<PAGE> 1
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
EXHIBIT 10.19
DISTRIBUTOR AGREEMENT
between
TECH DATA PRODUCT MANAGEMENT, INC.
and
NETGEAR, INC.
NETGEAR Agreement Number: N130 Effective Date: March 1, 1997
Term: 1 Year
Tech Data Product Management, Inc., a corporation organized under the laws of
Florida having a place of business located at 5350 Tech Data Drive, Clearwater,
FL 34620 ("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. Notices of a legal
nature shall be sent via registered or certified mail return receipt requested,
postage prepaid. All other notices will be sent via telefax with a confirming
"hard" copy to follow sent via mail, courier service or otherwise delivered to
the party to be notified. Notices of whatever nature shall be addressed to the
following address, or to such other address as may have been substituted by
written notice:
<TABLE>
<S> <C>
To Distributor: To NETGEAR:
Tech Data Product Management, Inc. 4401 Great America Parkway
5350 Tech Data Drive P.O. Box 58185
Clearwater, FL 34620 Santa Clara, CA 95052-8185
Attn: Tamra Muir Attn: Patricia Dutra-Gerard
Vice President - Marketing Operations
cc: Contracts Administration
</TABLE>
DISTRIBUTOR AND NETGEAR ACKNOWLEDGE THAT EACH HAS READ THIS AGE TOGETHER WITH
THE ATTACHED EXHIBIT, UNDERSTANDS IT AND AGREES TO BE BOUND BY ITS TERMS AND
CONDITIONS.
<TABLE>
<S> <C>
AGREED: AGREED:
TechData Product Management Inc. NETGEAR, Inc.
By: /s/ PEGGY K. CALDWELL By: /s/ LLOYD CARNEY
--------------------------- -------------------------------------------
(authorized signature) (authorized signature)
Name: PEGGY K. CALDWELL Name: LLOYD CARNEY
--------------------------- -------------------------------------------
(type or print) (type or print)
Title: Sr. V.P. Marketing Title: Exec V.P. & G.M. Enterprise Business Group
--------------------------- -------------------------------------------
Date: 4/11/97 Date: 4/18/97
--------------------------- -------------------------------------------
</TABLE>
<PAGE> 2
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the 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 non-exclusive 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. For the purposes
of this Agreement, Hardware and Software shall be collectively referred to as
"Products" unless stated otherwise. 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 user customers.
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. NETGEAR will use reasonable efforts
to transmit an acknowledgment in writing within 5 days of receipt of an
acceptable order. 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 agreed to in writing
by the parties. 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;
(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 5D.
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
2
<PAGE> 3
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
corresponding Products that are shipped by NETGEAR on or after the effective
date of the list price decrease. In the event of a List Price increase for any
of the Products, NETGEAR will extend to Distributor the price in effect at the
time the Distributor's order is acknowledged by NETGEAR provided that such order
was placed prior to the announcement of the list price increase and further
provided that Distributor requests shipment of the order within 60 days of the
effective date of the list price increase.
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 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 ("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 difference between
the Distributor's actual purchase price paid minus any prior credits and
allowances, and the new lower purchase price.
In order to receive a credit, Distributor a) must submit to NETGEAR within
thirty (30) days 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 three
months 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. Distributor shall be responsible for franchise taxes, sales and use
taxes or other similar taxes (excluding taxes on NETGEAR's income) and such
taxes 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. No taxes of any type shall be added to
invoices without the prior written consent of Distributor.
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 thirty days 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 material breach of the Agreement and Distributor
fails to cure said breach within 30 days, 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. 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 commercially reasonable time period.
5. SHIPMENT, CANCELLATION, RETURNS, TITLE, RISK OF LOSS
3
<PAGE> 4
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
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 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. NETGEAR will use best efforts to respond to
Distributor's request for an RMA number within 5 business days of receipt of the
request. 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 the terms of this. Agreement,
may be refused.
D. TITLE, RISK OF LOSS. For all shipments, 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.
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) deliver the License Agreement to its
customers, provided that said License Agreement is provided by NETGEAR to
Distributor, and (ii) use commercially 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 customers to translate,
decompile, disassemble, use for any competitive analysis, or reverse engineer
the Software or its documentation, in any way. Distributor agrees to not
translate, nor authorize others 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
4
<PAGE> 5
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
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.
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-user 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. The exclusive remedy of Distributor's customer under this
warranty is to receive replacement Product from Distributor and NETGEAR's sole
obligation and liability under this warranty is to issue an off-setting credit
to Distributor for Product returned by Distributor on behalf of its customer
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. GENERAL WARRANTY. NETGEAR warrants that NETGEAR has the right, title,
ownership interest and/or marketing rights necessary to provide Products to
Distributor as set forth in this Agreement. NETGEAR warrants that the Products,
when shipped, will be new, free and clear of all liens and encumbrances and that
subject to Distributor paying the applicable prices to NETGEAR as provided for
in this Agreement and to the terms of any Software license that accompanies any
Software, Distributor shall be entitled to resell or relicense the Products to
its customers for use without disturbance by NETGEAR. NETGEAR represents and
warrants that the Products, when shipped by NETGEAR, conform to all applicable
codes, laws and regulations then in effect in the Territory. NETGEAR agrees that
Distributor may pass through to its customers warranties granted by NETGEAR.
F. 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
5
<PAGE> 6
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
with another vendor's product resulting in the defect, or (iii) damaged by
improper environment, abuse, misuse, accident or negligence.
Distributor shall not alter, enlarge or limit the representations, liabilities
or warranties of NETGEAR in any way beyond those expressly set forth in this
Agreement. Distributor shall hold harmless and indemnify NETGEAR for any
expenses, claims, damages or liability arising from or related to any
unauthorized guarantees, warranties or representations made by Distributor,
including without limitation, attorneys' fees.
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, with shipping
charges PREPAID. 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 thirty (30) day
period following March 31, June 30, September 30 and December 31 of each year.
b) The total value of the returned Products shall not exceed ten percent
(10%) of the Net Shipments invoiced by NETGEAR for all Products, less any
credits granted, during the three (3) months 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 are in their original shipping containers and
have not been altered, damaged or used.
B. Subject to the following, Distributor may return for replacement previously
purchased Product which has had its packaging damaged and is thus rendered
unsaleable. Products returned under this provision must be new and unused and,
with the exception of the packaging, undamaged. When requesting an RMA for
return of Products under this provision, Distributor must advise NETGEAR that
the Products are being returned because of damaged packaging. In addition,
Distributor must, at that time, place an order for a like quantity of the same
Products as replacement for those to be returned. All Products returned under
this provision must be returned to NETGEAR with freight charges prepaid. If the
quantity of Products returned due to damaged packaging becomes excessive,
NETGEAR and Distributor agree to negotiate in good faith limitations or
restrictions to be imposed on such returns.
6
<PAGE> 7
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
C. Products which are returned under the Warranty or as a result of erroneous
shipment by NETGEAR or because Product packaging has become damaged and
unsaleable shall not be included in the ten percent (10%) maximum return above.
D. NETGEAR may, at its sole option, allow Distributor to exchange additional
products in order to correct major product mix imbalances in Distributor's
inventory or address inventory imbalances resulting from Product obsolescence.
Any additional Product exchanges will be subject to terms and conditions
mutually agreed to by NETGEAR and Distributor at the time of the exchange.
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 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.
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 reseller's name, address,
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. Distributor shall not be charged
by NETGEAR nor will it charge NETGEAR a fee of any kind for inspection to
information as provided for in this provision.
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 electronically and visually transmitted printed
materials and information disclosed by Distributor or NETGEAR, such as
7
<PAGE> 8
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
new product information, financial or technical 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 or as may be necessary by
reason of legal, accounting or regulatory requirements beyond said party's
reasonable control. 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.
D. 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.
E. ADMINISTRATIVE PROCEDURES. Distributor is 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, promotion and distribution of the
Products, Distributor agrees to use NETGEAR's and certain of Bay Networks' trade
names, logos and trademarks (the "Trademarks") as reasonably instructed in
writing 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. NETGEAR hereby represents and warrants to
Distributor that NETGEAR has the right and authority to grant Distributor the
right to use the Trademarks in accordance with this Agreement.
B. RIGHTS TO TRADEMARKS. Distributor acknowledges that Bay Networks is the
exclusive owner of the Trademarks and except as set forth herein, 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
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 any
Products with a Trademark or other mark of
8
<PAGE> 9
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
NETGEAR from a source other than NETGEAR, its subsidiaries, or an authorized
NETGEAR Distributor.
14. CLAIMS OF INFRINGEMENT
A. INDEMNIFICATION. NETGEAR agrees at its own expense to indemnify, defend and
hold harmless Distributor and its customers from and against any and all
actions, claims, direct losses, damages or liabilities arising or resulting from
any action brought against Distributor or its customers to the extent that it is
based on a claim that any Product infringes any patent, copyright, trade mark,
trade secret or other valid intellectual property right, and will pay any costs,
expenses and damages finally awarded against Distributor or its customers 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 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 or otherwise authorized 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 one year from the Effective Date
and will automatically renew for successive one (1) year periods unless
terminated as provided below.
B. TERMINATION. This Agreement may be terminated at any time without cause, by
either party upon thirty (30) days prior 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) days after receipt of written notice of such
breach from the party not in default. Upon termination of the Agreement by
NETGEAR for Distributor's uncured breach, NETGEAR may cancel all of
Distributor's unfulfilled orders without further obligation.
C. INVENTORY REPURCHASE. If NETGEAR cancels this Agreement without cause or if
Distributor terminates this Agreement for breach of a material obligation by
NETGEAR, NETGEAR shall repurchase from Distributor, at Distributor's option, all
Products in Distributor's inventory on the effective date of cancellation,
provided NETGEAR verifies that a) the Products are in their original shipping
containers and have not been altered, damaged or used, and b) the Products have
been included in the appropriate monthly inventory reports submitted per Section
11. The repurchase price shall be the price actually paid by Distributor less
any prior credits. Upon termination, Distributor agrees contact NETGEAR for an
RMA number and to ship the repurchased Products to NETGEAR's plant, freight
prepaid.
D. 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 early termination of the Agreement.
9
<PAGE> 10
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
E. 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; payment of duties; payment of fees; payment; indemnification;
refunds and credits; inventory repurchase; 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 and
reasonable expenses. 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. This 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 which certificate of
insurance shall name Distributor as an additional insured for purposes of claims
arising pursuant to this Agreement.
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, PUNITIVE 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 SECTIONS 12, 13, 14.A AND 16.A, IN NO EVENT WILL NETGEAR's TOTAL
LIABILITY FOR ANY DAMAGES IN ANY ACTION BASED ON OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT EXCEED THE TOTAL AMOUNT PAID TO NETGEAR PURSUANT
TO THE AGREEMENT. EXCEPT FOR DAMAGES ARISING FROM DISTRIBUTOR'S 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 THE TOTAL AMOUNT PAID 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
10
<PAGE> 11
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
about such Products, which may be imposed from time to time. Distributor agrees
not to export 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. In addition, NETGEAR shall obtain applicable
regulatory, testing laboratory or similar certifications and/or approvals which,
in its sole discretion, are required for sale of the Products in the Territory.
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. NETGEAR will use commercially reasonable efforts to provide thirty
(30) days written 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.
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. There are no
oral or written representations, understandings or agreements relating to the
11
<PAGE> 12
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
subject matter of this Agreement which are not expressed herein. This Agreement
shall be governed by the laws of the State of California except that body of law
dealing with conflicts of law.
12
<PAGE> 13
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the 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.
13
<PAGE> 14
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
EXHIBIT 2
DISTRIBUTOR'S ROUTING GUIDE
14
<PAGE> 15
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
EXHIBIT 2
[TECH DATA LETTERHEAD]
<TABLE>
<CAPTION>
DEST. FL GA NJ IN TX CA
ORIGIN ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AL Con-Way S Con-Way S Watkins Watkins Watkins Watkins
AR Watkins Watkins Watkins Watkins Con-Way S Watkins
AZ Watkins Watkins Watkins Watkins Watkins Viking
CA Watkins Watkins Watkins Watkins Watkins Viking
CO Roadway Roadway Roadway Roadway Roadway Viking
CT Watkins Watkins G.O.D. Watkins Watkins Watkins
DC Watkins Watkins G.O.D. Watkins Watkins Watkins
DE Watkins Watkins G.O.D. Watkins Watkins Watkins
FL Con-Way S Con-Way S Watkins Watkins Watkins Watkins
GA Con-Way S Con-Way S Watkins Watkins Watkins Watkins
IA Roadway Roadway Roadway ConWay C Roadway Roadway
ID Roadway Roadway Roadway Roadway Roadway Viking
IL Watkins Watkins Watkins ConWay C Watkins Watkins
IN Watkins Watkins Watkins ConWay C Watkins Watkins
KS Watkins Watkins Watkins Watkins Watkins Watkins
KY Watkins Watkins Watkins ConWay C Watkins Watkins
LA Watkins Watkins Watkins Watkins Central Watkins
MA Watkins Watkins G.O.D. Watkins Watkins Watkins
MD Watkins Watkins G.O.D. Watkins Watkins Watkins
ME Roadway Roadway G.O.D. Roadway Roadway Roadway
MI Watkins Watkins Watkins ConWay C Watkins Watkins
MN Watkins Watkins Watkins Roadway Watkins Watkins
MO Watkins Watkins Watkins ConWay C Watkins Watkins
MS Con-Way S Con-Way S Watkins Watkins Watkins Watkins
MT Roadway Roadway Roadway Roadway Roadway Roadway
NC Con-Way S Con-Way S Watkins Watkins Watkins Watkins
ND Roadway Roadway Roadway Roadway Roadway Roadway
NE Roadway Roadway Roadway Roadway Roadway Roadway
NH Watkins Watkins G.O.D. Watkins Watkins Watkins
NJ Watkins Watkins G.O.D. Watkins Watkins Watkins
NM Roadway Roadway Roadway Roadway Roadway Viking
NV Watkins Watkins Watkins Watkins Watkins Viking
NY Watkins Watkins G.O.D. Watkins Watkins Watkins
OH Watkins Watkins Roadway ConWay C Watkins Watkins
OK Watkins Watkins Watkins Watkins Central Watkins
OR Watkins Watkins Watkins Watkins Watkins Viking
PA Watkins Watkins G.O.D. Watkins Watkins Watkins
RI Watkins Watkins G.O.D. Watkins Watkins Watkins
SC Con-Way S Con-Way S Watkins Watkins Watkins Watkins
SD Roadway Roadway Roadway Roadway Roadway Roadway
TN Con-Way S Con-Way S Watkins Watkins Watkins Watkins
TX Watkins Watkins Watkins Watkins Con-Way S Watkins
UT Roadway Roadway Roadway Roadway Roadway Viking
VA Watkins Watkins G.O.D. Watkins Watkins Watkins
VT Roadway Roadway G.O.D. Roadway Roadway Roadway
WA Watkins Watkins Watkins Watkins Watkins Viking
WV Roadway Roadway G.O.D. Roadway Roadway Roadway
WI Watkins Watkins Watkins ConWay C Watkins Watkins
WY Roadway Roadway Roadway Roadway Roadway Roadway
</TABLE>
<PAGE> 16
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
EXHIBIT 3
NAMED ACCOUNTS
15
<PAGE> 17
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
EXHIBIT 4
MARKETING PLAN
16
<PAGE> 18
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
EXHIBIT 4
[*]
<PAGE> 19
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
[*]
<PAGE> 20
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
[*]
<PAGE> 21
* Portions denoted with an CONFIDENTIAL TREATMENT REQUESTED
asterisk have been omitted
and filed separately with
the Securities and Exchange
Commission pursuant to
a request for confidential
treatment.
[*]
