<PAGE> 1
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
AMENDMENT
TO THE
DISTRIBUTOR AGREEMENT
BETWEEN
INGRAM MICRO
AND
NETGEAR
This Amendment is entered into effective October 1, 1996 ("Amendment Date")
by and between NETGEAR, Inc. ("NETGEAR"), a wholly owned subsidiary of Bay
Networks, Inc., and Ingram Micro ("Distributor") acting on behalf of itself and
its affiliates.
NETGEAR and Distributor having previously entered into a Distributor
Agreement ("Agreement") with an Effective Date of March 1, 1996, now mutually
agree to amend that Agreement as follows:
1. Subject to the terms of this Amendment, the Territory listed in Section
2 of the Agreement is amended to be the United States and [*]
2. During the initial one year period beginning on the Amendment Date,
Distributor shall be the only distributor appointed by NETGEAR in [*] subject to
Distributor conducting mutually agreed to marketing activities as described in
the Marketing Plan for [*] to be developed and agreed to by and between the
parties and which shall be attached to and made a part of this Agreement as
Exhibit 4a. For the purposes of this provision, distributor shall mean a company
acquiring products directly from NETGEAR for resale or license to dealers or
other second tier resellers which in turn resell or license the products to end
use customers. The foregoing notwithstanding, during the initial [*] term and
any subsequent period, NETGEAR reserves the right to sell or license Products in
* to customers other than distributors such as, but not limited to resellers who
procure Products at centralized locations for resale to end-use customers solely
through their wholly or majority owned retail outlets, both store-front and
catalog. Following the initial [*] term, for any extension or renewal term,
Distributor's appointment as Distributor shall be non-exclusive and NETGEAR may
appoint other distributors in [*] at its sole discretion.
3. The terms and conditions of this Amendment, shall amend and supersede
any conflicting terms of the original Agreement. All other terms of the original
Agreement shall remain unchanged.
<PAGE> 2
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of the date first written above.
NETGEAR: DISTRIBUTOR:
NETGEAR, INC. INGRAM MICRO
By: /s/ Lloyd Carney By: /s/ Michael Terrell
-------------------------------- ----------------------------------
Name: Lloyd Carney Name: Michael Terrell
----------------------------- --------------------------------
Title: Executive VP Enterprise Group Title: Vice President Purchasing
----------------------------- --------------------------------
Date: 4/30/97 Date: 2/21/97
----------------------------- --------------------------------
-2-
<PAGE> 3
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
AMENDMENT #2 TO THE
DISTRIBUTION AGREEMENT
THIS AMENDMENT (the "Amendment") is entered into this 15th day of July
1998, by and between INGRAM MICRO INC. ("Ingram") and NETGEAR, INC. ("Vendor").
The parties have agreed to amend their Distribution Agreement ("Agreement")
dated October 1, 1996.
1. Section 2, TERRITORY, is amended to be United States, *.
2. This Amendment shall remain in effect for the current term and any
renewal term of the Agreement.
Notwithstanding the foregoing, all other provisions of the Agreement remain
unchanged. The Undersigned has read this Amendment, agrees hereto, and is an
authorized representative of its respective party.
INGRAM MICRO INC. NETGEAR, INC.
1600 East St. Andrew Place 4401 Great America Parkway
Santa Ana, CA 92705 P.O. Box 58185
Santa Clara, CA 95052-8185
By: /s/ Al Mann By: /s/ Patrick Lo
-------------------------------- --------------------------------
Name: Al Mann Name: Patrick Lo
-------------------------------- --------------------------------
Title: Vice President Purchasing Title: Vice President
<PAGE> 4
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
DISTRIBUTOR AGREEMENT
between
INGRAM MICRO
and
NETGEAR
NETGEAR Agreement Number: N115 Effective Date: March 1, 1996
Term: 1 Year
Ingram Micro, a corporation organized under the laws of the State of
California, having a place of business located at 1600 E. St. Andrew Place,
Santa Ana, California, USA, ("Distributor") and NETGEAR, Inc. ("NETGEAR"), a
wholly owned subsidiary of Bay Networks, Inc., organized under the laws of the
State of Delaware, having a place of business at 4401 Great America Parkway,
Santa Clara, California, USA, agree that the following terms govern the
purchase, sale, and licensing of Products (as defined below) between the
parties.
NOTICES:
All notices given under the Agreement are to be in writing and may be sent
by mail, telefax, courier service or otherwise delivered to the party to be
notified at the following address, or to such other address as may have been
substituted by written notice:
To Distributor: To NETGEAR:
1600 E. St. Andrew Pl. 4401 Great America Parkway
P.O. Box 25125 P.O. Box 58185
Santa Ana, CA 92799-5125 Santa Clara, CA 95052-8185
Katlyn Cho Patricia Dutra-Gerard
DISTRIBUTOR AND NETGEAR ACKNOWLEDGE THAT EACH HAS READ THIS AGREEMENT
TOGETHER WITH THE ATTACHED EXHIBIT, UNDERSTANDS IT AND AGREES TO BE BOUND BY ITS
TERMS AND CONDITIONS.
AGREED: AGREED:
Distributor NETGEAR, Inc.
By: /s/ Sanat K. Dutta By: /s/ Joe Booker
-------------------------------- --------------------------------
(authorized signature) (authorized signature)
Name: Sanat K Dutta Name: Joe Booker
-------------------------------- --------------------------------
(type or print) (type or print)
Title: Executive Vice President Title: Vice President & General Manager
-------------------------------- Commercial Business Unit
--------------------------------
Date: October 16, 1996 Date: November 5, 1996
-------------------------------- --------------------------------
-1-
<PAGE> 5
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
1. APPOINTMENT
Subject to Distributor's performance of its obligations under this
Agreement, Distributor is appointed as a NETGEAR Distributor and may purchase
certain equipment ("Hardware") and licenses for software including revisions and
updates ("Software"), as are listed in NETGEAR's then-current price list (the
"Price List") for resale within the Territory (as defined below). During the
initial one (1) year term of this Agreement, Distributor shall be the only
distributor appointed by NETGEAR in the Territory, subject to Distributor
conducting mutually agreed to marketing activities as described in the Marketing
Plan to be developed and agreed to by and between the parties and which shall be
attached to and made a part of this Agreement as Exhibit 4. For the purposes of
this provision, distributor shall mean a company acquiring products directly
from NETGEAR for resale or license to dealers or other second tier resellers
which in turn resell or license the products to end use customers. The foregoing
notwithstanding, during the initial one (1) year term and any subsequent period,
NETGEAR reserves the right to sell or license Products in the Territory to
customers other than distributors such as, but not limited to resellers who
procure Products at centralized locations for resale to end-use customers solely
through their wholly or majority owned retail outlets, both store-front and
catalog. Following the initial one (1) year term, for any extension or renewal
term, Distributor's appointment as Distributor shall be non-exclusive and
NETGEAR may appoint other distributors in the Territory at its sole discretion.
2. TERRITORY
Except as may be otherwise provided by law, Distributor may not distribute
or re-export any Products outside of the Territory identified herein as the
United States without the specific written consent of NETGEAR. In the event that
Distributor wishes to expand the scope of the Territory and is able to
adequately sell and support Products within the additional region, then upon the
approval of NETGEAR, the parties may choose by written agreement to modify the
Territory.
3. ORDERS
A. Distributor may purchase Products by placing orders under this
Agreement which are accepted by NETGEAR. No order will be effective until
accepted by delivery of NETGEAR's order acknowledgment. Distributor agrees that
each order placed with NETGEAR for Products shall be governed by this Agreement,
regardless of any additional or conflicting term in Distributor's order. Unless
otherwise specifically stated in the Order, all Orders accepted by NETGEAR shall
be deemed to be for immediate release. Orders may be sent by telefax or other
electronic media approved by NETGEAR and must specify:
(a) Distributor's Purchase Order number;
(b) Product and/or Service number and description for each item
ordered;
(c) Desired quantities;
(d) Purchase price for each Product or Service ordered;
-2-
<PAGE> 6
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
(e) Tax status, including exemption certificate number if tax
exempt;
(f) Preferred shipping method; and
(g) Exact "Bill to" and "Ship to" address.
B. Minimum/Standard Lot Sizes. Products must be ordered in the minimum
and/or standard lot size quantities specified in the Price Schedule. Orders for
less than minimum or non-standard lot size quantities of any Product may, at
NETGEAR's discretion, be rejected.
4. PRICES, PRICE LIST, TAXES AND PAYMENT
A. Prices. Prices for Products are those set out in NETGEAR's Price
List, less the applicable discount specified in Exhibit 1. All Product prices
are F.O.B. NETGEAR's point of shipment, except as specified in Section 5 D.
B. Changes. NETGEAR may modify the Price List at any time, including
changes to the Products or their corresponding list prices, but NETGEAR will
provide Distributor with written notice thirty days in advance of the effective
date of any price increase or Product deletion. Price decreases will apply to
the corresponding Products that are shipped by NETGEAR on or after the effective
date of the list price decrease.
C. Inventory Price Protection. In the event of a list price decrease
on any of the Products, Distributor may apply for a credit on those units of
Product: a) which were shipped by NETGEAR to Distributor no more than [*] prior
to the effective date of the list price decrease and remain unsold in
Distributor's inventory or are being returned under open RMA's or are in the
inventories of certain mutually agreed to Distributor retail accounts ("CMD
Named Accounts") as listed in Exhibit 3 to this Agreement on the effective date
of the list price decrease or b) which were in transit between NETGEAR and
Distributor on the effective date of the list price decrease.
The amount of the credit on any unit shall be equal to [*]. The foregoing
notwithstanding, in the event any of the Products were acquired under special
competitive pricing arrangements, the credit on such Products shall be [*].
In order to receive a credit, Distributor a) must submit to NETGEAR within
[*] of the effective date of the list price decrease, a report of inventory
eligible for the price credit and must have submitted its regular monthly
inventory report on time, according to Section 11, in each of the [*] prior to
the effective date of the list price decrease. Upon verification by NETGEAR of
the eligible units and credit amounts, NETGEAR will issue a credit to the
Distributor's account.
D. Taxes and other levies. Prices are exclusive of any tax, value-added
tax, fee, duty or governmental charge, however designated (except for NETGEAR's
franchise taxes or for taxes on NETGEAR's net income) which may be levied or
based on the Products, their sale, importation, use, or possession, or on this
Agreement. All such taxes or duties shall be for the account of Distributor and
any such taxes or duties required to be paid or collected by NETGEAR
-3-
<PAGE> 7
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
shall be paid by Distributor to NETGEAR unless Distributor provides NETGEAR with
a valid certificate of exemption acceptable to the appropriate taxing or
governmental authority.
E. Payment. Except as may be specifically authorized in writing by
NETGEAR, and subject to NETGEAR's continuing approval of Distributor's credit
status and financial condition, Distributor will pay NETGEAR for all Products
ordered by Distributor within [*] of the date the corresponding invoice is
issued by NETGEAR. The foregoing notwithstanding, the parties agree that payment
for the initial order placed by Distributor under this Agreement shall be due
and payable within [*] of the date the corresponding invoice is issued by
NETGEAR. NETGEAR, in its sole discretion, reserves the right to specify, and to
change from time to time, Distributor's credit line and payment terms. All
payments are to be made in U.S. dollars. Payment for shipments made outside of
the United States shall be made by wire transfer in accordance with wire
transfer procedures provided by NETGEAR. If at any time Distributor is
delinquent in the payment of any invoice, exceeds the credit line established by
NETGEAR, or is otherwise in breach of the Agreement, NETGEAR may, in its
discretion, withhold shipment (including partial shipments) of any order or may
require Distributor to pay cash on delivery for further shipments. Payment not
received by NETGEAR when due may be subject to a late payment service charge
provided NETGEAR has provided 10 days written notice to Distributor of
Distributor's failure to pay. The foregoing notwithstanding, Distributor shall
not be deemed in default under this provision if Distributor withholds payment
of amounts legitimately in dispute on any invoice provided that (1) Distributor
promptly pays the undisputed portion of the invoice in accordance with the terms
of this Agreement; (2) Distributor provides NETGEAR with written notice of the
disputed amount within 10 days of receipt of the invoice; and (3) Distributor
works in good faith with NETGEAR to resolve any dispute within a reasonable time
period.
5. SHIPMENT, CANCELLATION, RETURNS, TITLE, RISK OF LOSS, SECURITY
INTEREST
A. Shipment. Unless otherwise instructed by Distributor, NETGEAR will
ship Products ordered by Distributor using the method and carrier specified in
Distributor's then current Routing Guide, as may be amended from time to time by
written notice from Distributor. The version of the Routing Guide which is in
force on the Effective Date of this Agreement is attached to and made a part of
this Agreement as Exhibit 2. Distributor is responsible for all freight,
handling, insurance and other transportation charges, and agrees to pay all such
charges if separately identified on NETGEAR's invoice. NETGEAR will ship freight
collect, uninsured, if so instructed by Distributor's order.
B. Cancellation and Rescheduling. Distributor may not cancel or
reschedule any order, in whole or in part, less than five business days prior to
the corresponding shipment date specified in NETGEAR's order acknowledgment.
C. Returns. Products received by Distributor as a result of an error
by NETGEAR in shipment may be returned for credit. Such credit will
include an amount equal to the purchase price of the Product shipped in error as
well as the cost of return freight paid by Distributor to return the Product to
NETGEAR. Products with defects covered by the warranty may be returned
-4-
<PAGE> 8
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
for remedy under the warranty. Prior to returning any Product, whether for
exchange or warranty or non-warranty action, Distributor must obtain a Return
Materials Authorization (RMA) number from NETGEAR. Distributor should return the
Product to NETGEAR, with shipping charges PREPAID. NETGEAR will not accept
collect shipments. Any Product returned to NETGEAR, which is not returned in
accordance with terms of this Agreement, may be refused.
D. Title, risk of loss, security interest. For all shipments to
locations within the United States, title to the Hardware passes to Distributor
when presented by NETGEAR or its agent to the carrier, from which point
Distributor is responsible for risk of all loss, damage to, or theft of all
Products. For shipments to locations outside of the United States, (i) risk of
loss of all Products passes from NETGEAR to Distributor upon arrival at the
point of entry in the destination country specified in Distributor's order.
6. SOFTWARE LICENSES
A. Internal Use by Distributor. Distributor may purchase for its
internal use licenses to Software and accompanying documentation by placing
orders under this Agreement. Distributor's right to use the Software is subject
to the "shrink-wrap" license agreement with the Software and in its accompanying
documentation shipped by NETGEAR to Distributor.
B. Distribution of Software licenses to end-users. Distributor may
procure and distribute Software and accompanying documentation by placing orders
under this Agreement. The terms of the licenses for such Software to which
end-users are subject are included as a "shrink-wrap" license agreement with the
Software and in its accompanying documentation when shipped by NETGEAR (the
"License Agreement"). Distributor agrees that for each Software product it
procures under this Agreement, Distributor will (i) assure the deliver the
License Agreement to its customers, and (ii) use reasonable efforts to inform
its resale customers of the requirement to deliver the License Agreement to
their end-user customers in the form supplied by NETGEAR with the Products.
C. Limitations. Distributor may not, nor authorize its resale
customers or the end-user to translate, decompile, disassemble, use for any
competitive analysis, or reverse engineer the Software or its documentation, in
any way, except for the event where the end-user locates Products within the
European Union, in which case the Software Directive enacted by the Council of
European Communities Directive dated 14 May 1991 will apply to the examination
of the Software to facilitate interoperability; in such event Distributor agrees
to notify, and cause its end-user to notify NETGEAR of any such intended
examination of the Software and procure from NETGEAR its support and assistance.
Distributor agrees to not translate, nor allow end-users to translate any
portion of the Software or associated documentation into any other format or
foreign language without the prior written consent of NETGEAR. In no event will
Distributor grant the U.S. Government rights in any Software greater than those
set out in subparagraphs (a) through (d) of the Commercial Computer Software -
Restricted Rights clause at FAR 52.227-19 and the limitations for civilian
agencies set out the License Agreement; and subparagraph (c)(1)(ii) of the
Rights in Technical Data and Computer Software clause at DFARS 252.227-7013 for
agencies of the Department of Defense.
-5-
<PAGE> 9
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
7. WARRANTIES
A. Warranty Period. The warranty period for each Product is specified
in the Price List that is in effect on the date NETGEAR receives Distributor's
order, and shall apply regardless of any extended warranty period which
Distributor may choose to provide to its customers. NETGEAR reserves the right
to change a warranty period for a specific Product but only for orders placed
after the effective date of such change, provided that the minimum warranty
period for all Products is ninety days, except for those Products specifically
identified in the Price List as provided "AS IS" with no warranties.
B. Hardware Warranty. NETGEAR warrants to end-users that each item of
Hardware will be free from defects in workmanship and materials for its
respective warranty period which begins on the date of purchase by the end user.
Should a Product fail within this warranty period, Distributor shall replace
such defective Product from Distributor's inventory and accept return of the
failed Product from Distributor's customer. At intervals to be mutually agreed
upon between NETGEAR and Distributor, Distributor shall contact NETGEAR to
receive a Return Material Authorization number for the collected failed Product.
Upon receipt of the failed Product, NETGEAR shall issue a credit to Distributor
for Distributor's purchase price of the replacement Product issued, less any
prior credits or allowances. End-users' exclusive remedy is to receive
replacement Product from reseller and NETGEAR's sole obligation and liability
under this warranty is to issue an off-setting credit to reseller for Product
returned by reseller on behalf of its end-user because of defects in workmanship
or material.
C. Software Warranty. NETGEAR warrants to the end-user that each item
of Software, as delivered or updated by NETGEAR and properly installed and
operated on the Hardware or other equipment it is originally licensed for, will
function substantially as described in its then-current user documentation
during its respective warranty period. If any item of Software fails to so
perform during its warranty period, as the sole remedy NETGEAR or NETGEAR's
supplier will at its discretion provide a suitable fix, patch or workaround for
the problem which may be included in a future revision of the Software. For
specific Software which is distributed by NETGEAR as a licensee of third
parties, additional warranty terms offered by such third parties to end-users
may apply.
D. Distributor's internal use warranty. For Products ordered under
this Agreement for Distributor's internal use, NETGEAR provides Distributor the
same warranties as described above for end-users.
E. Limitations. NETGEAR does not warrant that any item of Software is
error-free or that its use will be uninterrupted. NETGEAR is not obligated to
remedy any Software defect which cannot be reproduced with the latest revision
of the Software. These warranties do not apply to any Product which has been (i)
altered, except by NETGEAR or in accordance with its instructions, or (ii) used
in conjunction with another vendor's product resulting in the defect, or (iii)
damaged by improper environment, abuse, misuse, accident or negligence.
Replacement parts furnished under this warranty may be refurbished or contain
refurbished components.
-6-
<PAGE> 10
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
THE FOREGOING WARRANTIES AND LIMITATIONS ARE EXCLUSIVE REMEDIES AND ARE IN
LIEU OF ALL OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY
LIMITATION WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ANY
PRODUCT THAT MAY BE FURNISHED BY NETGEAR WHICH IS NOT LISTED IN THE PRICE LIST,
OR WHICH IS IDENTIFIED IN THE PRICE LIST AS AN "AS IS" PRODUCT, IS FURNISHED "AS
IS" WITH NO WARRANTIES OF ANY KIND.
8. PRODUCT RETURNS
Prior to returning any Product, whether for exchange or warranty or
non-warranty action, Distributor must obtain a Return Materials Authorization
(RMA) number from NETGEAR. Distributor should return the product to NETGEAR,
[*]. NETGEAR will not accept collect shipments. Any Product returned to NETGEAR,
which is not returned in accordance with the terms of this Agreement, may be
rejected.
9. PRODUCT EXCHANGE PRIVILEGES
A. Distributor may return previously purchased Products for
replacement by an equal or greater value of different Products, under the
following conditions:
(a) Distributor may return Products only within the [*] period
following [*] and [*] of each year.
(b) The total value of the returned Products shall not exceed [*]
of the Net Shipments invoiced by NETGEAR for all Products, [*], during the [*]
immediately preceding each of the above dates.
(c) The replacement Products are not identical to the returned
Products. Distributor shall be invoiced for the replacement Products at prices
in effect at the time of return, and credited for the value of the returned
products at the prices actually paid by the Distributor less any prior credits.
(d) The returned Products have not been in the Distributor's
inventory for more than [*] after shipment from NETGEAR.
(e) The returned Products are in their original shipping containers
and have not been altered, damage or used.
10. DISTRIBUTOR'S RESPONSIBILITIES
A. Promotion and sale. Distributor shall sell or license Products only
to resale customers which will in-turn resell or transfer the licenses to those
Products to end use customers. Distributor may not sell or license Products
directly to end use customers without the express written
-7-
<PAGE> 11
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
consent of NETGEAR. Distributor agrees to use commercially reasonable efforts to
maximize sales of NETGEAR Products.
B. Support. Distributor shall be the sole point of contact for its
resale customers and their end-use customers in all support situations.
Distributor shall provide first level support for its customers. NETGEAR shall
provide second and third level support to Distributor in order to resolve end
user technical problems.
C. Training. Distributor agrees to maintain, and to adequately and
thoroughly train on an on-going basis, a sufficient staff of qualified sales,
marketing, technical and support personnel familiar with the applications,
features, benefits, operation and configuration of the Products so as to
effectively promote and support the Products and to assure end-user
satisfaction. NETGEAR agrees to provide assistance to Distributor to allow
Distributor to comply with the foregoing training responsibility.
D. Restriction on Appointment of Additional Distributors. NETGEAR's
agreement not to appoint additional distributors of NETGEAR Products in the
Territory during the * term of this Agreement is predicated upon Distributor
performing the mutually agreed upon activities included in the Marketing Plan
attached as Exhibit 4. In the event Distributor fails to perform the activities
included in the Marketing plan in [*] NETGEAR may appoint additional
distributors in the Territory and the provisions of this Agreement appointing
Distributor as the only NETGEAR distributor in the Territory shall be deemed
deleted.
11. REPORTS
A. Each month Distributor shall submit a Point of Sale (POS) shipments
report covering the preceding month, broken out by Product. The report may be
submitted via BBS and shall include, at a minimum, Distributor's [*], part
number, quantity shipped and unit cost.
B. Each month Distributor shall prepare and forward to NETGEAR a
weekly report showing Distributor's inventory of the Products purchased and
licensed from NETGEAR as of the end of the previous calendar month. The report
may be submitted via BBS and shall include, at a minimum the part number and the
number of units and purchase value of the inventory remaining by Product.
C. From time to time, but not more than twice per year, NETGEAR may
request access to information about the Distributor's business reasonably
required to insure that Distributor is in compliance with the terms of this
Agreement and the Distributor will grant the right for a NETGEAR representative
to visit the Distributor's place of business during normal business hours at a
mutually agreed upon time to examine such information.
12. PROPRIETARY RIGHTS AND INFORMATION
A. Use of Proprietary Information. "Proprietary information" includes,
without limitation, diagnostics, the Software, all documentation for Software,
other user manuals, as well as
8
<PAGE> 12
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
electronically and visually transmitted printed materials and information
disclosed by Distributor or NETGEAR, such as new product information, financial
or technical data, information reported under Section 11 above or other
information or data, that is marked with a proprietary or confidential legend.
Each party agrees to hold the Proprietary Information of the other in confidence
and to use the Proprietary Information only for the purposes expressly permitted
under this Agreement, and to disclose Proprietary Information only to its
employees and contractors as authorized in this Agreement and then only on a
need-to-know basis. Each party agrees to maintain adequate internal procedures,
including appropriate agreements with employees and authorized third parties, to
protect the confidentiality of the Proprietary Information as required by this
Agreement. Each party is entitled to appropriate injunctive relief in the event
of any unauthorized disclosure or use of its Proprietary Information by the
other party.
B. Limitations. Proprietary Information does not include information
which (i) is rightfully in the receiving party's possession in a complete and
tangible form before it is received from the disclosing party, (ii) is or
becomes a matter of public knowledge through no fault of the receiving party,
(iii) is rightfully furnished to the receiving party by a third party without
restriction on disclosure or use, or (iv) is independently developed by the
receiving party without use of or reference to the disclosing party's
Proprietary Information.
C. Reservation of Rights. NETGEAR, on behalf of itself and its
suppliers, reserves all proprietary rights in and to (i) all designs,
engineering details, and other data pertaining to the Products, (ii) all
original works, computer programs, fixes, updates (but not Distributor's or
end-users' developed programs), discoveries, inventions, patents, know-how and
techniques arising out of work done wholly or in part by NETGEAR or its
subcontractors in connection with the Agreement, and (iii) any and all products
developed as a result of such work. The performance by NETGEAR of professional
Services shall not be deemed a work-for-hire but shall instead be subject to
this section.
D. Administrative procedures. Distributor and end-users are each
responsible for the security of their own proprietary and confidential
information and for maintaining adequate procedures apart from the Products to
reconstruct lost or altered files, data or programs.
13. TRADEMARKS AND TRADE NAMES
A. Use of trademarks. In the advertising and promotion of the
Products, Distributor agrees to use NETGEAR's and certain of Bay Networks' trade
names, logos and trademarks (the "Trademarks") as reasonably instructed by
NETGEAR during the term of the Agreement. Solely for this purpose, NETGEAR and
Bay Networks grant Distributor a non-exclusive, royalty-free, limited right to
use the Trademarks. Distributor will not make or permit the removal or
modification of any Trademarks or tags, proprietary notices, labels, or other
identifying marks placed by Bay Networks, NETGEAR or their agents on the
Products or associated literature.
B. Rights to Trademarks. Distributor acknowledges that Bay Networks is
the exclusive owner of the Trademarks and the use of the Trademarks by
Distributor does not convey to Distributor any right, title or interest in or to
the Trademarks. Distributor has no claim or right in the
-9-
<PAGE> 13
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
Trademarks, service marks, or trade names owned, used or claimed now or in the
future by NETGEAR. Distributor agrees that it will not register, nor attempt to
register any Trademark or any mark confusingly similar to any Trademark in any
jurisdiction unless expressly approved in writing by Bay Networks in advance.
C. Notification. In order to assure proper use and protection of
Trademarks, Distributor agrees to inform NETGEAR in writing if Distributor
purchases, or is offered for purchase, any Products with a Trademark or other
mark of NETGEAR from a source other than NETGEAR, its subsidiaries, or an
authorized NETGEAR Distributor.
14. CLAIMS OF INFRINGEMENT
A. Indemnification. NETGEAR agrees to defend at its own expense any
action brought against Distributor to the extent that it is based on a claim
that any Product infringes a United States or Territory patent, copyright, trade
mark, trade secret or other valid intellectual property right, and will pay any
costs and damages finally awarded against Distributor in any such actions which
are attributable to any such claim. NETGEAR shall have no liability for any
settlement or compromise made without its prior written consent. NETGEAR shall,
at its option and expense, (1) procure the right to continue using the Product,
(2) replace or modify the Product so that it becomes non-infringing or, if (1)
or (2) are not reasonably or economically possible, (3) Distributor may return
the Product to NETGEAR for a refund of an amount equal to the depreciated value
of the equipment, or an amount equal to the Distributor's actual purchase price
paid without any depreciation minus any prior credits or allowances if the
returned Products are in their original shipping containers and have not been
altered, damaged or used.
B. Limitations. NETGEAR has no liability to Distributor under this
Section entitled CLAIMS OF INFRINGEMENT with respect to any claim which is based
upon or results from (i) the combination of any Product with any equipment,
device, firmware or software not furnished by NETGEAR, or (ii) any modification
of any Product by a party other than NETGEAR, (iii) Distributor's failure to
install or have installed changes, revisions or updates as instructed by
NETGEAR, or (iv) NETGEAR's compliance with Distributor's or end-user's
specifications, designs or instructions.
15. TERM OF AGREEMENT AND TERMINATION
A. Term. This Agreement will be in effect for * from the Effective
Date and will automatically renew for successive [*] periods unless terminated
as provided below.
B. Termination. This Agreement may be canceled at any time without
cause, by either party upon ninety (90) days written notice to the other party.
Either party may terminate this Agreement immediately if (i) the other party
becomes insolvent, files or has filed against it a petition in bankruptcy, or
ceases doing business; or (ii) the other party fails to cure a material breach
of the Agreement within thirty (30) day after receipt of written notice of such
breach from the party not in default. Upon termination of the Agreement by
NETGEAR for Distributor's breach, NETGEAR may cancel all of Distributor's
unfulfilled orders without further obligation. This Agreement may be
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<PAGE> 14
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
terminated at any time without cause by either party upon ninety (90) days
written notice to the other party.
C. Effect of termination. Except as otherwise specifically stated in
the Agreement, neither party will be liable to the other for damages in any form
by reason of the expiration or earlier termination of the Agreement.
D. Continuing effect. Any expiration or earlier termination of the
Agreement does not modify or alter any of the obligations of the parties which
accrued prior to such expiration or termination. The sections of the Agreement
which address taxes; duty; fee; payment; security interest; proprietary rights
and information; warranties; foreign reshipment; remedies; limitations;
termination and governing law survive any expiration or termination of the
Agreement. The section entitled SOFTWARE LICENSES also survives any expiration
or termination provided Distributor and end-users continues to comply with the
provisions of the applicable software license terms. Except as expressly agreed
in writing between the parties, no party is liable to the other for any dollar
amounts, costs or damages by reason of the expiration or earlier termination of
the Agreement.
16. LIMITATION OF LIABILITY
A. NETGEAR agrees to indemnify Distributor against any claim arising
out of or resulting from the Products or the Agreement, provided that any such
claim (i) is attributable to bodily injury, death, or to injury to or
destruction of physical property (other than the Products), and (ii) is caused
by the negligent act or omission of NETGEAR or a material defect in the Product.
This obligation on the part of NETGEAR is subject to Distributor's obligation to
(a) give NETGEAR prompt written notice of any such claim, (b) grant NETGEAR
control of the defense and settlement of such claim, and (c) assist fully in the
defense provided that NETGEAR reimburses Distributor's out-of pocket costs.
NETGEAR has no liability for any settlement or compromise made without its prior
written consent. Under no circumstances is NETGEAR liable for any third-party
claims except for those described in this section and in the section entitled
CLAIMS OF INFRINGEMENT.
B. NETGEAR, at its expense, agrees to maintain insurance coverage to
protect against its liabilities under the Agreement in an amount no less than is
reasonable or required by applicable statute. The insurance will include (a)
worker's compensation insurance, (b) comprehensive general liability insurance,
including coverage for product liability, bodily injury and property damage, and
(c) automobile liability insurance. Upon Distributor's written request, NETGEAR
will furnish the applicable certificate of insurance.
IN NO EVENT WILL EITHER PARTY OR THEIR RESPECTIVE PARENT CORPORATIONS OR
SUPPLIERS BE LIABLE FOR (1) THE COST OF SUBSTITUTE PROCUREMENT, SPECIAL,
INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, OR (2) ANY DAMAGES RESULTING
FROM INACCURATE OR LOST DATA OR LOSS OF USE OR PROFITS ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT, THE FURNISHING OF SERVICES, OR THE USE OR
PERFORMANCE OF PRODUCTS, EVEN IF INFORMED OF SUCH DAMAGES. EXCEPT FOR DAMAGES
ARISING UNDER
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<PAGE> 15
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
SECTIONS 14.A AND 16.A, IN NO EVENT WILL NETGEAR's OR BAY NETWORKS' TOTAL
LIABILITY FOR ANY DAMAGES IN ANY ACTION BASED ON OR ARISING OUT OF OR IN
CONNECTION WITH THE AGREEMENT EXCEED [*] TO NETGEAR PURSUANT TO THE AGREEMENT.
EXCEPT FOR DAMAGES ARISING FROM BREACH OF SECTIONS 6.C AND 12, 13 OR 17, IN NO
EVENT WILL DISTRIBUTOR's TOTAL LIABILITY FOR ANY DAMAGES IN ANY ACTION BASED ON
OR ARISING OUT OF OR IN CONNECTION WITH THE AGREEMENT EXCEED [*] TO NETGEAR
PURSUANT TO THE AGREEMENT.
17. FOREIGN RESHIPMENT
This Agreement is made subject to all laws, regulations, orders or other
restrictions on the export from the United States of Products and accompanying
documentation, or of other technical data and information about such Products,
which may be imposed from time to time. Distributor agrees not to export,
directly or indirectly, any such Products or information to any country for
which an export license or other governmental approval is required at the time
of export without first obtaining such license or approval. Distributor is
solely responsible, at its own expense, for obtaining all necessary import and
re-export permits and certificates and for the payment of any and all taxes and
duties imposed upon the movement and delivery of Products.
18. GENERAL
A. The relationship of NETGEAR and Distributor is that of independent
contractors. There is no relationship of agency, partnership, joint venture,
employment or franchise between the parties. Neither party has the authority to
bind the other or to incur any obligation on the other's behalf or to represent
itself as the other's agent or in any way which might result in confusion as to
the fact that the parties are separate and distinct entities.
B. If any provision of this Agreement is held to be invalid or
unenforceable, the remainder of the provisions shall remain in full force and
effect.
C. NETGEAR and Distributor agree to comply with the provisions of all
applicable federal, state, county and local laws, ordinances, regulations and
codes, domestic and foreign.
D. NETGEAR reserves the right to change the discount schedule, policy
or program, whether referred to in the Agreement or set forth in an Exhibit to
the Agreement. For changes which, in NETGEAR's opinion, may adversely affect
Distributor, NETGEAR will provide thirty (30) days notice, or such longer period
as NETGEAR deems appropriate, prior to the effective date of such change.
E. Distributor will keep suitable records to demonstrate compliance
with this Agreement. NETGEAR or its representative, at NETGEAR's cost may review
these records during normal business hours for the sole purpose of determining
Distributor's compliance with this Agreement.
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<PAGE> 16
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
F. Any waiver, amendment or modification of any right, remedy or other
term under the Agreement will not be effective unless mutually agreed to in
writing and signed by authorized representatives of both parties. Neither party
shall be bound by typographical or clerical errors.
G. Neither party is liable for its failure or delay to perform its
obligations under the Agreement due to strikes, wars, revolutions, acts of
terrorism, fires, floods, explosions, earthquakes, shortages in labor,
components or materials, government regulations, or other causes beyond its
control.
H. This Agreement may not be assigned by either party without prior
written permission from the other party, which permission shall not be
unreasonably withheld or delayed. Any attempt by either party to assign any
right, or delegate any duty or obligation which arises under the Agreement
without such permission will be voidable.
19. ENTIRE AGREEMENT, GOVERNING LAW
This Agreement, including its attachment and order acknowledgments under
the Agreement, constitutes the entire agreement between Distributor and NETGEAR
with respect to the purchase, resale and distribution of the Products and is
governed by the laws of the State of California except that body of law dealing
with conflicts of law.
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<PAGE> 17
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
EXHIBIT 1
DISCOUNT SCHEDULE
The initial Discount offered Distributor for purchase or license of NETGEAR
Products included on the NETGEAR Price List in effect on the Effective Date of
this Agreement is [*] off of the then current NETGEAR list price.
Distributor agrees that the foregoing Discount is only applicable to
Products included on the NETGEAR Price List on the Effective Date of this
Agreement. NETGEAR reserves the right to add Products to the Price List at its
sole discretion and any such additional Products shall be offered to Distributor
at discounts to be determined at that time.
<PAGE> 18
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
EXHIBIT 2
DISTRIBUTOR'S ROUTING GUIDE
<PAGE> 19
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
EXHIBIT 3
CMD NAMED ACCOUNTS
[*]
<PAGE> 20
* Portions denoted with an asterisk have been CONFIDENTIAL TREATMENT REQUESTED
omitted and filed separately with the EXHIBIT 10.18
Securities and Exchange Commission
pursuant to a request for confidential
treatment.
EXHIBIT 4
MARKETING PLAN
