<PAGE> 1
AMENDMENT NO. 1 TO FORM 10-Q FOR PERIOD ENDED SEPTEMBER 30, 1998
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
Amendment No. 1
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDING SEPTEMBER 30, 1998
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO ______
Commission File Number 0-24457
SOFTWARE.NET CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 94-3212136
(State of Incorporation) (IRS Employer Identification Number)
1195 West Fremont Avenue, Sunnyvale, California 94087
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's Telephone Number, including Area Code: (408) 616-4200
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of each of the issuer's classes of common stock
as of September 30, 1998:
<TABLE>
<S> <C>
Class Number of Shares
Common Stock, par value $0.001 27,334,744
</TABLE>
<PAGE> 2
The Registrant hereby amends the disclosure contained in Part I, Items 1
and 2 and Part II, Item 6 of the Registrant's Quarterly Report on Form 10-Q for
the period ended September 30, 1998 to amend certain information disclosed in
Part I, Items 1 and 2 and to add information in Part II, Item 6. In accordance
with Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as
amended, the complete text of such items, as amended, follows.
PART I. Financial Information
Item 1. Financial Statements
SOFTWARE.NET CORPORATION
(also known as Beyond.com)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------- ------------------
Sept 30, Sept 30, Sept 30, Sept 30,
1998 1997 1998 1997
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net revenues $9,742 $4,825 $23,511 $11,417
Cost of revenues 8,281 4,295 19,943 9,970
--------- --------- --------- --------
Gross Profit 1,461 530 3,568 1,447
Operating expenses:
Research and development 1,287 302 3,009 641
Sales and marketing 8,048 442 14,269 1,039
General and administrative 1,407 265 3,220 676
--------- --------- --------- --------
10,743 1,009 20,498 2,356
--------- --------- --------- --------
Operating loss (9,282) (479) (16,930) (909)
Interest income, net 384 24 241 96
--------- --------- --------- --------
Loss from continuing operations (8,898) (455) (16,689) (813)
Loss from discontinued operations - (1,036) - (2,074)
--------- --------- --------- --------
Net loss ($8,898) ($1,491) ($16,689) ($2,887)
Accretion of premium on redemption
of redeemable convertible preferred
stock in excess of purchase price - (25) (51) (76)
Net loss applicable to --------- --------- --------- --------
common shareholders ($8,898) ($1,516) ($16,740) ($2,963)
========= ========= ========= ========
Basic and diluted net loss
per share from continued operations ($0.33) ($0.05) ($1.04) ($0.10)
Basic and diluted net loss
per share from discontinued operations $ - ($0.12) - ($0.23)
--------- --------- --------- --------
Basic and diluted net loss
per share $ (0.33) ($0.17) ($1.04) ($0.33)
========= ========= ========= ========
Weighted average shares of common
stock outstanding used in computing
basic and diluted net loss per share 27,300 9,000 16,089 9,000
========= ========= ========= ========
Pro forma basic and diluted net loss
per share from continued operations ($0.72)
Pro forma basic and diluted net loss
per share from discontinued operations -
---------
Pro forma basic and diluted net loss
per share ($0.72)
Number of shares used in pro forma
basic and diluted net loss per share 23,213
=========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 3
software.net Corporation
(also known as Beyond.com)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
Sept 30, December 31,
1998 1997
--------- -----------
(unaudited) (Note)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $33,199 $2,571
Accounts receivable less allowances of
$1,141 at September 30, 1998 and
$400 at December 31, 1997 9,097 1,181
Prepaid partnership agreements 6,954 516
Cost of deferred revenue 3,610 4,938
--------- ---------
Total current assets 52,860 9,206
Property and equipment, net 2,053 380
Other non-current assets 1,343 -
Intangible assets 932 -
--------- ---------
Total assets $57,188 $9,586
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Note payable $5,002 $ -
Accounts payable 6,723 2,256
Other accrued liabilities 2,865 270
Current obligations under capital leases - 18
Deferred revenue 3,991 5,569
--------- ---------
Total current liabilities 18,581 8,113
Note payable to stockholder and director - 60
Non-current obligations under capital leases - 39
Commitments
Redeemable convertible preferred stock - 12,565
Stockholders' equity: (net capital deficiency)
Common stock 69,286 47
Deferred compensation (2,701) -
Accumulated deficit (27,978) (11,238)
--------- ---------
Total stockholders' equity
(net capital deficiency) 38,607 (11,191)
--------- ---------
Total liabilities and stockholders'
equity (net capital deficiency) $57,188 $9,586
========= =========
</TABLE>
Note: The balance sheet at December 31, 1997 has been derived from the
audited financial statements at that date.
See notes to consolidated financial statements.
<PAGE> 4
software.net Corporation
(also known as Beyond.com)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------
Sept 30, Sept 30,
1998 1997
--------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ($16,689) $(2,887)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 419 47
Amortization of deferred compensation 1,090 -
Net loss of discontinued operations - 2,074
Changes in operating assets and liabilities:
Accounts receivable (7,916) (2,102)
Prepaid expenses and deposits (7,781) (491)
Cost of deferred revenue 1,328 (6,548)
Accounts payable 4,467 1,857
Other accrued liabilities 2,797 608
Deferred revenue (1,578) 7,124
Cash used in discontinued operations - 4
--------- --------
Net cash used in operating activities (23,863) (314)
INVESTING ACTIVITIES
Purchases of property and equipment (1,949) (296)
Cash used in discontinued operations - (2,300)
--------- --------
Net cash used in investing activities (1,949) (2,596)
FINANCING ACTIVITIES
Proceeds from issuance of note payable 4,800 -
Repayment of note payable to related party (60) -
Repayment of capital lease obligations (57) (7)
Proceeds from sale of redeemable convertible
preferred stock 2,924 5,964
Proceeds from sale of common stock 48,833 -
--------- --------
Net cash provided by financing activities 56,440 5,957
--------- --------
Net increase in cash and equivalents 30,628 3,047
Cash and cash equivalents at beginning of period 2,571 3,737
--------- --------
Cash and cash equivalents at end of period $33,199 $6,784
========= ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
software.net Corporation
(also known as Beyond.com)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1998
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. In the
opinion of Management, all adjustments (consisting primarily of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three- and nine-month periods ended September 30, 1998
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's prospectus
dated June 17, 1998 comprising part of the Company's Registration Statement on
Form S-1 filed with the Securities and Exchange Commission.
In August 1998, the Company changed its name to Beyond.com subject to
stockholder approval.
The Company completed an initial public offering of its common stock on
June 22, 1998 (the "IPO"). A total of 5,750,000 shares of common stock was sold
by the Company to the public at a price of $9.00 per share. The underwriting
discount was $0.63 per share.
Pursuant to a Common Stock and Warrants Subscription Agreement entered into
in March 1998 and as a result of the Company's IPO, the Company issued a warrant
(the "IPO Warrant") and sold $2,000,000 in common stock to America Online,
Inc.("AOL") at $8.37 per share. The IPO Warrant was issued for the purchase of
358,422 shares of common stock at an exercise price per share of $8.37 and such
shares are non-forfeitable. The IPO Warrant vests in increments of 1/36 per
month period commencing March 1, 1998. The Company determined the value of the
IPO Warrant to be approximately $1,075,000 in total and recorded this amount as
additional purchase price for the marketing rights under the marketing
agreement. The value of the Warrant is being amortized on a consistent basis
with the marketing rights associated with the marketing agreement.
Additionally, at the time of the IPO each share of the Company's redeemable
convertible preferred stock was converted into shares of the Company's common
stock as specified in the Company's Certificate of Incorporation. Each
outstanding share of Series A, B, C, and D redeemable convertible preferred
<PAGE> 6
stock was converted into 2.00, 2.00, 1.00, and 1.00 shares of common stock,
respectively.
On April 4, 1998, the Company's Board of Directors and stockholders adopted
the 1998 Stock Option Plan and reserved an aggregate of 2,000,000 shares of
Common Stock for grants of stock options under such plan. In connection with
certain stock options granted in the nine months ended September 30, 1998, the
Company recorded deferred compensation for the estimated difference between the
exercise price of the options and the deemed fair value of $3.8 million which is
being amortized over the four year vesting period of the options.
In May 1998, the Company repaid CyberSource Corporation $400,000 plus
accrued interest for a loan memorialized in a promissory note issued by the
Company to CyberSource bearing interest at a rate of 5.32% compounded
semi-annually.
The Company entered into a credit agreement (the "Credit Agreement") with
Deutsche Bank AG ("Deutsche Bank")in May 1998. Pursuant to the Credit Agreement,
on May 21, 1998, Deutsche Bank issued a standby letter of credit to the Company
in the amount of $600,000 (the "Credit Facility") and loaned the Company an
additional $4,200,000 (the "Loan"). To date the Company has used the funds made
available under these arrangements to: (i) make a down-payment on a lease
entered into by the Company in May of 1998; (ii) meet rental obligations under
that lease; (iii) dispose of liabilities of the Company accrued in the ordinary
course of business; and (iv) support other working capital needs of the Company.
The Loan bears interest at a rate equal to the higher of (i) the daily Federal
Funds Rate plus 0.5% per annum or (ii) the Deutsche Bank daily prime lending
rate ("Base Rate"), plus 3.0%, per annum (approximately 11.25% at September 30,
1998). Interest is payable quarterly, in arrears, during the term of the Credit
Agreement. The Company is also required to pay a standby letter of credit fee
equal to a percentage of the face amount of the Credit Facility equal to the
Base Rate plus 3% less the LIBOR rate for a three-month loan. In conjunction
with the Credit Agreement, the Company is required to pay to Deutsche Bank (i)
an upfront fee of $120,000 and (ii) a credit line fee equal to 7.50% of the
amount by which the Company's gross revenues during the term of the Credit
Agreement exceed certain agreed upon thresholds, subject to maximum payments of
$337,500 in the aggregate. The Company has accrued approximately $200,000
related to the credit line fee as of September 30, 1998. All amounts borrowed
under the Credit Agreement are due on November 16, 1998. The Company is
presently in full compliance with the terms of the Credit Agreement, does not
anticipate a change to such status with respect to such terms, and intends to
pay all related interest and principal by November 16, 1998. In connection with
the Credit Agreement, Deutsche Bank has received a first priority lien on all of
the Company's assets, including intellectual property. Pursuant to the terms of
the Credit Agreement, the Company is subject to certain financial and
non-financial covenants including limitations on payments of dividends,
additional borrowings, acquisitions and disposition of assets and maintenance of
maximum operating cash flow deficiencies and minimum quick ratios.
The Company entered into a sublease in May 1998 for office space located in
Sunnyvale, California (the "Sublease").
<PAGE> 7
The Company intends that this location will serve as the Company's
principal administrative, engineering, marketing and customer service facility.
The Sublease term commenced as of July 1, 1998, and will end sixty-two (62)
months thereafter, unless sooner terminated. Under the terms of the Sublease,
the Company made a security deposit payment of $297,000 cash and issued an
irrevocable letter of credit for $595,000 prior to occupancy and commencement of
the Sublease term. Under the terms of the sublease, the Company is obligated to
make monthly payments of approximately $149,000 increasing to $174,000 over the
term of the Sublease. The Company does not have an option to renew or extend the
term of this Sublease.
The Company and Network Associates, a developer of electronic commerce
locations and publisher of certain products marketed under the McAfee and other
names, have entered into various agreements over the past fourteen (14) months
concerning the on-line sale of Software and the management of certain websites,
including the Co-Hosting Agreement and Web Site Services Agreement entered into
in September of 1998. Under these agreements, the Company acts as a reseller of
Network Associates' products, as co-host of certain internet sites developed by
Network Associates and as a provide of certain operational and management
services for Network Associates' Web site maintained at www.mcafeemall.com.
Pursuant to these agreements each of the Company and Network Associates is
obligated to the other for the payment of fees based on activities governed by a
particular agreement such as resales by the Company of Network Associates
products at the Company's Web site or the exclusive right to resell Network
Associates products at a co-hosted site. The Co-Hosting Agreement of September
1998 provides for substantial payments to Network Associates over the three year
term of the agreement. Termination of this relationship would likely have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the volume of online
traffic, customers or revenues obtained as a result of this relationship will
justify the Company's significant fixed financial obligations to Network
Associates, or to satisfy its contractual obligations necessary to prevent
termination of such agreements. The amounts paid under the Co-Hosting agreement
are being amortized to sales and marketing on a straight-line basis over the 3
year period of the contract.
Net loss per share is presented under Statement of Financial Accounting
Standards No. 128, "Earnings per Share" (FAS 128). Pro forma net loss per share
has been computed under FAS 128 and also gives effect to the conversion of
redeemable convertible preferred stock not included in net loss per share that
converted upon completion of the IPO.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS
130). FAS 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements and is effective for fiscal years beginning after December
15, 1997. The Company adopted FAS 130 in the nine months ended September 30,
1998. There was no impact to the Company as a result of the adoption of FAS 130,
as there is no difference between the Company's net loss reported and the
comprehensive net loss under FAS 130 for the periods presented.
Accounting standard SOP 98-1 was issued in first quarter, 1998, and is
effective in 1999. It requires capitalization of the development costs of
software to be used internally, e.g., for manufacturing or administrative
processes. The Company, which currently expenses such amounts as incurred,
expects to adopt the standard in the first quarter of 1999 for developmental
costs incurred in that quarter and thereafter. The Company does not expect the
adoption of SOP 98-1 to have a material impact on its financial condition or
results of operations.
From time to time, the Company has received, and may receive in the future,
notice of claims infringement of other parties' proprietary rights. In November
1998, the Company received a letter from a third party that appears to hold a
registered United States trademark for "A Better Way to Buy Software" asserting
that the Company's use of such phrase infringes such third party's trademark
rights in such phrase. The Company disputes the validity of this assertion.
However, there can be no assurance that such third party will not file a lawsuit
against the Company, which could subject the Company to injunctive relief or
money damages or that the Company will prevail in such litigations. In November
1998, the Company also received a letter from a third party asserting that the
Company's use of the name "Beyond.com" infringes the trademark and domain name
rights of such third party. The Company is monitoring this matter, the ultimate
outcome of which remains to be determined. The Company disputes the validity of
this assertion, however, there can be no assurance that the outcome of this
matter will not materially adversely affect the Company's ability to use the
"Beyond.com" mark, name or domain name, which would have a material adverse
effect on the Company's business, financial conditions or result of operations.
software.net Corporation
(also known as Beyond.com)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" are forward looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended. When used in
this report or elsewhere by management from time to time, the words "believes,"
"anticipates," "intends," plans," estimates," and similar expressions are
forward looking statements. Such forward looking statements contained herein are
based on current expectations and entail various risks and uncertainties that
could cause actual results to differ materially from those expressed in such
forward looking statements. For a more detailed discussion of these and other
business risks, see the Company's final prospectus filed pursuant to Rule 424 of
the Securities Act of 1933, as amended (File No. 333-51121) dated June
<PAGE> 8
17, 1998 comprising a part of the Company's Registration Statement on Form S-1,
as amended, filed with the Commission.
OVERVIEW
software.net Corporation (also known as Beyond.com, the "Company") is a
leading online reseller of commercial off-the-shelf computer software
("Software") to the consumer, small business, and large enterprise markets. The
Company operates its own Web site and delivers Software to its customers over
the Internet through electronic software delivery ("ESD") and through physical
delivery in shrink-wrap packages. In June 1998, the Company consummated the
initial public offering of its Common Stock. In August 1998, the Company began
doing business as "Beyond.com." A formal corporate name change will be submitted
for approval at a special meeting of stockholders to be held in December 1998.
Since inception the Company has experienced increasing net losses on an annual
basis. For the foreseeable future, the Company intends to expend significant
financial and management resources on brand development, marketing and
promotion, site content development, strategic relationships (such as those with
AOL, Netscape Communications Corporation ("Netscape"), Network Associates, Inc.
("NAI") (described below) and Excite, Inc. ("Excite")), and technology and
operating infrastructure, including ESD capabilities. Because the Company has
relatively low gross margins, achieving profitability given planned investment
levels depends upon the Company's ability to generate and sustain substantially
increased levels of net revenues. As a result, the Company expects to incur
additional losses and continued negative cash flow from operations for the
foreseeable future, and such losses are anticipated to increase significantly
from current levels as marketing and promotion costs increase, including new and
increased expenses incurred in expanding the Company's employee base and on mass
media advertising. There can be no assurance that the Company's revenues will
increase or even continue at their current level or that the Company will
achieve or maintain profitability or generate cash from operations in future
periods. The Company's current and future expense levels are to a large extent
fixed at a significant level primarily due to the strategic marketing
agreements, and these levels are based on its operating plans and estimates of
future revenues which depend on anticipated sales resulting from the strategic
marketing agreements with AOL, Excite and NAI and increased advertising and
government sales. Sales and operating results generally depend on the volume and
timing of orders received, which are difficult to forecast. Further, as noted
above, the Company expects these costs to increase above the fixed minimum. The
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall. Accordingly, any significant shortfall in
revenues would have an immediate adverse effect on the Company's business,
financial condition and results of operations. In view of the rapidly evolving
nature of the Company's business and its limited operating history in the online
Software reselling business, the Company is unable to accurately forecast its
revenues and believes that period-to-period comparisons of its operating results
are not necessarily meaningful and should not be relied upon as an indication of
future performance.
The Company expects to experience significant fluctuations in its future
quarterly operating results due to a variety of factors, many of which are
outside of the Company's control. Factors that may adversely affect the
Company's quarterly operating results include (i) the Company's ability to
retain existing customers, attract new customers and maintain customer
satisfaction; (ii) the announcement or introduction of new sites, services and
products by the Company and its competitors; (iii) price competition; (iv) the
<PAGE> 9
level of use of the Internet and online services and increasing consumer
acceptance of the Internet and other online services for the purchase of
consumer products such as those offered by the Company; (v) the Company's
ability to upgrade and develop its systems and infrastructure and attract new
personnel in a timely and effective manner; (vi) the level of traffic on the
Company's Web site; (vii) the termination of any strategic marketing alliances
such as those with AOL, Excite, Netscape and NAI pursuant to which the Company
has exposure to traffic on third party Web sites, or the termination of
contracts with major purchasers, particularly the United States government
agencies (the "U.S. government"); (viii) technical difficulties, system downtime
or Internet brownouts; (ix) the failure of Internet bandwidth to increase
significantly over time and/or an increase in the cost to consumers of
exploiting Internet bandwidth; (x) the amount and timing of operating costs and
capital expenditures relating to expansion of the Company's business, operations
and infrastructure; (xi) the number of popular Software titles introduced during
the period; (xii) certain government regulations; and (xiii) general economic
conditions and economic conditions specific to the Internet, online commerce and
the Software industry. The Company expects that it may experience seasonality in
its business, reflecting a combination of seasonal fluctuations in Internet
usage and traditional retail, governmental and corporate entity seasonal
spending patterns.
Gross margins may be impacted by a number of different factors, including
the mix of revenues from sales of shrink-wrap products versus revenues from ESD
product sales, the mix of Software products sold, the mix of revenues among
sales to government, corporate and consumer purchasers and the mix of revenues
from strategic partners such as AOL, Excite, Netscape and NAI and the Company's
Web site. The Company typically derives higher gross margins from advertising
and promotional revenues than from Software product sales. The Company typically
realizes higher gross margins on ESD Software product sales than on sales of
shrink-wrap Software products and lower gross margins on sales of widely
available commodity Software products than on sales of specialty Software
products. In addition, the Company typically realizes higher gross margins on
sales to consumer purchasers than on sales to government or corporate
purchasers. In addition, the Company also may from time to time offer attractive
pricing programs, which may reduce its gross margins periodically. The Company
believes that the size of new Software products will continue to increase and
that such Software products will not be suitable for ESD in the absence of
significant increases in network bandwidth. This trend may impact the Company's
ability to realize the higher gross margins associated in the ESD Software
product sales in respect of such Software products. Any change in one or more of
the foregoing factors could materially adversely affect the Company's gross
margins and operating results in future periods.
The Company and Network Associates, a developer of electronic commerce
locations and publisher of certain products marketed under the McAfee and other
names, have entered into various agreements over the past fourteen (14) months
concerning the on-line sale of Software and the management of certain websites,
including the Co-Hosting Agreement and Web Site Services Agreement entered into
in September of 1998. Under these agreements, the Company acts as a reseller of
Network Associates' products, as co-host of certain internet sites developed by
Network Associates and as a provide of certain operational and management
services for Network Associates' Web site maintained at www.mcafeemall.com.
Pursuant to these agreements each of the Company and Network Associates is
obligated to the other for the payment of fees based on activities governed by a
particular agreement such as resales by the Company of Network Associates
products at the Company's Web site or the exclusive right to resell Network
Associates products at a co-hosted site. The Co-Hosting Agreement of September
1998 provides for substantial payments to Network Associates over the three year
term of the agreement. Termination of this relationship would likely have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the volume of online
traffic, customers or revenues obtained as a result of this relationship will
justify the Company's significant fixed financial obligations to Network
Associates, or to satisfy its contractual obligations necessary to prevent
termination of such agreements.
RESULTS OF OPERATIONS: QUARTER AND NINE MONTHS ENDED September 30, 1998
Net Revenues. Net revenues increased from $11.4 million in the nine months
ended September 30, 1997 to $23.5 million in the nine months ended September 30,
1998, primarily as a result of increased sales to consumer and corporate
customers and as a result of a new U.S. government contract. Net revenues from
ESD Software sales were $12.8 million in the nine months ended September 30,
1998.
Net revenues increased from $4.8 million in the quarter ended September 30,
1997 to $9.7 million in the quarter ended September 30, 1998 primarily as a
result of new U.S. government contracts and increased sales to consumer and
<PAGE> 10
corporate customers. Net revenues from ESD Software sales were $4.7 million in
the quarter ended September 30, 1998.
Cost of Revenues. Cost of revenues consists primarily of the costs of
Software and Software licenses sold to consumer and corporate customers and
related credit card processing fees, as well as the costs of Software licenses
and Software updates provided to the U.S. government. Total cost of revenues
increased from $10.0 million in the nine months ended September 30, 1997 to
$19.9 million in the nine months ended September 30, 1998 as a result of
increased Software sales.
Total cost of revenues increased from $4.3 million in the quarter ended
September 30, 1997 to $8.3 million in the quarter ended September 30, 1998, as a
result of increased Software sales.
Gross Margin. Gross margin (gross profit as a percentage of net revenues)
increased from 12.7% in the nine months ended September 30, 1997 to 15.2% in the
nine months ended September 30, 1998. This increase primarily was due to a shift
in the Company's revenue mix, resulting from an increased percentage of higher
margin advertising and promotional revenues received from Software publishers.
The Company may in the future expand or increase the discounts it offers to its
customers and may otherwise alter its pricing structures and policies. Such
actions may have an adverse impact on gross margin in future periods. In
addition, the Company's gross margin in future periods may decline to the extent
that revenues from sales to the U.S. government or sales to large enterprise
customers increase as a percentage of the Company's total net revenues.
Gross margin increased from 11.0% in the quarter ended September 30, 1997
to 15.0% in the quarter ended September 30, 1998. This increase primarily was
due to a increase percentage of total revenue being derived from higher margin
advertising and promotional revenues received from Software publishers.
Research and Development Expenses. Research and development expenses
primarily consist of personnel and other expenses associated with developing and
enhancing the Company's Web sites, as well as associated facilities-related
expenses. Research and development expenses increased from $641,000 in the nine
months ended September 30, 1997 to $3.0 million in the nine months ended
September 30, 1998. Research and development expenses as a percentage of net
revenues increased from 5.6% in the nine months ended September 30, 1997 to
12.8% in the nine months ended September 30, 1998. Research and development
expenses increased in absolute dollars and as a percentage of net revenues
primarily due to an increase in personnel and equipment-related costs.
Research and development expenses increased from $302,000 in the quarter
ended September 30, 1997 to $1.3 million in the quarter ended September 30,
1998. Research and development expenses as a percentage of net revenues
increased from 6.3% in the quarter ended September 30, 1997 to 13.2% in the
quarter ended September 30, 1998. Research and development expenses increased in
absolute dollars and as a percentage of net revenues primarily due to an
increase in personnel and equipment-related costs. The Company believes that
continued investment in research and development is critical to attaining its
strategic objectives and, as a result, expects research and development expenses
to increase significantly in absolute dollars in future periods.
Sales and Marketing Expenses. Sales and marketing expenses consist
primarily of promotional expenditures, personnel and related expenses, and costs
associated with operating the Company's Web sites. In addition, sales and
<PAGE> 11
marketing expenses include the expenditures associated with the Company's
strategic marketing alliances. Sales and marketing expenses increased from $1.0
million in the nine months ended September 30, 1997 to $14.3 million in the nine
months ended September 30, 1998. Sales and marketing expenses as a percentage of
net revenues were 9.1% in the nine months ended September 30, 1997 and 60.7% in
the nine months ended September 30, 1998. Sales and marketing expenses increased
in absolute dollars and as a percentage of net revenues primarily due to costs
associated with the Company's strategic marketing alliances, branding and
marketing campaign (including charges associated with the Company's re-branding
efforts), as well as an increase in personnel and advertising expenditures.
Sales and marketing expenses increased from $442,000 in the quarter ended
September 30, 1997 to $8.0 million in the quarter ended September 30, 1998.
Sales and marketing expenses as a percentage of net revenues were 9.2% in the
quarter ended September 30, 1997 and 82.6% in the quarter ended September 30,
1998. Sales and marketing expenses increased in absolute dollars and as a
percentage of net revenues primarily due to costs associated with the Company's
strategic marketing alliances, branding and marketing campaign, as well as an
increase in personnel and advertising expenditures.
The Company intends to continue to pursue an aggressive branding, sales and
marketing campaign and therefore expects sales and marketing expenses to
increase significantly in absolute dollars in future periods. As a portion of
these expenditures, the Company's current strategic marketing alliances with
AOL, Excite and Netscape provide for payments totaling approximately $26 million
in accordance with the terms of these agreements. At September 30, 1998
approximately $21.1 million remained to be paid. The costs associated with the
AOL and Netscape agreements will be expensed rateably over their respective
terms. The costs associated with the Excite agreement will be expensed as
payments become due under the contract terms. The Co-Hosting Agreement with
Network Associates will require significant minimum payments over the next three
years. The Company may enter into similar strategic marketing alliances
requiring significant minimum payments in the near future and, as a result, may
experience substantial increases in its sales and marketing expenses.
General and Administrative Expenses. General and administrative expenses
primarily consist of personnel expenses, legal expenses, and facilities-related
expenses. General and administrative expenses increased from $676,000 in the
nine months ended September 30, 1997 to $3.2 million in the nine months ended
September 30, 1998. General and administrative expenses as a percentage of net
revenues were 5.9% in the quarter ended September 30, 1997 and 13.7% in the
quarter ended September 30, 1998. General and administrative expenses increased
in absolute dollars and as a percentage of net revenues primarily due to
increased personnel-related costs and facilities-related expenses associated
with the hiring of additional personnel as well as increased provisions for bad
debts.
General and administrative expenses increased from $265,000 in the quarter
ended September 30, 1997 to $1.4 million in the quarter ended September 30,
1998. General and administrative expenses as a percentage of net revenues were
5.5% in the quarter ended September 30, 1997 and 14.4% in the quarter ended
September 30, 1998. General and administrative expenses increased in absolute
dollars and as a percentage of net revenues primarily due to increased
personnel-related costs and facilities-related expenses associated with the
hiring of additional personnel, as well as increased provisions for bad debts.
The Company expects general and administrative expenses to
<PAGE> 12
increase in absolute dollars as the Company builds its infrastructure and as a
result of the costs associated with being a public company.
Interest Income, net. Interest income, net, consists of earnings on
the Company's cash and cash equivalents, net of interest expense. Interest
income, net, increased from $96,000 in the nine months ended September 30, 1997
to $241,000 in the nine months ended September 30, 1998, primarily as a result
of interest income from higher average cash balances offset by interest expenses
associated with the Company's credit facility.
Interest income, net, increased from $24,000 in the quarter ended September
30, 1997 to $383,000 in the quarter ended September 30, 1998, primarily as a
result of interest income associated with the Company's higher cash balances.
Income Taxes. The Company has recorded a net loss for the nine months and
quarters ended September 30, 1997 and September 30, 1998. As a result, no
provision for income taxes has been recorded in these periods.
LIQUIDITY AND CAPITAL RESOURCES
From inception through September 30, 1998, the Company has financed its
operations primarily through private sales of Preferred Stock and the initial
public offering ("IPO") of 5,750,000 shares of its Common Stock. The Company
raised net cash proceeds totaling $14.8 million through private sales of
Preferred Stock. On June 22, 1998, the Company received net proceeds of $46.8
million pursuant to the IPO. The Company raised an additional $2.0 million at
the closing of the IPO through the sale of Common Stock to AOL pursuant to a
Common Stock and Warrants Subscription Agreement entered into in March 1998 and
$4.8 million through a credit agreement entered into with Deutsche Bank, A.G. in
May 1998 (the "Deutsche Bank Credit Facility").
As of September 30, 1998, the Company had approximately $33.2 million of
cash and cash equivalents compared with $2.6 million at December 31, 1997. The
Company intends to repay the Deutsche Bank Credit Facility in November 1998. The
Company's current strategic marketing alliances provide for payments of
approximately $787,000 in the fourth quarter of 1998, approximately $8.7 million
in 1999, approximately $10.2 million in the year 2000 and approximately $1.5
million in the year 2001. The Company currently has no other material
commitments other than those under its operating leases, U.S. government
contracts, and certain equipment leases.
Net cash used in operating activities was $314,000 for the nine months
ended September 30, 1997 and $23.9 million for the nine months ended September
30, 1998. Cash used in operating activities for the nine months ended September
30, 1998 resulted from a net loss of $16.7 million, increases in accounts
receivable and prepaid expenses totalling $15.7 million related to accounts
receivable from government contracts and prepaid partnership agreements and an
increase in deferred revenue. These amounts were offset by increases in accounts
payable, accrued liabilities and deferred revenue related to general Company
growth and the execution of a new government contract.
<PAGE> 13
Net cash used in investing activities for the nine months ended September
30, 1998 of $1.9 million was attributable to leasehold improvements and computer
equipment.
Net cash provided by financing activities of $56.4 million for the nine
months ended September 30, 1998 primarily consists of proceeds from the
Company's IPO, the Deutche Bank Credit Facility, the AOL purchase of Common
Stock and the sale of the Company's Series D redeemable convertible Preferred
Stock.
The Company believes that the net proceeds from this Offering, together
with its current cash and cash equivalents will be sufficient to meet its
anticipated cash needs for working capital and capital expenditures for at least
the next twelve months. The Company is evaluating alternatives of selling
additional equity or debt securities or obtaining additional credit facilities,
in part to fund its financial obligations to AOL, NAI and Excite and in order
to continue to expand the Company's sales and marketing efforts. The sale of
additional equity or convertible debt securities could result in additional
dilution to the Company's stockholders. There can be no assurance that financing
will be available in amounts or on terms acceptable to the Company, if at all.
Year 2000 Compliance. The "Year 2000 Issue" is typically the result of
software and firmware being written using two digits rather than four to define
the applicable year. If the Company's software and firmware with date-sensitive
functions are not Year 2000 compliant, they may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities. The Company has evaluated its internal
systems and believes its internal systems are substantially Year 2000 compliant.
The Company is in the early stages of conducting an audit of its suppliers
and major customers as to the Year 2000 compliance of their systems. The Company
plans to develop a corporate awareness program, project plan (including
remediation, upgrading and replacement), validation testing and contingency
planning. The Company has initiated formal communication with significant
suppliers to determine the extent to which the Company's operations are
vulnerable to those third parties' failure to remediate their own Year 2000
issues. Suppliers of hardware, software or other products that might contain
embedded processors were requested to provide information regarding the Year
2000 compliance status of their products. The Company will continue to seek
information from non-responsive suppliers and plans to contact additional
suppliers during the fourth quarter of 1998. In addition, in order to protect
against the acquisition of additional non-compliant products, the Company now
requires suppliers to warrant that products sold or licensed to the Company for
the Company's internal systems are Year 2000 compliant. The Company's
expenditures to date have been immaterial with respect to Year 2000 compliance,
and the Company is currently evaluating the extent of its future expenditures in
addressing these issues. In the event that any of the Company's significant
suppliers do not successfully and timely achieve Year 2000 compliance, the
Company's business or operations could be adversely affected. There can be no
assurance that the systems of other companies on which the Company's systems
rely will be converted in a timely fashion and would not have an adverse effect
on the Company's operations.
Failure of the Company's internal computer systems or of such third-party
equipment or software, or of systems maintained by the Company's suppliers, to
operate properly with regard to the Year 2000 and thereafter could require the
Company to incur unanticipated expenses to remedy any problems, which could have
a material adverse effect on the Company's business, financial condition and
results of operations. Furthermore, the purchasing patterns of customers or
potential customers may be affected by Year 2000 issues as companies expend
significant resources to correct their current systems for Year 2000 compliance.
These expenditures may result in reduced funds available to purchase products
from the Company, which could have a material adverse effect on the Company's
business, financial condition and results of operations. The
<PAGE> 14
Internet market is highly dependent on such systems as it relates to information
transfer and e-commerce. Failure of internet companies to become Year 2000
compliant would have an adverse effect on the Company's ability to operate as a
business. The Company has not yet estimated all the Year 2000 costs but believes
the costs that will be incurred relating to the Company's internal computer
systems are immaterial to the Company's business operations or financial
condition and the Company is currently evaluating any financial exposure it may
face relating to the computer systems of its suppliers and major customers.
Additionally, the Company may incur material financial harm as a result of sales
of non-compliant commercial, off-the-shelf software to its customers. The
Company is currently evaluating any potential financial exposure related to this
issue.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.1 Agreement dated as of September 11, 1998, by and
between the Registrant and the United States
National Imaging and Mapping Agency ( NIMA
Contract # N00140-98-D-2139)
10.2 Co-hosting Agreement dated as of September 21,
1998, by and between the Registrant and Network
Associates, Inc.
10.3 Web Site Service Agreement dated as of September 21, 1998,
by and between the Registrant and Network Associates, Inc.
10.4 Electronic Services Distribution Agreement dated as of September 1, 1997, by and between The
Registrant and McAfee Software, Inc.
27.1 Financial Data Schedule
</TABLE>
*Confidential treatment requested.
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
software.net Corporation
(Registrant)
DATE: November 20, 1998 BY: /s/ Mark L. Breier
------------------ ------------------------------------
Mark L. Breier
President and
Chief Executive Officer
DATE: November 20, 1998 BY: /s/ Michael J. Praisner
------------------ ------------------------------------
Michael J. Praisner
Vice President and
Chief Financial Officer
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.1 Agreement dated as of September 11, 1998, by and between the
Registrant and the United States National Imaging and Mapping
Agency ( NIMA Contract # N00140-98-D-2139)
10.2 Co-hosting Agreement dated as of September 21, 1998, by and between
the Registrant and Network Associates, Inc.
10.3 Web Site Service Agreement dated as of September 21, 1998, by and
between the Registrant and Network Associates, Inc.
10.4 Electronic Services Distribution Agreement dated as of September 1,
1997, by and between The Registrant and McAfee Software, Inc.
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 10.1
<TABLE>
<S><C>
- -----------------------------------------------------------------------------------------------------------------------------------
1. THIS CONTRACT IS A RATED ORDER RATING PAGE OF
SOLICITATION, OFFER AND AWARD UNDER DPAS (15 CFR 350) > 1 21 PAGES
- -----------------------------------------------------------------------------------------------------------------------------------
2. CONTRACT NO. 3. SOLICITATION NO. 4. TYPE OF SOLICITATIONS 5. DATE ISSUED 6. REQUISITION/PURCHASE
[ ] SEALED BID (IFB) 11 SEP 98 NO.
N00140-98-D-2139 N00140-98-R-2139 [ ] NEGOTIATED (RFP) MIPRST98891D49
- -----------------------------------------------------------------------------------------------------------------------------------
7. ISSUED BY CODE N00140 8. ADDRESS OFFER TO (If other than Item 7)
-----------
FISC NORFOLK DETACHMENT PHILADELPHIA Same as Block #7
700 ROBBINS AVENUE, BLDG. 2B
PHILADELPHIA, PA 19111-5083
- -----------------------------------------------------------------------------------------------------------------------------------
NOTE: In sealed bid solicitations "offer" and "offeror" mean "bid" and "bidder".
- -----------------------------------------------------------------------------------------------------------------------------------
SOLICITATION
- -----------------------------------------------------------------------------------------------------------------------------------
9. Sealed offers in original and ___ copies for furnishing the supplies or services in the Schedule will be received at the place
specified in Item 8, or handcarried, in the depository located in ______________ until local time .
------ --------------
(Hour) (Date)
CAUTION - LATE Submissions, Modifications and Withdrawals: See Section L, Provision No. 52.214-7 or 52.215-10. All offers are
subject to all terms and conditions contained in this solicitation.
- -----------------------------------------------------------------------------------------------------------------------------------
10. FOR INFORMATION A. NAME B. TELEPHONE NO. (Include area code) (NO COLLECT CALLS)
CALL: > GUY GOSS DSN 442-9662
CODE 02P2A (215) 697-9662
- -----------------------------------------------------------------------------------------------------------------------------------
11. TABLE OF CONTENTS
- -----------------------------------------------------------------------------------------------------------------------------------
[x] SEC. DESCRIPTION PAGE(S) [x] SEC. DESCRIPTION PAGE(S)
- -----------------------------------------------------------------------------------------------------------------------------------
PART I - THE SCHEDULE PART II - CONTRACT CLAUSES
- -----------------------------------------------------------------------------------------------------------------------------------
X A SOLICITATION/CONTRACT FORM 1 X I CONTRACT CLAUSES 19
- -----------------------------------------------------------------------------------------------------------------------------------
X B SUPPLIES OR SERVICES AND PRICE/COSTS 2 PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
X C DESCRIPTION/SPECS./WORK STATEMENT 11 J LIST OF ATTACHMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
X D PACKAGING AND MARKING 12 PART IV - REPRESENTATIONS AND INSTRUCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
X E INSPECTION AND ACCEPTANCE 12 REPRESENTATIONS, CERTIFICATIONS AND
- ---------------------------------------------------------- K OTHER STATEMENTS OF OFFERORS
X F DELIVERIES OR PERFORMANCE 12
- -----------------------------------------------------------------------------------------------------------------------------------
X G CONTRACT ADMINISTRATION DATA 13 L INSTRS., CONDS., AND NOTICES TO OFFERORS
- -----------------------------------------------------------------------------------------------------------------------------------
X H SPECIAL CONTRACT REQUIREMENTS 16 M EVALUATION FACTORS FOR AWARD
- -----------------------------------------------------------------------------------------------------------------------------------
OFFER (Must be fully completed by offeror)
- -----------------------------------------------------------------------------------------------------------------------------------
NOTE: Item 12 does not apply if the solicitation includes the provisions at 42.214-16, Minimum Bid Acceptance Period.
- -----------------------------------------------------------------------------------------------------------------------------------
12. In compliance with the above, the undersigned agrees, if this offer is accepted within __ calendar days (60 calendar days unless
a different period is inserted by the offeror) from the date for receipt of offers specified above, to furnish any or all items
upon which prices are offered at the price shown opposite each item, delivered at the designated point(s), within the time
specified in the schedule.
- -----------------------------------------------------------------------------------------------------------------------------------
13. DISCOUNT FOR PROMPT PAYMENT 10 CALENDAR DAYS 20 CALENDAR DAYS 30 CALENDAR DAYS CALENDAR DAYS
(See Section I, Clause No. 52-232-8) % % 0% --
- -----------------------------------------------------------------------------------------------------------------------------------
14. ACKNOWLEDGEMENT OF AMENDMENTS AMENDMENT NO. DATE AMENDMENT NO. DATE
(The offeror acknowledges receipt -----------------------------------------------------------------------------------------
of amendments to the SOLICITATION
for and related documents -----------------------------------------------------------------------------------------
numbered and dated:
- -----------------------------------------------------------------------------------------------------------------------------------
15A. NAME CODE FACILITY 16. NAME AND TITLE OF PERSON AUTHORIZED TO SIGN
AND ---------- ---------- OFFER (Type or print)
ADDRESS BEYOND.COM
OF 1195 WEST FREMONT AVENUE KENDALL M. FARGO
OFFEROR SUNNYVALE, CA 94087 V.P. OF GOVERNMENT SALES
- -----------------------------------------------------------------------------------------------------------------------------------
15B. TELEPHONE NO. (Include area 15C. CHECK IF REMITTANCE ADDRESS 17. SIGNATURE 18. OFFER DATE
code) [ ] IS DIFFERENT FROM ABOVE - ENTER /s/ KENDALL M. FARGO 9/10/98
(408) 616-4216 SUCH ADDRESS IN SCHEDULE.
- -----------------------------------------------------------------------------------------------------------------------------------
AWARD (To be completed by Government)
- -----------------------------------------------------------------------------------------------------------------------------------
19. ACCEPTED AS TO ITEMS NUMBERED 20. AMOUNT 21. ACCOUNTING AND APPROPRIATION
- --------------------------------------------------------------------------- SEE SECTION H
22. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETI- -------------------------------------------------------
TION: 23. SUBMIT INVOICES TO ADDRESS SHOWN IN > ITEM
[ ] 10 U.S.C. 2304 (c)( ) [ ] 41 U.S.C. 253(c)( ) (4 copies unless otherwise specified) SEE SECTION G
- -----------------------------------------------------------------------------------------------------------------------------------
24. ADMINISTERED BY (If other than Item 7) CODE 50507A 25. PAYMENT WILL BE MADE BY CODE
----------- DTAS-COLUMBUS CENTER -----------
DCMAO SAN FRANCISCO DFAS-CO-JWV-VAN NUYS DIVISION
1265 BORREGAS AVENUE P.O. BOX 182157
SUNNYVALE, CA 94089 COLUMBUS, OH 43218-2157
- -----------------------------------------------------------------------------------------------------------------------------------
26. NAME OF CONTRACTING OFFICER (Type or print) 27. UNITED STATES OF AMERICA 28. AWARD DATE
J. J. SWIZEWSKI 9/18/98
(Signature of Contracting Officer)
- -----------------------------------------------------------------------------------------------------------------------------------
IMPORTANT - Award will be made on this Form, or on Standard Form 26, or by other authorized official written notice.
- -----------------------------------------------------------------------------------------------------------------------------------
NSN 7540-01-152-8064 STANDARD FORM 33 (REV. 4-85)
PREVIOUS EDITION NOT USABLE Prescribed by GSA
FAR (48 CFR) 53.214(c)
</TABLE>
<PAGE> 2
N00140-98-D-2139 PAGE 2
SECTION B SCHEDULE OF SUPPLIES/SERVICES AND PRICES
LOT I (BASE YEAR)
<TABLE>
<CAPTION>
Unit Total
CLIN Description Qty Unit Price Price
- ---- ----------- --- ---- ----- -----
<S> <C> <C> <C> <C> <C>
0001 Microsoft Office Maintenance 1 Lot $798,250.00 $ 798,250.00
0001AA Microsoft Office Standard 2,000 EA NSP* NSP
License Maintenance
0001AB Microsoft Office Professional 3,375 EA NSP NSP
License Maintenance
0001AB Microsoft Windows 32-bit OS 3,375 EA NSP NSP
License Maintenance
0001AD Microsoft BackOffice Client 5,375 EA NSP NSP
License Maintenance
0002 Microsoft Project License 1,100 EA $ 89.50 $ 98,450.00
Maintenance
0003 Claris FileMaker 2,600 EA $ 51.25 $133,250.00
License Maintenance
0004 Claris FileMaker Pro 10 EA $819.00 $ 8,190.00
Server New Licenses
0005 Claris FileMaker Pro 10 EA $189.00 $ 1,890.00
Server License Maintenance
0006 Reserved
0007 Symantec Norton Utilities 100 EA $ 62.00 $ 6,200.00
New Licenses
0008 Symantec Norton Utilities 200 EA $ 13.40 $ 2,680.00
License Maintenance
0009 Microsoft Window NT ADv 150 EA $114.50 $17,175.00
Server License Maintenance
</TABLE>
<PAGE> 3
N00140-98-D-2139 PAGE 3
LOT I (BASE YEAR) (Continued)
<TABLE>
<CAPTION>
Unit Total
CLIN Description Qty Unit Price Price
- ---- ----------- --- ---- ------- -----------
<S> <C> <C> <C> <C> <C>
0010 Microsoft NT File and Print 150 EA $ 20.50 $ 3,075.00
Services for Netware
License Maintenance
0011 Quota Advisor New Licenses 150 EA $552.29 $ 82,843.50
0011AA Quota Advisor License 150 EA NSP NSP
Maintenance
0012 Cheyenne ArcServe 6 for 150 EA $ 73.26 $ 10,989.00
NT License Maintenance
0013 Cheyenne Database Agent 29 EA $104.88 $ 3,041.52
For Exchange License
Maintenance
0014 Cheyenne Backup Agent for 31 EA $104.88 $ 3,251.28
SQL License Maintenance
0015 Cheyenne Database Agent for 150 EA $359.00 $ 53,850.00
Open File New Licenses
0016 Cheyenne Backup for Open 150 EA $ 72.00 $ 10,800.00
File License Maintenance
0017 Microsoft BackOffice Server 36 EA $282.50 $ 10,170.00
License Maintenance
0018 MapInfo New Licenses 300 EA $680.00 $204,000.00
0019 MapInfo License Maintenance 600 EA $359.00 $215,400.00
0020 Quarterdeck Procomm Plus 400 EA $ 82.00 $ 32,800.00
New Licenses
0021 Quarterdeck Procomm Plus 700 EA $ 19.75 $ 13,825.00
License Maintenance
0022 Jetform Perform/FormFlow 375 EA $ 40.72 $ 15,270.00
License Upgrade
0023 Jetform Perform/FormFlow 4,375 EA $ 10.50 $ 45,937.50
License Maintenance
0024 WinZip New Licenses 400 EA $ 5.86 $ 2,344.00
0024AA Winzip License Maintenance 400 EA $ NSP $ NSP
</TABLE>
* Not Separately Priced
<PAGE> 4
N00140-98-D-2139 PAGE 4
SECTION B SCHEDULE OF SUPPLIES/SERVICES AND PRICES
LOT II (OPTION YEAR I)
<TABLE>
<CAPTION>
Unit Total
CLIN Description Qty Unit Price Price
- ---- ----------- --- ---- ------------- -------------
<S> <C> <C> <C> <C> <C>
0025 Microsoft Office Maintenance 1 Lot $1,185,000.00 $1,185,000.00
0025AA Microsoft Office Standard 1,500 EA NSP NSP
License Maintenance
0025AB Microsoft Office Professional 5,000 EA NSP NSP
License Maintenance
0025AC Microsoft Windows 32-bit OS 5,000 EA NSP NSP
License Maintenance
0025AD Microsoft BackOffice Client 6,500 EA NSP NSP
License Maintenance
0026 Microsoft Project License 1,500 EA $ 89.50 $ 134,250.00
Maintenance
0027 Claris Filemaker License 3,200 EA $ 51.25 $ 164,000.00
Maintenance
0028 Claris FileMaker Pro 10 EA $ 189.00 $ 1,890.00
Server License Maintenance
0029 Reserved
0030 Symantec Norton Utilities 200 EA $ 13.40 $ 2,680.00
License Maintenance
0031 Microsoft Windows NT Adv 150 EA $ 114.50 $ 17,175.00
Server License Maintenance
</TABLE>
<PAGE> 5
N00140-98-D-2139 PAGE 5
LOT II (OPTION YEAR I) (Continued)
<TABLE>
<CAPTION>
Unit Total
CLIN Description Qty Unit Price Price
- ---- ----------- --- ---- ------- -----------
<S> <C> <C> <C> <C> <C>
0032 Microsoft NT File and Print 150 EA $ 20.50 $ 3,075.00
Services for Netware
License Maintenance
0033 Quota Advisor License 150 EA $ 59.29 $ 8,893.50
Maintenance
0034 Cheyenne ArcServe 6 for 150 EA N/A N/A
NT License Maintenance
0035 Cheyenne Database Agent 29 EA N/A N/A
For Exchange License
Maintenance
0036 Cheyenne Database Agent 31 EA N/A N/A
For SQL License Maintenance
0037 Cheyenne Backup for Open 150 EA N/A N/A
License File Maintenance
0038 Microsoft BackOffice Server 36 EA $282.50 $ 10,170.00
License Maintenance
0039 MapInfo License Maintenance 600 EA $371.00 $222,600.00
0040 Quarterdeck Procomm Plus 700 EA $ 24.23 $ 16,961.00
License Maintenance
0041 Jetform Perform/FormFlow 1,125 EA $ 62.12 $ 69,885.00
License Upgrade
0042 Jetform Perform/FormFlow 5,500 EA $ 10.47 $ 57,585.00
License Maintenance
0043 WinZip License Maintenance 400 EA NSP NSP
</TABLE>
<PAGE> 6
N00140-98-D-2139 PAGE 6
SECTION B SCHEDULE OF SUPPLIES/SERVICES AND PRICES
LOT III (OPTION YEAR II)
<TABLE>
<CAPTION>
Unit Total
CLIN Description Qty Unit Price Price
- ---- ----------- --- ---- ----- -----
<S> <C> <C> <C> <C> <C>
0044 Microsoft Office Maintenance 1 Lot $1,534,000.00 $1,534,000.00
0044AA Microsoft Office Standard 200 EA NSP NSP
License Maintenance
0044AA Microsoft Office Professional 6,300 EA NSP NSP
License Maintenance
0044AB Microsoft Windows 32-bit OS 6,300 EA NSP NSP
License Maintenance
0044AC Microsoft BackOffice Client 6,500 EA NSP NSP
License Maintenance
0045 Microsoft Project License 1,500 EA $ 89.50 $ 134,250.00
Maintenance
0046 Claris FileMaker License 3,200 EA $ 67.38 $ 215,616.00
Maintenance
0047 Claris FileMaker Pro 10 EA $ 245.29 $ 2,452.90
Server License Maintenance
0048 Reserved
0049 Symantec Norton Utilities 200 EA $ 13.40 $ 2,680.00
License Maintenance
0050 Microsoft Windows NT Adv 150 EA $ 114.50 $ 17,175.00
Server License Maintenance
</TABLE>
<PAGE> 7
N00140-98-D-2139 PAGE 7
LOT III (OPTION YEAR II) (Continued)
<TABLE>
<CAPTION>
Unit Total
CLIN Description Qty Unit Price Price
- ---- ----------- --- ---- ----- -----
<S> <C> <C> <C> <C> <C>
0051 Microsoft NT File and Print 150 EA $ 20.50 $ 3,075.00
Services for Netware
License Maintenance
0052 Quota Advisor License 150 EA $ 59.29 $ 8,893.50
Maintenance
0053 Cheyenne ArcServe 6 for 150 EA N/A N/A
NT License Maintenance
0054 Cheyenne Database Agent 29 EA N/A N/A
For Exchange License
Maintenance
0055 Cheyenne Backup Agent for 31 EA N/A N/A
SQL License Maintenance
0056 Cheyenne Backup for Open 150 EA N/A N/A
File License Maintenance
0057 Microsoft BackOffice Server 36 EA $282.50 $ 10,170.00
License Maintenance
0058 MapInfo License Maintenance 600 EA $359.00 $215,400.00
0059 Quarterdeck Procomm Plus 700 EA $ 24.23 $ 16,961.00
License Maintenance
0060 Jetform Perform/FormFlow 1,000 EA $ 62.12 $ 62,120.00
License Upgrade
0061 Jetform Perform/FormFlow 6,500 EA $ 10.47 $ 68,055.00
License Maintenance
0062 WinZip License Maintenance 400 EA $ 2.00 $ 800.00
</TABLE>
<PAGE> 8
N00140-98-D-2139 PAGE 8
SECTION B SCHEDULE OF SUPPLIES/SERVICES AND PRICES
LOT IV (OPTION III)
<TABLE>
<CAPTION>
Unit Total
CLIN Description Qty Unit Price Price
- ---- ----------- ----- ----- ------------- -------------
<S> <C> <C> <C> <C> <C>
0063 Microsoft Office Maintenance 1 Lot $1,534,000.00 $1,534,000.00
0063AA Microsoft Office Standard 200 EA NSP NSP
License Maintenance
0063AB Microsoft Office Professional 6,300 EA NSP NSP
License Maintenance
0063AC Microsoft Windows 32-bits/OS 6,300 EA NSP NSP
License Maintenance
0063AD Microsoft BackOffice Client 6,500 EA NSP NSP
License Maintenance
0064 Microsoft Project License 1,500 EA $ 89.50 $134,250.00
Maintenance
0065 Claris FileMaker License 3,200 EA $ 67.16 $214,912.00
Maintenance
0066 Claris FileMaker Pro 10 EA $245.29 $ 2,452.90
Server License Maintenance
0067 Reserved
0068 Symantec Norton Utilities 200 EA $ 13.40 $ 2,680.00
License Maintenance
0069 Microsoft Windows NT Adv 150 EA $114.50 $ 17,175.00
Server License Maintenance
0070 Microsoft NT File and Print 150 EA $ 20.50 $ 3,075.00
Services for Netware
License Maintenance
0071 Quota Advisor License 150 EA $ 59.29 $ 8,893.50
Maintenance
</TABLE>
<PAGE> 9
N00140-98-D-2139 Page 9
LOT IV (OPTION YEAR III) (Continued)
<TABLE>
<CAPTION>
Unit Total
CLIN Description Qty Unit Price Price
- ---- ----------- ----- ----- ------------- -------------
<S> <C> <C> <C> <C> <C>
0071 Quota Advisor License 150 EA $ 59.29 $ 8,893.50
Maintenance
0072 Cheyenne ArcServe 6 for 150 EA N/A N/A
NT License Maintenance
0073 Cheyenne Database Agent 29 EA N/A N/A
For Exchange License
Maintenance
0074 Cheyenne Backup Agent for 31 EA N/A N/A
SQL License Maintenance
0075 Cheyenne Backup for Open 150 EA N/A N/A
File License Maintenance
0076 Microsoft BackOffice Server 36 EA $282.50 $ 10,170.00
License Maintenance
0077 MapInfo License Maintenance 600 EA $359.00 $215,400.00
0078 Quarterdeck Procomm Plus 700 EA $ 24.23 $ 16,961.00
License Maintenance
0079 Jetform Perform/FormFlow 1,000 EA $ 62.12 $ 62,120.00
License Upgrade
0080 Jetform Perform/FormFlow 6,500 EA $ 10.47 $ 68,055.00
License Maintenance
0081 WinZip License Maintenance 400 EA $ 2.00 $ 800.00
</TABLE>
<PAGE> 10
N00140-98-D-2139 Page 10
SECTION C DESCRIPTION/SPECIFICATIONS
The software services available under this contract support the National
Imagery and Mapping Agency (NIMA).
All software licenses, upgrades, and new versions must be provided via
electronic software delivery method using encryption approved by the respective
software publishers.
Software maintenance includes "versions upgrades" and "successor or upgrade
products" meaning any "major product upgrade" (e.g. version 1.0 to 2.0), "minor
product upgrade" (e.g., version 2.0 to 2.1) and "maintenance upgrade" (e.g.,
version 2.0 to 2.1), and "maintenance upgrade" (e.g., version 2.01 to 2.01a)
for such products which have been generally available prior to expiration of
the contract. Windows 95 is considered a successor product to Windows 3.1 and
Windows 3.11. Successor or upgrade products do not include any existing or
future product which are not a direct successor to the products such as
extensions, add-on's and accessory products marketed separately from the
product.
Whenever the vendor receives new software or a service release, the vendor shall
ensure the software is virus-free, then make the software electronically
available so that NIMA has access to the software within 12 hours after the
vendor has received the software from the software publisher. Electronic access
shall be provided only to those individuals designated by the Contracting
Officer. The Contractor shall provide a minimum of four master production
CD-ROMs per line item ordered every time the software changes or has a service
release. CD-ROMs shall be delivered to each of the following sites in the
following minimum quantities;
NIMA St. Louis (1 each)
ATTN: Mary Sullivan/MS L-71/SCOD
3200 S. Second Street
St. Louis, MO 66118-3399
NIMA St. Louis (2 each)
ATTN: Dave Addoms/MS L-71/SNSS
3200 S. Second Street
St. Louis, MO 66118-3399
NIMA Bethesda (1 each)
ATTN: Paul Fox/MS D-79/SNSS
4600 Sangamore Road
Bethesda, MD 20816-5003
Except as noted below, the Contractor shall deliver at the end of each period of
performance a license confirmation for fully-paid, irrevocable and perpetual
upgrade licenses for the latest upgrades provided during that period of
performance based upon the quantities that have been ordered.
<PAGE> 11
N00140-98-D-2139 Page 11
CLIN 0001 - The government is entitled to use on all covered desktops and
servers all maintenance upgrades as defined in Section C provided during the
base year of performance. At the end of the base year, the Contractor shall
deliver a license confirmation for fully-paid, irrevocable and perpetual
upgrade licenses for 1,950 seats of the latest upgrades provided during the
base year of performance. A seat includes Office Professional, Windows 32-bit
OS and BackOffice Client Access.
CLINs 0002, 0009, 0010 and 0017 - The Government is entitled to use on all
covered desktops and servers all maintenance upgrades as defined in Section C
provided during the base year of performance. At the end of the base year, the
Contractor shall deliver for 50% of the quantities that have been ordered a
license confirmation for fully-paid, irrevocable and perpetual upgrade
licenses for the latest upgrades provided during the base year of performance.
CLIN 0025 - The Government is entitled to use on all covered desktops and
servers all maintenance upgrades as defined in Section C provided during the
base and option year I periods of performance. At the end of option year I, the
Contractor shall deliver a license confirmation for fully-paid, irrevocable and
perpetual upgrade licenses for 3,900 seats of the latest upgrades provided
during the base year and option year I periods of performance. A seat consists
of Office Professional, Windows 32-bit OS and BackOffice Client Access.
CLINs 0026, 0031, 0032 and 0038 - The Government is entitled to use on all
covered desktops and servers all maintenance upgrades as defined in Section C
provided during the base and option year I periods of performance. At the end
of option year I, the Contractor shall deliver for 100% of the quantities that
have been ordered a license confirmation for fully-paid, irrevocable and
perpetual upgrade licenses provided during the base year and option year I
periods of performance.
CLIN 0044 & 0063 - The Government is entitled to use on all covered desktops
and servers all maintenance upgrades as defined in Section C provided through
the Applicable period of performance. At the end of each period of performance,
the Contractor shall deliver a license confirmation for fully-paid, irrevocable
and perpetual upgrade licenses for 6,500 seats of the latest upgrades that have
been provided through that period of performance. A seat consists of Office
Professional, Windows 32-bit OS and BackOffice Client Access.
CLINs 0045, 0050, 0051 and 0057 - The Government is entitled to use on all
covered desktops and servers all maintenance upgrades as defined in Section C
provided during the option year II period of performance. At the end of option
year II, the Contractor shall deliver for 50% of the quantities that have been
ordered a license confirmation for fully-paid, irrevocable and perpetual upgrade
licenses for the latest upgrades provided during the option year II period of
performance.
CLINs 0064, 0069, 0070, 0076 - the Government is entitled to use on all covered
desktops and servers all maintenance upgrades as defined in Section C provided
during the option year II and option year III periods of performance. At the
end of option year III, the Contractor shall deliver for 100% of the quantities
that have been ordered a license confirmation for fully-paid irrevocable and
perpetual upgrade licenses for the latest upgrades provided during the option
year II and option year III periods of performance.
<PAGE> 12
N00140-98-D-2139 Page 12
SECTION D PACKAGING AND MARKING
MARKING OF SHIPMENTS (COMMERCIALLY PACKAGED ITEMS)
Marking shall be in accordance with ASTM D-3951-90 "Standard Practice for
Commercial Packaging."
PREPARATION FOR DELIVERY (COMMERCIALLY PACKAGED ITEMS)
Preservation, packaging and packing shall be in accordance with ASTM D-3951-90,
"Commercial Packaging of Supplies and Equipment."
SECTION E INSPECTION/ACCEPTANCE
The following clause is hereby incorporated into Section E by reference:
52.246-4 Inspection of Services - Fixed Price (AUG 1996)
INSPECTION AND ACCEPTANCE (SERVICES)
Inspection and acceptance of services to be furnished shall be made upon
completion of the services by:
Mr. Dan Collins
National Imagery and Mapping Agency
12310 Sunrise Valley Drive
Reston, VA 20191-3449
SECTION F DELIVERIES OR PERFORMANCE
The following clauses are hereby incorporated into section F by reference:
52.242-15 Stop-Work Order (AUG 1989)
52.242-17 Government Delay of Work (APR 1984)
52.247-34 F.O.B. Destination (NOV 1991)
DURATION OF CONTRACT PERIOD
This contract shall become effective on date of award and the ordering and
performance periods shall continue in effect during the period ending 12 months
after date of contract unless terminated in accordance with other provisions
herein. If the option periods are exercise, the ordering and performance
periods shall be extended as follows:
Option I (Lot II) 13 through 24 months after date of award
Option II (Lot III) 25 through 36 months after date of award
Option III (Lot IV) 37 through 48 months after date of award
<PAGE> 13
N00140-98-D-2139 Page 13
PLACE OF DELIVERY
See section C.
TRANSPORTATION OF SUPPLIES BY SEA (DFARS 252.247-7023) (NOV 1995)
(a) Definitions. As used in this clause--
(1) Components means articles, materials, and supplies incorporated directly
into end products at any level of manufacture, fabrication, or assembly by the
Contractor or any subcontractor.
(2) Department of Defense (DoD) means the Army, Navy, Air Force, Marine
Corps, and defense agencies.
(3) Foreign flag vessel means any vessel that is not a U.S.-Flag vessel.
(4) Ocean transportation means any transportation aboard a ship, vessel,
boat, barge, or ferry through international waters.
(5) Subcontractor means a supplier, materialman, distributor, or vendor at
any level below the prime contractor whose contractual obligation to perform
results from, or is conditioned upon, award of the prime contract and who is
performing any part of the work or other requirement of the prime contract.
However, effective May 1, 1996, the term does not include a supplier,
materialman, distributer, or vendor of commercial items or commercial
components.
(6) Supplies means all property, except land and interests in land, that is
clearly identifiable for eventual use by or owned by the DoD at the time of
transportation by sea.
(i) An item is clearly identifiable for eventual use by the DoD if, for
example, the contract documentation contains a reference to a DoD contract
number or a military destination.
(ii) Supplies includes (but is not limited to) public works; buildings
and facilities; ships; floating equipment and vessels of every character, type,
and description, with parts, subassemblies, accessories, and equipment; machine
tools; material; equipment; stores of all kinds; end items; construction
materials; and components of the foregoing.
(7) U.S.-flag vessel means a vessel of the United States or belonging to the
United states, including any vessel registered or having national status under
the laws of the United States.
(b) The Contractor shall employ U.S.-flag vessels in the transportation by sea
of any supplies to be furnished in the performance of this contract. The
Contractor and its subcontractors may request that the Contracting Officer
authorize in foreign-flag vessels, or designate available U.S.-flag vessels, if
the Contractor or a subcontractor believes that--
(1) U.S.-flag vessels are not available for timely shipment;
(2) The freight charges are inordinately excessive or unreasonable; or
(3) Freight charges are higher than charges to private persons for
transportation of like goods.
(c) The Contractor must submit any request for use of other than U.S.-flag
vessels in writing to the Contracting Officer at least 45 days prior to the
sailing date necessary to meet its delivery schedules. The Contracting Officer
will process requests submitted after such date(s) as expeditiously as
possible, but the Contracting Officer's failure to grant approvals to meet the
shipper's sailing date will not of itself constitute a compensable delay under
this or any other clause of this contract. Requests shall contain at a minimum--
<PAGE> 14
N00140-98-D-2139 Page 14
(1) Type, weight, and cube of cargo;
(2) Required shipping date;
(3) Special handling and discharge requirements;
(4) Loading and discharge points;
(5) Name of shipper and consignee;
(6) Prime contract number; and
(7) A documented description of efforts made to secure U.S.-flag vessels,
including points of contact (with names and telephone numbers) with at least two
U.S.-flag carriers contacted. Copies of telephone notes, telegraphic and
facsimile message or letters will be sufficient for this purpose.
(d) The Contractor shall, within 30 days after each shipment covered by this
clause, provide the Contracting Officer and the Division of National Cargo,
Office of Market Development, Maritime Administration, U.S. Department of
Transportation, Washington, DC 20590, one copy of the rated on board vessel
operating carrier's ocean bill of lading, which shall contain the following
information--
(1) Prime contract number;
(2) Name of vessel;
(3) Vessel flag of registry;
(4) Date of loading;
(5) Port of loading;
(6) Port of final discharge;
(7) Description of commodity;
(8) Gross weight in pounds and cubic feet if available;
(9) Total ocean freight in U.S. dollars; and
(10) Name of the steamship company.
(e) The Contractor agrees to provide with its final invoice under this contract
a representation that to the best of its knowledge and belief--
(1) No ocean transportation was used in the performance of this contract;
(2) Ocean transportation was used and only U.S.-flag vessels were used
for all ocean shipments under the contract;
(3) Ocean transportation was used, and the Contractor had the written
consent of the Contracting Officer for all non-U.S.-flag ocean transportation;
or
(4) Ocean transportation was used and some or all of the shipments were
made on non-U.S.-flag vessels without the written consent of the Contracting
Officer. The Contractor shall describe these shipments in the following format:
- --------------------------------------------------------------------------------
Item Description Contract Line Items Quantity
- --------------------------------------------------------------------------------
Total
$
- --------------------------------------------------------------------------------
(f) If the final invoice does not include the required representation, the
Government will reject and return it to the Contractor as an improper invoice
for the purposes of the Prompt Payment clause of this contract. In the event
<PAGE> 15
NOO140-98-D-2139 Page 15
there has been unauthorized use of non-U.S.-flag vessels in the performance of
this contract, the Contracting Officer is entitled to equitably adjust the
contract, based on the unauthorized use.
(g) The Contract shall include this clause, including this paragraph (g) in all
subcontracts under this contract, which exceed the simplified acquisition
threshold in Part 13 of the Federal Acquisition Regulation.
<PAGE> 16
N00140-98-D-2139 Page 16
SECTION G CONTRACT ADMINISTRATION DATA
SUBMISSION OF INVOICES - FIXED PRICE (NAPS 5252.232-9000) (JUL 1992)
(a) "Invoice" as used in this clause does not include contractor requests for
progress payments.
(b) The contractor shall submit original invoices with copies to the address
identified in the- solicitation/-contract award form (SF 26-Block 10; SF
33-Block 23, SF 1447-Block 14), unless delivery orders are applicable, in which
case invoices will be segregated by individual order and submitted to the
address specified in the order (DD 1155 - Block 13 or SF 26 - Block 10).
(c) The use of copies of the Material Inspection and Receiving Report (MIRR), DD
Form 250, as an invoice is encouraged. DFARS Appendix F-306 provides instruction
for such use. Copies of the MIRR used as an invoice are in addition to the
standard distribution stated in DFARS F-401.
(d) In addition to the requirements of the Prompt Payment clause of this
contract, the contractor shall cite on each invoice the contract line item
number (CLIN); the contract subline item number (SLIN), if applicable; the
accounting classification reference number (ACRN) as identified on the financial
accounting data sheets, and the payment terms.
(e) The contractor shall prepare a consolidated invoice covering all shipments
delivered under an individual order.
(f) If acceptance is at origin, the contractor shall submit the MIRR or other
acceptance verification directly to the designated payment office. If acceptance
is at destination, the consignee will forward acceptance verification to the
designated payment office.
SUBCONTRACTING PLAN - WAIVED
The contracting officer has determined that there are no subcontracting
possibilities and therefore, no Small Business and Small Disadvantaged Business
Subcontracting Plan is required.
<PAGE> 17
N00140-98-D-2139 Page 17
SECTION H SPECIAL CONTRACT REQUIREMENTS
MINIMUM AND MAXIMUM QUANTITIES (FISC DET PHILA)
As referred to in paragraph (b) of the "Indefinite Quantities" clause of this
contract, the total contract minimum quantity is a total of $1,000,000 worth of
orders at the contract unit price(s). The contract maximum quantity is the
total value for the quantities specified in the Schedule of Supplies/Services
and Prices. To meet the Government's minimum obligation under this contract,
the following funds are hereby administratively obligated:
AA 9780100.4802 8A8 85008500ST 650000 582CA 35102B 525700 $1,000,000.00
Funding shall be deobligated from the contract upon issuance of orders equal to
or in excess of the contract minimum.
ORDERING (INDEFINITE DELIVERY TIME AND MATERIAL/LABOR HOUR AND COST
REIMBURSEMENT CONTRACTS)
(a) Ordering: Supplies or services to be furnished under this contract shall be
furnished at such times as ordered by the issuance of Delivery Orders on DD
Form 1155 by the FISC Norfolk Detachment Philadelphia. All orders issued
hereunder are subject to the terms and conditions of this contract. This
contract shall control in the event of conflict with any Order. When mailed, a
Delivery Order shall be "issued" for purpose of this contract at the time the
Government deposits the order in the mail, or, if transmitted by other means,
when physically delivered to the contractor.
(b) Ordering Procedures:
(1) Delivery Orders issued shall include, but not be limited to the
following information:
(a) date of order
(b) contract and order number
(c) appropriation and accounting data
(d) description of the services to be performed
(e) description of end item(s) to be delivered
(f) DD Form 254 (Contract Security Classification Spec), if applicable
(g) DD Form 1423 (Contract Data Requirements List), if data to be
delivered under the order is not listed on the DD Form 1423 included in this
contract.
(h) exact place of pickup and delivery
(i) the inspecting and accepting codes (as applicable)
(j) period of time in which the services are to be performed
(k) for each applicable labor category, estimated number of labor
hours required to perform the Order.
(l) the estimated cost plus fixed fee or ceiling price for the order
(m) list of Government furnished material and the estimated value
thereof, if applicable.
<PAGE> 18
N00140-98-D-2139 Page 18
Oral orders may be placed hereunder only in emergency circumstances.
Information described above shall be furnished to the contractor at the time of
placing an oral order and shall be confirmed by issuance of a written Delivery
Order on DD Form 1155 within ten (10) working days.
(c) Modifications of Delivery Orders: Delivery Orders may be modified by the
Ordering Officer. Modifications to Delivery Orders shall include the information
set forth in paragraph b. above, as applicable. Delivery Orders may be modified
orally by the Ordering Officers in emergency circumstances. Oral modifications
shall be confirmed by issuance of a written modification within two working days
from the time of the oral communication modifying the order.
(d) The Cost Plus Fixed FEE or Ceiling Amount: for each Delivery Order will be
the ceiling price stated therein and may not be exceeded except when authorized
by a modification to the Delivery Order.
<PAGE> 19
N00140-98-D-2139 Page 19
SECTION I CONTRACT CLAUSES
CLAUSES - ALL CONTRACT TYPES
The following contract clauses are hereby incorporated by reference:
<TABLE>
<CAPTION>
Clause No. Title
--------- -----
<S> <C>
52.202-1 Definitions (OCT 1995)
52.203-5 Covenant Against Contingent Fees (APR 1984)
52.203-7 Anti-Kickback Procedures (JUL 1995)
52.204-4 Printing/Copying Double-Sided on Recycled Paper
(JUN 1996)
52.223-14 Toxic Chemical Release Reporting (OCT 1996)
252.225-7031 Secondary Arab Boycott of Israel (JUN 1992)
252.231-7000 Supplemental Cost Principles (DEC 1991)
52.203-3 Gratuities (APR 1984)
52.203-8 Cancellation, Rescission, and Recovery of Funds
for Illegal or Improper Activity (JAN 1997)
52.203-10 Price or Fee Adjustment for Illegal or Improper
Activity (JAN 1997)
52.203-12 Limitation on Payments to Influence Certain
Federal Transactions (JUN 1997)
52.209-6 Protecting the Government's Interest When
Subcontracting with Contractors Debarred,
Suspended, or Proposed for Debarment (JUL 1995)
52.215-2 Audit and Records - Negotiation (AUG 1996)
52.215-8 Order of Precedence-Uniform Contract Format
(OCT 1997)
52.219-8 Utilization of Small, Small Disadvantaged and
Women-Owned Small Business Concerns (JUN 1997)
52.219-9 Small, Small Disadvantaged and Women-Owned Small
Business Subcontracting Plan (AUG 1996)
52.222-3 Convict Labor (AUG 1996)
52.222-26 Equal Opportunity (APR 1984)
52.222-35 Affirmative Action for Disabled Veterans and
Veterans of the Vietnam Era (APR 1998)
52.222-36 Affirmative Action for Workers with
Disabilities (JUN 1998)
52.222-37 Employment Reports on Disabled Veterans and
Veterans of the Vietnam Era (JAN 1998)
52.223-2 Clean Air and Water (APR 1984)
52.223-6 Drug-Free Workplace (JAN 1997)
52.226-1 Utilization of Indian Organizations and
Indian-Owned Economic Enterprises (SEP 1996)
52.232-17 Interest (JUN 1996)
52.232-23 Assignment of Claims (JAN 1986)
52.232-25 Prompt Payment (JUN 1997)
(a)(5)(i)30th DAY
(B)(1)30TH DAY
52.232-33 Mandatory Information for Electronic Funds
Transfer Payment (AUG 1996)
52.233-1 Disputes (OCT 1995)
52.242-13 Bankruptcy (JUL 1995)
52.248-1 Value Engineering (MAR 1989)
252.203-7002 Display of DoD Hotline Poster (DEC 1991)
</TABLE>
<PAGE> 20
N00140-98-D-2139 Page 20
<TABLE>
<S> <C>
252.204-7003 Control of Government Personnel Work Product (APR 1992)
252.205-7000 Provision of Information to Cooperative Agreement Holders
(DEC 1991)
252.219-7004 Small, Small Disadvantaged and Women-Owned Small Business
Subcontracting Plan (DoD Contracts) (APR 1996)
252.219-7005 Incentive for Subcontracting with Small Businesses, Small
Disadvantaged Businesses, Historically Black Colleges and
Universities, and Minority Institutions (NOV 1995)
(a) 0 percent
252.227-7015 Technical Data - Commercial Items (NOV 1995)
252.227-7019 Validation of Asserted Restrictions - Computer Software
(JUN 1995)
252.244-7000 Subcontracts for Commercial Items and Commercial Components
(DOD Contracts) (FEB 1997)
</TABLE>
CLAUSES - FIXED-PRICE SERVICE
The following contract clauses are hereby incorporated by reference:
<TABLE>
<CAPTION>
Clause No Title
<S> <C>
52.203-6 Restrictions on Subcontractor Sales to the Government (JUL 1995)
52.232-1 Payments (APR 1984)
52.233-3 Protest after Award (AUG 1996)
252.201-7000 Contracting Officer's Representative (DEC 1991)
52.219-9 Small, Small Disadvantaged and Women-Owned Small Business
Subcontracting Plan (AUG 1996)
52.229-4 Federal, State, and Local Taxes (Noncompetitive Contract)
(JAN 1991)
52.232-8 Discounts for Prompt Payment (MAY 1997)
52.232-11 Extras (APR 1984)
52.244-1 Subcontracts (Fixed-Price Contracts) (OCT 1997)
52.244-5 Competition in Subcontracting (DEC 1996)
52.246-25 Limitation of Liability-Services (FEB 1997)
52.249-2 Termination for Convenience of the Government (Fixed-Price)
(SEP 1996)
52.249-8 Default (Fixed-Price Supply and Service) (APR 1984)
</TABLE>
CLAUSES AND PROVISIONS - INDEFINITE DELIVERY
<TABLE>
<CAPTION>
Clause No Title
<S> <C>
52.216-18 Ordering (OCT 1995)
(a) issued from date of award through twelve months
52.216-19 Order Limitations (OCT 1995)
(a) less than $1,000.00
(b)(1) in excess of $2,000,000.00
(b)(2) in excess of $2,000,000.00
(b)(3) within 30 days
(d) within 10 days
</TABLE>
<PAGE> 21
N00140-98-D-2139 PAGE 21
Clause No. Title
52.216-22 Indefinite Quantity (OCT 1995)
(d) twelve months after date of contract
CLAUSES INCORPORATED BY REFERENCE (FAR 52.252-2) (FEB 1998)
This contract incorporates one or more clauses by reference, with the same
force and effect as if they were given in full text. Upon request, the
Contracting Officer will make their full text available. Also, the full text of
a clause may be accessed electronically at this/these address(es):
http://www-far.npr.gov
OPTION TO EXTEND THE TERM OF THE CONTRACT (FAR 52.217.9) (MAR 1989)
(a) The Government may extend the term of this contract by written notice to
the Contractor within 30 days of contract expiration; provided, that the
Government shall give the Contractor a preliminary written notice of its intent
to extend at least 60 days before the contract expires. The preliminary notice
does not commit the Government to an extension.
(b) If the Government exercises this option, the extended contract shall be
considered to include this option provision.
(c) The total duration of this contract, including the exercise of any options
under this clause, shall not exceed 48 months.
<PAGE> 22
<TABLE>
<S><C>
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1. CONTRACT ID CODE PAGE OF PAGES
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT O 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
A00001 98 OCT 19
- -----------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE S0507A 7. ADMINISTERED BY (If other than Item 6) CODE
-------------- --------------
DCMC SAN FRANCISCO
1265 BORREGAS AVENUE
SUNNYVALE, CA 94089-1308
DCMON-GFOX/C. GORTON, 408-541-7015)
- -----------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and ZIP Code) [X] 9A. AMENDMENT OF SOLICITATION NO.
---
BEYOND.COM -----------------------------------------------
1195 WEST FREMONT AVENUE 9B. DATED (SEE ITEM 11)
SUNNYVALE, CA 94087
--------------------------------------------------
10A. MODIFICATION OF CONTRACT/ORDER
XX NO.
N0010498D2139
-----------------------------------------------
- -------------------------------------------------------------------------------- 10B. DATED (SEE ITEM 13)
CODE 04AE6 FACILITY CODE 98 SEP 11
- -----------------------------------------------------------------------------------------------------------------------------------
11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] The above numbered solicitation is amended as set forth in Item 14.4 The hour and date specified for receipt of Offers [ ] is
extended, [ ] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:
(a) By completing Items 8 and 15, and returning ___ copies of the amendment; (b) By acknowledging receipt of this amendment on each
copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment
numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE
SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted,
such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this
amendment, and is received prior to the opening hour and date specified.
- -----------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
NO CHANGE
- -----------------------------------------------------------------------------------------------------------------------------------
13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS
IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
- -----------------------------------------------------------------------------------------------------------------------------------
[X] A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT
- ---- ORDER NO. IN ITEM 10A.
- -----------------------------------------------------------------------------------------------------------------------------------
X B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying offices,
appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
- -----------------------------------------------------------------------------------------------------------------------------------
C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:
- -----------------------------------------------------------------------------------------------------------------------------------
D. OTHER (Specify type of modification and authority)
- -----------------------------------------------------------------------------------------------------------------------------------
E. IMPORTANT: Contractor [X] is not, [ ] is required to sign this document and return _____ copies to the issuing office.
- -----------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter
where feasible.)
THE PURPOSE OF THIS MODIFICATION IS TO:
(a) CORRECT BLOCK 24 ADMINISTERED BY TO READ "DCMC SAN FRANCISCO" IN LIEU OF DCMAO SAN FRANCISCO.
(b) CORRECT THE PAYMENT OFFICE IN BLOCK 25 TO READ: MQ0339
DFAS-COLUMBUS CENTER
WEST ENTITLEMENT OPERATIONS
P.O. BOX 182381
COLUMBUS, OH 43218-2381
Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
- -----------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
B.K. HESS
Administrative Contracting Officer
- -----------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED
BY BY /s/ B.K. HESS
---------------------------------------- ----------------------------------------
(Signature of person authorized to sign) (Signature of Contracting Officer) 98 OCT 19
- -----------------------------------------------------------------------------------------------------------------------------------
NSN 7540-01-152.8070 Created using ProForm software. STANDARD FORM 30 (REV. 10-85)
PREVIOUS EDITION UNUSABLE Prescribed by GSA
FAR (48 CFR) 53.243
</TABLE>
<PAGE> 23
<TABLE>
<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
ORDER FOR SUPPLIES OR SERVICES Form Approval PAGE 1 OF 4
OMB No. 0706-0187
(Contractor must submit four copies of invoice) Expires Jun 30, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Public reporting burden for this collection of information is estimated to average 1 hour per requirement, including the time for
reviewing instructions, searching existing sole sources, gathering and maintaining the ???? ??????, and completing and reviewing the
collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information
including suggestions for reducing this burden to Department of Defense, Washington Headquarters Services, Directorate for
Information Operations and Reports, 1216 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302 and to the Office of
Management and Budget, Paperwork Reduction Project (0704-0187), Washington, DC 20503.
PLEASE DO NOT RETURN YOUR FORM TO EITHER OF THESE ADDRESSES.
SEND YOUR COMPLETED FORM TO THE PROCUREMENT OFFICIAL IDENTIFIED ITEM 6.
- ------------------------------------------------------------------------------------------------------------------------------------
1. CONTRACT/PURCH ORDER NO 2. DELIVERY ORDER NO 3. DATE OF ORDER 4. REQUISITION PURCH REQUEST NO 5. PRIORITY
(YYMMDD)
N00140-98-D-2139 0001 11 SEP 98 MIPRST98893D16 NONE CITED
- ---------------------------------------------------------------------------------------------------------------
6. ISSUED BY CODE N00140 7. ADMINISTERED BY (If other than Item 6) CODE S0507A
-------- ------------------------
FISC NORFOLK DETACHMENT PHILADELPHIA DCMAO SAN FRANCISCO 8. DELIVERY FOR
700 ROBBINS AVENUE, BLDG. 2B 1265 BORREGAS AVENUE [X] DEST
PHILADELPHIA, PA 19111-5083 SUNNYVALE, CA 94089 [ ] OTHER
GUY GOSS, CODE 02P2A, (215) 697-9662 (See Schedule if other)
- ------------------------------------------------------------------------------------------------------------------------------------
9. CONTRACTOR CODE 04AE6 FACILITY CODE 10. DELIVER TO FOB POINT BY (Date) 11. MARK IF
------- ------ (YYMMDD) BUSINESS IS
BEYOND.COM SEE SCHEDULE [ ] SMALL
NAME AND 1195 WEST FREMONT AVENUE ---------------------------------- [ ] SMALL DISAD-
ADDRESS SUNNYVALE, CA 94087 12. DISCOUNT TERMS ADVANTAGED
NET 30 DAYS [ ] WOMEN-OWNED
----------------------------------------------------
13. MAIL INVOICES TO
SEE SCHEDULE
- ------------------------------------------------------------------------------------------------------------------------------------
14. SHIP TO CODE 15. PAYMENT WILL BE MADE BY CODE
------ ------ MARK ALL
PACKAGES AND
SEE SECTION C OF THE CONTRACT PAPERS WITH
CONTRACT OR
ORDER NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
16 DELIVERY X This delivery order is issued on another Government agency or in accordance with and subject to terms and
conditions of above numbered contract.
TYPE ----------------------------------------------------------------------------------------------------------------------------
OF PURCHASE Reference your _______ furnish the following on items specified herein.
ORDER ---------------------------------------------------------------------------------------------------------------
- -------------------- ACCEPTANCE: THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY
PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO
PERFORM THE SAME.
BEYOND.COM /s/ KENDALL M. FARGO Kendall M. Fargo, V.P. of Sales 980911
------------------ -------------------- ------------------------------- -----------
NAME OF CONTRACTOR SIGNATURE TYPED NAME AND TITLE DATE SIGNED
(YYMMDD)
[ ] If this box is marked, supplier must sign Acceptance and return the following number of copies:
- ------------------------------------------------------------------------------------------------------------------------------------
17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE
SEE SCHEDULE
- ------------------------------------------------------------------------------------------------------------------------------------
18. 19. 20. QUANTITY 21. UNIT 22. 23.
ITEM NO SCHEDULE OF SUPPLIES/SERVICES ORDERED/ UNIT PRICE AMOUNT
ACCEPTED*
- ------------------------------------------------------------------------------------------------------------------------------------
SEE PAGE 2
- ------------------------------------------------------------------------------------------------------------------------------------
* If quantity accepted by 24. UNITED STATES OF AMERICA 25. TOTAL $1,773,681.80
the Government is same as --------------------------------------------
quantity ordered, initial /s/ J. J. SWIZEWSKI 29.
by *. If different, enter BY: J. J. SWIZEWSKI CONTRACTING/ORDERING OFFICER DIFFERENCES -------------------
actual quantity accepted
before quantity ordered and
initial.
- ------------------------------------------------------------------------------------------------------------------------------------
26. QUANTITY IN COLUMN 20 HAS BEEN 27. SHIP NO 28. DO VOUCHER NO 30. _________________
_______ INITIALS
[ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE [ ] PARTIAL ----------------------------------------------------
CONTRACT EXCEPT AS NOTED [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR
- ------------- ------------------------------------------------- ------------- -------------------------------
DATE SIGNATURE OF AUTHORIZED GOVERNMENT 31. PAYMENT 34. CHECK NUMBER
REPRESENTATIVE
- ---------------------------------------------------------------- [ ] COMPLETE -------------------------------
36. I certify this Account is correct and proper for payment. [ ] PARTIAL 35. BILL OF LADING NO
[ ] FINAL
- ------------- -------------------------------------------------
DATE SIGNATURE OF CERTIFYING OFFICER
- ------------------------------------------------------------------------------------------------------------------------------------
37. RECEIVED AT 38. RECEIVED BY (Print) 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. A/P ACCOUNT NUMBER 42. A/P VOUCHER NO
- ------------------------------------------------------------------------------------------------------------------------------------
DD Form 1166, JUN 94 PREVIOUS EDITION MAY BE USED
</TABLE>
<PAGE> 1
Exhibit 10.2
CO-HOSTING AGREEMENT
This Co-Hosting Agreement (the "Agreement") is made by and between NETWORKS
ASSOCIATES, INC., a Delaware corporation, doing business as Network Associates,
Inc., with its principal place of business at 3965 Freedom Circle, Santa Clara,
California 95054 ("NAI"), and SOFTWARE.NET CORPORATION, a Delaware corporation,
a.k.a. Beyond.com, with its principal place of business at 1195 West Fremont
Avenue, Sunnyvale, California 94087 ("Co-Host"). The Effective Date of this
Agreement (herein called the "Effective Date") is September 21, 1998.
RECITALS
WHEREAS, Co-Host owns various Internet locations, including the location
set forth in Part 1 of Exhibit "A" hereto (the "Co-Host Site") and markets
software and computer hardware products from the Co-Host Site (herein referred
to as the "Goods").
WHEREAS, Co-Host, as successor of Cybersource Corporation, and NAI are
parties to an Electronic Software Distribution Agreement, dated as of September
1, 1997 regarding the electronic distribution of NAI's Goods (the "ESD
Agreement").
WHEREAS, NAI has developed various Internet locations (the "NAI Internet
Sites") (with separate URL designations issued to NAI by InterNIC) (said
designations being herein referred to individually as an "URL") comprised of one
or more file servers, with an Internet access at the applicable URL. Those
portions of the NAI Internet Site or any future Internet locations developed by
NAI which are accessible by members of the general public are referred to herein
as the "Originating Locations." NAI permits the maintenance of "hot links" from
the Originating Locations to other Internet locations, whereby the end user can
transfer from the NAI Internet Sites to the Co-Host Site by clicking the
pointing device on highlighted text or images. "Originating Locations" does not
include the McAfee Mall (as defined in Part 2 of Exhibit "A") or web servers
within a firewall or accessible only by passwords or other similarly restricted
URLs (the "Restricted Sites"); provided, however, that the term Restricted Sites
shall not include sites accessible only through online services (such as AOL)
and other portals generally accessible to the public.
WHEREAS, NAI and Co-Host desire to place a Co-Host "hot link" for the Goods
at the Originating Locations and NAI and Co-Host desire to enter into certain
additional agreements regarding such marketing opportunities through the
Originating Locations.
THEREFORE, in consideration of the foregoing, and of the mutual covenants
and agreements hereinafter set forth, Co-Host and NAI have entered into the
agreements hereinafter set forth.
1
<PAGE> 2
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the Effective Date.
SOFTWARE.NET CORPORATION
(A.K.A. BEYOND.COM)
ADDRESS FOR NOTICES
1195 West Fremont Avenue
Sunnyvale, California 94087
Attention: President
By: /s/ JAMES R. LUSSIER
---------------------------------------
Name: James R. Lussier
Title: Vice President, Business Operations
Date: 9/21/98
NETWORKS ASSOCIATES, INC.
ADDRESS FOR NOTICES
1195 West Fremont Avenue
Sunnyvale, California 94087
Attention: President
By: [SIG]
---------------------------------------
Name: [ILLEGIBLE]
Title: CFO
Date: September 21, 1998
2
<PAGE> 3
TERMS AND CONDITIONS OF AGREEMENT
1. LOCATION. During the Term (as defined in Section 6 (a) below), NAI shall
provide the following marketing considerations to Co-Host:
(a) Co-Hosting Rights. Co-Host shall be permitted to maintain on the
Online Service Page (as defined in Part 2 of Exhibit "A") of the
Originating Locations in the manner set forth on Exhibit "B" hereto
(and on such other positions as are set forth on Exhibit "B" or as the
parties may mutually agree upon in writing from time to time) a hot
link to Internet locations specified by the Co-Host (the
"Destination") from which Goods (other than Competitor's Goods
(hereinafter defined)) may be sold. The web pages at the Destination
shall be maintained in accordance with the requirements of this
Agreement, including without limitation, Section 2 hereof.
"Competitor's Goods" as used herein shall mean the Goods of any of the
persons or entities described on Part 1 of Exhibit "C" attached hereto
and made a part hereof. The Destination shall not contain any links to
any third party sites for the purchase of Competitor's Goods; provided
that the Destination will link to the Co-Host Site (which will sell
Competitor's Goods).
(b) Exclusive Positioning. Co-Host shall be the exclusive reseller of
software products ("Software") at the Originating Locations. [*]
(c) Short Term Product Exclusives. [*]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3
<PAGE> 4
[*] "NAI Goods" as used herein shall mean retail desktop software
products offered by NAI under the "McAfee" brand or other NAI owned
brand, which NAI makes available for resale through distributors and
resellers via the Internet.
(d) Reference Site. Co-Host may refer to the Originating Locations as a
Co-Host customer location and to NAI as a Co-Host customer hereunder
provided all such references shall be subject to the prior review and
approval of NAI, which approval will not be unreasonably withheld.
(e) Links to Online Service Page. [*]
NAI reserves the right to change the URL of the Originating Locations from time
to time and agrees to give Co-Host as much notice of any such change as is
practicable.
2. MARKETING AND SALES.
(a) Placement of Order. In consideration of the Co-Hosting Fee set forth
in Part 3 of Exhibit "A", NAI shall provide the marketing
consideration identified in Section 1 during the Term of this
Agreement.
(b) Advertising Materials; Destination Operation. Co-Host shall provide to
NAI artwork and text materials with respect to the advertisement of
the Destination at the Originating Locations. Such artwork and
materials must be non-infringing, inoffensive, accurate, truthful and
otherwise comply with all applicable laws. Co-Host shall comply with
all applicable laws in connection with the operation of the
Destination, including without limitation, requirements regarding the
confidentiality of information concerning end users. NAI retains the
right, but not the obligation, to disapprove or remove any
advertisements or advertising materials it reasonably deems illegal,
inappropriate or otherwise inconsistent with the purposes of the
Originating Sites, without the consent of Co-Host.
(c) Use of Trademarks. Co-Host hereby grants to NAI a non-exclusive,
non-transferable, royalty-free license during the term of this
Agreement to use the trademarks, service marks and trade names of
Co-Host in connection with the advertising and promotion of the Goods
from the Originating Locations, provided that NAI complies with the
terms of Section 9(b) of the Web Site Services Agreement (as defined
below). Co-Host reserves the right to terminate the foregoing right,
after giving NAI notice and opportunity to cure the allegedly harmful
use, if in Co-Host's reasonable judgment, NAI's use of such
trademarks, service marks and trade names harms the business, image or
goodwill of Co-Host.
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4
<PAGE> 5
(d) Limited Duty of Promotion. NAI shall have no duty or obligation to
advertise or promote the Goods, other than as set forth in this
Section 2. Except as expressly set forth herein (including, without
limitation, as set forth in this Section 2(d)), NAI does not,
expressly or impliedly, guaranty or warrant any results or level of
sales or customer leads to Co-Host. NAI reserves the right to cease
publication of the Originating Locations for brief periods from time
to time for maintenance or other purposes; provided that the
Originating Locations will comply with the same "Uptime Requirements"
specified with respect to the "Managed Site" in the Web Site Services
Agreement.
(e) Marketing Promotions. During the Term, Co-Host and NAI will regularly
discuss and implement mutually agreed upon jointly funded marketing
promotions. NAI and Co-Host hereby agree that the marketing promotions
set forth on Exhibit "D" hereto will be implemented as set forth on
Exhibit "D".
(f) Distribution of Physical Products. NAI grants to Co-Host the right to
distribute physical copies of NAI's Goods to end users ordering from
the Managed Site, the Destination or Beyond.com upon the terms set
forth in Exhibit "E" attached hereto and made a part hereof.
3. PAYMENT AND RECORDS.
(a) Fees. Subject to the provisions of Section 6 hereof, Co-Host shall pay
to NAI the amount designated in Part 3 of Exhibit "A" as the
Co-Hosting Fee upon the schedule set forth in such Part.
(b) Payment Terms. Except as set forth in such Part 3 of Exhibit "A",
payments from Co-Host to NAI shall be due thirty (30) days from the
date of invoice. All payments will be made in United States dollars,
free of any taxes then currently applicable, at the address designated
above by NAI. Late payments shall bear interest at the lesser of: (i)
the maximum rate permitted by law, and (ii) the rate of 1.5% per month
from the due date until paid.
4. EQUITABLE RELIEF. Each party acknowledges that any breach of its
obligations under this Agreement with respect to the proprietary rights or
confidential information of the other party will cause the other party
irreparable injury for which there are inadequate remedies at law, and
therefore such other party will be entitled to equitable relief in addition
to all other remedies provided by this Agreement or available at law.
5. PROPRIETARY RIGHTS. NAI retains ownership of the NAI Internet Site, the
Originating Locations, the trademarks and all intellectual property rights
in connection with the NAI Internet Site, including without limitation, its
URL designations and all rights from InterNIC in connection therewith.
Co-Host and its licensors retain ownership of all intellectual property
rights in the advertising materials provided, the trademarks and all
intellectual property rights in connection with the Destination and the
Co-Host Site, including, without limitation, its URL designations and all
rights from InterNIC in connection therewith, and all of its other
intellectual property rights.
5
<PAGE> 6
6. TERM AND TERMINATION.
(a) Term. [*]
(b) Termination. [*]
(c) Effect of Termination. Upon the effective date of the termination, all
outstanding invoices and other invoicable amounts will become due and
payable. Co-Host's contractual right to the marketing consideration
shall cease immediately upon the effective date of the termination.
[*]
7. CONFIDENTIALITY. Confidential Information disclosed by either party in
writing and marked as "confidential," proprietary" or the like (or
disclosed verbally if a written summary is provided within thirty days),
including any information relating to such party's research, development,
proprietary technology, product and marketing plans, finances, personnel
and business opportunities will be considered confidential information.
Each party will not use the other party's confidential information except
as required to achieve the objectives of this Agreement and will not
disclose such confidential information except to employees, agents and
contractors who have a need to know in the discharge of their duties under
this Agreement. Such restrictions will not apply to information that
becomes public knowledge other than through the disclosing party, is
independently developed by the non-disclosing party, or is lawfully
required to be disclosed by any governmental agency or otherwise required
to be disclosed by law.
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
6
<PAGE> 7
Neither party will make any disclosure of, or statement covering, the terms
of this Agreement, including the financial terms, to any third parties
(other than its attorneys, accountants and professional consultants),
without obtaining the other's prior written consent, except as required by
court order or applicable regulatory authorities, including without
limitation, the rules and regulations of the Securities and Exchange
Commission, any stock exchange and the NASDAQ. The parties agree that under
their current understanding, disclosure of the financial terms of this
Agreement is not required under the foregoing rules and regulations. The
obligations of this Section 7 shall survive the termination of this
Agreement, under any circumstances. The parties shall make a joint press
release announcing the relationship, the timing and content of which shall
be subject to the mutual agreement of the parties.
8. RELATIONSHIP OF THE PARTIES. The parties are independent contractors and
not partners, joint venturers or agents, and neither party may obligate the
other to any warranty or other obligation. Neither NAI nor Co-Host is by
virtue of this Agreement authorized as an agent or other representative of
the other party.
9. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.
(a) Co-Host represents and warrants to NAI that Co-Host has all right,
title, ownership interest and/or marketing rights necessary to provide
the advertising materials to NAI, to perform its obligations hereunder
and to operate the Destination. Each party further represents and
warrants to the other that it has not entered into any agreements or
commitments which are inconsistent with or in conflict with the rights
granted or obligations incurred by the representing party in this
Agreement. Co-Host further represents and warrants that the
advertising materials supplied hereunder do not infringe any Covered
Country (hereinafter defined) copyright, trademark, or trade secret
right. Covered Country shall mean the United States of America and any
member state of the European Economic Union. Co-Host agrees that, if
notified promptly in writing and given sole control of the defense and
all related settlement negotiations, it will defend NAI, its
employees, officers and agents, against any claim based on an
allegation that (i) advertising materials supplied hereunder infringes
a Covered Country patent, copyright, trademark or state trade secret
right, or (ii) Co-Host violated any law, statute or ordinance or any
governmental or administrative order, rule or regulation with regard
to the advertising materials, the operation of the Destination or the
manufacture, possession, distribution, use or sale of the Goods.
Co-Host will pay any resulting costs, damages and attorneys' fees
finally awarded by a court, or agreed to in settlement by Co-Host,
with respect to any such claims. NAI agrees that, if the advertising
materials become, or in Co-Host's opinion are likely to become, the
subject of an infringement claim, NAI will permit Co-Host, at
Co-Host's option and expense, to, among other things, procure the
right for NAI to continue marketing and using the advertising
materials, or to replace or modify them so that they become
non-infringing.
7
<PAGE> 8
(b) NAI represents and warrants that NAI has all right, title, ownership
interest and/or marketing rights necessary to operate the Originating
Locations, provide the Products to Co-Host, and the Products shall be
free and clear of all liens and encumbrances. NAI further represents
and warrants that it has not entered into any agreements or
commitments which are inconsistent with or in conflict with the rights
granted to Co-Host in this Agreement. NAI further represents and
warrants that the Products supplied hereunder do not infringe any
Covered Country patent, copyright, trademark, or trade secret right.
NAI agrees that, if notified promptly in writing and given sole
control of the defense and all related settlement negotiations, it
will defend Co-Host, its employees, officers and agents against any
claim based on an allegation that (i) a Product supplied hereunder
infringes a Covered Country patent, copyright, trademark or trade
secret right, or (ii) NAI violated any law, statute or ordinance or
any governmental or administrative order, rule or regulation with
regard to a Product or its manufacturer, possession, use or sale. NAI
will pay any resulting costs, damages and attorneys' fees finally
awarded by a court, or agreed to in settlement by NAI, with respect to
any such claims to the extent of the compensation received under this
Agreement. Co-Host agrees that, if the Products in the inventory of
Co-Host, or the operation thereof, become, or in NAI's opinion are
likely to become, the subject of an infringement claim, Co-Host will
permit NAI, at NAI's option and expense, to, among other things,
procure the right for Co-Host to continue marketing and using such
Products, or to replace or modify them so that they become
non-infringing. If neither of the foregoing alternatives is available
on terms that NAI deems reasonable, Co-Host will return such Products
on written request from NAI. NAI will grant Co-Host a credit equal to
the price paid by Co-Host for such returned Products, as adjusted for
discounts, returns and credits actually given, provided that such
returned Products are in an undamaged condition. NAI will have no
obligation to Co-Host with respect to infringement of patents,
copyrights, trademarks or trade secrets or other proprietary rights
beyond that stated in this Section 9(b).
(c) No Combination Claims. Notwithstanding Section 9(b), NAI will not be
liable to Co-Host for any claims to the extent they arise solely based
upon the combination, operation or use of any Product with equipment,
data or programming not supplied by NAI, or to the extent they arise
solely based upon the alteration or modification of the Products by
the Co-Host or the purchaser of such Products.
10. LIMITATION OF LIABILITY. [*] EXCLUSIVE OF ANY CLAIMS BY THIRD PARTIES FOR
INJURY OR DAMAGES TO PERSONS OR TANGIBLE PROPERTY DIRECTLY CAUSED BY ANY
PRODUCT, NEITHER PARTY'S LIABILITY WITH REGARD TO THIS AGREEMENT OR THE
ADVERTISING MATERIALS, IF ANY, WILL INCLUDE CONSEQUENTIAL, INCIDENTAL,
SPECIAL OR OTHER INDIRECT DAMAGES, SUCH AS LOST PROFITS, EVEN IF
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
8
<PAGE> 9
THE OTHER PARTY HAS KNOWLEDGE OF THE LIKELIHOOD OF SUCH DAMAGES.
11. FORCE MAJEURE. Neither party shall be liable for the failure to perform any
of its obligations under this Agreement, except for payment obligations, if
such failure is caused by the occurrence of any event beyond the reasonable
control of such party, including without limitation, fire, flood, strikes
and other industrial disturbances, failure of raw materials suppliers,
failure of transport, accidents, transmission difficulties, phone service
interruptions, riots, insurrections, acts of God or orders of governmental
agencies.
12. GENERAL.
(a) This Agreement, the Web Site Services Agreement and the certain ESD
Agreement between the parties set forth the entire agreement between
the parties on all subject matters and supercede all prior agreements
and understandings between the parties.
(b) This Agreement may not be changed, terminated or amended except in
writing. Whenever the consent of any party is required hereunder, such
consent may be given or withheld in such party's sole discretion and
with or without reason or cause, unless this Agreement states
otherwise.
(c) The parties agree that the terms and conditions of this Agreement
shall prevail over any contrary or additional terms in any purchase
order (unless agreed to in writing by both parties), sales
acknowledgment, confirmation or any other document issued by either
party affecting the purchase and/or sale of Goods. The terms of the
Exhibits to this Agreement shall be equal in importance to the terms
of the body of this Agreement.
(d) Either party's failure or delay in exercising any of its rights will
not constitute a waiver of such rights unless expressly waived in
writing. Neither party may assign this Agreement without the other's
prior written approval, except by operation of law or in connection
with the sale of substantially all of the assets of such party's
business or the acquisition of such party by a third party.
(e) This Agreement will be governed and interpreted according to the laws
of the State of California, without reference to principles of
conflicts of laws. Each party hereto expressly consents to the
personal jurisdiction of the state and federal courts located in Santa
Clara County, California, and expressly waives any defense to any
action based on inconvenient forum, choice of venue, lack of personal
jurisdiction, sufficiency of service of process or the like.
(f) In the event of any litigation or arbitral proceeding between they
parties regarding this Agreement, the advertising materials or the
obligations of the parties hereunder, the party not prevailing therein
shall pay the reasonable attorneys' fees and court costs of the party
prevailing therein.
9
<PAGE> 10
(g) If a court of law finds any provision of this Agreement unenforceable,
the parties agree to modify such provision to the extent necessary to
make it legal and enforceable while preserving its intent and the
economic effect of the unenforceable provision.
(h) Any notices and demands provided hereunder must be in writing and will
be deemed given upon the earlier of actual receipt or two (2) days
after being sent by overnight Federal Express or Express Mail, return
receipt requested, to the appropriate address set forth above, as such
contacts and addresses may be changed by written notice to the other
party.
10
<PAGE> 11
EXHIBIT "A"
Additional Agreement Terms
(with location of first reference in Agreement)
1. Destination (Recitals)
www.mol.com or any successor site, which shall be the page to which traffic
is directed from the public NAI URLs.
Co-Host Site
www.beyond.com
2. Certain Definitions
1. "Aggregate Revenue" [*]
2. [*]
3. McAfee Mall shall mean the same thing as the Managed Site under the Web
Site Services Agreement.
4. Online Service Page shall mean the general reference page for the NAI
Sites established under the URL www.mol.com or any successor URL.
5. [*]
3. Co-Hosting Fee (Section 2(a))
[*]
(a) [*]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
11
<PAGE> 12
(b) [*]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
12
<PAGE> 13
EXHIBIT "B"
SPECIFICATIONS FOR HOT LINK FROM THE ONLINE SERVICE PAGE OF ANY
ORIGINATING LOCATION
[*]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
13
<PAGE> 14
EXHIBIT "C"
COMPETITORS OF NAI
PART 1
[*]
COMPETITORS OF CO-HOST
PART 2
[*]
THE PARTIES AGREE TO ACT IN GOOD FAITH IN MODIFYING THE ABOVE LIST OF
COMPETITORS.
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
14
<PAGE> 15
EXHIBIT "D"
Joint Marketing Programs
PROGRAM: FUNDING:
1. [*]
2. [*]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
1
<PAGE> 16
EXHIBIT "E"
DISTRIBUTION ADDENDUM
WHEREAS, NAI owns and/or markets certain computer software and hardware
products set forth on Exhibit "A" ("Products").
WHEREAS, Co-Host is an independent reseller of computer products to end
users ordering products through web sites on the Internet operated by Co-Host.
WHEREAS, Co-Host distributes electronic copies of the Products pursuant to
the ESD Agreement.
WHEREAS, Co-Host desires to distribute the Products and NAI desires to make
the Products available to Co-Host for further distribution.
THEREFORE, in consideration of the foregoing, and of the mutual covenants
and agreements hereinafter set forth, NAI and Co-Host enter into the following
additional agreements regarding the Products:
1. APPOINTMENT. NAI appoints Co-Host as a non-exclusive distributor of the
Products to end users ordering the Products from the Destination or the
Co-Host Site, and Co-Host accepts this appointment. Co-Host shall
distribute the Products, as an independent reseller, at its own risk and
expense and subject to any such prices, contractual terms and conditions as
Co-Host may from time to time determine. Nothing in this Agreement shall
prohibit Co-Host from distributing competing products in the Territory. The
"Territory" as that term is used herein shall mean all countries in the
world except countries to which export or re-export of any Product, or the
direct products of any Product is prohibited by United States law without
first obtaining the permission of the United States Office of Export
Administration or its successor. Co-Host shall not have the right to assign
or otherwise transfer this Agreement or any rights herein granted to any
other person or entity, except by operation of law or in connection with
the sale of all of its assets, or the acquisition of the Co-Host by a third
party. Any such attempted assignment shall be void and the Agreement shall
remain in effect.
2. DISTRIBUTION. Co-Host has the right to market and distribute the Products
subject to the license agreement that accompanies such Product. Co-Host may
not engage in the rental of any of the Products. Co-Host shall not in any
event remove from or obscure upon any Products any labels placed thereon by
NAI containing statements of restrictions upon distribution, without the
prior written consent of NAI. NAI reserves the right in its sole discretion
and without liability to Co-Host to add additional Products, change the
prices for the Products pursuant to Section 5, modify the Products, change
the level of NAI's support for the Products and discontinue the
availability of any Product. Any addition or deletion from the list of
Products will be indicated by NAI's revision to the NAI price list, and NAI
will use reasonable efforts to provide Co-Host with thirty (30) days notice
prior to the effective date of such changes indicated on the NAI price
list.
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<PAGE> 17
3. MARKETING.
(a) General. Co-Host will use commercially reasonable efforts to market
the Products it orders to the best of its ability, and to that end
will (i) conduct marketing activities authorized by NAI, (ii) support
special promotions initiated by NAI, and (iii) maintain a sound
financial condition. Co-Host will conduct its business in a manner
that reflects favorably upon the Products and NAI.
(b) Advertising; Use of Trademarks. Co-Host may advertise and promote the
Products in a commercially reasonable manner and, subject to the
provisions of Section 5 of the Co-Hosting Agreement, may use
trademarks, service marks and trade names provided by NAI in
connection therewith, provided that all such promotions and
advertising will be consistent with NAI's general quality standards
and the provisions of Section 5 of the Co-Hosting Agreement. Unless
otherwise agreed upon in writing by NAI, Co-Host will submit each
advertisement and promotion to NAI for trademark review and approval
prior to initial release, which approval will not be unreasonably
delayed or withheld. All such usage which was not expressly approved
by NAI must be terminated immediately upon receipt of notice from NAI
to that effect.
(c) Trademarks Rights. NAI owns any and all trademarks, trade names, and
service marks for the Products (as noted in Section 5 of the
Co-Hosting Agreement). Such trademarks, trade names, and service marks
shall include all product names, the names "Network Associates,"
logos, designs, and other designations or brands used by NAI in
connection with the Products. Co-Host acknowledges and agrees that NAI
is not granting to Co-Host any rights in any Product trademark, trade
name, or service mark in or outside of the Territory.
4. INSPECTIONS, RECORDS AND REPORTING.
(a) Sales Out Reports. Co-Host will provide to NAI within ten (10) days
after the end of each calendar month, a computer media data file in
the format established by NAI showing, for such month, Co-Host's total
sales, by customer and by Product from each location. If requested by
NAI, Co-Host shall provide such reports with respect to weekly periods
or bi-weekly periods prior to the end of the calendar month in which
such period occurs.
(b) Inventory Level Reports. Co-Host will provide to NAI on Monday of each
week, a computer media data file in the format established by NAI
showing Co-Host's current inventory levels of each Product (including
items in transit), and weekly runrate snapshots and the other
information reasonably requested by NAI.
(c) Records. For three (3) years after each calendar quarter during the
term of this Agreement, Co-Host will keep, at Co-Host's office, full
and accurate books of account and copies of all documents and other
materials for such quarter relating to this Agreement and Co-Host's
records, accounts and contracts relating to the distribution of the
Products.
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<PAGE> 18
(d) Audit. NAI may inspect the records described in Sections 4(c) upon
demand from time to time. In addition, Co-Host agrees to allow NAI's
independent auditors to audit and analyze appropriate accounting
records of Co-Host from time to time (but not more than one every six
(6) months) to ensure compliance with all terms of this Agreement. Any
such audit shall be permitted by Co-Host within fifteen (15) days of
Co-Host's receipt of NAI's written request to audit, during normal
business hours. The cost of such an audit will be borne by NAI unless
a material discrepancy indicating inadequate record keeping or that
additional fees due to NAI are discovered, in which case the cost of
the audit shall be borne by Co-Host. A discrepancy shall be deemed
material if it involves payment or adjustment of more than five
percent of the amount reported in favor of NAI. Audits and inspections
shall not interfere unreasonably with Co-Host's business activities.]
5. ORDERING AND PAYMENT.
(a) [*]
(b) [*]
(c) [*]
(i) [*]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE> 19
(ii) [*]
(iii) [*]
(iv) [*]
(d) [*]
(e) TAXES.
(i) All amounts payable by Co-Host to NAI under this Agreement are
exclusive of any tax, withholding tax, levy, or similar
governmental charge that may be assessed by any jurisdiction in
or outside the Territory except income and similar taxes levied
on and payable by NAI. Such taxes, withholding taxes, levies, and
governmental charges (collectively "Taxes") include Taxes based
on sales, use, excise, import or export values/fees, value-added,
income, revenue, net worth, or may be the result of the delivery,
possession, or use of the Products, the execution or performance
of this Agreement or otherwise. Should any Taxes be due, Co-Host
agrees to pay such Taxes and indemnify NAI for any claim for
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE> 20
such Taxes demanded. Co-Host shall make no deduction from any
amounts owed to NAI for any Taxes. Co-Host covenants to NAI that
all Products distributed hereunder will be in the ordinary course
of Co-Host's business, and Co-Host agrees to provide NAI with
appropriate information and/or documentation satisfactory to the
applicable taxing authorities to substantiate any claim of
exemption from any Taxes.
(ii) For all Taxes paid by Co-Host, Co-Host shall provide to NAI
within forty-five (45) days after the end of any quarter, a
certificate of tax payment documenting the payment and amount of
the Taxes paid during the preceding quarter.
6. SHIPMENT, RISK OF LOSS AND DELIVERY.
(a) Shipment. All the physical Products will be shipped by NAI, F.C.A.
(Incoterms 1990) place of shipment. Co-Host is responsible for paying
all freight charges, transportation expenses, insurance charges, all
applicable taxes, duties, import and export fees and similar charges
associated with the delivery of the Products to Co-Host. All shipments
will be made using either any carrier approved by both Co-Host and
NAI. Co-Host will not without NAI's prior written consent, submit any
order calling for the shipment of a Product to more than a single
redistribution site.
(b) Risk of Loss. All risk of loss of or damage to the Products will pass
to Co-Host upon delivery by NAI to the common carrier. Co-Host will
bear the risk of loss or damage in transit.
(c) Partial Delivery. Unless Co-Host clearly advises NAI to the contrary
in writing NAI, may make partial shipments on account of Co-Host's
orders which shall, to be separately invoiced and paid for when due.
7. RETURNS.
(a) Returned Merchandise Authorization. Notwithstanding anything to the
contrary herein contained, NAI will not issue credit to nor be
obligated to accept returns for any reason for any physical Products
unless NAI shall have previously issued a written Return Merchandise
Authorization ("RMA"). The preceding sentence governs whether or not
NAI is obligated to issue an RMA under this Agreement or applicable
law. RMAs must be in writing, signed by NAI and only authorize the
return of Products in good resalable conditions unless expressly
provided otherwise herein. If damaged goods are received pursuant to
an RMA, no credit shall be given by NAI with respect to such damaged
goods unless the RMA indicates otherwise. Co-Host shall be responsible
for all freight charges for goods returned pursuant to an RMA, unless
otherwise indicated herein or in the RMA.
(b) Customer Returns and Bad Box. Subject to Section 7 (a), Co-Host may,
during the term of this Agreement, obtain a credit against current or
future invoices from
6
<PAGE> 21
NAI, for Products which have been returned by end users as defective,
or pursuant to the warranty stated in NAI's end user license. Such
credit will be in an amount equal to the original invoice price less
any discounts or other credits previously received. Co-Host shall also
have the ability to return for credit Products which have boxes that
are or become damaged, unless such damage was caused by Co-Host. An
offsetting purchase order must be placed for all bad box returns. In
the event of claims by end users of incomplete Product, NAI, at its
discretion, may supply to Co-Host, at no charge, any and all missing
materials which are supposed to be provided with the current release
of such Products or replace the entire Products in such situation.
(c) Discontinued Products. Co-Host may, during the term of this Agreement,
obtain a credit for the price paid by Co-Host to be applied against
current or future invoices, for all versions of Products shipped by
NAI within the previous ninety (90) days that NAI discontinues or
which are removed from NAI's current retail price list. Such credit
will be equal to the price paid by Co-Host for such obsolete Products,
less discounts received under Section 5 of this Agreements. All such
discontinued Products will be counted and inspected at the Inspection
Site by NAI's employee, and upon NAI's acceptance thereof (which will
be a condition of Co-Host's eligibility for a credit hereunder) such
Products will be promptly and completely destroyed or, if requested by
NAI, such Products or any portion thereof will be returned to NAI as
it directs. No Product shall be deemed discontinued if a later version
of the Product is still being offered by NAI and end users may obtain
the current version of such Product from NAI electronically at no
additional charge.
(d) Freight. Co-Host will pay all costs (including freight) associated
with the return of the Products to NAI and back to Co-Host as provided
herein, except that NAI will be responsible for all freight costs
associated with (i) the return of Products under Section 7(b), (ii)
the return of any discontinued or obsolete Products under Section
7(c), and (iii) the return of other Product updates agreed upon by NAI
and Co-Host.
8. GENERAL.
(a) Co-Host agrees that it will not, directly or indirectly, export or
transmit the Product and technical data (or any part thereof) or any
process or service that is the direct product of the software and
documentation, to any group S or Z country specified in Supplement No.
1 of Section 770 of the Export Administration Regulations or to any
other country to which such export or transmission is restricted by
such regulation or statute, without the prior written consent, if
required, of the Office of Export Administration of the U.S.
Department of Commerce, or such other governmental entity as may have
jurisdiction over such export or transmission.
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<PAGE> 22
(b) Co-Host acknowledges that some NAI Products hereto contain encryption
and some are export restricted (the "Restricted Software") by the U.S.
Department of Commerce's Bureau of Export Administration (BXA).
Co-Host further acknowledges that for this reason, the export of such
items may subject the Co-Host or its executives to fines and/or other
severe penalties. Unless all required permits and/or approvals have
been obtained, Co-Host shall not export or re-export the Restricted
Software outside of the United States, whether directly or indirectly,
and will not cause, approve or otherwise facilitate others such as
agents, subsequent purchasers, licensees or any other third parties in
doing so. The parties agree to cooperate with each other with respect
to any application for any required licenses and approvals. However,
Co-Host acknowledges it is their ultimate responsibility to comply
with all export laws with respect to the Restricted Software and that
NAI has no further responsibility after the initial sale to the
Co-Host within the United States.
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<PAGE> 23
EXHIBIT "A" TO EXHIBIT "E"
1. PRODUCTS COVERED (RECITALS). Product(s) provided to Co-Host shall be all
NAI Goods as that term is defined in Section 1 (c) of the Agreement and no other
products.
2. PRICES AND DISCOUNTS (SECTION 5(a)).
[*]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 1
Exhibit 10.3
WEB SITE SERVICES AGREEMENT
This Web Site Services Agreement (the "Agreement") is made and entered into
effective as of September 21, 1998, by and between software.net Corporation, a
Delaware corporation, a.k.a. Beyond.com, located at 1195 West Fremont Avenue,
Sunnyvale, California 94087 ("Reseller") and Networks Associates, Inc., a
Delaware corporation, doing business as Network Associates, Inc. located at 3965
Freedom Circle, Santa Clara, California 95054 ("Vendor" or "NAI").
BACKGROUND
(a) Vendor is the owner of all rights to (or has a license to sell) the
Software.
(b) Reseller, as successor of Cybersource Corporation, and Vendor are parties
to an Electronic Software Distribution Agreement, dated September 1, 1997,
regarding the electronic distribution of NAI's Products (the "Reseller
Agreement").
(c) Vendor and Reseller have simultaneously herewith entered into a certain
Co-Hosting Agreement (herein so called) relating to the offering of
software and computer hardware from Vendor's public web sites (other than
the web site maintained by Vendor at www. mcafeemall.com (or such other
name as the site may be given from time to time, including, without
limitation, the "McAfee Store") (the "Managed Site")).
(d) Vendor desires to enter into this Agreement, whereby Reseller would be
responsible for operating and managing certain aspects of the Managed Site
on behalf of Vendor for the purpose of electronically distributing Vendor's
Products to End-User customers in accordance with the terms and conditions
of this Agreement.
NOW THEREFORE, in consideration of the foregoing, and of the mutual covenants
and agreements hereinafter set forth, the parties hereby agree as follows:
1. DEFINITIONS.
Unless otherwise defined herein, the terms used in this Agreement shall have the
following meanings:
(a) CONTENT: means the text, pictures, sound, graphics, video and other data
that appears on the applicable web page or web site.
(b) CUSTOMIZED CONTENT: means the Vendor-specific content that is set up by
Reseller under this Agreement for the Managed Site. Customized Content
shall be subject to the prior approval of Vendor and its continued
placement on the Managed Site thereafter shall be subject to the results of
the quarterly status meetings described on Exhibit "A". The Customized
Content which Vendor initially approves for placement upon on Managed Site
is described on Exhibit "B" attached hereto and made a part hereof.
<PAGE> 2
(c) VENDOR CONTENT: means the content specifically provided by Vendor to be
included in the Managed Site.
(d) RESELLER CONTENT: means content specifically provided by Reseller to be
included in the Managed Site. Reseller Content shall be subject to the
prior approval of Vendor and its continued placement on the Managed Site
thereafter shall be subject to the results of the quarterly status meetings
described on Exhibit "A".
(e) RESELLER PROPRIETARY HOST SYSTEM: means Reseller's proprietary engine that
is maintained on Reseller's servers and that permits Vendor Clients to
review literature and place orders to obtain Vendor Products via the world
wide web.
(f) RESELLER TRADEMARKS: means the trademarks, service marks, trade names and
logos used by and owned by Reseller.
(g) VENDOR CLIENT: means a customer of Vendor that utilizes the Managed Site.
(h) VENDOR TRADEMARKS: means the trademarks, service marks, trade names and
logos used by and owned by Vendor.
(i) SOFTWARE: means retail desktop software products offered by Vendor under
the "McAfee" brand or other Vendor owned brand, which Vendor makes
available for sale via the Internet. The term "Product" shall have the same
meaning as the term Software.
(j) OTHER TERMS: Other capitalized terms used herein shall have the same
meaning as provided in the Co-Hosting Agreement unless the context requires
otherwise.
2. VENDOR OBLIGATIONS.
(a) Vendor shall establish and maintain the appropriate hypertext links from
its Online Service Page and the NAI Internet Sites to the designated URL or
URLs for the Managed Site under the designation, the McAfee Mall, McAfee
Store or such other designation as may be give to the Managed Site. Such
links shall be of reasonable prominence to give sufficient notice to
viewers of Vendor's Online Service Page.
(b) Other than technical support related to Vendor Clients' purchases and
downloading of the Vendor Products, Vendor shall provide all other support
to Vendor Clients, including without limitation, the support being provided
in accordance with its current technical support policies.
(c) Vendor shall cooperate and work with Reseller in accordance with the terms
of the Miscellaneous section of Exhibit "A" of this Agreement.
(d) Except for those Products listed in Exhibit "A" of this Agreement, Vendor
shall not sell Vendor's or other third party software (including the
Products) from its public web sites except through the Managed Site or the
Destination (as defined in the Co-Hosting Agreement). Vendor agrees that
any software and computer hardware offered for sale on
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<PAGE> 3
the Managed Site must be fulfilled, at Vendor's election, through the
Managed Site, the Destination or must link to the Co-Host Site (as defined
in the Co-Hosting Agreement). Vendor will not advertise on the Managed Site
(whether with banners, buttons or other forms of online advertising) or
link directly to web sites which are involved in the resale of software
from such page on the web sites.
(e) Vendor will display on each page of the Managed Site a statement to the
effect that the Managed Site is operated by Vendor in partnership of with
Reseller. The parties will agree in good faith on the prominence and exact
format of such statement on each such page with increasing prominence to be
given to such statement on the online order pages of the Managed Site.
(f) Vendor will reasonably promote and operate the Managed Site.
3. RESELLER OBLIGATIONS.
(a) Reseller will build, maintain and manage the online order pages of the
Managed Site (the "Order Pages") to process orders for Vendor Products both
for electronic software download ("ESD") and for physical delivery. The
structure of the Order Pages shall be based on Reseller's standard
templates, but the graphical content, including the Customized Content will
be subject to the approval of Vendor. All buttons, links and labels for the
Managed Site shall be labeled McAfee Mall, McAfee Store or other
designation approved by Vendor.
(b) Reseller will be responsible for supporting Vendor Clients in the purchase
and download process from the Managed Site, but will not otherwise provide
product or technical support. Reseller will exercise all commercially
reasonable efforts to distribute the most current version of Vendor's
Products and other products which Vendor makes or desires to make available
from the Managed Site.
(c) Reseller will provide for financial and tax reporting for all activity on
the Managed Site in accordance with Exhibit "A".
(d) Reseller shall undertake export and licensing restriction management in
accordance with the requirements set forth in the Co-Hosting Agreement and
the Reseller Agreement, which export and licensing restriction requirements
are incorporated herein by reference. Reseller shall comply with all
applicable laws in connection with the operation of the Managed Site,
including without limitation, laws relating to the use of information
concerning Vendor Clients. Subject to the Reseller's rights set forth in
Section 5(c) of this Agreement, Reseller shall also comply with Vendor's
on-line privacy policies to the extent commercially reasonable upon written
notice of such policies.
(e) Vendor shall be responsible for all credit card fraud activity committed on
the Managed Site. The initial risk procedures for the Managed Site are set
forth on Exhibit "C" attached hereto. The risk procedures shall be a
subject in the quarterly meetings between the parties described in Exhibit
"A".
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<PAGE> 4
(f) Reseller shall cooperate and work with Vendor in accordance with the terms
of the Miscellaneous section of Exhibit "A".
4. LICENSE.
(a) CUSTOMIZED CONTENT. Vendor grants Reseller a non-exclusive, royalty-free
license and right during the term of this Agreement, to use, reproduce,
electronically distribute, publicly display, and publicly perform the
Customized Content delivered to Reseller by Vendor only in connection with
the Managed Site. Vendor shall indemnify and hold harmless Reseller for any
liabilities, losses, damages, costs and expenses (including attorneys' fees
and costs) based on any third party claim that Customized Content infringes
another's U. S. patent, copyright, trademark, service mark, or trade secret
or that said Customized Content is defamatory or violates another's right
to publicity or privacy; provided that Reseller promptly notifies Vendor in
writing of the claim and allows Vendor to control, and fully cooperates
with Vendor in, the defense and all related settlement negotiations. Vendor
shall have no liability for any settlement or compromise made without its
consent. Upon notice of an alleged infringement, or if in the Vendor's
opinion such a claim is likely, Vendor shall have the right, at its option,
to obtain the right for Reseller to continue to exercise the rights granted
under this Agreement, substitute other software with similar operating
capabilities, or modify the Software so that it is no longer infringing.
The foregoing indemnification shall not apply to claims of infringement to
the extent they arise by reason of the combination of the software or
documentation with any other product if such claim would have been avoided
but for such combination.
(b) RESELLER LINK. Reseller grants to Vendor a non-exclusive, non-transferable,
revocable, royalty-free license and right during the term of this
Agreement, to use, reproduce, electronically distribute, publicly display,
and publicly perform Reseller's hypertext link, including certain of
Reseller's graphic icon buttons and other proprietary content used in
conjunction therewith as authorized in writing by Reseller, to link
Vendor's web site to the Managed Site, provided that Vendor complies with
section 9b, below. Reseller reserves the right to terminate the foregoing
right if in its sole discretion, Vendor's usage of Reseller's hypertext
link, graphic icon buttons and other proprietary content, harms the
business, image and goodwill of Reseller.
5. PROPRIETARY RIGHTS.
(a) Vendor acknowledges that as between the parties, Reseller owns all right,
title and interest in and to all components of the Order Pages and the
Co-Host Site. Reseller acknowledges that as between the parties, Vendor
owns all right, title and interest in and to the Managed Site and its
associated URLs. Vendor acknowledges that the Reseller Trademarks are
trademarks owned solely and exclusively by Reseller, and agrees to use the
Reseller Trademarks only in the form and manner and with appropriate
legends as prescribed by Reseller. Vendor agrees not to use any other
trademark or service mark in connection with any of the Reseller Trademarks
without prior written approval of
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<PAGE> 5
Reseller. All use of Reseller Trademarks shall inure to the benefit of
Reseller. Reseller acknowledges that the Vendor Trademarks are trademarks
owned solely and exclusively by Vendor, and agrees to use the Vendor
Trademarks only in the form and manner and with appropriate legends as
prescribed by Vendor. Reseller agrees not to use any other trademark or
service mark in connection with any of the Vendor Trademarks without prior
written approval of Vendor. All use of Vendor Trademarks shall inure to the
benefit of Vendor.
(b) Nothing in this Agreement shall give Vendor any right or license to use,
reproduce, display or distribute (electronically or otherwise) any
technology or intellectual property rights in the Order Pages and the
Co-Host Site.
(c) Except as required by law, Reseller shall be entitled to use any
information that it collects regarding the visitors to and purchasers from
the Managed Site, including e-mail names, such information shall be
considered co-owned by NAI and Reseller, with the restriction that Reseller
may not sell, license or disclose such information to any competitor of
NAI.
6. TERM AND TERMINATION.
(a) TERM. [*]
(b) TERMINATION FOR CAUSE. [*]
(i) [*]
(ii) [*]
(iii) [*]
(iv) [*]
(v) [*]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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(vi) [*]
(vii) [*]
(b1) TERMINATION BY RESELLER. [*]
(c) EFFECT OF TERMINATION. Reseller shall remit all fees due under this
Agreement to Vendor within thirty (30) days of such termination.
(d) EFFECT ON END USERS. Termination of this Agreement by either party will not
affect the rights of any End User under the terms of the End-User License
Agreement and shall not affect terms of any other agreement between the
parties except to the extent specifically provided for in such agreement.
7. COMPENSATION.
Reseller and Vendor shall be compensated in accordance with the terms of
the Revenue Sharing portion of Exhibit "A".
8. DISCLAIMER; UPTIME REQUIREMENT.
(a) Vendor acknowledges and agrees that Reseller shall not be responsible for
Order Pages unavailability due to (i) outages caused by the failure of
public network or communications components or (ii) errors in the HTML
coding in, or any other aspect of, the electronic files provided by Vendor.
[*] Compliance with the Uptime Requirement shall be determined with respect
to each one month period during the Term.
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE> 7
Failure to meet the Reseller Uptime Requirement shall be grounds for
termination of this Agreement without notice or opportunity to cure.
(b) Reseller acknowledges and agrees that Vendor shall not be responsible for
Managed Site unavailability due to (i) outages caused by the failure of
public network or communications components or (ii) errors in the HTML
coding in, or any other aspect of, the electronic files provided by
Reseller. [*]
9. TRADEMARK USE.
(a) Reseller acknowledges that the Vendor Trademarks are trademarks owned
solely and exclusively by Vendor, and agrees to use the Vendor Trademarks
only in the form and manner and with appropriate legends as prescribed by
Vendor. Reseller agrees not to use any other trademark or service mark in
connection with any of the Vendor Trademarks without prior written approval
of Vendor. All use of Vendor Trademarks shall inure to the benefit of
Vendor.
(b) Vendor acknowledges that the Reseller Trademarks are trademarks owned
solely and exclusively by Reseller, and agrees to use the Reseller
Trademarks only in the form and manner and with appropriate legends as
prescribed by Reseller. Vendor agrees not to use any other trademark or
service mark in connection with any of the Reseller Trademarks without
prior written approval of Reseller. All use of Reseller Trademarks shall
inure to the benefit of Reseller.
(c) Reseller shall indemnify and hold Vendor harmless from and against any and
all liabilities, losses, damages, costs and expenses (including legal fees
and expenses) associated with any claim or action brought against Vendor
that may arise from Reseller's improper or unauthorized replication,
packaging, marketing, distribution, or installation of the Software,
including claims based on representations, warranties, or
misrepresentations made by Reseller.
(d) [*]
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE> 8
[*]
10. GENERAL PROVISIONS.
(a) ASSIGNMENT. This Agreement may not be assigned by either party (except by
operation of law or in connection with the sale of substantially all of the
assets of such party's business or the acquisition of such party by a third
party) to any other person, persons, firms, or corporations without the
express written approval of the other party.
(b) NOTICES. All notices and demands hereunder shall be in writing and will be
deemed given upon the earlier of actual receipt or two (2) days after being
sent by overnight Federal Express or Express Mail, return receipt
requested, to the appropriate address set forth above, as such contracts
and addresses may be changed by written notice to the other party.
(c) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California. Each party
hereto expressly consents to the personal jurisdiction of the state and
federal courts located in Santa Clara County, California, and expressly
waives any defense to any action based on inconvenient forum, choice of
venue, lack of personal jurisdiction, sufficiency of service of process or
the like.
(d) RELATIONSHIP OF THE PARTIES. Each party is acting as an independent
contractor and not as an agent, partner, or joint venture with the other
party for any purpose. Except as provided in this Agreement, neither party
shall have the right, power, or authority to act or to create any
obligation, express or implied, on behalf of the other.
(e) SURVIVAL OF CERTAIN PROVISIONS. The indemnification and confidentiality
obligations set forth in the Agreement shall survive the termination of the
Agreement by either party for any reason.
(f) HEADINGS. The titles and headings of the various sections and paragraphs in
this Agreement are intended solely for convenience of reference and are not
intended for any other purpose whatsoever, or to explain, modify or place
any construction upon or on any of the provisions of this Agreements.
(g) ALL AMENDMENTS IN WRITING. No provisions in either party's purchase orders,
or in any other business forms employed by either party will supersede the
terms and conditions of this Agreement, and no supplement, modification, or
amendment of this Agreement shall
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE> 9
be binding, unless executed in writing by a duly authorized representative
of each party to this Agreement.
(h) ENTIRE AGREEMENT. The parties have read this Agreement and agree to be
bound by its terms, and further agree that it, the Co-Hosting Agreement and
the Reseller Agreement, constitutes the complete and entire agreement of
the parties and supersedes all previous communications, oral or written,
and all other communications between them relating to the license and to
the subject hereof. No representations or statements of any kind made by
either party, which are not expressly stated herein, shall be binding on
such party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
SOFTWARE.NET CORPORATION NETWORKS ASSOCIATES, INC.
(a.k.a. Beyond.com) doing business as Network Associates, Inc.
By: /s/ JAMES R. LUSSIER By: [SIG]
-------------------------------- --------------------------------------
Name: James R. Lussier Name: [ILLEGIBLE]
Title: Vice President, Business Title: CFO
Operations
Date: September 21, 1998 Date: 21 SEP 1998
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<PAGE> 10
EXHIBIT "A"
REVENUE SHARING
(a) [*]
(b) [*]
(c) TAXES. Reseller will collect and remit to the appropriate authorities all
federal, state and local taxes designated, levied, or based upon the sale
of Products by Reseller as required by applicable law.
(d) PAYMENT AND REPORTS. [*]
(e) VENDOR CLIENT INFORMATION. Reseller will provide to Vendor within ten (10)
days after the end of each month, a report for the immediately prior month
showing (i) the name and address of each Vendor Client that purchased the
Product from Reseller, and (ii) the name and quantity of the Product
purchased by the Vendor Client through the Managed Site.
(f) BOOK AND RECORDS. Reseller agrees to maintain adequate books and records
relating to the distribution of Products to Vendor Client. Such books and
records shall be available at their place of keeping for inspection by
Vendor or its representative, for the purpose of determining whether the
correct fees have been paid to Vendor in accordance with the terms of this
Agreement, and whether Reseller has otherwise complied with the terms of
this Agreement. Vendor shall have the right to conduct such an audit upon
ten (10) days advance notice twice each year. In the event that such an
audit discloses an underpayment of more than five percent (5%), then
Reseller shall pay the costs of such audit.
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 11
(g) FAILURE TO PAY. Any sales fee payment or part of a payment that is not paid
when due shall bear interest at the rate of 1.5% per month from its due
date until paid. Failure of Reseller to pay any fees or other charges when
due shall constitute sufficient cause for Vendor to immediately suspend its
performance hereunder and/or to terminate this Agreement upon due notice
given.
EXCLUDED PRODUCTS
Any NAI products which are not included in the definition of Software, none of
which which will be required to flow through the Managed Site.
MISCELLANEOUS
(a) Reseller will provide Vendor with daily reporting on sales numbers.
(b) [*]
(c) Reseller and Vendor will develop programs and offers targeted to these
customers as they flow through the site.
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
-2
<PAGE> 12
EXHIBIT "B"
DELETED.
<PAGE> 13
EXHIBIT "C"
INITIAL RISK LEVEL
PICK ONE AND DELETE THE OTHER.
If initialed level guidelines are not attached to this Agreement, then such
level shall be agreed to by the parties; provided, that failing agreement, the
Initial Risk Level shall be that specified by Network Associates, Inc.
OR
The initial risk level shall be a score of 46, as such risk level is
defined by Cybersource Corporation in connection with its IVS fraud service as
in existence on the date hereof.
<PAGE> 1
Exhibit 10.4
ELECTRONIC SOFTWARE DISTRIBUTION AGREEMENT
This Agreement is made and entered into on September 1, 1997 by and between
CyberSource Corporation, a California corporation, located at 550 South
Winchester Blvd., Suite 301, San Jose, CA 95128 ("Electronic Reseller") and
McAfee Software, Inc., a Delaware corporation, located at 2805 Bowers Avenue,
Santa Clara, California 95051 ("Vendor").
BACKGROUND
a) Vendor is the Developer and Owner of all rights (or has a license to sell)
to the Software identified in Exhibit A.
b) Vendor desires to enter into a Distribution Agreement with Electronic
Reseller whereby Electronic Reseller will be responsible for
electronically packaging Vendor's Software and associated Documentation,
and electronically distributing such packaged Software Products to
End-User customers or resellers in accordance with the terms and
conditions of this Agreement.
c) Electronic Reseller desires to obtain the right to electronically package
Vendor's Software and Documentation, and electronically distribute same in
accordance with the terms of this Agreement.
NOW THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS
a) Software: the executable object code for Vendor's software identified
on Exhibit A, including all subsequent versions thereof provided to
Electronic Reseller pursuant to this Agreement.
b) Documentation: all computer readable collateral materials normally
provided from time to time by Vendor to End Users for use of the
Software, that are identified in Exhibit A, and all subsequent
versions thereof provided to Electronic Reseller pursuant to this
Agreement.
c) End-User License Agreement: the computer readable license agreement
attached hereto as Exhibit 8, as modified from time to time, that
governs the use of the Software by End Users, and which is to be
included with each copy of the Software sold by the Electronic
Reseller hereunder.
d) Electronic Reseller Materials: computer readable materials provided
by Electronic Reseller for inclusion in an electronic package
containing the Software, Documentation, and End-User License
Agreement, which materials have been approved in advance, in writing,
by Vendor.
e) Product: a copy of the Software, Documentation, End-User License
Agreement and Electronic Reseller Materials, if any, packaged in
computer readable form together for electronic delivery on
software.net(TM) in accordance with this Agreement.
f) End User: person(s) or entity(ies) that acquires a Product for use
rather than resale or distribution.
g) Vendor Trademarks: the trademarks, trade names, and logos used by
Vendor and identified on Exhibit A.
h) Territory: all countries in the world only via the Internet except
(i) countries to which export or re-export of any Product, or the
direct products of any Product is prohibited by United States law
without first obtaining the permission of the United states Office of
Export Administration or its successor, and (ii) countries that may
be hereafter excluded pursuant to the terms of this Agreement.
2. LICENSE.
A. Rights Granted to Electronic Reseller. Vendor grants Electronic
Reseller a non-transferable, and non-exclusive license and right to:
1. reproduce the Software, Documentation, and the End-User License
Agreement in computer readable form;
2. modify the Documentation to incorporate Electronic Reseller's
name, subject to prior approval of Vendor;
3. package the Software, Documentation, Electronic Reseller
Materials and the End-User License Agreement in a computer
readable manner specified by Vendor.
4. utilize the Vendor Trademarks in connection with the replication
of the Software, packaging and distribution of the Products, in
a manner specified by Vendor; and
5. Distribute the Products to End Users or resellers in the
Territory, subject to the restrictions set forth in this
Agreement.
b. Rights Reserved to Vendor. Electronic Reseller acknowledges that the
Software and Documentation are the property of Vendor or its
licensers and that Electronic Reseller has no rights in the foregoing
except those expressly granted by this Agreement. Nothing herein
shall be construed as restricting Vendor's right to sell, lease,
license, modify, publish or otherwise distribute the Software or
Documentation, in whole or in part, to any other person.
<PAGE> 2
3. REPRODUCTION BY ELECTRONIC RESELLER.
a) Reproduction and Packaging. Electronic Reseller agrees to accurately
replicate the Software and Documentation provided by the Vendor in
computer readable form, and to package these items as specified by
the Vendor.
b) Vendor Trademarks and Legends. Electronic Reseller shall include
copies of the Vendor Trademark copyright notices and other
proprietary rights legends, on all copies of the Documentation and
Software that it packages in computer readable form, in the manner
specified by the Vendor.
4. DISTRIBUTION BY ELECTRONIC RESELLER.
a) Inventory. Electronic Reseller will maintain access to
software.net(TM) sufficient to serve adequately the needs of End
User Customers.
b) Packaging. Electronic Reseller will distribute the Products only via
the Internet and only as packaged in accordance with this Agreement,
with all packaging, warranties, disclaimers and End-User License
Agreements intact. Electronic Reseller will make copies of the
current End-User License Agreement available to End User customers in
computer readable form.
c) Product Returns. Electronic Reseller agrees to honor any refund
requests received from End User customers pursuant to the terms of
the End-User License Agreement relating to Products distributed by
Electronic Reseller.
d) Cost of Distribution. Costs relating to evaluation, packaging and
distribution of the Software and Documentation shall be borne by the
Electronic Reseller.
5. ELECTRONIC RESELLER MARKETING OBLIGATIONS.
a) Marketing Efforts. Electronic Reseller agrees to use its best efforts
to market, promote, sub-license (to End Users only), and distribute
the most current version of the Software. Such marketing, promotion,
sublicensing and distribution shall be performed in accordance with
all applicable laws.
b) Reverse Engineering. Electronic Reseller agrees not to: (i)
disassemble, de-compile or otherwise reverse engineer the Software or
otherwise attempt to learn the source code, structure, algorithms or
ideas underlying the Software; (ii) take any action contrary to
Vendor's End-User License Agreement except as expressly and
unambiguously allowed under this Agreement.
c) End User License Fees. Electronic Reseller shall have the sole
discretion to set the license fee charge to End Users for the
Software.
d) Customer Registration. Electronic Reseller agrees to provide Vendor
with customer information, for the purpose of Vendor to register the
customer into Vendor database for technical support and other related
issues, including name, address, email address and product purchased.
6. VENDOR'S DELIVERY OBLIGATIONS.
a) Initial Deliverables. Vendor shall deliver the current version of the
Software Documentation to Electronic Reseller immediately following
execution of this Agreement. Vendor will provide Electronic Reseller
with (i) copies of the Software on CD-ROM or master diskettes,
(ii) Product specification information in HTML format, or in another
mutually agreeable computer readable form that can be reproduced by
the Electronic Reseller, (iii) Product Documentation in a computer
readable form mutually agreeable to the parties that can be
reproduced by the Electronic Reseller, and (iv) vendor press releases
and announcements in a computer readable from mutually agreeable to
the parties that can be reproduced by the Electronic Reseller.
b) Deleted.
c) New Versions. Vendor shall provide Electronic Reseller with computer
readable copies of all new releases, updates, or revisions of the
Software and Documentation within a reasonable time after each such
release is made generally available by Vendor. Vendor will notify
Electronic Reseller of its plans for each new release, update or
revision of the Software or Documentation within a reasonable period
of time prior to such release.
d) New Products. Electronic Reseller understands and acknowledges that
Vendor continues to review software products available on the market
and to conduct its own research and development activities with
respect to the internal development of such new products. Vendor
makes no representations or warranties with respect to continued
availability of any of the Software covered by this Agreement, or the
nature or availability of any future modifications, updates, or
enhancements thereto. Similarly, Vendor makes no representations
with respect to any new product offerings it may make in the future,
the compatibility of such products with the Software covered by this
Agreement, or the availability of such new products to the Electronic
Reseller.
<PAGE> 3
7. VENDOR'S SUPPORT OBLIGATIONS.
a) Support for End Users. Vendor will provide support to End Users of
the Software to be distributed hereunder, in accordance with its
then-current published software policy if any.
b) Support for Electronic Reseller. Vendor will provide Electronic
Reseller, without charge, such technical information, current
maintenance documentation, and telephone assistance as is necessary
to enable Electronic Reseller to effectively reproduce, package and
distribute the Software. Electronic Reseller is not entitled to
source code for the Software.
8. VENDOR'S WARRANTIES.
a) Authority. Vendor represents that it has the right and authority to
enter into this Agreement and to grant Electronic Reseller the
rights to the Software and Documentation granted in this Agreement.
b) Media. Vendor warrants to Electronic Reseller that the master media
on which the Software is delivered to allow Electronic Reseller to
replicate the Software is free from defects in material and
workmanship. Vendor agrees to replace any media delivered to
Electronic Reseller that proves defective.
c) Non-Infringement. Vendor warrants to Electronic Reseller that the
Vendor has all rights, title, and interest in the product or has
obtained the right to grant the licenses set forth in this
Agreement. As of the execution date of the Agreement, Vendor
represents that to the best of Vendor's knowledge the Product does
not infringe upon or misappropriate the proprietary rights of any
third party arising under the laws of the United States of America.
d) End User Warranties. Vendor will provide a warranty for the End
Users of the Software as set forth in the End User License
Agreement attached as Exhibit B. Electronic Reseller is not
authorized to make any other warranties on Vendor's behalf.
9. ELECTRONIC RESELL WARRANTIES.
a) Authority. Electronic Reseller represents that it has the right and
authority to enter into this Agreement.
b) Replication. Electronic Reseller represents and warrants that it
will accurately replicate the Software and Documentation, and that
all Software distributed by the Electronic Reseller will not
contain any viruses, worms, date bombs, time bombs, or other code
that is specifically designed to cause the Software to cease
operating, or to damage, interrupt, or interfere with any End
User's Software or data.
10. PAYMENTS.
a) Electronic Conversion Fee. Vendor will pay the Electronic Vendor
Fee as specified in Exhibit C at the time of the signing of the
Agreement. Products available from Vendor will be installed on
Electronic Reseller's server upon receipt of payment and fulfillment
of other obligations made a part of this Agreement.
b) Amount. Electronic Reseller will pay Vendor in accordance with the
Schedule attached hereto as Exhibit C, for each copy of a Product
delivered to an End User by Electronic Reseller, provided, however,
that no fee shall be due for copies of Products returned to
Electronic Reseller for refund in accordance with the End-User
License Agreement and accompanied by an executed Letter of
Destruction from the End-User. Any changes to Exhibit C with
respect to product sell price or product cost to Electronic
Reseller must be submitted to Electronic Reseller at least thirty
(30) days prior to the effective date.
c) Taxes. Electronic Reseller will pay, or require its End User
customers to pay, all federal, state and local taxes designated,
levied, or based upon the sale of Products by Electronic Reseller.
d) Payment and Reports. Within thirty (30) days after the end of each
month, Electronic Reseller will remit to Vendor the sales fee due
on copies of Products delivered by Electronic Reseller to End User
customers during the immediately preceding month, and provide Vendor
with a written report (the "Report"), specifying the number of
copies of Products that Electronic Reseller has shipped during the
immediately prior month and the calculation of the amounts due to
Vendor in connection therewith.
End User Information. Electronic Reseller will provide Vendor within
thirty (30) days after the end of each month, a report for the
immediately prior month showing (i) the name and address of each End User
that purchased the Product from Electronic Reseller, and (ii) the name
and quantity of the Product purchased by the End User. Electronic
Reseller will not share customer information with any other parties
without the Vendors prior consent.
e) Book and Records. Electronic Reseller agrees to maintain adequate
books and records relating to the distribution of Products to End
User Customers. Such books and records shall be available at their
place of keeping for inspection by Vendor or its representative,
for the purpose of determining whether the correct fees have been
paid to Vendor in accordance with the terms of this Agreement, and
whether Electronic Reseller has otherwise compiled with the terms
of this Agreement. Vendor shall have the right to conduct such an
audit upon
<PAGE> 4
ten days advance notice twice each year. In the event that such an
audit discloses an underpayment of more than five percent (5%), the
Electronic Reseller shall pay the costs of such audit.
f) Failure to Pay. Any sales fee payment or part of a payment that is not
paid when due shall bear interest at the rate of 1.5% per month from
its due date until paid. Failure of Electronic Reseller to pay any
fees or other charges when due shall constitute sufficient cause for
Vendor to immediately suspend its performance hereunder and/or to
terminate this Agreement.
11. CONFIDENTIALITY.
Each party agrees that all binary code, inventions, algorithms,
know-how and ideas it obtains from the other and all other business,
technical and financial information it obtains from the other are the
confidential property of the disclosing party ("Confidential
Information"). If conspicuously labeled as "proprietary" or
"confidential" or some similar designation or, if disclosed orally or
visually, is confirmed in writing labeled as "proprietary" or
"confidential" or some similar designation within thirty (30) days of
such oral or visual disclosure. All binary code (including, but not
limited to the Software), binary documentation and underlying
inventions, algorithms, know-how and ideas are hereby identified as
Vendor's Confidential Information. Except as expressly and
unambiguously allowed herein, the receiving party will hold in
confidence and not use or disclose any Confidential Information and
shall similarly bind its employees and contractors in writing. The
receiving party shall not be obligated under this Section 11 with
respect to information the receiving party can document; (1) is or has
become readily publicly available with restriction through no fault of
the receiving party or its employees or agents; or (2) is received
without restriction from a third party lawfully in possession of such
information and lawfully empowered to disclose such information; or
(3) was rightfully in the possession of the receiving party without
restriction prior to its disclosure by the disclosing party; or (4) is
independently developed by the receiving party by employees without
access to the other party's similar Confidential Information; or (5)
is required by law or order of a court administrative agency or other
governmental body to be disclosed by the receiving party. The parties
obligations with respect to Confidential Information (other than with
respect to any source code as to which the obligations shall continue
for twenty (20 years) shall continue for the shorter of three (3)
years from the date of termination of this Agreement or until one of
the above enumerated conditions becomes applicable. Each party
acknowledges that its breach of this Section 11 would cause
irreparable injury to the other for which monetary damages are not an
adequate remedy. Accordingly, a party will be entitled to injunctions
and other equitable remedies in the event of such breach by the other.
12. VENDOR TRADEMARKS.
a) Use. Electronic Reseller acknowledges that the Vendor Trademarks are
trademarks owned solely and exclusively by Vendor, and agrees to use
the Vendor Trademarks only in the form and manner and with appropriate
legends as prescribed by Vendor. Electronic Reseller agrees not to use
any other trademark or service mark in connection with any of the
Vendor Trademarks without prior written approval of Vendor. All use of
Vendor Trademarks shall inure to the benefit of Vendor.
b) Notices. Electronic Reseller shall not remove, alter, cover or
obfuscate any copyright notice or other proprietary rights notice
placed in or on the Software or Documentation by Vendor.
13. INDEMNIFICATION.
a) By Vendor. Vendor will defend, indemnify and hold Electronic Reseller
harmless from and against any and all liabilities, losses, damages,
costs and expenses (including legal fees and expenses) associated with
any claim or action brought against Electronic Reseller for actual or
alleged infringement of any US patent, US copyright, US trademark, US
service mark, trade secret, or other US proprietary rights based upon
the duplication, sale, license, or use of the Software or
Documentation by Electronic Reseller in accordance with this
Agreement, provided that Electronic Reseller promptly notifies Vendor
in writing of the claim and allows Vendor to control, and fully
cooperates with Vendor in, the defense and all related settlement
negotiations. Vendor shall have no liability for any settlement or
compromise made without its consent. Upon notice of an alleged
infringement, or if in the Vendors opinion such a claim is likely,
Vendor shall have the right, at its option, to obtain the right for
Electronic Reseller to continue to exercise the rights granted under
this Agreement, substitute other software with similar operating
capabilities, or modify the Software so that it is no longer
infringing. The foregoing indemnification shall not apply to claims of
infringement to the extent they arise by reason of the combination of
the software or documentation with any other product if such claim
would have been avoided but for such combination. In the event that
none of the above options are reasonably available, in Vendor's sole
opinion, Vendor may terminate
<PAGE> 5
this Agreement.
b) By Electronic Reseller. Electronic Reseller shall indemnify and hold
Vendor harmless from and against any and all liabilities, losses,
damages, costs and expenses (including legal fees and expenses)
associated with any claim or action brought against Vendor that may
arise from Electronic Reseller's improper or unauthorized replication,
packaging, marketing, distribution, or installation of the Software,
including claims based on representations, warranties, or
misrepresentations made by Electronic Reseller, or any other improper
or unauthorized act or failure to act on the part of Electronic
Reseller.
14. LIMITATION OF LIABILITY. BOTH PARTIES LIABILITY SHALL BE LIMITED TO DIRECT
DAMAGES AND, EXCEPT AS PROVIDED IN THE SECTION ENTITLED "INDEMNIFICATION,"
SHALL NOT EXCEED THE AMOUNT OF THE LICENSE FEES PAID BY ELECTRONIC RESELLER
TO VENDOR HEREUNDER. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR
INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS)
SUFFERED BY THE OTHER PARTY, EVEN IF IT HAS PREVIOUSLY BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
15. TERM AND TERMINATION.
a) [*]
b) [*]
[*]
c) [*]
d) [*]
e) [*]
16. GENERAL PROVISIONS.
a) Assignment. This Agreement may not be assigned by Electronic Reseller
or by operation of law to any other person, persons, firms, or
corporations without the express written approval of Vendor.
b) Notices. All notices and demands hereunder shall be in writing and
shall be served by personal service or by mail at the address of the
receiving party set forth in this Agreement (or at such different
address as may be designated by such party by written notice to the
other party). All notices and demands by mail shall be certified or
registered mail, return receipt requested, or by nationally-recognized
private express courier, and shall be deemed complete upon receipt.
c) Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California.
d) Relationship of the Parties. Each party is acting as an Independent
contractor and not as an agent, partner, or joint venture with the
other party for any purpose. Except as provided in this Agreement,
neither party shall have the right, power, or authority to act or to
create any obligation, express or implied, on behalf of the other.
e) Survival of Certain Provisions. The indemnification and
confidentiality obligations set forth in the Agreement shall survive
the termination of the Agreement by either party for any reason.
f) Headings. The titles and headings of the various sections and
paragraphs in this Agreement are intended solely for convenience of
reference and are not intended for any other purpose whatsoever, or to
explain, modify or
[*}CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
5
<PAGE> 6
that it constitutes the complete and entire agreement of the parties and
supersedes all previous communications, oral or written, and all other
communications between them relating to the license and to the subject
hereof. No representations or statements of any kind made by either party,
which are not expressly stated herein, shall be binding on such party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
CYBERSOURCE CORPORATION MCAFEE SOFTWARE, INC. VENDOR
By: /s/ BLAKE BURKE By: /s/ PETER R. WATKINS
------------------------------ ------------------------------
Print Name: Blake Burke Print Name: Peter Watkins
---------------------- ---------------------
Title: [TITLE] Title: VP & GM
--------------------------- ---------------------------
Date: 9/2/97 Date: 9/11/97
---------------------------- ----------------------------
EXHIBIT A
I. SOFTWARE PRODUCTS
List all products here, with their respective suggested list price.
SEE EXHIBIT C.
II. REQUIREMENTS CHECKLIST
The "checklist" of things needed to complete the process are:
Musts to post product- (these are things we need before your product can be
posted)
1) Executed Electronic Reseller Agreement.
2) Master or Gold copy of the program(s). Program(s) can be delivered to (or
acquired by) software.net in one of the following methods. 1) on CD, 2)
download files from Vendors FTP site, or 3) 3.5" disks (this in order of
preference).
3) Computer-readable electronic end-user license (.txt file). Please include
as a separate file, it takes extra time to pull ones from the install
process.
4) Computer-readable product documentation (.pdf or .txt file). (if
documentation is to be included)
5) A range of 100 license numbers (if the product is serialized).
6) Fill out the template located in Exhibit D for each product. IMPORTANT.
This is the information used by software.net webmasters to post your
products. Identify all punctuation clearly so we can get it right the first
time.
Should Have's, but not essential to products being added to site:
7) Computer-readable product specification sheet, collateral, or other
information (html, .pdf or .txt file). We can also pull
<PAGE> 7
this information from your web site if available. Notify us to the method
you wish to provide us the data and the appropriate locations.
8) Trademarks/logos (.gif file).
Products will be converted for electronic distribution by CyberSource
Corporation. Product conversion includes packaging the product in CyberSource's
secure and encrypted packaging container, inclusion in the software.net online
catalog, and posting of product information provided by vendor in HTML format.
Send to CyberSource Corporation, Attention: software.net Marketing, 550 South
Winchester Blvd., Suite 301, San Jose, CA 95128.
<PAGE> 8
EXHIBIT B
END-USER LICENSE AGREEMENT
NOTICE TO USERS: CAREFULLY READ THE FOLLOWING LEGAL AGREEMENT. USE OF ANY OF
THE SOFTWARE PROVIDED WITH THIS AGREEMENT (THE "SOFTWARE") CONSTITUTES YOUR
ACCEPTANCE OF THESE TERMS. IF YOU DO NOT AGREE TO THE TERMS OF THIS AGREEMENT
WITH RESPECT TO ANY OF THE SOFTWARE PROVIDED, PROMPTLY REMOVE THE SOFTWARE
TOGETHER WITH ALL COPIES FROM YOUR COMPUTER AND RETURN IT AND THE ACCOMPANYING
ITEMS (INCLUDING WRITTEN MATERIALS AND PACKAGING) TO THE LOCATION WHERE YOU
OBTAINED THEM FOR A REFUND. REGISTERING YOUR PRODUCT WITH MCAFEE SOFTWARE, INC.
("MCAFEE"), WILL IMPROVE COMMUNICATIONS WITH MCAFEE. A Registration form is
located below. [If you purchased the product directly from McAfee, you are
already registered.]
1. LICENSE GRANT. McAfee and its suppliers grant to you a non-exclusive,
non-transferable right to use the SOFTWARE on file servers connected to a
maximum number of user computers, or on a maximum number of user computers, not
exceeding the number of user computers specified on the packaging for this
product. If the media upon which the SOFTWARE is received by you contains
versions of the SOFTWARE for different operating systems (e.g. VirusScan for
OS/2 and VirusScan for Windows 95), then you may only use the version of the
SOFTWARE applicable to the operating system used on the user computer for which
the SOFTWARE is licensed; provided, however, that any license to use VirusScan
for Windows 3.1x and VirusScan for Windows 95 also includes a license to use
VirusScan for DOS. You agree you will only copy the SOFTWARE into any
machine-readable or printed form as necessary to use it in accordance with this
license or for backup purposes in support of your use of the SOFTWARE.
This license is effective until terminated. You may terminate it at any point
by destroying the SOFTWARE together with all copies of the SOFTWARE. Also,
McAfee has the option to terminate if you fail to comply with any term or
condition of this Agreement. You agree upon such termination to destroy the
SOFTWARE together with all copies of the SOFTWARE.
2. UPGRADES. This license is limited to the version of the SOFTWARE enclosed
and does not include the right to upgrades except as provided in this Section
2. If you purchased this software from a retail store or directly from McAfee,
you are entitled: (a) as to products other than VirusScan Deluxe, to download
and use all upgrades of the SOFTWARE (including virus signature files (DAT
files)) released during the one year period following purchase; and (b) as to
VirusScan Deluxe, to download and use all upgrades of the SOFTWARE (including
virus signature
<PAGE> 9
files (DATfiles) released during the two year period following purchase. If
you receive the SOFTWARE packaged with PC hardware or software not purchased
from McAfee, you are entitled to one free electronic update of the SOFTWARE. If
the PC hardware with which the SOFTWARE was received was purchased for
individual or home use, then you are further entitled to download and use all
upgrades of the SOFTWARE (including virus signature files (DAT files)) released
during the three month period following purchase. If the PC hardware with which
the SOFTWARE was received was purchased for business use, then you may download
and use all upgrades of the SOFTWARE (including virus signature files (DAT
files)) released during the three month period following purchase upon
obtaining a corporate password from McAfee. You must in any event register with
McAfee to receive upgrades hereunder.
3. COPYRIGHT. The SOFTWARE is protected by United States copyright law and
international treaty provisions. You acknowledge that no title to the
intellectual property in the SOFTWARE is transferred to you. You further
acknowledge that title and full ownership rights to the SOFTWARE will remain
the exclusive property of McAfee or its suppliers, and you will not acquire any
rights to the SOFTWARE except as expressly set forth in this license. You agree
that any copies of the SOFTWARE will contain the same proprietary notices which
appear on and in the SOFTWARE.
4. REVERSE ENGINEERING. You agree that you will not attempt to reverse compile,
modify, translate, or disassemble the SOFTWARE in whole or in part.
5. LIMITED WARRANTY. For 30 days from the date of shipment, we warrant that the
media (for example diskettes) on which the SOFTWARE is contained will be free
from defects in materials and workmanship.
6. CUSTOMER REMEDIES. If the SOFTWARE does not conform to the limited warranty
in Section 5 above ("Limited Warranty"), your sole remedy shall be to return
the media with a description of the problem to McAfee. The defective media in
which the SOFTWARE is contained will be replaced by McAfee at no additional
charge to you. If you do not receive media which is free from defects and
materials and workmanship during the 60-day warranty period, McAfee will refund
to you the amount you paid for the SOFTWARE. The Limited Warranty is void if
failure of the SOFTWARE has resulted from accident or from abuse or
misapplication by you. Any replacement SOFTWARE will be warranted for the
remainder of the original Limited Warranty period.
7. NO OTHER WARRANTIES, NEITHER McAFEE NOR ITS SUPPLIERS WARRANT THAT THE
SOFTWARE IS ERROR FREE, EXCEPT FOR THE EXPRESS LIMITED WARRANTY IN SECTION 5
("LIMITED WARRANTY"). McAFEE AND ITS SUPPLIERS DISCLAIM ALL OTHER WARRANTIES
WITH RESPECT TO THE SOFTWARE, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND
<PAGE> 10
NONINFRINGEMENT OF THIRD PARTY RIGHTS.
SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES OR
LIMITATIONS ON HOW LONG AN IMPLIED WARRANTY MAY LAST, OR THE EXCLUSION OR
LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATIONS OR
EXCLUSIONS MAY NOT APPLY TO YOU. THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS
AND YOU MAY ALSO HAVE OTHER RIGHTS WHICH VARY FROM JURISDICTION TO JURISDICTION.
8. SEVERABILITY. In the event of invalidity of any provision of this license,
the parties agree that such invalidity shall not affect the validity of the
remaining portions of this license.
9. NO LIABILITY FOR CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL McAFEE OR ITS
SUPPLIERS BE LIABLE TO YOU FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL, OR
INDIRECT DAMAGES OF ANY KIND ARISING OUT OF THE DELIVERY, PERFORMANCE OR USE OF
THE SOFTWARE, EVEN IF McAFEE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. IN NO EVENT WILL McAFEE'S OR ITS SUPPLIERS' LIABILITY FOR ANY CLAIMS,
WHETHER IN CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY, EXCEED, IN THE
AGGREGATE THE LICENSE FEE PAID BY YOU, IF ANY.
10. GOVERNING LAW. This license will be governed by the internal laws of the
State of California. The United Nations Convention on Contracts for the
International Sale of Goods is specifically disclaimed.
11. ENTIRE AGREEMENT. This is the entire agreement between you and McAfee and
its suppliers which supersedes any prior agreement or understanding, whether
written or oral, relating to the subject matter of this license.
12. NetRemote users are licensed to use the SOFTWARE on one LAN connected user
computer. Additionally, users are licensed to use the SOFTWARE on a maximum
number of 2 user computers connected by an asynchronous/modem connection.
U.S. GOVERNMENT RESTRICTED RIGHTS
Any distribution or license of the SOFTWARE to the U.S. Government or its
agencies or instrumentalities (the "Government") is made only with RESTRICTED
RIGHTS. Use, duplication or disclosure by the Government is subject to
restriction as set forth in subparagraph (c)(1)(ii) of the Rights in Technical
Data and Computer Software clause at DFAR 252.227-7013, or as set forth in the
particular department or agency regulations or rules which provide McAfee
protection equivalent to or greater than the above-cited clause.
Contractor/Manufacturer is McAfee Software, Inc. 2805 Bowers Avenue, Santa
Clara, California 95051-0963.
Should you have any questions concerning this license agreement, or if you
desire to contact McAfee for any reason, please call (408) 988-3832, fax (408)
970-9727, or write: McAfee Software, Inc. 2805 Bowers Avenue,
<PAGE> 11
Santa Clara, California 95051-0963. McAfee Associates, Inc. is considered a
Supplier for purposes of this License.
<PAGE> 12
Exhibit C
Sales Fee Schedule sold at Software.Net (see notes below)
<TABLE>
<CAPTION>
PRODUCT NAME PLATFORM SRP ELP COST
- ------------ -------- --- ---- ----
<S> <C> <C> <C> <C>
[*] [*}
[*] [*}
[*] [*}
[*] [*}
[*] [*}
</TABLE>
Sales Fee Schedule sold at NetScape.com hosted by Software.Net (see notes below)
<TABLE>
<CAPTION>
PRODUCT NAME PLATFORM SRP ELP COST
- ------------ -------- --- ---- ----
<S> <C> <C> <C> <C>
[*] [*}
[*] [*}
[*] [*}
[*] [*}
[*] [*}
</TABLE>
Notes:
1. SRP - The suggested published list price for boxed product sold into
retail stores, determined by the Vendor.
2. ELP - (Electronic List Price) - The list price for the Electronic version.
[*]
3. Cost - This is what Electronic Reseller will pay vendor for each copy of
product distributed.
Annual product maintenance fee(1):
Covers one full year of product updates and releases.
[*]
*Marketing Plan Description:
At launch:
- - Large promotion space (1 wk) on software.net homepage for the initial launch.
- - Rotating banner on the homepage for 1st quarter.
- - Listing in Cool Deals section (1 wk).
[*}CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 13
Ongoing commitment through 1997 if McAfee products stay in top 5:
- -Top promotional spot in at least one open center each week.
- -Continuing of rotating banner on software.net homepage.
Marketing Plan Fee Fee waived
1-All Annual product maintenance fees can be applied to a sponsorship program
within the first thirty (30) days of this agreement. See marketing kit for
details of sponsorship opportunities.
2-software.net will invoice this amount which is due and payable at time of
signed agreement. This is a payment for services to be performed and
software.net will not perform such services until payment has been received.
Exhibit D
Please fill out the following template for each product (as you wish it to
appear in software.net):
Vendor Name (up to 36 characters): McAfee Software, Inc.
Product Name (include version number): To be provided with each version
supplied (TPB)
Does this product come with electronic documentation? Yes online help ? Yes
What platform(s) does this product run under? (TPB)
What is the approximate box street price of this product? See Exhibit C
What is the approximate ESD street price of this product-The price software.net
will sell product for (10-20% less than the box street price) See Exhibit C
What is software.net's cost See Exhibit C
What, if any, is the vendor part number of this product? (TPB)
Is this product serialized?: NO if yes, have serial numbers been provided? ____
Does this product have an export ban? (TPB) If yes, to which countries is
export restricted or banned?
______________________________________________________________________________
Name of business/marketing contact: [*]
Phone Number: __________________ Email Address: [*]
Name of technical contact (to call if trouble with preparing products): _______
Phone Number: __________________ Email Address: [*]
Name of person to receive monthly reports via email: Philip Artt
Phone Number: [*] Email
Address: [*]
From the category listing below, enter one (1) category this product fits into:
(TPB)
1541.Operating System Software
[*}CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 14
<TABLE>
<S> <C>
1501. Spreadsheet Software 1543. Programming and Languages Utilities
1503. Database Software 1545. Memory Manager Software
1505. Wordprocessor Software 1547. File Conversion & File Transfer Software
1507. Suites & Integrated Software Packages 1549. Reference & Information Software
1509. Desktop Publishing Software 1551. Education & Entertainment Software
1511. Communications Software 1553. Games & Entertainment Software
1512. Internet Software 1555. Voice Recognition Software
1513. Fax, OCR & Document Imaging Software 1561. Forms Generator, Designer & filler
1515. E-Mail, Groupware & Video Conference Software 1563. Back-up Software
1517. Terminal Emulation Software 1565. Menu S/W & Desktop Organizers
1521. Graphics & Presentation Graphics Software 1567. Virus Detection Software
1523. CAD Software 1569. Security Software
1525. Multimedia Software 1571. Diagnostic Software
1527. Clip Art, Symbol & Image Libraries 1573. Screen Saver Software
1529. Font Software 1575. Printer Utility Software
1531. Accounting Software 1577. Network Mgmt & Utility Software
1533. Tax Software 1579. General Utility Software
1535. Statistics Software 9900. Information
1537. Project & Time Management Software 9901. Electronic Books
1539. General Business Software
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SOFTWARE.NET CORPORATION FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1998
<CASH> 33,199
<SECURITIES> 0
<RECEIVABLES> 10,238
<ALLOWANCES> 1,141
<INVENTORY> 0
<CURRENT-ASSETS> 52,860
<PP&E> 2,427
<DEPRECIATION> 374
<TOTAL-ASSETS> 57,188
<CURRENT-LIABILITIES> 18,581
<BONDS> 0
0
0
<COMMON> 69,286
<OTHER-SE> 30,679
<TOTAL-LIABILITY-AND-EQUITY> 57,188
<SALES> 23,511
<TOTAL-REVENUES> 23,511
<CGS> 19,943
<TOTAL-COSTS> 19,943
<OTHER-EXPENSES> 20,498
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 241
<INCOME-PRETAX> (16,689)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,689)
<DISCONTINUED> 0
<EXTRAORDINARY> 51
<CHANGES> 0
<NET-INCOME> (16,740)
<EPS-PRIMARY> (1.04)
<EPS-DILUTED> (0.72)
</TABLE>
