreement will provide for the
delivery of items necessary to recreate, modify, maintain and
use the Software, including without limitation, flow chart and
diagrams, compilers, operating Software, and relevant
documentation, such as design documentation and the document
environment ("Source Code") to the escrow agent, and require
the Supplier to deposit in escrow any modifications or
enhancements to the Source Code of the Software within 45 days
after provision of such modifications and/or enhancements to
Sprint or its Customers. In addition, Sprint will be
permitted to inspect the Source Code, which has been deposited
in escrow, through an independent third-party, to verify that
the Source Code has been deposited and that it contains
everything needed to use and maintain the Software. The fees
of the escrow agent will be paid by Sprint.
(b) Sprint will have the right to obtain a copy of the Source Code
from the escrow agent to maintain, modify and enhance the
Software for itself and sublicensees, subject to the
confidentiality provisions of this Agreement, and only if one
or more of the following events occurs:
(i) Supplier willfully refuses for more than 30 days to
deliver the Software to Sprint, or to support the
Software licensed by Sprint to a Customer, in breach
of Supplier's obligations under this Agreement, or
(ii) Supplier is unable to deliver the Software to Sprint
due to Supplier's voluntary or involuntary
bankruptcy, insolvency, dissolution or cessation of
active business operations for a period of more than
30 days.
If one or more of the above listed events occurs, Supplier
automatically, by the terms of this Agreement, grants to
Sprint a personal (except for third parties permitted to work
with the source code pursuant to Subsection (c) below,
non-exclusive, royalty free, worldwide license to use the
Source Code for the purpose of meeting its support obligations
to itself and its Customers. The 30-day period referred to
in subsections (i) and (ii) commences when Supplier receives
written notice from Sprint that the event has occurred.
(c) In the event of an Escrow withdraw as set forth in this
Section, Sprint may not sublicense the Source Code to any
third party not a Customer. Sprint may permit
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CONTRACT NO.
third parties to work with the Source Code on Sprint's behalf,
provided the third-parties are subject to a non-disclosure
agreement.
15.0 USE OF PRODUCTS
(a) The Products purchased under this Agreement may either be used
by Sprint or Sprint may sell, lease, sublicense or distribute
in any manner the Equipment or Software directly to its
Customers. Supplier licenses to Sprint and authorizes Sprint
to sublicense to Customers the right to use any intellectual
property, if any, contained in the Products for use by Sprint
and its customers under this Agreement.
(b) Sprint may make copies of Product documentation if Sprint
reproduces Supplier's proprietary notice on each copy.
16.0 LIABILITY AND INDEMNIFICATION
(a) Supplier and Sprint agree to release, irrevocably and forever
each other, and will defend, pay all judgments, expenses, and
costs (including attorney fees) and generally indemnify,
defend and hold each other harmless from all liability, suit,
claim or proceeding ("claims") resulting from the performance
or non-performance of this Agreement brought against either
party by any person for any damage, loss or destruction of
any kind, including, without limitation, loss to any property
or for any personal injury, including, without limitation,
death, defamation and invasion of privacy, to any person,
including without limitation any personnel of Sprint or
Supplier if the loss, destruction, injury or death results or
allegedly results, in whole or in part, from the act,
negligence, error, omission or willful misconduct or breach of
this Agreement by Supplier or Sprint.
(b) Supplier agrees to handle and defend all claims brought
against Sprint or its Customers, including without limitation,
Sprint's lessees, bailees, transferees and assigns, so far as
based on any claim that the work or Services performed, or the
Products furnished or manufactured by Supplier in the course
of this Agreement or any resulting use or sale of any work,
Services or Products constitutes an infringement of any patent
or copyright of any country, or misappropriation of any trade
secret, or constitutes a breach of any moral right, right of
publicity, or intellectual property right.
(c) If the sale or use of the Products or Services is enjoined,
Supplier must, at Supplier's option and Supplier's expense,
either:
(i) procure for Sprint and its Customers the right to use
the Products or Services; or
(ii) replace the Products or Services with equivalent
non-infringing Products or Services; or
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CONTRACT NO.
(iii) modify the Products and Services so they become
non-infringing; or
(iv) remove the Products or Services and refund the
purchase price, including transportation,
installation, removal and other incidental charges.
(d Sprint will notify Supplier in writing of any claims, and will
provide information, assistance and authority for Supplier's
handling and defense of the claim, all at Supplier's expense.
(e) Other than the parties's indemnification obligations under
section 16 of this agreement, neither party will be
responsible to the other for: i) except for indemnifications
made under Section 16b, special, indirect or consequential
loss or damage (including lost data) whether or not such loss
or damage is caused by the fault or negligence of that party,
its employees, agents or subcontractors, ii) for procurement
of substitute goods, technology of services, iii) except for
indemnification obligations under Section 16b, any amounts in
excess, in the aggregate, *** This section does not limit
liability for bodily injury to a person.
17.0 INSURANCE
(a) Supplier will obtain and maintain during the term of this
Agreement, with financially reputable insurers licensed to do
business in all jurisdictions where Product or Services are
delivered or performed and that are reasonably acceptable to
Sprint, not less than the following insurance:
(i) Workers' Compensation as required under any Workers'
Compensation or similar law in the jurisdiction where
the Product is manufactured or work is performed with
an employer's liability limit of not less than
$500,000 per accident; and
(ii) Commercial General Liability, including Product
Liability Insurance and Contractual Liability and
Products/Completed Operations Liability, with a limit
of not less than $1,000,000 combined single limit per
occurrence for bodily injury, personal injury, and
property damage liability, naming Sprint as an
additional insured;
(iii) Business Auto liability insurance covering the
ownership, maintenance or use of any owned, non-owned
or hired automobile with minimum limits of one
million dollars ($1,000,000) combined single limit
per accident for each bodily injury, including death,
and property damage liability, naming Sprint as an
additional insured; and
- -------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
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CONTRACT NO.
(iv) "All Risk" Property Insurance covering not less than
the full replacement cost of Supplier's personal
property while installing, training, or servicing on
Sprint or Customer premises.
(b) Certificates of Insurance. Supplier must, as a material
condition of this Agreement, prior to commencement of any work
and prior to any renewal of insurance, deliver to Sprint a
certificate of insurance, satisfactory in form and content to
Sprint, evidencing that the above insurance, is in force and
will not be canceled or materially altered without first
giving Sprint 30 days' prior written notice.
(c) Nothing contained in this Section 17 limits Supplier's
liability to Sprint to the limits of insurance certified or
carried.
18.0 RIGHT OF AUDIT
Supplier will maintain all records pertaining to this Agreement for at
least 3 years after final payment. Sprint may audit, copy and inspect
the records at reasonable times during the term of this Agreement and
for the 3-year period to verify costs incurred. The audit will be
performed by an independent third party mutually agreed upon and paid
for by Sprint, unless issues related to costs charged Sprint or
Supplier's performance are discovered, in which case the Supplier will
incur the cost of the audit.
19.0 NOTICE
Any communication relating to this Agreement must be in writing and
reference the Contract Number and Order number, if applicable and sent
by certified mail, return receipt requested, telex, facsimile or
overnight mail to the following addresses or as may be later
designated by written notice of a party:
Sprint: Ted Berberich
SPRINT
Switched Data Services
8320 Ward Parkway
Kansas City, MO 64114
Phone: (913) 624-4681
Fax: (913) 624-4681
Copy: Ted Freese
Lead Negotiator, Materials & Services Management
SPRINT
903 E. 104th Street
Kansas City, MO 64131
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CONTRACT NO.
Phone: 816-854-7880
Fax: 816-854-7022
With a copy of Default Notice to:
SPRINT LAW DEPARTMENT
8140 Ward Parkway
Kansas City, Missouri 64114
Supplier: Richard Wathen, VP Finance
VISUAL NETWORKS
2092 Gaither Road
Rockville, MD 20850
Phone: 301-330-7140
Fax: 301-258-5137
20.0 ARBITRATION
(a) Any dispute arising out of or relating to this Agreement,
including any issues relating to arbitrability or the scope of
this arbitration clause, will be finally settled by
arbitration in accordance with the rules of the American
Arbitration Association applying the substantive law of Kansas
without regard to any conflict of laws provision. The
arbitration will be governed by the United States Arbitration
Act, 9 U.S.C. Section 1 et seq., and judgment upon the award
rendered by the arbitrator(s) may be entered by any court with
jurisdiction. The arbitration will be held in the Kansas
City, Missouri metropolitan area. The arbitrators are not
empowered to award damages in excess of compensatory damages
and each party waives any damages in excess of compensatory
damages. Notwithstanding the foregoing, Sprint or Supplier
may bring a claim for injunctive relief as provided in Section
12(e) in a court of competent jurisdiction without first
submitting the matter to Arbitration.
(b) Claims made by Supplier may only be brought against the Sprint
Affiliate which issued the Order giving rise to the claim.
21.0 FEDERAL REQUIREMENTS
(a) Sprint's Status as a Government Contractor. If Sprint or the
federal government determines that this Agreement supports
specific requirements included in a Sprint contract or
subcontract with the federal government, Supplier will be
subject to certain federal acquisition regulations ("FAR's")
contained in Sprint's contract or subcontract. Supplier will
be subject only to FAR's that must be included in all
subcontracts as a matter of law. The applicable FAR will be
attached to the affected Order.
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CONTRACT NO.
(b) Small Business/Small Disadvantaged Business Reporting. If
this Agreement has subcontracting opportunities, Supplier will
make an accounting of dollars applicable to the Products and
Services purchased by Sprint that are subcontracted to firms
that are Small Businesses, Small Disadvantaged Businesses, or
Women-Owned Businesses under Small Business Administration
Regulations. These dollars will be reported annually in
writing to the following address:
Small Business Coordinator
SPRINT
903 E. 104th Street
Kansas City, Missouri 64131
22.0 GENERAL
(a) Ethics Code. Supplier agrees to comply with Sprint's Code of
Ethics, where applicable, a copy of which is attached to this
Agreement and is incorporated in this Agreement.
(b) Supplier Performance. Time is of the essence in Supplier's
performance under this Agreement. Sprint is not obligated to
pay for Products delivered or Services performed which do not
conform to Sprint's Order.
(c) Independence of Parties. Neither party is in a joint venture
with or partner or agent of the other. Neither party has the
authority to bind the other in any way. Both parties agree
not to make any commitment in the name of or which purports to
be binding on the other.
(d) Independent Contractor
(i) Supplier must comply with laws, regulations and
orders relating to equal employment opportunity,
workers' compensation, unemployment compensation and
FICA. Upon request, Supplier will furnish Sprint
with
its EEO policies and procedures, verification of
workers' compensation, unemployment compensation,
FICA and the number of hours any individual performs
Services for Sprint within any 12 consecutive month
period.
(ii) Supplier, its subcontractors, employees or agents are
independent contractors for all purposes and at all
times. Supplier has the responsibility for, and
control over, the means and details of performing the
Services, subject to Sprint's inspection. Supplier
will provide all training, hiring, supervising, hours
of work, work policies and procedures, work rules,
compensation, payment for expenses and discipline and
termination of its employees.
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CONTRACT NO.
(iii) Sprint will incur no responsibility or obligation to
employees, agents, subcontractors or other parties
utilized by Supplier to perform the Services set
forth in this Agreement. Such person or parties
will, at all times, remain employees, agents or
subcontractors (whichever is applicable) of Supplier.
(iv) Supplier is solely responsible for payment of wages,
salaries, fringe benefits and other compensation of,
or claimed by, Supplier's employees including,
without limitations, contributions to any employee
benefit, medical or savings plan and is responsible
for all payroll taxes including, without limitation,
the withholding and payment of all federal, state and
local income taxes, FICA, unemployment taxes and all
other payroll taxes. Supplier is also solely
responsible for compliance with applicable Workers'
Compensation laws with respect to maintenance of
workers' compensation coverages on Supplier's
employees. Supplier will indemnify and defend Sprint
from all claims by any person, government or agency
relating to payment of taxes and benefits, including
without limitation, any penalties and interest which
may be assessed against Sprint. Supplier will
similarly indemnify and defend Sprint from all claims
by any person or governmental agency which arise
directly or indirectly from any failure by Supplier
to comply with applicable Workers' Compensation laws
with respect to maintenance of workers' compensation
coverage on Supplier's employees.
(v) If Sprint determines that a Supplier-provided
employee, agent or subcontractor is not providing
satisfactory service, Sprint will advise Supplier and
may require Supplier to remove that individual or
subcontractor. Sprint will only pay for work
actually performed by the removed individual or
subcontractor prior to Sprint's notice for removal
and not for transportation or per diem costs
associated with replacing the individual. Supplier
will submit additional resumes to Sprint for purposes
of filling a vacancy at no additional charge.
(vi) Supplier and Sprint will require its employees,
agents and subcontractors to comply with the terms
and conditions of this Agreement.
(f) Survival. Numbered provisions 9, 10 ,11, 12, 13, 14, 15, 16,
17, 18, 20, 22(j) and (k) will survive the expiration or
termination of this Agreement, as well as provisions in this
Agreement that by their content are intended to survive the
performance, termination or cancellation of this Agreement.
(g) Severability. If a provision of this Agreement is
unenforceable, the remaining provisions will remain in effect,
to be construed as if the unenforceable provision were
originally deleted.
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CONTRACT NO.
(h) Waiver. The waiver of a breach of any term of this Agreement
will not constitute the waiver of any other breach of the same
or any other term.
(i) Assignment. Neither party may assign all or any part of this
Agreement without the prior written notice of the other, which
may not be unreasonably withheld, except Sprint may assign
this Agreement to any Sprint controlled Affiliate without
Supplier's consent.
(j) Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Kansas,
without regard to any conflict of laws provision therein.
(k) Publicity. Except as required by law or this Agreement,
neither party will, without the other party's prior written
consent, which shall not be unreasonably withheld:
(i) make any news release, public announcement, denial or
confirmation of this Agreement or its subject matter;
or
(ii) in any manner advertise or publish the fact of this
Agreement
(l) Remedies. Remedies available to either party under this
Agreement are cumulative and may be exercised concurrently or
separately. The exercise of any one remedy is not an election
of that remedy to the exclusion of other remedies. The rights
and remedies of the parties in this Agreement are not
exclusive and are in addition to any other rights and remedies
available in law or in equity.
(m) Security. Supplier warrants and agrees its employees, agents
and subcontractors will abide by Sprint's security
requirements provided by Sprint to Supplier for the designated
premises where services are performed under this Agreement.
Any security breach will be referred to Sprint's Corporate
Security department.
Supplier will be liable for any security breach resulting from
its failure to comply with Sprint Security requirements, and
will indemnify, defend and hold Sprint harmless for any loss
or damage arising out of or relating to any security breach.
(n) Weapons. Supplier is prohibited from carrying weapons or
ammunition onto Sprint's premises or using or carrying weapons
while performing work on Sprint's behalf or attending
Sprint-sponsored activities. Supplier further agrees to
comply with any postings or notices located at Sprint's
premises regarding safety, security or weapons.
23.0 ENTIRE AGREEMENT
This Agreement, including all Exhibits listed below, contains the
entire agreement between the parties with respect to the subject
matter contained. In the event of an
- 18 -
<PAGE> 19
CONTRACT NO.
inconsistency between the terms of this Agreement and those of an
Order, the terms of this Agreement control. In the event of an
inconsistency between the body of this Agreement and the exhibits, the
body of this Agreement controls:
Exhibit A including any related Schedules:
Product and Cable prices to Sprint
Post Term Maintenance Support Fees
Post Warranty Equipment Warranty Fees
Installation Fees
Post Term Spare Parts Prices
Exhibit B: Sprint Transportation Routing Guide
Exhibit C: Supplier Affiliates and Distributors
Exhibit D: Warranty and Maintenance Services
Exhibit E: Supplier Support Obligations
- 19 -
<PAGE> 20
CONTRACT NO.
SIGNED:
SPRINT/UNITED MANAGEMENT VISUAL NETWORKS COMPANY
/s/ John Todd /S/ Richard Wathen
- -------------------------------- ----------------------------------
(SIGNATURE) (SIGNATURE)
JOHN TODD RICHARD WATHEN
- -------------------------------- ----------------------------------
(PRINT NAME) (PRINT NAME)
VP - ENTERPRISE SERVICES CHIEF FINANCIAL OFFICER
- -------------------------------- ----------------------------------
(TITLE) (TITLE)
8/22/96 8/20/96
- -------------------------------- ----------------------------------
(DATE) (DATE)
/S/ GARY MEDFORD
- --------------------------------
(SIGNATURE
GARY MEDFORD
- --------------------------------
(PRINT NAME)
AVP - MATERIALS & SERVICES MGMT.
- --------------------------------
(TITLE)
AUGUST 23, 1996
- --------------------------------
(DATE)
- 20 -
<PAGE> 1
EXHIBIT 10.7
[AT&T LOGO]
GENERAL AGREEMENT #
FOR THE PROCUREMENT OF
EQUIPMENT, SERVICES AND SUPPLIES,
AND THE LICENSING OF SOFTWARE
BETWEEN
VISUAL NETWORKS, INC.
AND
AT&T CORP.
Agreement made November 26, 1997 by and between VISUAL Networks, Inc.(Visual) a
Delaware corporation, having a place of business at 2092 Gaither Road,
Rockville, Maryland, 20850 and AT&T Corp. (AT&T) a New York corporation,
having a place of business at 10 Independence Boulevard, Warren, NJ 07059, to
facilitate the anticipated future procurement for both internal use and resale
of Equipment, the license of Software, and the purchase of Maintenance Services
and Materials.
On the basis of VISUAL's representations and in reliance upon VISUAL's
expertise in analyzing, designing and providing Equipment and Software for
AT&T's applications per the specifications, the parties agree as follows:
<PAGE> 2
pg 2
Article I
Definitions Applicable To
The Entire Agreement
DEFINITIONS
The definitions of this Article, which are set forth below in italics, apply to
all the Articles of this Agreement:
Associated Entity means a corporation, partnership or venture, forty
(40) percent of whose voting stock or ownership interest is
owned directly or indirectly by AT&T.
AT&T means AT&T Corporation or an Associated Entity which enters into
or issues an Order under this Agreement.
Console Software means PACs ,PAMs, and MICs
Enhancements mean all Software changes, including enhancements, new
releases, new versions, product improvements, system
modifications, updates, upgrades, field modifications and the
like.
Equipment means either standard or non-standard equipment. standard
equipment means Ethernet CSU/DSC devices & V35 probes with
Ethernet interfaces; non-standard equipment means any other
equipment supplied under the terms of this agreement.
Identification means any copy or semblance of any trade name,
trademark, service mark, insignia, symbol, logo, or any other
product, service, or organization designation, or any
specification or drawing of AT&T.
Indemnities means AT&T, its customers, officers, directors, employees
and representatives, others doing work under its immediate or
ultimate direction and control, its end customers and
intermediaries in the distribution chain, and its successors
and assigns.
Information means any idea, data, program, technical, business or
other intangible information, however conveyed.
Installation Date means the dates by which the Equipment or Materials
which have been delivered are to be installed and ready for
use.
Maintenance Order means an order for Maintenance Services written on
AT&T's Order.
Maintenance Services includes all Services required by this Agreement
to keep the Equipment in good operating condition within the
Equipment manufacturer's specifications and other
specifications applicable to this Agreement.
Materials mean repair, maintenance or replacement parts for Equipment,
Media not fixedly embedded in Equipment, and tangible supplies
of other kinds which are for or associated with Equipment.
Media or Medium means any document, print, tape, disc, tool,
semiconductor chip or other tangible information-conveying
article.
Modifications mean AT&T additions to the Software, deletions from the
Software, or merges of the Software with one or more programs
owned or licensed by AT&T forming an updated and otherwise
modified software.
Order means AT&T's form of purchase order or contract used for the
purpose of ordering Equipment, Software, Services or
Materials.
Product means Equipment, Software, or Materials supplied under this
agreement.
Services means (1)Maintenance Services and other services in support
of purchased Equipment; (2) other services such as
installation, configuration, staging, training or other
professional services; or 3) the subject matter called for by
any Order.
Software means intangible Information constituting one or more
computer or apparatus programs and the informational content
of such programs, together with any documentation
<PAGE> 3
pg 3
supplied in conjunction with and supplementing such programs,
the foregoing being provided to AT&T by way of electronic
transmission or by being fixed in Media furnished to AT&T.
Software Source Material means Information consisting of all
intangible source programs, technical documentation and other
information required for maintenance, modification or
correction of the most current version of the Software
supplied to AT&T.
Specifications means the specifications for the Equipment and Software
as set forth in Exhibit 1 of this Agreement or if not so set
forth, shall mean VISUAL's current published specifications,
user documentation, and other information for the Equipment
and Software as of the date of an Order and any additional
specifications furnished by AT&T.
Use means use by any individual having authorized access to the
computer on which the Software is operated.
<PAGE> 4
pg 4
Article II
Provisions Applicable To
Purchase of Equipment And Materials
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
- ------ ----
<S> <C>
EQUIPMENT TESTING 5
MARKING 5
MEAN TIME BETWEEN FAILURE RATES 5
RETURN OF EQUIPMENT and MATERIALS 5
RISK OF LOSS 6
SPECIFICATION 6
TITLE 6
WARRANTY 6
</TABLE>
<PAGE> 5
pg 5
DEFINITIONS
The definitions of Article I apply to this Article.
EQUIPMENT TESTING
In addition to any other tests to be requested by AT&T as set forth in this
Agreement, VISUAL is responsible for the performance of standard factory
production tests established by VISUAL which, in the absence of any other
testing requested by AT&T as set forth elsewhere in this Agreement, shall be
deemed to be the final tests under this Agreement. Such tests shall be
performed in accordance with VISUAL normal testing and quality control
procedures for Equipment of the type purchased hereunder to insure that the
Equipment provided hereunder meets all applicable Specifications. At the
option of AT&T, VISUAL shall furnish a copy of its test plans and quality
control procedures to AT&T prior to initiating any such testing and AT&T, at
its expense, may witness any of the testing by giving prior notice to VISUAL.
VISUAL also agrees to maintain detailed records of all such tests and to
provide AT&T, if requested, with written results of these tests.
VISUAL shall only ship units which have successfully passed testing for safety
and for compliance with the functional specification. Specifically, each unit
shipped shall pass in-circuit-test (ICT), power surge (Hypot), and functional
testing per the product Specification.
MARKING
All material furnished under this Agreement shall be marked for identification
purposes in accordance with the Specifications set forth in this Agreement or
an Order, and as follows:
(a) with VISUAL model/serial number;
(b) with month and year of manufacture
VISUAL agrees to add any other identification which might be requested by AT&T
such as but not limited to distinctive marks conforming to AT&T's serialization
plan. Charges, if any, for such additional identification marking shall be as
agreed upon by VISUAL and AT&T.
MEAN TIME BETWEEN FAILURE RATES
VISUAL shall issue a quarterly report that provides the necessary information
to clearly identify quality issues that may occur in its product lines. That
report shall include the following metrics:
***
The information shall be presented in several different formats including an
overall product summary and a summary for each discrete product type.
RETURN OF EQUIPMENT AND MATERIALS
VISUAL agrees to accept for credit Equipment and Materials returned under any
of the following circumstances:
1. AT&T termination or cancellation of an Order for VISUAL's standard
Equipment or exchange by AT&T of one VISUAL Product for another VISUAL
Product within *** days of the termination or cancellation, provided
Product is not usable in other equipment within the location;
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 6
pg 6
2. VISUAL or AT&T error in the ordering or shipping process, provided the
Equipment or Materials are returned by AT&T to VISUAL within *** days of
receipt; or
3. Receipt of defective Equipment or Materials or failure of Equipment or
Materials under the applicable warranty.
Equipment shall be returned without penalty to AT&T if the return is due to
fault of VISUAL. If the return is not the result of any VISUAL fault, AT&T's
may return standard equipment within *** days of the date of shipment from
VISUAL and shall be subject to a *** % restocking charge . Return of
non-standard Equipment shall be dealt with on a case by case basis with VISUAL
making good faith efforts to accept non-standard equipment back under the same
terms as standard Equipment if possible. Equipment or Materials returned for
credit must be in complete cartons and in good resaleable condition, except
where the Equipment or Materials are defective or fail under the applicable
warranty
RISK OF LOSS
VISUAL shall retain risk of loss and damage to the Equipment or Materials prior
to the passage of title pursuant to the Title clause unless caused by the
willful or negligent acts of AT&T or its employees. Shipments shall be made FOB
destination , prepay and add. Carrier is to be chosen by VISUAL unless
otherwise determined by AT&T
SPECIFICATION
Products sold by VISUAL to AT&T under this Agreement shall meet VISUAL'S design
and manufacturing Specifications as defined under Warranty. In addition, VISUAL
agrees that it will meet the Specifications defined in Exhibit 1 and any future
specifications agreed to by the parties.
TITLE
Title to Product shall rest in AT&T upon their acceptance which shall be deemed
to occur upon receipt of the Product at AT&T's receiving dock unless otherwise
specified by AT&T before or promptly after such receipt.
WARRANTIES
Equipment Warranty
VISUAL warrants to AT&T and its customers that the Equipment and Materials
furnished shall be merchantable and free from defects in design, material and
workmanship and shall conform to and perform in accordance with the
Specifications. These warranties extend to the future performance of the
Equipment and materials and shall continue for the longer of (a) five (5) years
after the Equipment or materials are accepted by AT&T, or (b) a greater period
if specified elsewhere in this Agreement or an Order. VISUAL also warrants to
AT&T and its customers that the Equipment and Materials shall be new and that
services shall be performed in a first class, workmanlike manner. In addition,
if the Equipment or materials furnished contains one (1) or more manufacturer's
warranties, VISUAL hereby assigns those warranties to AT&T and its Customers.
Equipment, Materials or Services not meeting the warranties will, at AT&T's
option, (a) be returned for repair or replacement by VISUAL at no cost to AT&T
or its customers and with transportation costs and risk of loss and damage in
transit borne by the respective parties as
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 7
pg 7
described herein. VISUAL shall not charge AT&T for any repair or maintenance of
Equipment or Materials covered by this warranty
All warranties shall continue in full force and effect notwithstanding transfer
of title to the Equipment or Materials by AT&T, so long as AT&T and its
customers shall remain the user of the Equipment or Materials. All warranties
shall also survive inspection, acceptance and payment.
SERVICE WARRANTY
Visual warrants to AT&T and its customers that replacement and repair parts and
components furnished under this Agreement or an Order shall be new,
merchantable, free from defects in design, material and workmanship and shall
conform to and perform in accordance with the specifications and drawings and
shall function properly for their intended purpose. These warranties extend to
the future performance of the parts and components and shall continue for the
longer of (a) the design life of such parts or components, (b) five (5) years
from the date of AT&T's acceptance of their installation, (c) the duration of
the Maintenance Order, or (d) a greater period as may be specified elsewhere in
the Maintenance Order. Visual further warrants to AT&T that the Maintenance
Services shall be performed with promptness and diligence, in a first-class,
workmanlike manner and to AT&T's satisfaction and that the Equipment shall
function in good operating condition during the duration of the Maintenance
Order. In addition, if the parts or components bear one (1) or more
manufacturers' warranties, Visual hereby assigns those warranties to AT&T.
All warranties shall survive inspection, acceptance and payment.
Equipment, parts, components or Maintenance Services not meeting the warranties
will, at AT&T's option, be returned for repair, replacement or reperformance
by Visual at no cost to AT&T or be subject to refund.
Whenever Equipment , repair parts or components under warranty are returned to
Visual for repair or replacement purposes, AT&T shall bear all costs of
packing, rigging, transportation and insurance to return the Equipment to
Visual, and Visual shall bear all costs of packing, rigging, transportation and
insurance to replace that Equipment.
Software Warranty
VISUAL warrants to AT&T and its customers the following:
1. The Software will conform to and perform in accordance with the
Specifications.
2. That for a period of 90 days after receipt, the Media conveying the
Software will be free from defects in material and workmanship. VISUAL
will replace defective Media at no charge.
3. The foregoing warranties extend to the future performance of the Software
and shall continue for the longer of (a) five (5) years after the Software
is accepted by AT&T, or (b) a greater period specified elsewhere in this
Agreement or an Order
4. There are no copy protection or similar mechanisms within the Software
which will, either now or in the future, interfere with the grants made in
this Agreement or an Order.
5. AT&T and its customers shall have quiet enjoyment of the Software.
6. As to Software for which VISUAL does not solely own all intellectual
property rights, VISUAL has full right, power and authority to sub-license
the Software to AT&T and its customers as provided in this Agreement or an
Order.
7. If the Software, or any portion thereof, is or becomes unusable, totally,
or in any respect during the applicable warranty period, VISUAL will
re-perform Services, correct errors, defects and non-conformities and
restore the Software to conforming condition free of significant errors at
no cost to AT&T or its customers. Corrected Software shall be warranted as
set forth in this clause.
8. To the best of VISUAL knowledge, the Software does not contain any
malicious code, program, or other internal component (e.g. computer virus,
computer worm, computer time bomb, or similar component ) that could
damage, destroy, or alter Software, firmware, or hardware or which could,
in any manner, reveal, damage, destroy, or alter any data or other
information accessed through or
<PAGE> 8
pg 8
processed by the Software in any manner. VISUAL shall immediately advise
AT&T, in writing, upon reasonable suspicion or actual knowledge that the
Software provided under this Agreement or an Order may result in the harm
described above.
9. VISUAL warrants that Software will record, store, process and present
calendar dates falling on or after January 1, 2000, in the same manner and
with the same functionality as it performed before January 1, 2000.
10. VISUAL warrants that any Software upgrade will not cause the system
configuration to become corrupt or lost. VISUAL also warrants any Software
upgrade will not adversely effect the "database" or the elements supported
(e.g. if the application database has 5000 elements, the change will not
cause the data to be re-keyed back in to the application ).
11. All warranties shall survive inspection, acceptance and payment.
All warranties shall continue in full force and effect notwithstanding transfer
of title to the Equipment or Materials by AT&T, so long as AT&T, its customers
or its Associated Entities shall remain the user of the Equipment or Materials.
All warranties shall also survive inspection, acceptance and payment.
Whenever Equipment , repair parts or components under warranty are returned to
Visual for repair or replacement purposes, AT&T shall bear all costs of
packing, rigging, transportation and insurance to return the Equipment to
Visual, and Visual shall bear all costs of packing, rigging, transportation and
insurance to replace that Equipment.
<PAGE> 9
pg 9
Article III
Provisions Applicable to License of Software
<TABLE>
<CAPTION>
CLAUSE PAGE
------ ----
<S> <C>
DEFINITIONS 10
LICENSE GRANT 10
LICENSE IDENTIFICATION 10
INTELLECTUAL PROPERTY RIGHTS 10
REMOTE ACCESS 10
RISK OF LOSS 10
SOFTWARE AND PROGRAMMING AIDS 11
SOURCE PROGRAMS AND TECHNICAL DOCUMENTATION 11
SEVERITY EPIDEMIC CONDITIONS 11
</TABLE>
<PAGE> 10
pg 10
DEFINITIONS
The definitions of Article I apply to this Article.
LICENSE GRANT
Visual hereby grants to AT&T an irrevocable, nonexclusive, worldwide license to
Use the Software. *** The license shall be effective from the date of AT&T's
acceptance of the Equipment and Software and shall remain in effect until the
Use of the Software, as it may have been updated or enhanced by Visual from
time to time, is permanently discontinued by AT&T under the terms of the Order.
AT&T agrees that, upon termination of the license of Software, all parts of the
Software shall be completely removed, destroyed, or returned to Visual, at
AT&T's option, unless this requirement is waived by Visual. However, in the
event of such termination, AT&T may retain copies of the Software for archival
purposes only. Upon delivery to AT&T, all media shall become the property of
AT&T except that fixed in Equipment, title to which shall pass to AT&T upon
acceptance of the Equipment. The foregoing license extends to any use of any
program or Software developed using the object code of the Software. AT&T may
sublicense the Software as set forth above. All obligations, undertakings and
indemnifications by Visual under an Order shall run and inure to the benefit of
AT&T and the sublicenses. No sublicense shall release Visual from its
obligations under an Order, except that Visual shall be a third party
beneficiary .
LICENSE IDENTIFICATION
AT&T and Visual will develop a method for Visual Software packaged by AT&T to
inform AT&T customers that their use of Visual Software is subject to the
license grant terms of this agreement .
INTELLECTUAL PROPERTY RIGHTS
Title to the Software and to intellectual property rights therein shall remain
in VISUAL or VISUAL's licensor, as applicable. AT&T shall have the right to
make a reasonable number of copies of the Software for Use as authorized in
this Agreement. AT&T however, shall not knowingly reproduce copies of the
Software for the purpose of supplying it to others except individuals
authorized herein.
REMOTE ACCESS
AT&T shall have the right, at no additional charge or fee, to have the Software
used at any other location by means of remote electronic access subject to the
limitations of the applicable licenses granted.
RISK OF LOSS
If any Software fixed in the Media is lost, damaged, or made invalid during
shipment, Visual will promptly replace the Software and Media at no additional
charge to AT&T. VISUAL acknowledges that, from time to time, Software in AT&T's
possession may become lost or damaged. Accordingly, VISUAL agrees that, during
the six-month period following delivery of any Software to AT&T, VISUAL shall
promptly replace any Software that is lost or damaged while in the possession
of AT&T, at the established charge for the associated Media. Notwithstanding
anything to the contrary contained in the preceding sentence, AT&T agrees that
it will take reasonably prudent steps to safeguard all Software against loss
and damage and VISUAL shall only be required to replace a reasonable number of
copies of any lost or damaged Software, with the determination of such
reasonable number being made by VISUAL.
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 11
pg 11
SOFTWARE AND PROGRAMMING AIDS
On the delivery date, VISUAL shall furnish to AT&T, at no additional charge or
fee, the following basic items:
1. Object program (the fully compiled or assembled series of
instructions, written in machine language, ready to be loaded into the
computer, that guides the operation of the computer) stored in a
Medium compatible with the Equipment described in the Order;
2. Program implementation and user instructions and required procedures;
3. The Software Specifications, as well as the required machine
configuration;
4. Sample data output, such as printouts or typical screen displays, and
any other programs, routines, subroutines, utility or service
programs, flow charts, logic diagrams and listings, descriptive
Specifications and acceptance Specifications or related material
VISUAL may have which is necessary or useful for the full
implementation and Use of the Software and which VISUAL normally
furnishes to users of the Software .
SOURCE PROGRAMS AND TECHNICAL DOCUMENTATION
VISUAL shall, at AT&T's request, enter into an Escrow Agreement substantially
the same in form and substance to the form attached to this Agreement to
safeguard VISUAL's Software Specifications and source program at any time
during the duration of this Agreement. Both parties shall negotiate in good
faith such Escrow Agreement.
EPIDEMIC CONDITION
If during the term of this Agreement and for one year after the last shipment
date of Equipment, Software, or Materials (collectively referred to as
"Product") under this Agreement AT&T notifies VISUAL that Product shows
evidence of an "Epidemic Condition," VISUAL shall prepare and propose a
Corrective Action Plan ("CAP") with respect to such material within five (5)
working days of such notification, addressing implementation and procedure
milestones for remedying such Epidemic Condition(s). An extension of this
time-frame is permissible upon mutual written agreement of the parties.
***
An Epidemic Condition will be considered to exist when one or more of the
following conditions occur:
***
Only major functional and visual/mechanical/appearance defects are considered
for determining Epidemic Condition. Product may be either sampled or, at AT&T's
option, 100% audited at AT&T premises or AT&T's customers' locations.***
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 12
pg 12
For the purpose of this Agreement, functional DOA shall be defined as any
Product that during the test, installation or upon its first use fails to
operate per the specification. Visual/mechanical/appearance DOA is defined as
any Product containing one or more major defects that would make the Product
unfit for use or installation. An Epidemic Condition shall not include failures
due to customer misapplication, utilization of parts not approved by VISUAL, or
chain failures induced by internally or externally integrated subassemblies.
In the event that VISUAL develops a remedy for the defect(s) that caused the
Epidemic Condition and AT&T agrees in writing that the remedy is acceptable,
VISUAL shall:
***
VISUAL and AT&T shall mutually agree in writing as to the remedy's
implementation schedule. VISUAL shall use its best efforts to implement the
remedy in accordance with the agreed-upon schedule.
***
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 13
pg 13
Article IV
Provisions Applicable To
MAINTENANCE SERVICES For EQUIPMENT
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
------ ----
<S> <C>
DEFINITIONS 14
BREAKAGE, DISAPPEARANCE AND CONDITION 14
CONTINGENCY 14
ELIGIBILITY FOR MAINTENANCE SERVICES 14
IDENTIFICATION CREDENTIALS 14
MAINTENANCE FACILITIES 15
PRECAUTIONS 15
TECHNICAL INFORMATION, SOFTWARE AND PROGRAMMING AIDS 15
TITLE 15
</TABLE>
<PAGE> 14
pg 14
Definitions
The definitions of Article I apply to this Article.
BREAKAGE, DISAPPEARANCE AND CONDITION
VISUAL shall take such precautions VISUAL deems necessary or desirable (which
do not violate AT&T's plant rules or cause inconvenience or delay to AT&T)
regarding tools, equipment, and Materials, regardless of whether or not owned
by VISUAL, which VISUAL causes to be brought to AT&T's premises. AT&T shall
have no responsibility for their care, safekeeping, or operating condition.
AT&T shall not bear any cost or expense associated with their breakage or
disappearance unless resulting from AT&T's negligence.
Notwithstanding anything to the contrary contained in the preceding sentence ,
in the event that AT&T makes a special request of VISUAL to perform special
demonstrations of Equipment, Software, systems capabilities, etc., at any
AT&T site or at the site of AT&T's customers and such demonstrations require
the use of Visuals equipment, AT&T shall be responsible for and bear the risk
of loss associated with any breakage, destruction or disappearance of such
Equipment, Software, & Material, resulting from AT&T's negligence.
CONTINGENCY
If VISUAL fails to perform the Maintenance Services, AT&T may arrange for the
performance of the Maintenance Services by another party after having given
VISUAL at least twenty-four (24) hours prior written notice of intention to do
so. VISUAL shall be responsible to AT&T for all reasonable expenses incurred
in such performance.
ELIGIBILITY FOR MAINTENANCE SERVICES
Equipment shall be eligible for Maintenance Services provided it shall have
been under Maintenance Service or warranty by VISUAL or any authorized
maintenance provider on the date of commencement of this Agreement. From time
to time, AT&T may assume responsibility for equipment either:
1.owned by AT&T customers or
2.having that ownership transferred to AT&T
If the Equipment is not eligible, but can be made eligible, AT&T may, at its
expense, make or have made those changes required to upgrade the Equipment to
eligibility status. Warranties shall be effective as provided for in this
Agreement. VISUAL will invoice AT&T a one time equipment transfer fee per unit
at a cost of ***. Additionally, after the initial term of this agreement is
over, Visual may invoice AT&T, on a per unit basis, a cost of either i.***
per year or ii. *** for the balance of any extension to this agreement but not
to exceed 3 years.
IDENTIFICATION CREDENTIALS
AT&T may, at its discretion, require VISUAL's employees and subcontractors to
exhibit identification credentials, which AT&T may issue, in order to gain
access to AT&T's premises for the performance of
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 15
pg 15
the Services. If for any reason, any of VISUAL's employees or subcontractors
are no longer performing Services, VISUAL shall immediately inform AT&T's
Representative in the speediest manner possible. Notification shall be
followed by the prompt delivery to AT&T's Representative of the identification
credentials involved or a written statement of the reasons why the
identification credentials cannot be returned. VISUAL shall be liable for any
damage or loss sustained by AT&T if the identification credentials are not
returned to AT&T. until VISUAL has informed AT&T of the loss.
MAINTENANCE FACILITIES
AT&T shall provide VISUAL with adequate working space, including heat, light,
ventilation, electric current and outlets for use by VISUAL's maintenance
personnel. These facilities shall be within a reasonable distance of the
Equipment to be serviced and shall be provided at no charge to VISUAL. AT&T
shall not be responsible for any damage to VISUAL's Equipment or Materials
stored on AT&T's premises unless the damage results from AT&T's negligence.
PRECAUTIONS
VISUAL shall take care in all operations to safeguard people as well as
property and not to interfere with or curtail AT&T or customer operations at
the services site.
TECHNICAL INFORMATION, SOFTWARE AND PROGRAMMING AIDS
VISUAL shall furnish to AT&T on the agreed-upon delivery date without
additional charge any technical information, programs, routines, subroutines,
documentation, or related material it has or may develop or modify, necessary
for the general use or maintenance of Equipment under Maintenance Service,
which are normally so furnished to maintenance customers.
TITLE
Title to replacement, repair parts and components of Equipment shall vest in
AT&T upon installation. Title to enhancements and modifications and to
intellectual property rights therein (other than those originating as a result
of development Services funded by AT&T) shall remain in VISUAL. Title to
updates and modifications originating as a result of development Services
funded by AT&T and to intellectual property rights therein vest in accordance
with the applicable underlying contract between AT&T and VISUAL.
<PAGE> 16
pg 16
Article V
General Provisions Applicable To
Entire Agreement
Contents
<TABLE>
<CAPTION>
Clause PAGE
<S> <C>
Assignment and Subcontracting 20
Assignment by AT&T 19
AT&T Announcement Plan 19
Benefits 25
Capacity Planning Review 19
CFC Packaging 20
Change 20
Changes to Product 20
Choice of Law 21
Clause Headings 21
Clean-up 21
Contents of Order 21
Continuing Availability 22
Compliance with Laws 21
Default 22
Discontinuance of Manufacture 23
Documentation 24
Effective Date and Duration of Agreement 18
Emergency 24
Entire Agreement 33
Force Majeure 24
Future Improvements 25
Government Contract Provisions 25
Heavy Metals in Packaging 25
Identification 26
Impleader 26
Indemnity 26
Infringement 27
Inspection 27
Insurance 27
Invoices and Terms of Payment 28
ISO Certification 28
Labor Relations 28
Mediation 29
Non-exclusive Market Rights 29
Notices 29
Order 18
Order Termination 30
Ordering Companies 18
Ozone Depleting Substances 30
Planning and Production Capacity 18
Quarterly Reports 30
Releases Void 30
Right of Entry and Plant Rules 30
</TABLE>
<PAGE> 17
pg 17
<TABLE>
<S> <C>
Sale & License 18
Scope of Agreement 18
Severability 31
Shipping 31
Standards 31
Survival of Obligations 32
Taxes 32
Timely Performance 32
Tools and Equipment 32
Use of Information 33
Variation of Quantity 33
VISUAL's Information 32
Waiver 33
Work Done by Others 33
</TABLE>
<PAGE> 18
pg 18
DEFINITIONS
The definitions of Article I apply to this Article.
ORDERING COMPANIES
AT&T may order under this Agreement. Also, those additional Associated
Entities, both U.S. and foreign, designated in writing by AT&T, may order
under this agreement.
Any order issued under this Agreement shall be a contractual relationship
between the ordering Company and Visual, and Visual shall only look to the
ordering Company for performance of Company's obligations under such an order.
SCOPE OF AGREEMENT
This Agreement is applicable to the procurement for internal use and resale by
AT&T from VISUAL of Equipment, Software, intellectual property rights,
Services, and Materials.
EFFECTIVE DATE AND DURATION OF AGREEMENT
This Agreement shall become effective as of the date set forth above and shall
continue in effect for a period of three (3) years (the initial term) and
thereafter until terminated by either VISUAL or AT&T upon delivery of thirty
(30) days' prior written notice to the other party. The amendment or
termination of this Agreement shall not affect the obligations of AT&T or
VISUAL under any then existing Order issued under this Agreement.
SALE & LICENSE
***
ORDER
Each Order shall reference this Agreement thereby incorporating the provisions
of this Agreement. If notice of rejection of an Order is not received by AT&T
within *** days from the date of issuance of an Order, the Order shall be
deemed to have been accepted by VISUAL.
PLANNING AND PRODUCTION CAPACITY
***
CAPACITY PLANNING REVIEW
***
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 19
pg 19
AT&T ANNOUNCEMENT PLAN FOR VISUAL NETWORKS
AT&T & VISUAL will interface in implementing a marketing plan for use of VISUAL
Products in a managed DSU offer as outlined in Exhibit 3.
ASSIGNMENT BY AT&T
AT&T Corp. shall have the right to assign this Agreement or an Order and to
assign its rights and delegate its duties under this Agreement or an Order
either in whole or in part at any time and without VISUAL's consent to (i) any
present or future Associated Entity of AT&T Corp. which may not be a competitor
of VISUAL,, or (ii) any other entity resulting from the sale, reorganization
or other transfer of all or part of the assets of AT&T Corp. or any Associated
Entity. AT&T shall give VISUAL written notice of any assignment and
delegation. The assignment and delegation shall not affect any rights or
duties that VISUAL or AT&T may then or thereafter have as to Equipment,
Software, Services or Materials ordered by AT&T prior to the effective date of
the assignment and delegation. Upon acceptance of the assignment and
delegation and assumption of the duties under this Agreement or an Order, AT&T
shall be released and discharged, to the extent of the assignment and
delegation, from all further duties under this Agreement or the Order as to
Equipment, Software, Services or Materials so assigned.
ASSIGNMENT AND SUBCONTRACTING
VISUAL shall not assign any right or interest under this Agreement or an Order
(excepting monies due or to become due) nor delegate any Services or other
obligation to be performed or owed by VISUAL under this Agreement without the
prior written consent of AT&T, whose consent will not be unreasonably withheld.
Any attempted assignment, delegation, or subcontracting in contravention of
the above provisions shall be deemed void and ineffective. Any assignment of
monies shall be void and ineffective if any of the following occur: (1) AT&T
receives less than thirty (30) days' prior written notice of the assignment
from VISUAL or (2) the assignment attempts (i) to impose upon AT&T obligations
to the assignee additional to the payment of monies, or (ii) to preclude AT&T
from dealing solely and directly with VISUAL in all matters pertaining to this
Agreement including the negotiation of amendments or settlements of charges
due. All Services performed by VISUAL subcontractors at any tier shall be
deemed Services performed by VISUAL.
CFC PACKAGING
VISUAL warrants that all packaging materials furnished under this Agreement and
all packaging associated with Equipment, Software, or Materials furnished
under this Agreement were not manufactured using and do not contain
chlorofluorocarbons. "Packaging" means all bags, wrappings, boxes, cartons and
any other packing materials used for packaging. VISUAL agrees to indemnify,
defend (at AT&T's request), and hold harmless Indemnities from and against
any losses, damages, claims, demands, suits, liabilities, fines, penalties, and
expenses (including reasonable attorneys' fees) that arise out of or result
from AT&T's good faith reliance upon this warranty.
CHANGE
***
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 20
pg 20
CHOICE OF LAW
The construction, interpretation and performance of this Agreement and all
transactions under it shall be governed by the laws of the State of New Jersey,
excluding its choice of law rules and excluding the Convention for the
International Sale of Goods. The provisions of the New Jersey Uniform
Commercial Code apply to this Agreement and all transactions under it,
including agreements and transactions relating to the furnishing of Services,
the Lease or rental of Equipment or Materials, the procurement of intellectual
property rights and the license of Software. VISUAL shall submit to the
jurisdiction of any court wherein an action is commenced against AT&T based on
a claim for which VISUAL has agreed to indemnify AT&T under this Agreement.
CLAUSE HEADINGS
The headings of the clauses in this Agreement are inserted for convenience only
and are not intended to affect the meaning or interpretation of this
Agreement.
CLEAN-UP
Upon completion of installation or removal of the Equipment or of any other
Services performed on AT&T's or its customer's premises, VISUAL shall, at its
expense, promptly remove all implements, surplus materials and debris used in
or produced by those activities.
COMPLIANCE WITH LAWS
VISUAL and all persons furnished by VISUAL shall comply, at their own expense,
with all applicable federal, state, local and foreign laws, ordinances,
regulations and codes
CONTENTS OF ORDER
1) EQUIPMENT, SOFTWARE OR MATERIALS
An Order for the purchase of Equipment, Software, or Materials shall contain
the following:
1. The incorporation by reference of this Agreement;
2. A complete list of the Equipment or Materials to be purchased or
Software to be licensed specifying the quantity, type, model, feature
description, list price, and purchase price to be paid (net of
discount) and if applicable the name or names of the manufacturer and
model number or numbers of the equipment with which the Software shall
be compatible;
3. The invoice address;
4. The location at which the Equipment or Materials are to be delivered
or installed including floor, street, city and state;
5. The ship date
6. A complete list of the Services and associated costs, if any, such as,
but not limited to, training, if any required, and a schedule of their
performance;
7 Any other special provisions agreed upon by both parties.
<PAGE> 21
pg 21
Ordered items shall be shipped complete on date(s) specified in an Order unless
otherwise agreed to by AT&T.
CONTINUING AVAILABILITY
Except as set forth in the clause DISCONTINUANCE OF MANUFACTURE, VISUAL agrees
to offer for sale to AT&T, during the Term of this Agreement***:
(a) Equipment and Software conforming to the Specifications set
forth in this Agreement or in an Order;
(b) maintenance, replacement and repair parts which are
functionally equivalent to those in the Equipment covered by
this Agreement (the "Parts"); and
(c) support Services which are equivalent to the support Services
set forth in this Agreement, or support services as may be
otherwise agreed upon by the parties.
The prices for such Equipment, Software, Parts, or Services shall be the prices
set forth in this Agreement and the Appendices hereto during the Term. Prices
for Equipment, Software, Parts, or Services following the end of the Term shall
be the prices in VISUAL 's then current agreement with AT&T for said Equipment,
Software, Parts, or Services, or if no such agreement exists, VISUAL 's then
current Service Provider Standard Pricing Schedule prices or other prices
agreed upon by the parties. If the Equipment, Software, Parts, or Services is
not offered on VISUAL 's then current price Service Provider Standard Pricing
Schedule or if the parties fail to agree on prices, such Equipment, Software,
Parts, or Services shall be made available to AT&T at reasonable prices for
said Equipment, Software, Parts, or Services at the time for delivery.
DEFAULT
If VISUAL shall be in material breach or default of any of the provisions of
this Agreement and the breach or default shall continue for a period of THIRTY
(30) days after AT&T gives written notice to VISUAL, then in addition to all
other rights and remedies which AT&T may have at law or equity or otherwise,
AT&T shall have the right to cancel this Agreement without any charge to, or
obligation or liability of, AT&T. If AT&T shall be in material breach or
default of any of the provisions of this Agreement and the breach or default
shall continue for a period of THIRTY (30) days after VISUAL gives written
notice to AT&T, then in addition to all other rights and remedies which
VISUAL may have at law or equity or otherwise, VISUAL shall have the right to
cancel this Agreement without any charge to, or obligation or liability of,
VISUAL .
DISCONTINUANCE OF MANUFACTURE
VISUAL shall provide AT&T at least six (6) months prior written notice of its
intent to discontinue manufacture ("MD") of any Equipment or Software covered
by this Agreement. VISUAL shall continue to provide spare parts as well as
repair and/or refurbish the MD Equipment or Software for a period of five
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 22
pg 22
(5) years from the date of VISUAL's written notice to AT&T of discontinuance
of manufacture. In addition, AT&T shall have the opportunity to make an
end-of-life buy of such MD Equipment or Software for a period of up to six (6)
months from the date of VISUAL 's MD notice. VISUAL shall fill all such
end-of-life buy Orders placed by AT&T in accordance with its then-current lead
times and manufacturing capabilities. Any changes to quantities in such Orders
must be mutually agreed to by the parties.
<PAGE> 23
pg 23
DOCUMENTATION
1) VISUAL agrees to furnish at no charge, with each and every shipment to
AT&T, standard user documentation necessary and required for AT&T to install,
operate and maintain the Equipment, Software and Materials purchased hereunder
in paper or electronic form as requested by AT&T; and to update documentation
to reflect changes and updates in Equipment, Software and Materials. AT&T may
reproduce such documentation for internal use, provided such reproduced
documentation contains all appropriate Copyrights and Trademarks of VISUAL .
Such Equipment and Materials will include paper documentation for installation.
VISUAL will provide AT&T with electronic formatting documentation containing
these Copyrights and Trademarks.
2) VISUAL agrees to provide current supporting documentation, for use by AT&T
in responding to RFP's, regarding the capabilities, interfaces, power, heat,
foot print, Mean Time Between Failures, and management capabilities of VISUAL's
Equipment, Software and Materials covered under this Agreement.
EMERGENCY
VISUAL shall use commercially resonable efforts to assist AT&T in obtaining
components and equipment compatible with the Equipment in an emergency.
FORCE MAJEURE
Neither party shall be held responsible for any delay or failure in performance
of any part of an Order to the extent the delay or failure is caused by fire,
flood, explosion, war, strike, embargo, government requirement, civil or
military authority, act of God, or other similar cause beyond its control and
without the fault or negligence of the delayed or nonperforming party or its
subcontractors ("Force Majeure Conditions"). Notwithstanding the foregoing,
VISUAL's liability for loss or damage to AT&T's Equipment, Software, Materials
or other tangible article in VISUAL's possession or control shall not be
modified by this clause. If any Force Majeure Condition occurs, the party
delayed or unable to perform shall give immediate notice to the other party,
stating the nature of the Force Majeure Condition and any action being taken to
avoid or minimize its effect, and the party affected by the other's delay or
inability to perform may elect to:
1. suspend this Agreement or the Order for the duration of the Force Majeure
Condition, and
a. at the affected party's option, as applicable:
i. obtain a Lease elsewhere for equipment to perform the
functions of the Equipment leased under the Order and
deduct from the duration of the Order the time for which
such other Lease was obtained, or
ii. obtain a license elsewhere for Software to perform the
functions of the Software licensed under the Order and
deduct from the duration of the Order the time for which
such other license was obtained, or
iii. buy or sell elsewhere Equipment, Materials or Services to
be bought or sold under an Order and deduct from any
commitment the Equipment, Materials or Services bought
or sold or for which commitments have been made
elsewhere, and
b. resume performance under the Order for the remainder of the
duration (once the Force Majeure Condition ceases) with an
option in the affected party to extend such duration up to
the length of time the Force Majeure Condition endured and/or,
<PAGE> 24
pg 24
2. terminate the Order (at no charge) as to any Equipment, Software or
Materials which have not been shipped or as to any Services which has not
been commenced, when the delay or nonperformance continues for a period of
at least twenty five (25) days
Unless written notice is given within twenty five ( 25 ) days after the
affected party is notified of the Force Majeure Condition, paragraph 1 of this
section shall be deemed selected.
FUTURE IMPROVEMENTS
At least forty-five (45) days before VISUAL publicly announces improvements,
enhancements or new features, VISUAL shall advise AT&T of such features and
advantages.
BENEFITS
VISUAL assures AT&T that all prices, terms, warranties and benefits granted to
AT&T for like products and like quantities by VISUAL for the Equipment,
Software, Materials, Services and improvements, are at least as favorable as
those now offered by VISUAL to any of its commercial customers. If, during the
duration of this Agreement, VISUAL should enter into a supply arrangement with
any other customer for the Equipment, Software, and Services provided
hereunder with a third party upon terms that, with respect to purchase prices
or other items which could provide a change in relative benefits, are more
favorable to such third party than the overall terms contained herein, then
VISUAL agrees to amend this Agreement to provide AT&T with the same or
comparable overall terms.
GOVERNMENT CONTRACT PROVISIONS
The following provisions regarding equal opportunity, and all applicable laws,
rules, regulations and executive orders specifically related thereto,
including applicable provisions and clauses from the Federal Acquisition
Regulation and all supplements thereto, are incorporated in this Agreement as
they apply to Services performed under specific U.S. Government contracts: 41
CFR 60-1.4, Equal Opportunity; 41 CFR 60-1.7, Reports and Other Required
Information; 41 CFR 60-1.8, Segregated Facilities; 41 CFR 60-250.4, Affirmative
Action for Disabled Veterans and Veterans of the Vietnam Era (if in excess of
$10,000); and 41 CFR 60-741.4, Affirmative Action for Disabled Workers (if in
excess of $2,500), wherein "contractor" and "subcontractor" mean "VISUAL".
In addition, Orders placed under this Agreement containing a notation that the
Equipment, Software, Services or Materials are intended for use under U.S.
Government contracts shall be subject to the other U.S. Government provisions
printed, typed or written thereon, or on the reverse side thereof, or in
attachments thereto.
HEAVY METALS IN PACKAGING
VISUAL warrants to AT&T that no lead, cadmium, mercury or hexavalent chromium
have been intentionally added to any packaging or packaging component (as
defined under applicable laws) to be provided to AT&T under this Agreement.
VISUAL further warrants to AT&T that the sum of the concentration levels of
lead, cadmium, mercury and hexavalent chromium in the package or packaging
component provided to AT&T under this Agreement or an Order does not exceed one
hundred (100) parts per million. Upon request, VISUAL shall provide to AT&T
Certificates of Compliance certifying that the packaging and/or packaging
components provided under this Agreement are in compliance with the
requirements set forth above in this clause. VISUAL agrees to indemnify,
defend (at AT&T's request), and hold harmless Indemnities (all hereinafter
referred to in this clause as "AT&T") from and against any
<PAGE> 25
pg 25
losses, damages, claims, demands, suits, liabilities, fines, penalties, and
expenses (including reasonable attorneys' fees) that arise out of or result
from AT&T's good faith reliance upon said warranties or any certifications of
compliance.
IDENTIFICATION
VISUAL shall not, without AT&T's prior written consent, engage in advertising,
promotion or publicity related to this Agreement, or make public use of any
Identification in any circumstances related to this Agreement. VISUAL shall
remove or obliterate any Identification prior to any use or disposition of any
Equipment, Software or Materials rejected or not purchased, licensed or leased
by AT&T, and failing to do so, shall indemnify, defend (at AT&T's request) and
hold harmless Indemnities (all hereinafter referred to in this clause as
"AT&T") from and against any losses, damages, claims, demands, suits,
liabilities, fines, penalties and expenses (including reasonable attorneys'
fees) arising out of VISUAL's failure to so remove or obliterate.
IMPLEADER
VISUAL shall not implead or bring any action against AT&T or its customers or
the employees of AT&T or its customers based on any claim by a person for
personal injury or death to an employee of AT&T or its customers occurring in
the course or scope of employment that arises out of Equipment, Software,
Services or Materials furnished under this Agreement or an Order.
INDEMNITY
All persons furnished by VISUAL shall be considered solely VISUAL's employees
or agents, and VISUAL shall be responsible for payment of all unemployment,
social security and other payroll taxes, including contributions when required
by law. VISUAL shall indemnify, defend (at AT&T's request), and hold
harmless Indemnities from and against any losses, damages, claims, demands,
suits, liabilities, fines, penalties, and expenses (including reasonable
attorneys' fees) that do, or allegedly do, arise out of or result from:
1. injuries or death to persons or damage to property, including
theft, in any way arising out of, occasioned by, caused or alleged to have
been caused by the performance of the Services performed by VISUAL or persons
furnished by VISUAL ,
2. assertions under Workers' Compensation or similar acts made by
persons furnished by VISUAL or by any subcontractor, or by reason of any
injuries to persons for which AT&T would be responsible under Workers'
Compensation or similar acts if the persons were employed by AT&T,
3. any failure on the part of VISUAL to satisfy all claims
against it for labor, equipment, materials, intangible items and other
obligations relating directly or indirectly to the performance of the Services;
or
4. any failure by VISUAL to perform VISUAL's obligations under
this clause or the Insurance clause.
VISUAL shall defend Indemnities, at AT&T's request, against any of these
claims, demands or suits. AT&T shall notify VISUAL within a reasonable time
of any written claims or demands against AT&T for which VISUAL is responsible
under this clause.
<PAGE> 26
pg 26
INFRINGEMENT
VISUAL shall indemnify, and hold harmless Indemnities from and against any
losses, damages, liabilities, fines, penalties, and expenses (including
reasonable attorneys' fees) that arise out of or result from any proved claim
(1) of infringement of any patent, copyright, trademark or trade secret right,
or other intellectual property right, private right, or any other proprietary
or personal interest, and (2) related by circumstances to the existence of
this Agreement or an Order or performance under or in contemplation of either
of them ("Infringement Claim"). However, if the Infringement Claim arises
solely from VISUAL's adherence to AT&T's written instruction regarding
Services or tangible or intangible goods provided by VISUAL ("Items") and if
the Items are not (1) commercial items available on the open market or the same
as such items, or (2) items of VISUAL's designated origin, design or
selection, AT&T shall indemnify VISUAL. AT&T or VISUAL (at AT&T's request)
shall defend or settle, at its own expense, any demand, action or suit on any
Infringement Claim for which it is the indemnitor under the preceding
provisions and shall timely notify the other of any assertion against it of
any Infringement Claim and shall cooperate in good faith with the other to
facilitate the defense of any such claim.
INSPECTION
AT&T reserves the right to witness testing procedures and inspect Equipment,
Software and Materials furnished under this Agreement or an Order. AT&T shall
also have access to VISUAL's facilities for Quality System Reviews. If such
inspection at VISUAL's manufacturing facility is requested by AT&T, VISUAL's
shall notify AT&T when Equipment, Software or Materials are ready for
inspection. Arrangements will be mutually agreed upon between VISUAL's and
for inspection prior to shipment. VISUAL's shall make available to AT&T, on a
mutually-agreed to scheduled basis, without charge, its current production
testing facilities and personnel as may be requested by AT&T to inspect
Equipment, Software and Materials to determine whether they meet the
requirements of the Specifications.
INSURANCE
VISUAL shall maintain and cause VISUAL's subcontractors to maintain during the
duration of this Agreement all of the following:
1. Workers' Compensation insurance as prescribed by the law of the state or
nation in which the Services is performed;
2. Employer's liability insurance with limits of at least $500,000 for each
occurrence;
3. comprehensive automobile liability insurance if the use of motor vehicles
is required, with limits of at least $1,000,000 combined single limit for
bodily injury and property damage for each occurrence;
4. Commercial General Liability ("CGL") insurance, including Products Blanket
Contractual Liability and Broad Form Property damage, with limits of at
least $1,000,000 combined single limit for bodily injury and property
damage for each occurrence;
5. if the furnishing to AT&T (by sale or otherwise) of Equipment, products or
Materials is involved, CGL insurance endorsed to include products
liability and completed operations coverage in the amount of $5,000,000
for each occurrence; and
6. Errors and Omissions insurance in the amount of at least $1,000,000 per
claim with an annual aggregate of at least $3,000,000 inclusive of legal
defense costs.
<PAGE> 27
pg 27
VISUAL 's insurer(s) and anyone claiming by, through, under or in VISUAL 's
behalf shall have no claim, right of action or right of subrogation against
AT&T and its customers based on any loss or liability insured against under
the foregoing insurance. VISUAL and VISUAL's subcontractors shall furnish
prior to the start of Services certificates or adequate proof of the foregoing
insurance including, if specifically requested by AT&T, copies of the
endorsements and insurance policies. AT&T shall be notified in writing at
least thirty (30) days prior to cancellation of or any change in the policy.
INVOICES AND TERMS OF PAYMENT
Invoices for the charges specified in an Order shall be submitted by VISUAL to
the address specified in the Order. Unless payment terms more favorable to
AT&T are stated on VISUAL 's invoices and AT&T elects to pay on such terms,
undisputed invoices for purchased Equipment, Materials, annual Maintenance
Services or licensed Software shall be payable no later than the *** day after
(a) the date of receipt of undisputed invoices or (b) the date of acceptance of
the Equipment or Software or Materials or delivery of Materials at AT&T's
dock, whichever is later.
VISUAL shall (1) render proper original invoices showing Order number, through
routing, weight and unit price per the denomination specified in the Order,
(2) render separate invoices for each shipment and (3) forward bill of lading
and shipping notices with invoice. If prepayment of transportation charges is
authorized, VISUAL shall include the transportation charges from the FOB point
to the destination as a separate item on the invoice stating the name of the
carrier used.
ISO CERTIFICATION
AT&T recognizes that VISUAL intends to be ISO 9000 registered. Therefore,
under this Agreement, VISUAL shall have the portion of VISUAL 's quality system
that applies to the Equipment, Materials, and Services covered under this
Agreement registered to the then current and applicable ISO 9000 Series
standards (which may have a different nomenclature in applicable other
countries). Such registration must be made by an accredited third party
registrar(s).
VISUAL warrants that VISUAL is in the process of obtaining ISO certification
and shall receive such certification no later than March 31, 1998.
VISUAL shall provide AT&T's representative (if requested) with a copy of the
appropriate certificates of registration issued by such third party
registrar(s). If VISUAL fails, for any reason, to obtain or maintain or
provide to AT&T certificates of registration as set forth above, or fails to
become certified in countries requested by AT&T, then AT&T shall have the
right, and without any cost to or obligation or liability of AT&T, to terminate
this Agreement and any outstanding orders placed under this Agreement.
LABOR RELATIONS
VISUAL shall be responsible for its labor relations with any labor organization
represented among its employees and shall be responsible for adjusting all
disputes between itself and its employees or any union representing such
employees. The provisions of this paragraph shall be extended by VISUAL to all
subcontractors hereunder. VISUAL shall immediately notify AT&T if VISUAL has
knowledge of any actual or potential labor dispute which is delaying or could
delay the timely performance of this Agreement.
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 28
pg 28
MEDIATION
If a dispute arises out of or relates to this Agreement, or its breach, and the
parties have not been successful in resolving the dispute through direct
negotiation, the parties shall attempt to resolve the dispute through non-
binding mediation by submitting the dispute to a sole mediator selected by the
parties or, at the option of a party, to mediation by the American Arbitration
Association ("AAA"). Each party shall bear its own expenses and an equal
share of the expenses of the mediator and the fees of the AAA. The parties,
their representatives, other participants and the mediator shall hold in
confidence the existence, content and result of the mediation. If the dispute
is not resolved by the mediation, the parties shall have the right to resort to
any remedies permitted by law. Defenses based on the passage of time are
suspended upon submitting the dispute to the mediator and during the mediation.
The time period during the mediation shall be disregarded in calculating such
defenses. Nothing in this clause shall be construed to preclude any party
from seeking injunctive relief in order to protect its rights during
mediation. A request by a party to a court for injunctive relief shall not be
deemed a waiver of the obligation to mediate.
NON-EXCLUSIVE MARKET RIGHTS
This Agreement neither grants to VISUAL an exclusive right or privilege to
sell, license or Lease to AT&T any or all Equipment, Software, Services or
Materials described in this Agreement which AT&T may require, nor requires the
purchase, license or lease of any Equipment, Software, Services or Materials
from VISUAL by AT&T. AT&T may contract with other manufacturers for the
acquisition of comparable Equipment, Software, Services or Materials.
Purchases, licenses or leases by AT&T under this Agreement shall be initiated
by the placement of an Order by AT&T and the Order shall not restrict the
right of AT&T to cease acquisition nor require AT&T to continue any level of
acquisition from VISUAL .
NOTICES
Any notice, demand or other communication (other than an Order) required, or
which may be given, under this Agreement shall, unless specifically otherwise
provided in this Agreement, be in writing and shall be given or made by
overnight courier service, confirmed facsimile, registered or certified mail
(return receipt) or other media which provides the sender with written record
of delivery, and shall be addressed to the respective parties as follows:
To VISUAL : VISUAL
2092 Gaither Rd.
Rockville, Md. 20850
Mr. Peter Minihane
Fax ( 301) 296-2308
To AT&T: AT&T Corp.
***
10 Independence Boulevard
Warren, NJ 07059
***
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 29
pg 29
The notice, demand or other communication (other than an Order) shall be deemed
to have been given or made when picked up by the delivery services mentioned
above. The above addresses may be changed at any time by giving thirty (30)
days prior written notice.
ORDER TERMINATION
An Order of standard Equipment may be terminated by AT&T, at no charge, at any
time prior to shipment from VISUAL's plant or commencement of Services.
Orders for non-standard Equipment may be terminated, at no charge, *** days in
advance of required ship date. In the event that AT&T desires to cancel
non-standard Equipment in less than *** days from required ship date, Visual
agrees to good faith efforts to accept that cancellation at no charge to AT&T.
AT&T shall notify VISUAL in writing of any such termination for either standard
or non-standard Equipment.
At any time, AT&T may terminate individual Orders for Maintenance Services, at
no charge, provided AT&T gives at least *** days prior written notice to
VISUAL. If the charges for a terminated Order were paid annually in advance,
VISUAL shall promptly refund to AT&T the unused prorata portion of the charges.
OZONE DEPLETING SUBSTANCES
VISUAL warrants and certifies that all Equipment, Software, and Materials,
including packaging and packaging components, provided to AT&T under this
Agreement have been accurately labeled, in accordance with the requirements of
40 CFR Part 82 entitled "Protection of Stratospheric Ozone, Subpart E - The
labeling of Products Using Ozone Depleting Substances." VISUAL agrees to
indemnify, defend and hold harmless Indemnities from and against any losses,
damages, claims, demands, suits, liabilities, fines, penalties, and expenses
(including reasonable attorneys' fees) that may be sustained by reason of
VISUAL 's non-compliance with such applicable law or the terms of this
warranty and certification.
QUARTERLY REPORTS
VISUAL shall render quarterly reports covering Orders placed under this
Agreement for Equipment, Software, Services and Materials as early in the
subsequent quarter as possible. This report shall be submitted in a mutually
agreed upon format.
RELEASES VOID
Neither party shall require (i) waivers or releases of any personal rights, or
(ii) execution of documents which conflict with the provisions of this
Agreement, from employees, representatives or customers of the other in
connection with visits to its premises, and no such releases, waivers, or
documents shall be pleaded by them or third persons in any action or
proceeding.
- ----------------------------------
*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
<PAGE> 30
pg 30
RIGHT OF ENTRY AND PLANT RULES
Each party shall have the right to enter the premises of the other party during
normal business hours with respect to the performance of this Agreement,
subject to all plant rules and regulations, security regulations and
procedures and U.S. Government clearance requirements, if applicable. VISUAL
shall become acquainted with conditions governing the delivery, receipt and
storage of Materials and Equipment at the site of the Services so that VISUAL
will not interfere with AT&T's operations. Storage space will not necessarily
be provided adjacent to the site of the Services. Therefore, VISUAL shall be
expected to select, uncrate, remove and transport Materials and Equipment from
the storage areas provided. AT&T is not responsible for the safekeeping of
VISUAL 's property on AT&T's premises. VISUAL shall not stop, delay or
interfere with AT&T's work schedule without the prior approval of AT&T's
Representative. VISUAL shall provide and maintain sufficient covering and
take any other precautions necessary to protect AT&T's stock, equipment and
other property from damage due to VISUAL's performance of the Services.
SEVERABILITY
If any of the provisions of this Agreement shall be invalid or unenforceable,
the invalidity or unenforceability shall not invalidate or render
unenforceable the entire Agreement or Order, but rather the entire Agreement or
Order shall be construed as if not containing the particular invalid or
unenforceable provision or provisions, and the rights and obligations of the
parties shall be construed and enforced accordingly.
SHIPPING
VISUAL shall do all of the following:
1. Ship the Equipment, Software and Materials to the site designated in an
Order by the date set forth in the Order in accordance with specific
shipping instructions,
2. Place the Order number on all subordinate documents,
3. Enclose a packing memorandum with each shipment, and when more than one
(1) package is shipped, identify the one containing the memorandum,
4. Mark the Order number on all packages and shipping papers, and.
5. Furnish adequate protective packing at no additional charge.
If VISUAL does not comply with the F.O.B. terms of an Order or with AT&T's
shipping or routing instructions, VISUAL authorizes AT&T to deduct from any
invoice any increased costs incurred by AT&T as a result of VISUAL 's
noncompliance.
STANDARDS
Employees of VISUAL with records of criminal convictions, other than minor
traffic violations, shall not be assigned to AT&T's premises until a detailed
statement of the circumstances is furnished to AT&T for its review, and AT&T
has given its written approval of such assignment. In fulfilling VISUAL 's
obligations
<PAGE> 31
pg 31
under this clause, VISUAL shall comply fully with all laws relating to the
making of investigative reports and the disclosure of information contained
therein.
VISUAL 'S INFORMATION
VISUAL shall not provide nor have they provided in contemplation of, this
Agreement any information or medium, unless VISUAL has the right to do so, and
VISUAL shall not view any of the information as confidential or proprietary.
Further, there are no limitations on the Use of Software except as otherwise
agreed to in the OPERATING SYSTEM SOFTWARE clause in Article II and in the
LICENSE GRANT and INTELLECTUAL PROPERTY RIGHTS clauses in Article III.
Notwithstanding the above, AT&T will protect Software received from VISUAL
with the same degree of care that AT&T normally uses to protect its own
Software that it does not wish to become public knowledge, and AT&T will advise
any recipient of such Software of that obligation.
SURVIVAL OF OBLIGATIONS
The obligations of the parties under this Agreement, which by their nature
would continue beyond the termination, cancellation or expiration of this
Agreement, including, by way of illustration only and not limitation, those in
the COMPLIANCE WITH LAWS, IDENTIFICATION, IMPLEADER, INDEMNITY, INFRINGEMENT,
INSURANCE, RELEASES VOID, USE OF INFORMATION and WARRANTY clauses, shall
survive termination, cancellation or expiration of this Agreement.
TAXES
AT&T shall reimburse VISUAL for only State and local sales and use taxes, as
applicable, with respect to transactions under this Agreement or an Order
unless AT&T advises Visual that an exemption applies. Taxes payable by AT&T
shall be billed as separate items on VISUAL's invoices and shall not be
included in VISUAL's prices. AT&T shall have the right to have VISUAL
contest any such taxes that AT&T deems improperly levied at AT&T's expense and
subject to AT&T's direction and control.
TIMELY PERFORMANCE
If VISUAL has knowledge that anything prevents or threatens to prevent the
timely performance of the Services under this Agreement, VISUAL shall
immediately notify AT&T's Representative thereof and include all relevant
information concerning the delay or potential delay.
TRAINING AND TECHNICAL SERVICE
VISUAL shall provide, (a) assistance and advice, as may be reasonably
requested by AT&T necessary to assist in the use of the Equipment and Software
and (b) any training as it normally provides without charge to users of the
Equipment or Software.
<PAGE> 32
pg 32
TOOLS AND EQUIPMENT
Unless otherwise specifically provided in an Order, VISUAL shall be responsible
for providing all labor, tools and equipment ("Tools") for performance of an
Order. If VISUAL actually uses any Tools owned or rented by AT&T or its
customers, VISUAL acknowledges that VISUAL accepts the Tools "as is, where is"
and that neither AT&T nor its customers have any responsibility for the
condition or state of repair of the Tools and that VISUAL shall have risk of
loss and damage to such Tools. VISUAL shall not remove the Tools from AT&T's
or its customers' premises and shall return the Tools to AT&T or its customers
upon completion of use, or at such earlier time as AT&T or its customers may
request, in the same condition as when received by VISUAL, reasonable wear
and tear excepted.
USE OF INFORMATION
VISUAL shall view as AT&T's property, any Information or Medium, however
conveyed, provided to, or acquired by VISUAL ,under or in contemplation of
this Agreement or an Order. VISUAL shall, at no charge to AT&T, and as AT&T
directs, destroy or surrender to AT&T promptly at its request any such Medium
or any copy of such Information. VISUAL shall keep Information confidential
and use it only in performing under this Agreement or an Order and obligate its
employees, subcontractors and others working for it to do so, provided that
the foregoing shall not apply to Information previously known to VISUAL free
of obligation, or made public through no fault imputable to VISUAL .
VARIATION OF QUANTITY
AT&T assumes no liability for Equipment, Software, or Materials produced,
processed or shipped in excess of the amount specified in any Order placed
with VISUAL.
WAIVER
The failure of either party at any time to enforce any right or remedy
available to it under this Agreement or otherwise with respect to any breach
or failure by the other party shall not be construed to be a waiver of that
right or remedy with respect to any other breach or failure by the other party.
WORK DONE BY OTHERS
If any part of the Services performed by VISUAL is dependent upon Services done
by others, VISUAL shall inspect and promptly report to AT&T any defect that
renders the other work unsuitable for VISUAL's proper performance. VISUAL's
silence shall constitute approval of the other work as fit, proper and suitable
for VISUAL's performance of the Services or other work.
ENTIRE AGREEMENT
This Agreement shall incorporate the typed or written provisions on AT&T's
Orders issued pursuant to this Agreement and shall constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and the Order(s) and shall not be modified or rescinded, except by a
writing signed by duly authorized representatives of VISUAL and AT&T.
<PAGE> 33
pg 33
The provisions of this Agreement shall apply to:
1. any Orders issued pursuant to this Agreement, and
2. any Services, Material, Equipment, intellectual property
rights and Software or other Information furnished under, in
performance of, pursuant to, or in contemplation of, this
Agreement.
Printed provisions on the reverse side of AT&T's Orders (except as specified
otherwise in this Agreement) and all provisions on VISUAL's forms shall be
deemed deleted. Additional or different provisions inserted in this Agreement
by VISUAL, or deletions thereto, whether by alterations, addenda, or
otherwise, shall be of no force and effect, unless expressly consented to by
AT&T in writing. Estimates or forecasts furnished by AT&T shall not
constitute commitments. The provisions of this Agreement supersede all
contemporaneous oral agreements and all prior oral and written quotations,
communications, agreements and understandings of the parties with respect to
the subject matter of this Agreement.
APPENDICES
The following Appendices are attached and by this reference are made a part of
this Agreement:
EXHIBIT 1 SPECIFICATIONS
EXHIBIT 2 SERVICE LEVEL AGREEMENT
EXHIBIT 3 AT&T ANNOUNCEMENT PLAN FOR VISUAL NETWORKS
EXHIBIT 4 VISUAL NETWORKS SERVICE PROVIDER STANDARD PRICING SCHEDULE
AGREED:
VISUAL NETWORKS, INC. AT&T CORP.
By: /s/ Scott Stouffer By: /s/ Diana Jones
------------------------- ------------------------------
(signed) (signed)
Name: Scott Stouffer Name: Diana Jones
------------------------- --------------------------
(printed) (printed)
Title: President Title: Director
------------------------- --------------------------
Date: December 3, 1997 Date: December 2, 1997
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